FIRST MID BANCSHARES, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS First Mid Bancshares, Inc. Condensed Consolida ted Balance Sheets (Unaudited) (In thousands, except share data) March 31, 2025 December 31, 2024 Assets Cash and due from banks: Non-interest bearing $ 105,235 $ 92,112 Interest bearing 96,159 29,029 Federal funds sold 76 75 Cash and cash equivalents 201,470 121,216 Certificates of deposit 2,520 3,500 Investment securities: 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) 1,039,727 1,063,292 Held-to-maturity, at amortized cost (estimated fair value of $ 2,285 and $ 2,279 at March 31, 2025 and December 31, 2024, respectively) 2,285 2,279 Equity securities, at fair value 4,471 4,439 Loans held for sale 3,644 6,614 Loans 5,695,214 5,665,848 Less allowance for credit losses ( 70,051 ) ( 70,182 ) Net loans 5,625,163 5,595,666 Interest receivable 37,453 38,639 Other real estate owned 2,075 2,179 Premises and equipment, net 97,446 100,234 Goodwill, net 203,391 203,391 Intangible assets, net 55,280 58,515 Bank owned life insurance 171,127 170,854 Right of use lease assets 13,817 13,861 Tax assets 57,896 66,858 Other assets 54,923 68,197 Total assets $ 7,572,688 $ 7,519,734 Liabilities and stockholders’ equity Deposits: Non-interest bearing $ 1,394,590 $ 1,329,155 Interest bearing 4,735,790 4,727,941 Total deposits 6,130,380 6,057,096 Securities sold under agreements to repurchase 219,772 204,122 Interest payable 6,625 5,280 FHLB borrowings 195,000 242,520 Junior subordinated debentures, net 24,335 24,280 Subordinated debt, net 79,535 87,472 Lease liabilities 14,255 14,190 Other liabilities 31,837 38,383 Total liabilities 6,701,739 6,673,343 Stockholders’ equity: Common stock ($ 4 par value; authorized 30,000,000 shares; issued 24,650,465 and 24,564,356 shares in 2025 and 2024, respectively; outstanding 23,981,916 and 23,895,807 shares in 2025 and 2024, respectively) 100,602 100,258 Additional paid-in capital 515,975 512,810 Retained earnings 411,633 395,189 Deferred compensation 509 2,756 Accumulated other comprehensive loss ( 135,350 ) ( 142,383 ) Treasury stock, at cost ( 668,549 shares in 2025 and 652,571 shares in 2024) ( 22,420 ) ( 22,239 ) Total stockholders’ equity 870,949 846,391 Total liabilities and stockholders’ equity $ 7,572,688 $ 7,519,734 See accompanying notes to unaudited condensed consolidated financial statements. 2 First Mid Bancshares, Inc. Condensed Consolidated State ments of Income (unaudited) (In thousands, except per share data) Three months ended March 31, (In thousands, except per share data) 2025 2024 Interest income: Interest and fees on loans $ 79,918 $ 77,823 Interest on investment securities 6,777 7,405 Interest on certificates of deposit 36 20 Interest on federal funds sold 1 17 Interest on deposits with other financial institutions 827 2,407 Total interest income 87,559 87,672 Interest expense: Interest on deposits 23,722 26,096 Interest on securities sold under agreements to repurchase 1,180 2,056 Interest on FHLB borrowings 1,807 2,314 Interest on other borrowings 24 — Interest on junior subordinated debentures 468 542 Interest on subordinated debentures 949 1,194 Total interest expense 28,150 32,202 Net interest income 59,409 55,470 Provision (release) for credit losses 1,652 ( 357 ) Net interest income after provision for credit losses 57,757 55,827 Other income: Wealth management revenues 5,800 5,322 Insurance commissions 9,925 9,213 Service charges 2,901 2,956 Securities gains (losses), net ( 181 ) — Mortgage banking revenue, net 711 706 ATM/debit card revenue 3,646 4,055 Bank owned life insurance 1,687 1,121 Other 375 1,105 Total other income 24,864 24,478 Other expense: Salaries and employee benefits 31,748 30,448 Net occupancy and equipment expense 8,479 7,560 Net other real estate owned expense 101 ( 21 ) FDIC insurance 849 869 Amortization of intangible assets 3,231 3,497 Stationery and supplies 431 391 Legal and professional 3,076 2,449 ATM/debit card 1,831 1,191 Marketing and donations 852 862 Other 3,874 6,116 Total other expense 54,472 53,362 Income before income taxes 28,149 26,943 Income taxes 5,978 6,440 Net income $ 22,171 $ 20,503 Per share data: Basic net income per common share $ 0.93 $ 0.86 Diluted net income per common share 0.93 0.86 See accompanying notes to unaudited condensed consolidated financial statements. 3 First Mid Bancshares, Inc. Condensed Consolidated Statements o f Comprehensive Income (unaudited) Three months ended March 31, (In thousands) 2025 2024 Net income $ 22,171 $ 20,503 Other comprehensive income (loss) 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 6,902 ( 11,240 ) Less: 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 ( 131 ) — Other comprehensive income (loss), net of taxes 7,033 ( 11,240 ) Comprehensive income $ 29,204 $ 9,263 See accompanying notes to unaudited condensed consolidated financial statements. 4 First Mid Bancshares, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) For the three months ended March 31, 2025 (In thousands) Common Stock Additional Paid-In- Capital Retained Earnings Deferred Compensation Accumulated Other Comprehensive Loss Treasury Stock Total December 31, 2024 $ 100,258 $ 512,810 $ 395,189 $ 2,756 $ ( 142,383 ) $ ( 22,239 ) $ 846,391 Net income — — 22,171 — — — 22,171 Other comprehensive income, net tax — — — — 7,033 — 7,033 Cash dividends on common stock ( 0.24 /share) — — ( 5,727 ) — — — ( 5,727 ) Issuance of 73,618 restricted shares pursuant to 2017 stock incentive plan, net of forfeitures 294 2,575 — — — — 2,869 Issuance of 5,600 common shares pursuant to 2017 stock incentive plan 22 196 — — — — 218 Issuance of 6,891 common shares pursuant to the employee stock purchase plan 28 188 — — — — 216 Deferred compensation — — — ( 2,779 ) — ( 181 ) ( 2,960 ) Grant of restricted units pursuant to 2017 stock incentive plan — 1,791 — — — — 1,791 Release of restricted units pursuant to 2017 stock incentive plan — ( 1,634 ) — — — — ( 1,634 ) Vested restricted shares/units compensation expense — 49 — 532 — — 581 March 31, 2025 $ 100,602 $ 515,975 $ 411,633 $ 509 $ ( 135,350 ) $ ( 22,420 ) $ 870,949 5 First Mid Bancshares, Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) For the three months ended March 31, 2024 (In thousands) Common Stock Additional Paid-In- Capital Retained Earnings Deferred Compensation Accumulated Other Comprehensive Loss Treasury Stock Total December 31, 2023 $ 99,919 $ 509,314 $ 338,662 $ 2,629 $ ( 136,427 ) $ ( 20,893 ) $ 793,204 Net income — — 20,503 — — — 20,503 Other comprehensive loss, net tax — — — — ( 11,240 ) — ( 11,240 ) Cash dividends on common stock ( 0.23 /share) — — ( 5,471 ) — — — ( 5,471 ) Issuance of 47,580 restricted shares pursuant to 2017 stock incentive plan, net of forfeitures 191 1,401 — — — — 1,592 Issuance of 5,600 common shares pursuant to 2017 stock incentive plan 22 166 — — — — 188 Issuance of 8,612 common shares pursuant to the employee stock purchase plan 34 160 — — — — 194 Deferred compensation — — — ( 2,288 ) — 35 ( 2,253 ) Grant of restricted units pursuant to 2017 stock incentive plan — 1,311 — — — — 1,311 Release of restricted units pursuant to 2017 stock incentive plan — ( 617 ) — — — — ( 617 ) Vested restricted shares/units compensation expense — 50 — 491 — — 541 March 31, 2024 $ 100,166 $ 511,785 $ 353,694 $ 832 $ ( 147,667 ) $ ( 20,858 ) $ 797,952 See accompanying notes to unaudited condensed consolidated financial statements. 