What changed in this filing

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Item 1. Financial Statements

2025-05-09 compared with 2024-11-08 · 265 added, 466 removed, 872 unchanged (46% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, 2024

March 31, 2025

December 31, 2024

6 unchanged sentences

Investment securities:

Available-for-sale, at fair value (amortized cost of $ 1,274,661 and $ 1,363,721 at September 30, 2024 and December 31, 2023, respectively)

Held-to-maturity, at amortized cost (estimated fair value of $ 2,298 and $ 2,286 at September 30, 2024 and December 31, 2023, respectively)

Available-for-sale, at fair value (amortized cost of $ 1,225,046 and $ 1,257,436 at March 31, 2025 and December 31, 2024, respectively)

Held-to-maturity, at amortized cost (estimated fair value of $ 2,285 and $ 2,279 at March 31, 2025 and December 31, 2024, respectively)

Equity securities, at fair value

8 unchanged sentences

Right of use lease assets

Deferred tax asset, net

Liabilities and stockholders’ equity

27 unchanged sentences

Three months ended

Nine months ended

September 30,

(In thousands, except per share data)

2 unchanged sentences

Interest on investment securities

Interest on certificates of deposit investments

Interest on certificates of deposit

Interest on federal funds sold

10 unchanged sentences

Net interest income

Provision for credit losses

Provision (release) for credit losses

Net interest income after provision for credit losses

23 unchanged sentences

Diluted net income per common share

Cash dividends declared per common share

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

Three months ended

Nine months ended

September 30,

(In thousands)

Other comprehensive income (loss)

Unrealized gains (losses) on available-for-sale securities, net of tax benefit (expense) of ($ 11,316 ) and $ 10,183 for three months ended September 30, 2024 and 2023, respectively and ($ 7,300 ) and $ 10,223 for the nine months ended September 30, 2024 and 2023, respectively

reclassification adjustment for realized gains (losses) included in net income, net of tax benefit (expense) of $ 77 and ($ 983 ) for three months ended September 30, 2024 and 2023, respectively and $ 119 and ($ 968 ) for the nine months ended September 30, 2024 and 2023, respectively

Unrealized gains (losses) on available-for-sale securities, net of tax benefit (expense) of ($ 2,594 ) and $ 4,225 for three months ended March 31, 2025 and 2024, respectively

reclassification adjustment for realized gains (losses) included in net income, net of tax benefit of $ 50 and $ 0 for three months ended March 31, 2025 and 2024, respectively

Other comprehensive income (loss), net of taxes

3 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the three months ended September 30, 2024 and 2023

(In thousands)

Comprehensive

Income (Loss)

June 30, 2024

Other comprehensive income, net tax

Cash dividends on common stock ( .24 /share)

Forfeiture of 1,201 restricted shares pursuant to the 2017 stock incentive plan

Issuance of 9,384 common shares pursuant to the employee stock purchase plan

Deferred compensation

Vested restricted shares/units compensation expense

September 30, 2024

June 30, 2023

Other comprehensive loss, net tax

Cash dividends on common stock ( .230 /share)

Issuance of 11,624 common shares pursuant to the employee stock purchase plan

Issuance of 3,290,222 common shares pursuant to the acquisition of Blackhawk Bancorp, Inc., net proceeds

Deferred compensation

Vested restricted shares/units compensation expense

September 30, 2023

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the nine months ended September 30, 2024

For the three months ended March 31, 2025

(In thousands)

1 unchanged sentence

December 31, 2024

Other comprehensive loss, net tax

Other comprehensive income, net tax

Cash dividends on common stock ( 0.24 /share)

6 unchanged sentences

Vested restricted shares/units compensation expense

September 30, 2024

March 31, 2025

First Mid Bancshares, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the nine months ended September 30, 2023

For the three months ended March 31, 2024

(In thousands)

6 unchanged sentences

Issuance of 8,612 common shares pursuant to the employee stock purchase plan

Issuance of 3,290,222 common shares pursuant to the acquisition of Blackhawk Bancorp, Inc., net proceeds