6 First Mid Bancshares, Inc. Condensed Consolidated Stateme nts of Cash Flows (unaudited) Three months ended March 31, (In thousands) 2025 2024 Cash flows from operating activities: Net income $ 22,171 $ 20,503 Adjustments to reconcile net income to net cash provided by operating activities: Provision (release) for credit losses 1,652 ( 357 ) Depreciation, amortization and accretion, net 4,996 5,338 Change in cash surrender value of bank owned life insurance ( 1,200 ) ( 1,121 ) Gain on death benefit paid from bank owned life insurance ( 487 ) — Stock-based compensation expense 688 606 Operating lease payments ( 822 ) ( 836 ) Loss on investment securities, net 181 — Loss (gain) on sales and write-downs of other real estate owned, net 80 ( 70 ) Loss on sale of premises and equipment 14 — Gain on sale of loans held for sale, net ( 641 ) ( 233 ) Loss on repayment of subordinated debentures 289 — Gain on repayment of FHLB advances ( 85 ) — Decrease (increase) in accrued interest receivable 1,186 ( 2,585 ) Increase in accrued interest payable 1,486 910 Origination of loans held for sale ( 25,500 ) ( 10,448 ) Proceeds from sale of loans held for sale 29,111 10,844 Decrease in other assets 21,118 10,537 Decrease in other liabilities ( 6,353 ) ( 4,040 ) Net cash provided by operating activities 47,884 29,048 Cash flows from investing activities: Proceeds from maturities of certificates of deposit 980 — Purchases of certificates of deposit — ( 2,275 ) Proceeds from sales of securities available-for-sale 8,291 — Proceeds from maturities of securities available-for-sale 23,927 21,621 Purchases of securities available-for-sale ( 500 ) ( 994 ) Purchase of securities held-to-maturity ( 21 ) ( 11 ) Net decrease (increase) in loans ( 31,149 ) 80,542 Purchases of premises and equipment ( 1,930 ) ( 1,480 ) Proceeds from sale of premises and equipment 3,500 — Proceeds from sales of other real property owned 33 — Proceeds from bank owned life insurance death benefit 1,414 — Net cash provided by investing activities 4,545 97,403 Cash flows from financing activities: Net increase in deposits 73,284 119,277 Increase (decrease) in repurchase agreements 15,650 ( 3,002 ) Proceeds from FHLB advances 50,000 — Repayment of FHLB advances ( 97,435 ) ( 25,000 ) Proceeds from short-term debt 4,000 — Repayment of short-term debt ( 4,000 ) — Repayment of subordinated debenture ( 8,381 ) — Proceeds from issuance of common stock 434 382 Dividends paid on common stock ( 5,727 ) ( 5,471 ) Net cash provided by financing activities 27,825 86,186 Increase in cash and cash equivalents 80,254 212,637 Cash and cash equivalents at beginning of period 121,216 143,064 Cash and cash equivalents at end of period $ 201,470 $ 355,701 See accompanying notes to unaudited condensed consolidated financial statements. 7 First Mid Bancshares, Inc. Condensed Consolidated Statements of Cash Flows (unaudited) Three months ended March 31, (In thousands) 2025 2024 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 26,805 $ 31,321 Income taxes, net of refunds ( 1,191 ) ( 823 ) Supplemental disclosures of noncash investing and financing activities Loans transferred to other real estate $ — $ 183 Initial recognition of right-of-use assets 668 729 Initial recognition of lease liabilities 668 729 8 Notes to Condensed Consolidated Financial Statements (unaudited) Note 1 -- Basis of Accou nting and Consolidation The unaudited condensed consolidated financial statements include the accounts of First Mid Bancshares, Inc. (“Company”) and its wholly owned subsidiaries: First Mid Bank & Trust, N.A. (“First Mid Bank”), First Mid Wealth Management Company, First Mid Insurance Group, Inc. (“First Mid Insurance”), and First Mid Captive, Inc. 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 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. The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all the information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and related footnote disclosures although the Company believes that the disclosures made are adequate to make the information not misleading. 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. 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. Website The Company maintains a website at www.firstmid.com . All periodic and current reports of the Company and amendments to these reports filed with the Securities and Exchange Commission (“SEC”) can be accessed, free of charge, through this website as soon as reasonably practicable after these materials are filed with the SEC. General Litigation The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. 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. 9 Stock Plans At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the First Mid-Illinois Bancshares, Inc. 2017 Stock Incentive Plan (“SI Plan”). The SI Plan was implemented to succeed the Company’s 2007 Stock Incentive Plan, which had a ten-year term. The SI Plan is intended to provide a means whereby directors, employees, consultants and advisors of the Company and its subsidiaries may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company and its subsidiaries, thereby advancing the interests of the Company and its stockholders. Accordingly, directors and selected employees, consultants and advisors may be provided the opportunity to acquire shares of common stock of the Company on the terms and conditions established in the SI Plan. Following the stockholders’ approval at the 2021 annual meeting of the Company, a maximum of 550,000 shares of common stock may be issued under the SI Plan. There have been no stock options awarded under any Company plan since 2008. 