Purchase of 170 shares of treasury stock

Deferred compensation

2 unchanged sentences

Vested restricted shares/units compensation expense

September 30, 2023

March 31, 2024

See accompanying notes to unaudited condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Stateme nts of Cash Flows (unaudited)

Nine months ended September 30,

Three months ended March 31,

(In thousands)

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses

Provision (release) for credit losses

Depreciation, amortization and accretion, net

Change in cash surrender value of bank owned life insurance

Change in bank owned life insurance

Gain on death benefit paid from bank owned life insurance

Stock-based compensation expense

Operating lease payments

Loss (gain) on investment securities, net

(Gain) loss on sales and write downs of other real estate owned, net

Loss on sale of other assets

Loss on investment securities, net

Loss (gain) on sales and write-downs of other real estate owned, net

Loss on sale of premises and equipment

Gain on sale of loans held for sale, net

Gain on repayment of subordinated debentures

Increase in accrued interest receivable

Loss on repayment of subordinated debentures

Gain on repayment of FHLB advances

Decrease (increase) in accrued interest receivable

Increase in accrued interest payable

1 unchanged sentence

Proceeds from sale of loans held for sale

Decrease (increase) in other assets

Decrease in other assets

Decrease in other liabilities

1 unchanged sentence

Cash flows from investing activities:

Proceeds from maturities of certificates of deposit investments

Purchases of certificates of deposit investments

Proceeds from maturities of certificates of deposit

Purchases of certificates of deposit

Proceeds from sales of securities available-for-sale

Proceeds from maturities of securities available-for-sale

Proceeds from maturities of securities held-to-maturity

Purchases of securities available-for-sale

Purchase of securities held-to-maturity

Net (increase) decrease in loans

Net decrease (increase) in loans

Purchases of premises and equipment

2 unchanged sentences

Proceeds from bank owned life insurance death benefit

Net cash (used in) provided by acquisition

Net cash provided by investing activities

Cash flows from financing activities:

Net decrease in deposits

Decrease in repurchase agreements

Net increase in deposits

Increase (decrease) in repurchase agreements

Proceeds from FHLB advances

Repayment of FHLB advances

Proceeds from short-term debt

Repayment of short-term debt

Repayment of subordinated debenture

Proceeds from issuance of common stock

Purchase of treasury stock

Dividends paid on common stock

Net cash used in financing activities

Net cash provided by financing activities

Increase in cash and cash equivalents

4 unchanged sentences

Condensed Consolidated Statements of Cash Flows (unaudited)

Nine months ended September 30,

Three months ended March 31,

(In thousands)

6 unchanged sentences

Initial recognition of lease liabilities

Dividends reinvested in common stock

Supplemental disclosures for purchases of capital stock

Fair value of assets acquired

Consideration paid:

Common stock issued

Total consideration paid

Fair value of liabilities assumed

Notes to Condensed Consolidated Financial Statements (unaudited)

6 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

The financial information reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods ended September 30, 2024 and 2023, and all such adjustments are of a normal recurring nature.

Certain amounts in the prior year’s consolidated financial statements may have been reclassified to conform to the September 30, 2024 presentation and there was no impact on net income or stockholders’ equity.

The results of the interim period ended September 30, 2024 are not necessarily indicative of the results expected for the year ending December 31, 2024.

The Company operates as a one-segment entity for financial reporting purposes.

The financial information reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods ended March 31, 2025 and 2024, and all such adjustments are of a normal recurring nature.

Certain amounts in the prior year’s consolidated financial statements may have been reclassified to conform to the March 31, 2025 presentation and there was no impact on net income or stockholders’ equity.

The results of the interim period ended March 31, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025.

The 2024 year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

2 unchanged sentences

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2024 Annual Report on Form 10-K.

Blackhawk Bancorp, Inc.

On March 20, 2023, First Mid Bancshares, Inc.

(“First Mid”) and Eagle Sub LLC, a newly formed Wisconsin limited liability company and wholly-owned subsidiary of First Mid (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Blackhawk Bancorp, Inc., a Wisconsin corporation (“Blackhawk”), pursuant to which, among other things, First Mid agreed to acquire 100 % of the issued and outstanding shares of Blackhawk pursuant to a business combination whereby Blackhawk will merge with and into Merger Sub, whereupon the separate corporate existence of Blackhawk will cease and Merger Sub will continue as the surviving company and a wholly-owned subsidiary of First Mid (the “Merger”).

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $ 0.01 per share, of Blackhawk issued and outstanding immediately prior to the effective time of the Merger (other than shares held in treasury by Blackhawk and dissenting shares) were converted into and become the right to receive 1.15 shares of common stock, par value $ 4.00 per share, of First Mid and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments.

On an aggregate basis, the total consideration payable by First Mid at the closing of the Merger to Blackhawk’s shareholders and equity award holders was 3,290,222 shares of First Mid common stock valued at $ 93.51 million and $ 1,928 of cash in lieu of fractional shares.

The Blackhawk Merger closed August 15, 2023 and Blackhawk Bank was merged into First Mid Bank on December 1, 2023.

Mid Rivers Insurance Group, Inc.

During the quarter ended September 30, 2024, Mid Rivers Insurance Group, Inc.

was acquired by the Company for a purchase price of $ 10.1 million and instantly merged into First Mid Insurance Group.

The Company maintains a website at www.firstmid.com .

3 unchanged sentences

It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

Segment Reporting

The Company operates as a single segment entity for financial reporting purposes and has adopted ASU 2023-07 during the year ended December 31, 2024 .

The Chief Financial Officer, Matthew Smith (CFO), serves as the Company’s chief operating decision maker (CODM).

The CODM allocates resources and assesses performance of the Company based on the consolidated performance, excluding all significant intercompany balances and transactions, of the Company and its wholly owned subsidiaries and does not significantly utilize disaggregated segment financial information for decision making and resource allocation.

Management has reviewed the requirements of ASU 2023-07 and has determined that no additional segment disclosures are required.

Specifically,

• the Company does not use the tracked performance on the disaggregated segment level for decision-making or resource allocation purposes,

• no significant segment-specific expenses or performance metrics are used internally for decision-making or resource allocation purposes, and

• the level of financial consolidation presented in these financial statements aligns with the CODM’s internal reporting and decision-making process

Based on this assessment the Company’s financial statement disclosures fully comply with ASC 2023-07, and no additional qualitative segment disclosures are necessary.

At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the First Mid-Illinois Bancshares, Inc.

5 unchanged sentences

There have been no stock options awarded under any Company plan since 2008.

The Company has awarded 53,766 and 60,550 shares of restricted stock during the nine months ended September 30, 2024 and 2023, respectively, and 39,150 and 37,900 restricted stock units during the nine months ended September 30, 2024 and 2023 , respectively.

The Company has awarded 79,635 and 53,766 shares of restricted stock during the three months ended March 31, 2025 and 2024, respectively, and 46,000 and 39,150 restricted stock units during the three months ended March 31, 2025 and 2024 , respectively.

Employee Stock Purchase Plan

4 unchanged sentences

A maximum of 600,000 shares of common stock may be issued under the ESPP.

During the nine months ended September 30, 2024 and 2023, 25,319 shares and 28,762 shares, respectively, were issued pursuant to the ESPP.

During the three months ended March 31, 2025 and 2024, 6,891 shares and 8,612 shares, respectively, were issued pursuant to the ESPP.

Captive Insurance Company

7 unchanged sentences

The Captive is included in the Company's consolidated financial statements and its federal income return.

Bank Owned Life Insurance

First Mid Bank has purchased life insurance policies on certain senior management.

Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts that are probable at settlement.

Revenue Recognition

Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), establishes a revenue recognition model for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

Most of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans and investment securities, and revenue related to mortgage servicing activities, which are subject to other accounting standards.

A description of the revenue-generating activities that are within the scope of ASC 606, and included in other income in the Company’s condensed consolidated statements of income are as follows:

Trust revenues.

The Company generates fee income from providing fiduciary services through its subsidiary, First Mid Wealth Management Company.