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 At the Annual Meeting of Stockholders held April 25, 2018, the stockholders approved the First Mid-Illinois Bancshares, Inc. Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to promote the interests of the Company by providing eligible employees with the opportunity to purchase shares of common stock of the Company at a 15 % discount through payroll deductions. The ESPP is also intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. A maximum of 600,000 shares of common stock may be issued under 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 First Mid Captive, Inc. (the “Captive"), a wholly owned subsidiary of the Company which was formed and began operations in December 2019, is a Nevada-based captive insurance company. The Captive insures against certain risks unique to operations of the Company and its subsidiaries for which insurance may not be currently available or economically feasible in today's insurance marketplace. The Captive pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. The Captive is subject to regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. It has elected to be taxed under Section 831(b) of the Internal Revenue Code. Pursuant to Section 831(b), if gross premiums do not exceed $ 2.85 million , then the Captive is taxable solely on its investment income. The Captive is included in the Company's consolidated financial statements and its federal income return. Accumulated Other Comprehensive Loss 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 March 31, 2025 Net unrealized losses on securities available-for-sale $ ( 185,319 ) Tax benefit 49,969 Balance at March 31, 2025 $ ( 135,350 ) December 31, 2024 Net unrealized losses on securities available-for-sale $ ( 194,144 ) Tax benefit 51,761 Balance at December 31, 2024 $ ( 142,383 ) 10 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 Other Comprehensive Income (Loss) Three months ended March 31, 2025 2024 Affected Line Item in the Statements of Income Realized gain (loss) on available-for-sale securities $ ( 181 ) $ — Securities gains (losses), net Tax effect 50 — Income taxes Total reclassifications out of accumulated other comprehensive income (loss) $ ( 131 ) $ — Net reclassified amount See “Note 3 – Investment Securities” for more detailed information regarding unrealized losses on available-for-sale securities. New Accounting Pronouncements In December 2023, the Financial Accounting Standards Board issued ASU No. 2023-09, Income Tax (Topic 740): Improvements to Income Tax Disclosures. 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 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 Basic net income per common share available to common stockholders is calculated as net income less preferred stock dividends divided by the weighted average number of common shares outstanding. 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 months ended March 31, 2025 and 2024 were as follows: Three months ended March 31, 2025 2024 Basic net income per common share Available to common stockholders: Net income $ 22,171,000 $ 20,503,000 Weighted average common shares outstanding 23,858,817 23,872,731 Basic earnings per common share $ 0.93 $ 0.86 Diluted net income per common share Available to common stockholders: Net income applicable to diluted earnings per share $ 22,171,000 $ 20,503,000 Weighted average common shares outstanding 23,858,817 23,872,731 Dilutive potential common shares: restricted stock awarded 100,411 87,604 Diluted weighted average common shares outstanding 23,959,228 23,960,335 Diluted earnings per common share $ 0.93 $ 0.86 11 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 March 31, 2025 and December 31, 2024 were as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized (Losses) Fair Value March 31, 2025 Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 203,079 $ — $ ( 18,146 ) $ 184,933 Obligations of states and political subdivisions 324,071 181 ( 62,147 ) 262,105 Mortgage-backed securities: GSE residential 636,759 834 ( 103,891 ) 533,702 Other securities 61,137 — ( 2,150 ) 58,987 Total available-for-sale $ 1,225,046 $ 1,015 $ ( 186,334 ) $ 1,039,727 Held-to-maturity: Other investments $ 2,285 $ — $ — $ 2,285 Total held-to-maturity $ 2,285 $ — $ — $ 2,285 December 31, 2024 Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 212,513 $ 3 $ ( 21,158 ) $ 191,358 Obligations of states and political subdivisions 324,046 135 ( 56,441 ) 267,740 Mortgage-backed securities: GSE residential 653,760 552 ( 114,570 ) 539,742 Other securities 67,117 — ( 2,665 ) 64,452 Total available-for-sale $ 1,257,436 $ 690 $ ( 194,834 ) $ 1,063,292 Held-to-maturity: Other investments $ 2,279 $ — $ — $ 2,279 Total held-to-maturity $ 2,279 $ — $ — $ 2,279 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 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 March 31, 2025 2024 Gross gains $ — $ — Gross losses ( 181 ) — 12 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): One year or less After 1 through 5 years After 5 through 10 years After ten years Total Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 173,943 $ 10,990 $ — $ — $ 184,933 Obligations of state and political subdivisions 30,126 123,008 100,221 8,750 262,105 Mortgage-backed securities: GSE residential 116 8,194 31,129 494,263 533,702 Other securities 45,411 12,762 814 — 58,987 Total available-for-sale investments $ 249,596 $ 154,954 $ 132,164 $ 503,013 $ 1,039,727 Weighted average yield 2.06 % 2.33 % 2.26 % 1.80 % 2.00 % Full tax-equivalent yield 2.17 % 2.82 % 2.69 % 1.83 % 2.17 % Held to maturity: Other investments $ — $ — $ — $ 2,285 $ 2,285 Total held-to-maturity $ — $ — $ — $ 2,285 $ 2,285 Weighted average yield — % — % — % — % — % Full tax-equivalent yield — % — % — % — % — % The weighted average yields are calculated based on the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent yields have been calculated using a 21 % tax rate. With the exception of obligations of the U.S. Treasury and other U.S. 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 Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses March 31, 2025 Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 1,091 $ ( 2 ) $ 183,392 $ ( 18,144 ) $ 184,483 $ ( 18,146 ) Obligations of states and political subdivisions 17,581 ( 1,343 ) 237,147 ( 60,804 ) 254,728 ( 62,147 ) Mortgage-backed securities: GSE residential 1,158 ( 5 ) 503,901 ( 103,886 ) 505,059 ( 103,891 ) Other securities — — 53,237 ( 2,150 ) 53,237 ( 2,150 ) Total $ 19,830 $ ( 1,350 ) $ 977,677 $ ( 184,984 ) $ 997,507 $ ( 186,334 ) December 31, 2024 Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 1,340 $ — $ 189,327 $ ( 21,158 ) $ 190,667 $ ( 21,158 ) Obligations of states and political subdivisions 20,349 ( 1,248 ) 241,502 ( 55,193 ) 261,851 ( 56,441 ) Mortgage-backed securities: GSE residential 1,135 ( 18 ) 511,746 ( 114,552 ) 512,881 ( 114,570 ) Other securities — — 58,702 ( 2,665 ) 58,702 ( 2,665 ) Total $ 22,824 $ ( 1,266 ) $ 1,001,277 $ ( 193,568 ) $ 1,024,101 $ ( 194,834 ) 13 U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies. 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. Treasury securities and obligations of U.S. government corporations and agencies in a continuous unrealized loss position for twelve months or more. Obligations of states and political subdivisions. 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 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 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 Loans are stated at amortized cost net of an allowance for credit losses. Amortized cost is the unpaid principal net of unearned premiums and discounts, and net deferred origination fees and costs. Deferred loan origination fees are reduced by loan origination costs and are amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding. A summary of loans at March 31, 2025 and December 31, 2024 follows (in thousands): March 31, 2025 December 31, 2024 Construction and land development $ 269,300 $ 236,258 Agricultural real estate 374,034 391,436 1-4 family residential properties 493,490 502,243 Multifamily residential properties 358,115 334,032 Commercial real estate 2,421,215 2,442,627 Loans secured by real estate 3,916,154 3,906,596 Agricultural loans 296,110 239,138 Commercial and industrial loans 1,308,062 1,340,865 Consumer loans 47,632 54,481 All other loans 165,572 169,232 Total gross loans 5,733,530 5,710,312 Less: loans held for sale 3,644 6,614 5,729,886 5,703,698 Less: Net deferred loan fees, premiums and discounts 34,672 37,850 Allowance for credit losses 70,051 70,182 Net loans $ 5,625,163 $ 5,595,666 Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at fair value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties. 14 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 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. Total loans to borrowers whose businesses are directly related to agriculture increased $ 39.5 million from $ 630.6 million at December 31, 2024 due to seasonal timing of cash flow requirements. Loans concentrated in corn and other grain farming increased $ 65.5 million from $ 507.6 million at December 31, 2024. The Company's underwriting practices include collateralization of loans. Any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, the Company has $ 218.0 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has $ 1.1 billion of loans to lessors of non-residential buildings, and $ 589.8 million of loans to lessors of residential buildings and dwellings. The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the board of directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation and most borrowers are below regulatory thresholds. The Company can occasionally have outstanding balances to one borrower up to but not exceeding the regulatory threshold should underwriting guidelines warrant. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments. The Company’s lending can be summarized into the following primary areas: Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. 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 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 March 31, 2025 (in thousands): March 31, 2025 Commercial real estate Owner occupied $ 773,520 Non owner occupied Shopping centers and malls 235,325 Industrial and warehouse 219,134 Hotels and motels 205,438 Skilled nursing facility 163,402 Office 158,157 Assisted living facility 119,125 Retail 110,295 RV parks and campgrounds 98,534 Medical office 82,680 Other property types 255,605 Total commercial real estate $ 2,421,215 15 Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80 % of the value of the collateral and amortization periods limited to seven years . Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government- assisted lending programs through the Small Business Administration and U.S. Department of Agriculture. Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. 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 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. Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells most of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80 % of the value of the collateral and have amortization periods of twenty-five years or less. The Company does not originate subprime mortgage loans. Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral. Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality. Allowance for Credit Losses The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and modified loans, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating large individually evaluated loans separately from non-individually evaluated loans. Individually Evaluated Loans 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 and the loan does not share risk characteristics with other loans. 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 , 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 16 probable. A specific allowance is assigned when expected cash flows or collateral are less than the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs. Non-Individually Evaluated Loans Non-individually evaluated loans comprise the vast majority of the Company’s total loan portfolio and include loans in accrual status and those credits not identified as modified loans. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Special Mention, Substandard, or Doubtful. To determine the allowance, the loan portfolio is segmented based on similar risk characteristics. The allowance for credit losses is estimated using a discounted cash flow (DCF) methodology. The DCF projects future cash flows over the life of the loan portfolio. Probability of default (PD) and loss given default (LGD) are key components in calculating expected losses in this model. The PD is forecasted using a regression model that determines the likelihood of default with a forward-looking forecast of unemployment rates. The LGD is the percentage of defaulted loans that is ultimately charged off. The allowance is calculated as the net present value of the expected cash flows less the amortized cost basis of the loans. 