Fees are billed in arrears based upon the preceding period account balance.

Revenue from farm management services is recorded when the service is complete, for example when crops are sold.

Brokerage commissions.

Revenue is recorded at the beginning of each quarter through billing to customers based on the account asset size on the last day of the previous quarter.

If a withdrawal of funds takes place, a prorated refund may occur;

this is reflected within the same quarter as the original billing occurred.

All performance obligations are met within the same quarter that the revenue is recorded.

Insurance commissions.

The Company’s insurance agency subsidiary, First Mid Insurance, receives commissions on premiums of new and renewed business policies.

First Mid Insurance records commission revenue on direct bill policies as the cash is received.

For agency bill policies, First Mid Insurance retains its commission portion of the customer premium payment and remits the balance to the carrier.

In both cases, the entire performance obligation is held by the carriers.

Service charges on deposits.

The Company generates revenue from fees charged for deposit account maintenance, overdrafts, wire transfers, and check fees.

The revenue related to deposit fees is recognized at the time the performance obligation is satisfied.

ATM/debit card revenue.

The Company generates revenue through service charges on the use of its ATM machines and interchange income from the use of Company issued credit and debit cards.

The revenue is recognized at the time the service is used and the performance obligation is satisfied.

Other income.

Treasury management fees and lock box fees are received and recorded after the service performance obligation is completed.

Merchant bank card fees are received from various vendors;

however, the performance obligation is with the vendors.

The Company records gains on the sale of loans and the sale of OREO properties after the transactions are complete and transfer of ownership has occurred.

As each of the Company’s facilities is in markets with similar economies, no disaggregation of revenue is necessary.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss included in stockholders’ equity as of September 30, 2024 and December 31, 2023 are as follows (in thousands):

The components of accumulated other comprehensive loss included in stockholders’ equity as of March 31, 2025 and December 31, 2024 are as follows (in thousands):

Unrealized Losses on Securities

September 30, 2024

March 31, 2025

Net unrealized losses on securities available-for-sale

Balance at September 30, 2024

Balance at March 31, 2025

December 31, 2024

1 unchanged sentence

Balance at December 31, 2024

Amounts reclassified from accumulated other comprehensive loss and the affected line items in the statements of income during the three and nine months ended September 30, 2024 and 2023, were as follows (in thousands):

Amounts reclassified from accumulated other comprehensive loss and the affected line items in the statements of income during the three months ended March 31, 2025 and 2024, were as follows (in thousands):

Amounts Reclassified from

1 unchanged sentence

Three months ended

Nine months ended

September 30,

Affected Line Item in the Statements of Income

Realized gain (loss) on available-for-sale securities

Securities (loss) gain, net

Securities gains (losses), net

Total reclassifications out of accumulated other comprehensive income (loss)

6 unchanged sentences

The amendments expand the disclosure requirements of income taxes, primarily related to the income tax rate reconciliation and income taxes paid with the intention to enhance transparency and decision usefulness of income tax disclosures.

The amendments are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The adoption of this accounting pronouncement will have no impact on the Financial Statements aside from additional disclosures presented in the Notes to Consolidated Financial Statements.

In November 2023, the Financial Accounting Standards Board issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in this update require annual and interim disclosures on significant segment expenses that are regularly provided to the chief operating decision maker and require annual and interim disclosures on “other segment items” that comprise the difference between segment revenue less segment expense compared to the reported measure of segment profit or loss.

In addition, the amendments will require all annual disclosures that are currently required to be reported on an interim basis and requires disclosure of the title and position of the chief operating decision maker and how that position uses the information to assess segment performance and the allocation of resources.

ASU 2023-07 also requires entities that have a single reportable segment, such as the Company, to provide all disclosures required in this update and the existing segment disclosures in Topic 280.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is evaluating the accounting and disclosure requirements of ASU 2023-07 and does not expect them to have a material effect on the consolidated financial statements.

The amendments are effective for the fiscal years beginning after December 15, 2024 10-K filings.

Early adoption was permitted but not applied.