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. The Company also considers specific current economic events occurring globally, in the U.S. and in its local markets. Events considered include the status of trade agreements with China, scheduled increases in minimum wage and changes to the minimum salary threshold for overtime provisions, current and projected unemployment rates, current and projected grain and oil prices and economies of local markets where customers work and operate. Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type described above, are analyzed to estimate the qualitative factors used to adjust the historical loss rates. During the current period, the following assumptions and factors were considered when determining the historical loss rate and any potential adjustments by loan pool. Construction and Land Development Loans. Historical losses in this segment remain very low. 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 moderate level for the quarter due to balances hitting an internal concentration threshold. Agricultural Real Estate Loans. Historical losses in the segment remain very low. Farmland values have increased over an extended period of time and remained stable over the last year. The qualitative factor for this segment was reduced by a moderate amount for the quarter. Residential Real Estate Non Owner Occupied Loans. The loan segment has remained stable throughout the last several years. Both adversely classified and past dues have been consistent. There was no change to the qualitative factors for this segment. Residential Real Estate Owner Occupied Loans. The loan segment has remained stable throughout the last several years. Both adversely classified and past dues have been consistent. There was no change to the qualitative factors for this segment. HELOC Loans. These loans are a small segment to overall loan balances. 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 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. Agricultural Loans. Losses in this segment are very low. 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 significant level due to an increase in past dues. 17 Commercial and Industrial Loans. This segment includes the largest balance of allowance for credit losses. 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 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): Construction and Land Development Agricultural Real Estate 1-4 Family Residential Properties Commercial Real Estate Agricultural Loans Commercial and Industrial Consumer Loans Total Three months ended March 31, 2025 Beginning balance $ 3,275 $ 1,361 $ 3,579 $ 32,669 $ 1,957 $ 25,602 $ 1,739 $ 70,182 Provision (release) for credit loss expense 456 ( 69 ) ( 14 ) ( 125 ) 809 559 36 1,652 Loans charged off — — ( 39 ) ( 338 ) ( 1,117 ) ( 223 ) ( 366 ) ( 2,083 ) Recoveries collected — — 18 8 — 90 184 300 Ending balance $ 3,731 $ 1,292 $ 3,544 $ 32,214 $ 1,649 $ 26,028 $ 1,593 $ 70,051 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 Agricultural Real Estate 1-4 Family Residential Properties Commercial Real Estate Agricultural Loans Commercial and Industrial Consumer Loans Total Three months ended March 31, 2024 Beginning balance $ 2,918 $ 1,366 $ 4,220 $ 31,758 $ 705 $ 25,450 $ 2,258 $ 68,675 Provision (release) for credit loss expense ( 217 ) ( 8 ) ( 424 ) 618 125 ( 609 ) 158 ( 357 ) Loans charged off — — ( 67 ) — ( 52 ) ( 274 ) ( 426 ) ( 819 ) Recoveries collected — — 49 161 — 64 163 437 Ending balance $ 2,701 $ 1,358 $ 3,778 $ 32,537 $ 778 $ 24,631 $ 2,153 $ 67,936 Twelve months ended December 31, 2024 Beginning Balance $ 2,918 $ 1,366 $ 4,220 $ 31,758 $ 705 $ 25,450 $ 2,258 $ 68,675 Provision (release) for credit loss expense 352 ( 5 ) ( 785 ) 1,178 3,587 510 798 5,635 Loans charged off — — ( 195 ) ( 451 ) ( 2,410 ) ( 688 ) ( 2,004 ) ( 5,748 ) Recoveries collected 5 — 339 184 75 330 687 1,620 Ending balance $ 3,275 $ 1,361 $ 3,579 $ 32,669 $ 1,957 $ 25,602 $ 1,739 $ 70,182 Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined. For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. 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 18 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 March 31, 2025 (in thousands): Collateral Allowance Real Estate Business Assets Total for Credit Losses Agricultural real estate $ 575 $ — $ 575 $ — 1-4 family residential properties 166 — 166 — Multifamily residential properties 882 — 882 — Commercial real estate 4,194 — 4,194 9 Loans secured by real estate 5,817 — 5,817 9 Agricultural loans — 5,951 5,951 51 Commercial and industrial loans — 1,234 1,234 337 Total loans $ 5,817 $ 7,185 $ 13,002 $ 397 Credit Quality The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings which are commensurate with a loan considered “criticized”: Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard. Loans classified as substandard are inadequately protected by the current sound-worthiness and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing factors, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans. 19 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 Revolving Risk rating 2025 2024 2023 2022 2021 Prior Loans Total March 31, 2025 Construction and land development loans Pass $ 11,064 $ 99,298 $ 108,605 $ 14,446 $ 15,111 $ 20,232 $ — $ 268,756 Special mention — — — — — 377 — 377 Substandard — — — 6 — 9 — 15 Total $ 11,064 $ 99,298 $ 108,605 $ 14,452 $ 15,111 $ 20,618 $ — $ 269,148 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Agricultural real estate loans Pass $ 17,676 $ 24,813 $ 15,902 $ 136,691 $ 53,147 $ 115,001 $ — $ 363,230 Special mention — — 188 107 982 7,184 — 8,461 Substandard — — — 574 — 1,148 — 1,722 Total $ 17,676 $ 24,813 $ 16,090 $ 137,372 $ 54,129 $ 123,333 $ — $ 373,413 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — 1-4 family residential property loans Pass $ 13,535 $ 39,573 $ 35,010 $ 70,278 $ 73,881 $ 164,131 $ 79,716 $ 476,124 Special mention 215 175 — 279 315 579 160 1,723 Substandard 116 169 658 903 783 7,119 544 10,292 Total $ 13,866 $ 39,917 $ 35,668 $ 71,460 $ 74,979 $ 171,829 $ 80,420 $ 488,139 Current period gross write-offs $ — $ — $ — $ — $ — $ 39 $ — $ 39 Commercial real estate loans Pass $ 81,229 $ 212,592 $ 215,627 $ 662,091 $ 516,834 $ 1,027,151 $ — $ 2,715,524 Special mention — 653 13,709 4,052 2,055 10,969 — 31,438 Substandard — — 48 3,355 457 4,021 — 7,881 Total $ 81,229 $ 213,245 $ 229,384 $ 669,498 $ 519,346 $ 1,042,141 $ — $ 2,754,843 Current period gross write-offs $ — $ — $ — $ 338 $ — $ — $ — $ 338 Agricultural loans Pass $ 77,868 $ 148,331 $ 21,178 $ 20,152 $ 13,992 $ 3,871 $ — $ 285,392 Special mention — 590 2,214 793 80 — — 3,677 Substandard 170 1,101 4,030 2,163 278 — — 7,742 Total $ 78,038 $ 150,022 $ 27,422 $ 23,108 $ 14,350 $ 3,871 $ — $ 296,811 Current period gross write-offs $ — $ — $ 540 $ 503 $ 74 $ — $ — $ 1,117 Commercial and industrial loans Pass $ 135,026 $ 271,202 $ 113,732 $ 258,176 $ 187,818 $ 469,240 $ — $ 1,435,194 Special mention 10 5,928 9,491 1,699 3,643 7,516 — 28,287 Substandard — 65 2,280 557 306 2,595 — 5,803 Total $ 135,036 $ 277,195 $ 125,503 $ 260,432 $ 191,767 $ 479,351 $ — $ 1,469,284 Current period gross write-offs $ — $ — $ 14 $ 53 $ — $ 156 $ — $ 223 Consumer loans Pass $ 1,498 $ 4,167 $ 4,376 $ 21,299 $ 10,064 $ 5,331 $ — $ 46,735 Special mention — 20 — 36 — — — 56 Substandard — 39 28 135 160 67 — 429 Total $ 1,498 $ 4,226 $ 4,404 $ 21,470 $ 10,224 $ 5,398 $ — $ 47,220 Current period gross write-offs $ — $ 2 $ 14 $ 75 $ 36 $ 239 $ — $ 366 Total loans Pass $ 337,896 $ 799,976 $ 514,430 $ 1,183,133 $ 870,847 $ 1,804,957 $ 79,716 $ 5,590,955 Special mention 225 7,366 25,602 6,966 7,075 26,625 160 74,019 Substandard 286 1,374 7,044 7,693 1,984 14,959 544 33,884 Total $ 338,407 $ 808,716 $ 547,076 $ 1,197,792 $ 879,906 $ 1,846,541 $ 80,420 $ 5,698,858 Current period gross write-offs $ — $ 2 $ 568 $ 969 $ 110 $ 434 $ — $ 2,083 20 The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category as of December 31, 2024 (in thousands): Term Loans by Origination Year Revolving Risk rating 2024 2023 2022 2021 2020 Prior Loans Total December 31, 2024 Construction and land development loans Pass $ 82,696 $ 101,715 $ 14,390 $ 15,817 $ 4,735 $ 16,342 $ — $ 235,695 Special mention — — — — — 382 — 382 Substandard — — 6 — — 10 — 16 Total $ 82,696 $ 101,715 $ 14,396 $ 15,817 $ 4,735 $ 16,734 $ — $ 236,093 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — Agricultural real estate loans Pass $ 25,824 $ 17,292 $ 159,433 $ 55,083 $ 48,700 $ 73,592 $ — $ 379,924 Special mention — 192 107 986 1,755 5,630 — 8,670 Substandard — 141 966 — — 1,059 — 2,166 Total $ 25,824 $ 17,625 $ 160,506 $ 56,069 $ 50,455 $ 80,281 $ — $ 390,760 Current period gross write-offs $ — $ — $ — $ — $ — $ — $ — $ — 1-4 family residential property loans Pass $ 46,350 $ 36,454 $ 74,580 $ 75,325 $ 61,936 $ 110,348 $ 79,714 $ 484,707 Special mention 175 — 204 326 — 577 59 1,341 Substandard 174 672 916 737 557 6,875 618 10,549 Total $ 46,699 $ 37,126 $ 75,700 $ 76,388 $ 62,493 $ 117,800 $ 80,391 $ 496,597 Current period gross write-offs $ — $ 46 $ 13 $ 33 $ — $ 103 $ — $ 195 Commercial real estate loans Pass $ 216,297 $ 213,704 $ 680,665 $ 535,056 $ 289,855 $ 774,516 $ — $ 2,710,093 Special mention 659 13,732 4,090 2,053 713 10,462 — 31,709 Substandard — 49 3,844 467 — 4,067 — 8,427 Total $ 216,956 $ 227,485 $ 688,599 $ 537,576 $ 290,568 $ 789,045 $ — $ 2,750,229 Current period gross write-offs $ — $ — $ 151 $ — $ — $ 300 $ — $ 451 Agricultural loans Pass $ 175,402 $ 24,024 $ 13,147 $ 9,162 $ 1,585 $ 2,306 $ — $ 225,626 Special mention 617 2,208 976 100 — — — 3,901 Substandard 843 7,092 2,209 — — — — 10,144 Total $ 176,862 $ 33,324 $ 16,332 $ 9,262 $ 1,585 $ 2,306 $ — $ 239,671 Current period gross write-offs $ — $ 2,213 $ 100 $ 52 $ — $ 45 $ — $ 2,410 Commercial and industrial loans Pass $ 307,785 $ 228,411 $ 278,845 $ 183,042 $ 131,005 $ 360,610 $ — $ 1,489,698 Special mention 54 1,149 1,277 748 1,020 7,583 — 11,831 Substandard 65 1,410 789 446 98 815 — 3,623 Total $ 307,904 $ 230,970 $ 280,911 $ 184,236 $ 132,123 $ 369,008 $ — $ 1,505,152 Current period gross write-offs $ 10 $ 47 $ 207 $ 378 $ 10 $ 36 $ — $ 688 Consumer loans Pass $ 5,098 $ 5,138 $ 24,430 $ 11,810 $ 4,494 $ 2,385 $ — $ 53,355 Special mention — — 14 — — — — 14 Substandard 12 21 259 216 54 29 — 591 Total $ 5,110 $ 5,159 $ 24,703 $ 12,026 $ 4,548 $ 2,414 $ — $ 53,960 Current period gross write-offs $ 98 $ 63 $ 154 $ 139 $ 59 $ 1,491 $ — $ 2,004 Total loans Pass $ 859,452 $ 626,738 $ 1,245,490 $ 885,295 $ 542,310 $ 1,340,099 $ 79,714 $ 5,579,098 Special mention 1,505 17,281 6,668 4,213 3,488 24,634 59 57,848 Substandard 1,094 9,385 8,989 1,866 709 12,855 618 35,516 Total $ 862,051 $ 653,404 $ 1,261,147 $ 891,374 $ 546,507 $ 1,377,588 $ 80,391 $ 5,672,462 Current period gross write-offs $ 108 $ 2,369 $ 625 $ 602 $ 69 $ 1,975 $ — $ 5,748 21 The following table presents the Company’s loan portfolio aging analysis at March 31, 2025 and December 31, 2024 (in thousands): 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans Receivable Total Loans > 90 Days and Accruing March 31, 2025 Construction and land development $ 11 $ — $ — $ 11 $ 269,137 $ 269,148 $ — Agricultural real estate — 53 841 894 372,519 373,413 — 1-4 family residential properties 4,011 150 1,301 5,462 482,677 488,139 — Multifamily residential properties — — 472 472 356,386 356,858 — Commercial real estate 3,223 17 388 3,628 2,394,357 2,397,985 — Loans secured by real estate 7,245 220 3,002 10,467 3,875,076 3,885,543 — Agricultural loans 1,193 97 5,836 7,126 289,685 296,811 — Commercial and industrial loans 100 16 376 492 1,303,220 1,303,712 — Consumer loans 207 31 8 246 46,974 47,220 — All other loans — — — — 165,572 165,572 — Total loans $ 8,745 $ 364 $ 9,222 $ 18,331 $ 5,680,527 $ 5,698,858 $ — Percent of total loans 0.32 % December 31, 2024 Construction and land development $ 6 $ — $ — $ 6 $ 236,087 $ 236,093 $ — Agricultural real estate — — 533 533 390,227 390,760 — 1-4 family residential properties 2,209 931 2,089 5,229 491,368 496,597 — Multifamily residential properties — — 472 472 332,172 332,644 — Commercial real estate 595 553 344 1,492 2,416,093 2,417,585 — Loans secured by real estate 2,810 1,484 3,438 7,732 3,865,947 3,873,679 — Agricultural loans 550 — 1,289 1,839 237,832 239,671 — Commercial and industrial loans 337 89 463 889 1,335,031 1,335,920 — Consumer loans 442 48 111 601 53,359 53,960 — All other loans — — — — 169,232 169,232 — Total loans $ 4,139 $ 1,621 $ 5,301 $ 11,061 $ 5,661,401 $ 5,672,462 $ — Percent of total loans 0.19 % Individually Evaluated Loans Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain modified, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in restructuring where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status. The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be modified is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status. The amount of interest income recognized by the Company within the periods stated above was due to loans modified in 22 restructuring that remain on accrual status. Non-Accrual Loans The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded as of March 31, 2025 and December 31, 2024 (in thousands). There were no loans past due over eighty-nine days that were still accruing. March 31, 2025 December 31, 2024 Nonaccrual with no Allowance for Total Nonaccrual with no Allowance for Total Credit Loss Nonaccrual Credit Loss Nonaccrual Construction and land development $ 6 $ 6 $ 6 $ 6 Agricultural real estate 1,871 1,871 2,213 2,213 1-4 family residential properties 4,155 4,983 4,196 4,937 Commercial real estate 7,243 7,328 4,901 7,716 Loans secured by real estate 13,275 14,188 11,316 14,872 Agricultural loans 6,077 8,585 1,371 11,521 Commercial and industrial loans 1,374 2,114 1,320 2,071 Consumer loans 155 155 311 311 Total loans $ 20,881 $ 25,042 $ 14,318 $ 28,775 Interest income that would have been recorded under the original terms of such nonaccrual loans totaled $ 471,000 and $ 267,000 for the three months ended March 31, 2025 and 2024, respectively. Loan Modifications to Borrowers Experiencing Financial Difficulty The following table shows the amortized cost of loans at March 31, 2025 and 2024 that were both experiencing financial difficulty and modified segregated by portfolio segment and type of modification. The percentage of the amortized cost of loans that were modified to borrowers in financial distress as compared to outstanding loans is also presented below. Total Payment Term Interest Class of Principal Delay Extension Rate Financing Forgiveness Investment Modifications Reduction Receivable March 31, 2025 Agricultural real estate $ — $ 304 $ — $ — 0.01 % 1-4 family residential properties — 42 748 — 0.01 % Commercial real estate — 822 158 979 0.03 % Loans secured by real estate — 1,168 906 979 0.05 % Commercial and industrial loans — 859 87 — 0.02 % Consumer loans — 2 7 — — % Total $ — $ 2,029 $ 1,000 $ 979 0.07 % March 31, 2024 Agricultural real estate $ — $ 325 $ — $ — 0.01 % 1-4 family residential properties — 52 795 — 0.02 % Commercial real estate — 719 126 532 0.03 % Loans secured by real estate — 1,096 921 532 0.05 % Commercial and industrial loans — 185 196 — 0.01 % Consumer loans — 6 12 — — % Total $ — $ 1,287 $ 1,129 $ 532 0.05 % 23 The Company closely monitors the performance of loans that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of such loans that have been modified in the last twelve months ended March 31, 2025 and 2024. 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due March 31, 2025 Commercial real estate $ 174 $ — $ — $ 174 Commercial and industrial loans — — — — Total loans $ 174 $ — $ — $ 174 March 31, 2024 Commercial real estate $ — $ — $ — $ — Commercial and industrial loans — — — — Total loans $ — $ — $ — $ — The following table shows the financial effect of loan modifications during the current quarter to borrowers experiencing financial difficulty for the three months ended March 31, 2025 and 2024. Weighted Average Weighted Average Interest Rate Term Extension Reduction (in months) March 31, 2025 Commercial real estate 1.00 % — Commercial and industrial loans — % — Total 1.00 % — March 31, 2024 Commercial real estate — % — Commercial and industrial loans — % 6.59 Total — % 6.59 A loan is considered to be in payment default once it is 90 days past due under the modified terms. There were four and zero loans modified during the prior twelve months that experienced defaults for three months ended March 31, 2025 and 2024 , respectively. Note 5 -- Goodwill and Intangible Assets The Company has goodwill from business combinations, intangible assets from branch acquisitions, identifiable intangible assets assigned to core deposit relationships and customer lists of First Mid Wealth Management Company and First Mid Insurance. The following table presents gross carrying value and accumulated amortization by major intangible asset class as of March 31, 2025 and December 31, 2024 (in thousands): March 31, 2025 December 31, 2024 Gross Carrying Value Accumulated Amortization Gross Carrying Value Accumulated Amortization Goodwill not subject to amortization $ 207,151 $ 3,760 $ 207,151 $ 3,760 Intangibles from branch acquisition 3,015 3,015 3,015 3,015 Core deposit intangibles 79,945 46,999 79,945 44,736 Other intangibles 30,857 13,861 30,857 13,180 $ 320,968 $ 67,635 $ 320,968 $ 64,691 Core deposit intangibles are being amortized over a period of 10 years and other intangibles, primarily customer lists, are being amortized over periods ranging from 3 to 12 years . 24 During the quarter ended September 30, 2024, goodwill of $ 6.9 million was recorded for the acquisition of the stock of Mid Rivers Insurance Group, Inc. (MRIG) in connection with its insurance business. First Mid Insurance was assigned all this goodwill. The following provides a reconciliation of the purchase price paid for Mid Rivers Insurance Group, Inc. and the amount of goodwill recorded (in thousands): Unallocated purchase price $ 10,059 Less purchase accounting adjustments: Insurance Company intangible $ 4,305 Other liabilities ( 1,176 ) 3,129 $ 6,930 The Company has mortgage servicing rights acquired in previous acquisitions. Mortgage servicing rights are accounted for under the amortization method. The following table summarizes the activity pertaining to mortgage servicing rights included in intangible assets as of March 31, 2025, March 31, 2024 and December 31, 2024 (in thousands): March 31, 2025 March 31, 2024 December 31, 2024 Beginning balance $ 5,629 $ 6,859 $ 6,859 Adjustment to valuation reserve 1 ( 33 ) 7 Mortgage servicing rights amortized ( 287 ) ( 364 ) ( 1,226 ) Interest only strip ( 5 ) ( 3 ) ( 11 ) Ending balance $ 5,338 $ 6,459 $ 5,629 Fair value of portfolio $ 6,500 $ 7,246 $ 6,716 Total amortization expense for three months ended March 31, 2025 and 2024 was as follows (in thousands): Three months ended March 31, 2025 2024 Core deposit intangibles $ 2,263 $ 2,554 Customer list intangibles 681 579 Mortgage servicing rights 287 364 $ 3,231 $ 3,497 Aggregate amortization expense for the current year and estimated amortization expense for each of the five succeeding years is shown in the table below (in thousands): Aggregate amortization expense: For period 01/01/25-03/31/25 $ 3,231 Estimated amortization expense: For period 04/01/25-12/31/25 9,079 For year ended 12/31/26 10,594 For year ended 12/31/27 9,330 For year ended 12/31/28 8,116 For year ended 12/31/29 6,764 In accordance with GAAP, the Company performed its annual goodwill impairment test as of September 30, 2024 and determined that, as of that date, goodwill was not impaired. The Company believes no test was considered necessary during the quarter