The adoption of this accounting pronouncement will have no impact on the Financial Statements aside from additional disclosures presented in the Notes to Consolidated Financial Statements in the year ending December 31, 2025 10-K filing.

Note 2 -- Earnings Per Share

1 unchanged sentence

Diluted net income per common share available to common stockholders is computed using the weighted average number of common shares outstanding, increased by the Company’s stock options, unless anti-dilutive.

The components of basic and diluted net income per common share available to common stockholders for the three and nine months ended September 30, 2024 and 2023 were as follows:

The components of basic and diluted net income per common share available to common stockholders for the three months ended March 31, 2025 and 2024 were as follows:

Three months ended

Nine months ended

September 30,

Basic net income per common share

10 unchanged sentences

Diluted earnings per common share

There were no shares excluded when computing diluted earnings per share for the three and nine months ended September 30, 2024 and 2023 because they were anti-dilutive.

There were no shares excluded when computing diluted earnings per share for the three months ended March 31, 2025 and 2024 because they were anti-dilutive.

Note 3 -- Investment Securities

The amortized cost, gross unrealized gains and losses and estimated fair values for available-for-sale and held-to-maturity securities by major security type at September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

The amortized cost, gross unrealized gains and losses and estimated fair values for available-for-sale and held-to-maturity securities by major security type at March 31, 2025 and December 31, 2024 were as follows (in thousands):

March 31, 2025

Available-for-sale:

21 unchanged sentences

Total held-to-maturity

The Company also had $ 4.4 million and $ 4.1 million of equity securities, at fair value, as of September 30, 2024 and December 31, 2023, respectively.

The Company also had $ 4.5 million and $ 4.4 million of equity securities, at fair value, as of March 31, 2025 and December 31, 2024, respectively.

The Company's held-to-maturity securities are annuities for which the risk of loss is minimal.

As such, as of September 30, 2024, the Company did not record an allowance for credit losses on its held-to-maturity securities.

Realized gains and losses resulting from sales of securities were as follows during the three and nine months ended September 30, 2024 and 2023 (in thousands):

As such, as of March 31, 2025, the Company did not record an allowance for credit losses on its held-to-maturity securities.

Realized gains and losses resulting from sales of securities were as follows during the three months ended March 31, 2025 and 2024 (in thousands):

Three months ended

Nine months ended

September 30,

The following table indicates the expected maturities of investment securities classified as available-for-sale presented at fair value, and held-to-maturity presented at amortized cost, at September 30, 2024 and the weighted average yield for each range of maturities (dollars in thousands):

The following table indicates the expected maturities of investment securities classified as available-for-sale presented at fair value, and held-to-maturity presented at amortized cost, at March 31, 2025 and the weighted average yield for each range of maturities (dollars in thousands):

Available-for-sale:

17 unchanged sentences

Treasury and other U.S.

government agencies and corporations, there were no investment securities of any single issuer, the book value of which exceeded 10 % of stockholders' equity at September 30, 2024.

Investment securities carried at approximately $ 834.1 million and $ 831.0 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law.

The following table presents the aging of gross unrealized losses and fair value by investment category as of September 30, 2024 and December 31, 2023 (in thousands):

government agencies and corporations, there were no investment securities of any single issuer, which the book value exceeded 10 % of stockholders' equity at March 31, 2025.

Investment securities carried at approximately $ 529.8 million and $ 632.9 million at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law.

The following table presents the aging of gross unrealized losses and fair value by investment category as of March 31, 2025 and December 31, 2024 (in thousands):

Less than 12 months

12 months or more

September 30, 2024

March 31, 2025

Available-for-sale:

15 unchanged sentences

Government Corporations and Agencies.

At September 30, 2024 there were twenty-eight available-for-sale securities with a fair value of $ 193.5 million and unrealized losses of $ 18.1 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2023, there were thirty-six available-for-sale securities with a fair value of $ 210.1 million and unrealized losses of $ 26.2 million in a continuous unrealized loss position for twelve months or more.

At March 31, 2025 there were twenty-seven available-for-sale securities with a fair value of $ 183.4 million and unrealized losses of $ 18.1 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2024, there were twenty-nine available-for-sale securities with a fair value of $ 189.3 million and unrealized losses of $ 21.2 million in a continuous unrealized loss position for twelve months or more.

There were no held-to-maturity U.S.

2 unchanged sentences

Obligations of states and political subdivisions.

At September 30, 2024, there were two hundred forty-seven obligations of states and political subdivisions with a fair value of $ 251.1 million and unrealized losses of $ 45.7 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2023 there were two hundred thirty-seven obligations of states and political subdivisions with a fair value of $ 241.6 million and unrealized losses of $ 49.0 million in a continuous unrealized loss position for twelve months or more.

At March 31, 2025, there were two hundred fifty-one obligations of states and political subdivisions with a fair value of $ 237.1 million and unrealized losses of $ 60.8 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2024 there were two hundred forty-seven obligations of states and political subdivisions with a fair value of $ 241.5 million and unrealized losses of $ 55.2 million in a continuous unrealized loss position for twelve months or more.

Mortgage-backed Securities:

GSE Residential.

At September 30, 2024, there were two hundred forty-two mortgage-backed securities with a fair value of $ 547.2 million and unrealized losses of $ 93.3 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2023, there were two hundred sixty-three mortgage-backed securities with a fair value of $ 566.2 million and unrealized losses of $ 113.0 million in a continuous unrealized loss position for twelve months or more.

At March 31, 2025, there were two hundred thirty-three mortgage-backed securities with a fair value of $ 503.9 million and unrealized losses of $ 103.9 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2024, there were two hundred forty-one mortgage-backed securities with a fair value of $ 511.7 million and unrealized losses of $ 114.6 million in a continuous unrealized loss position for twelve months or more.

Other securities.

At September 30, 2024, there were forty other securities with a fair value of $ 58.3 million and unrealized losses of $ 3.0 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2023, there were forty-three other securities with a fair value of $ 57.9 million and unrealized losses of $ 4.4 million in a continuous unrealized loss position for twelve months or more.

At March 31, 2025, there were thirty-six other securities with a fair value of $ 53.2 million and unrealized losses of $ 2.2 million in a continuous unrealized loss position for twelve months or more.

At December 31, 2024, there were forty other securities with a fair value of $ 58.7 million and unrealized losses of $ 2.7 million in a continuous unrealized loss position for twelve months or more.

The Company does not consider available-for-sale securities with unrealized losses at March 31, 2025 , to be experiencing credit losses and recognized no resulting allowance for credit losses.

The Company does not intend to sell these investments, and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost basis, which may be the maturity dates of the securities.

The unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase.

Note 4 – Loans and Allowance for Credit Losses

3 unchanged sentences

Interest on substantially all loans is credited to income based on the principal amount outstanding.

A summary of loans at September 30, 2024 and December 31, 2023 follows (in thousands):

September 30, 2024

A summary of loans at March 31, 2025 and December 31, 2024 follows (in thousands):

March 31, 2025

December 31, 2024

15 unchanged sentences

These loans are primarily for 1-4 family residential properties.

Accrued interest on loans, which is excluded from the amortized cost of the balances above, totaled $ 32.5 million and $ 29.9 million at September 30, 2024 and December 31, 2023, respectively.

Accrued interest on loans, which is excluded from the amortized cost of the balances above, totaled $ 31.7 million and $ 33.7 million at March 31, 2025 and December 31, 2024, respectively.

Most of the Company’s business activities are with customers located near the Company's branch locations in Illinois, Missouri, Texas, and Wisconsin.

At September 30, 2024, the Company’s loan portfolio included $ 618.4 million of loans to borrowers whose businesses are directly related to agriculture.

At March 31, 2025, the Company’s loan portfolio included $ 670.1 million of loans to borrowers whose businesses are directly related to agriculture.

Of this amount, $ 573.1 million was concentrated in corn and other grain farming.

18 unchanged sentences

For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined.

Maximum loan-to-value ratios range from 65 % to 80 % depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x .

Amortization periods for commercial real estate loans are generally limited to twenty or twenty five years , depending on the loan-to-value.

Maximum loan-to-value ratios range from 65 % to 85 % depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x to 1.35x .

Amortization periods for commercial real estate loans are generally limited to twenty to thirty years , depending on the collateral type and loan-to-value.

The Company’s commercial real estate portfolio is below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators.

The following table represents the gross commercial real estate loans by property type as of September 30, 2024 (in thousands):

September 30, 2024

The following table represents the gross commercial real estate loans by property type as of March 31, 2025 (in thousands):

March 31, 2025

Commercial real estate

6 unchanged sentences

Assisted living facility

RV parks and campgrounds

Medical office

15 unchanged sentences

Operating lines are typically written for one year and secured by the crop.

Loan-to-value ratios on loans secured by farmland generally do not exceed 65 % and have amortization periods limited to twenty-five years .

Loan-to-value ratios on loans secured by farmland generally do not exceed 80 % and have amortization periods ranging from twenty-five to thirty years depending on the loan-to-value.

Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate.

21 unchanged sentences

The Company individually evaluates certain loans for impairment.

In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns.

This evaluation considers expected future cash flows, the value of collateral and other factors that may impact the borrower’s ability to make payments when due.

For loans greater than $ 250,000 , impairment is individually measured each quarter using one of three alternatives:

For loans greater than $ 250,000 , allowance for credit loss is individually measured each quarter using one of three alternatives:

(1) the present value of expected future cash flows discounted at the loan’s effective interest rate;

(2) the loan’s observable market price, if available;

or (3) the fair value of the collateral less costs to sell for collateral dependent

loans and loans for which foreclosure is deemed to be probable.

or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be

A specific allowance is assigned when expected cash flows or collateral are less than the carrying amount of the loan.

11 unchanged sentences

The allowance is calculated as the net present value of the expected cash flows less the amortized cost basis of the loans.

Prior to 2022, the allowance for credit losses was measured on a collective (pool) basis for non-individually evaluated loans with similar risk characteristics.

Historical credit loss experience provided the basis for the estimate of expected credit losses.

Adjustments to expected losses are made using qualitative factors for relevant to each loan segment including merger & acquisition activity, economic conditions, changes in policies, procedures & underwriting, and concentrations.

Adjustments to expected losses are made using qualitative factors relevant to each loan segment including merger and acquisition activity, economic conditions, changes in policies, procedures and underwriting, and concentrations.

In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.

8 unchanged sentences

While inflationary pressures have caused some risk in this segment, most projects are associated with financially strong borrowers.

The qualitative factors for this segment increased by a minor amount for the quarter due to balances hitting 90 % of an internal concentration threshold.

The qualitative factors for this segment increased by a moderate level for the quarter due to balances hitting an internal concentration threshold.

Agricultural Real Estate Loans.

1 unchanged sentence

Farmland values have increased over an extended period of time and remained stable over the last year.

There was no change to the qualitative factors for this segment.

The qualitative factor for this segment was reduced by a moderate amount for the quarter.

Residential Real Estate Non Owner Occupied Loans.

7 unchanged sentences

These loans are a small segment to overall loan balances.

In the period, past dues increased to a level that resulted in a significant increase to the qualitative factors for this segment.

In the period, there were no changes to the qualitative factors for this segment.

Commercial Real Estate Owner Occupied Loans.

This segment has remained stable, despite macro segment concerns over commercial real estate.

The Company has previously increased qualitative factors for those conditions, but believes the stability in the portfolio and improvement in the macro-economic environment warranted a moderate decrease in the factor for the period.

The Company has previously increased qualitative factors for those conditions, but believes the stability in the portfolio and passing of time for repricing warranted a moderate decrease in the factor for the period.

Commercial Real Estate Non Owner Occupied Loans.

This segment includes the Company's largest balances.

While qualitative factors had been increased in past periods for the economic uncertainty in the macro conditions, the Company did not believe any additional changes were warranted other than minor decrease for falling below the internal concentration thresholds for factor adjustments.

While qualitative factors had been increased in past periods for the economic uncertainty in the macro conditions, the Company did not believe any additional changes were warranted.

Agricultural Loans.

1 unchanged sentence

Commodity prices have remained depressed for an extended period but yields have experienced increases from previous concerns from the weather.

The qualitative factors of this segment were increased in

prior periods and the Company added to the factor again at a minor level.

The qualitative factors of this segment were increased in prior periods and the Company added to the factor again at a significant level due to an increase in past dues.

Commercial and Industrial Loans.

This segment includes the largest balance of allowance for credit losses.

The qualitative factors for this segment were not changed in the periods as the allowance is viewed as appropriate for the current risk and outlook.

Most of the repricing for higher rates in this loan segment has already occurred.

The qualitative factors for this segment were increased over time due to the repricing of higher rates.

Given time has passed, and the outlook is for stable to declining rates, this issue has subsided.

During the period, the qualitative factor was reduced by a minor amount.

Consumer Loans.

This segment is a small portion of the Company's loan portfolio.

This segment will likely be impacted by any recession that may appear and already been impacted by the inflationary pressures.

The current allowance for this segment is appropriate for the risk and, therefore, there were no changes to the qualitative factors period.

Acquired Loans.

Prior to January 1, 2020 loans acquired with evidence of credit deterioration since origination and for which it was probable that all contractually required payments would not be collected were considered purchased credit impaired at the time of acquisition.

Purchase credit-impaired ("PCI") loans were accounted for under ASC 310-30, Receivables--Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"), and were initially measured at fair value, which included the estimated future credit losses expected to be incurred over the life of the loan.

Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date.

The cash flows expected to be collected were estimated using current key assumptions, such as default rates, value of underlying collateral, severity and prepayment speeds.

Subsequent to January 1, 2020, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans.

At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans.

As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan.

Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium.

Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans.

For acquired loans not deemed purchased credit deteriorated at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans.

At the acquisition date, an initial allowance for expected credit losses is estimated and recorded as credit loss expense.

The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

The following table presents the activity in the allowance for credit losses based on portfolio segment for the three and nine months ended September 30, 2024 (in thousands):

This segment will likely be impacted in the event of a recession that may occur.

The qualitative factor for this segment was decreased by a significant amount during the period due to a sizeable decrease in past dues.

The following table presents the activity in the allowance for credit losses based on portfolio segment for the three months ended March 31, 2025 (in thousands):

and Industrial

Three months ended

September 30, 2024

Beginning balance

Provision for credit loss expense

Loans charged off

Recoveries collected

Ending balance

Nine months ended

September 30, 2024

March 31, 2025

Beginning balance

Provision for credit loss expense

Provision (release) for credit loss expense

Loans charged off

1 unchanged sentence

Ending balance

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and nine months ended September 30, 2023 and for the year ended December 31, 2023 (in thousands):

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three months ended March 31, 2024 and for the year ended December 31, 2024 (in thousands):

Construction and Land Development

6 unchanged sentences

Three months ended

September 30, 2023

Beginning balance

Initial allowance on loans purchased with credit deterioration

Provision for credit loss expense

Loans charged off

Recoveries collected

Ending balance

Nine months ended

September 30, 2023

March 31, 2024

Beginning balance

Initial allowance on loans purchased with credit deterioration

Provision for credit loss expense

Provision (release) for credit loss expense

Loans charged off

4 unchanged sentences

Beginning Balance

Initial allowance on loans purchased with credit deterioration

Provision for credit loss expense

Provision (release) for credit loss expense

Loans charged off

5 unchanged sentences

For individually evaluated loans that are considered solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines

the amount of the loss.

The Company adheres to time frames established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due.

Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of September 30, 2024 (in thousands):

Agricultural real estate

3 unchanged sentences

Loans secured by real estate

Agricultural loans

Commercial and industrial loans

13 unchanged sentences

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans.

The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of September 30, 2024 (in thousands):

The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of March 31, 2025 (in thousands):

Term Loans by Origination Year

September 30, 2024

March 31, 2025

Construction and land development loans

Special mention

Current period gross writeoffs