ended March 31, 2025 due to the lack of triggering events or material changes to the value of the Company’s goodwill. Note 6 -- Repurchase Agreements and Other Borrowings Securities sold under agreements to repurchase were $ 219.8 million at March 31, 2025, an increase of $ 15.7 million from $ 204.1 million at December 31, 2024. All the transactions have overnight maturities with a weighted average rate of 2.37 % . The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third-party financial institution in the 25 counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained, while mitigating the potential of over-collateralization in the event of counterparty default. Collateral pledged by class for repurchase agreements are as follows (in thousands): March 31, 2025 December 31, 2024 US Treasury securities and obligations of U.S. government corporations and agencies $ 68,173 $ 70,664 Mortgage-backed securities: GSE: residential 151,599 133,458 Total $ 219,772 $ 204,122 Gross FHLB borrowings, were $ 195.0 million and $ 242.4 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 the advances were as follows: Advance Term (in years) Interest Rate Maturity Date 25,000,000 3.0 4.40 % June 15, 2026 25,000,000 3.0 4.37 % May 10, 2027 25,000,000 3.0 4.32 % May 17, 2027 25,000,000 5.0 3.82 % June 29, 2028 25,000,000 5.0 3.93 % June 27, 2029 5,000,000 10.0 1.15 % October 3, 2029 5,000,000 10.0 1.12 % October 3, 2029 10,000,000 10.0 1.39 % December 31, 2029 25,000,000 5.0 3.46 % February 7, 2030 25,000,000 10.0 2.71 % March 5, 2035 Note 7 -- Fair Value of Assets and Liabilities Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities which use observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. Available-for-Sale Securities. The fair value of available-for-sale securities is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independent sources of market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Fair value determinations for Level 3 measurements of securities are the responsibility of the Treasury function of the Company. The Company contracts with a pricing specialist to generate fair value estimates on a monthly basis. The Treasury function of the Company challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value 26 complies with accounting standards generally accepted in the United States, analyzes the changes in fair value and compares these changes to internally developed expectations and monitors these changes for appropriateness. Loans Held for Sale. The fair value of loans held for sale is based on independent asset pricing services which use observable market data as of the measurement date and are therefore classified in Level 2 of the valuation hierarchy. Derivatives. The fair value of derivatives is based on models using observable market data as of the measurement date and are therefore classified in Level 2 of the valuation hierarchy. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of March 31, 2025 and December 31, 2024 (in thousands): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) March 31, 2025 Available-for-sale securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 184,933 $ — $ 184,933 $ — Obligations of states and political subdivisions 262,105 — 262,105 — Mortgage-backed securities 533,702 — 533,702 — Other securities 58,987 — 53,228 5,759 Total available-for-sale securities 1,039,727 — 1,033,968 5,759 Equity securities 4,471 4,471 — — Loans held for sale 3,644 — 3,644 — Derivative assets: interest rate swaps 2,424 — 2,424 — Total assets $ 1,050,266 $ 4,471 $ 1,040,036 $ 5,759 Derivative liabilities: interest rate swaps $ 1,744 $ — $ 1,744 $ — December 31, 2024 Available-for-sale securities: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 191,358 $ — $ 191,358 $ — Obligations of states and political subdivisions 267,740 — 267,740 — Mortgage-backed securities 539,742 — 539,742 — Other securities 64,452 — 58,693 5,759 Total available-for-sale securities 1,063,292 — 1,057,533 5,759 Equity securities 4,439 4,439 — — Loans held for sale 6,614 — 6,614 — Derivative assets: interest rate swaps 2,949 — 2,949 — Total assets $ 1,077,294 $ 4,439 $ 1,067,096 $ 5,759 Derivative liabilities: interest swaps $ 2,006 $ — $ 2,006 $ — 27 The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2025 and 2024 is summarized as follows (in thousands): Three months ended March 31, 2025 Other Total Beginning balance $ 5,759 $ 5,759 Transfers into Level 3 — — Maturities — — Ending balance $ 5,759 $ 5,759 Three months ended March 31, 2024 Other Total Beginning balance $ 6,163 $ 6,163 Transfers into Level 3 1 1 Maturities ( 199 ) ( 199 ) Ending balance $ 5,965 $ 5,965 Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. Collateral Dependent Loans. Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment and estimating fair value include using the fair value of the collateral for collateral dependent loans. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value, which includes selling costs. Individually evaluated loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method. Management establishes a specific allowance for individually evaluated loans that have an estimated fair value that is below the carrying value. The total carrying amount of loans for which a change in specific allowance has occurred as of March 31, 2025 was $ 13.0 million and a fair value of $ 12.6 million resulting in specific loss exposures of $ 462,000 . When there is little prospect of collecting principal or interest, loans, or portions of loans, may be charged-off to the allowance for credit losses. Losses are recognized in the period an obligation becomes uncollectible. The recognition of a loss does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future. Foreclosed Assets Held For Sale. Other real estate owned acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for credit losses. Due to the subjective nature of establishing the fair value when the asset is acquired, the actual fair value of the other real estate owned, or foreclosed asset could differ from the original estimate. If it is determined that fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Operating costs associated with the assets after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense. The total carrying amount of other real estate owned as of March 31, 2025 was $ 2.1 million . Other real estate owned included in the total carrying amount and measured at fair value on a nonrecurring basis during the period amounted to $ 71,000 . 28 The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2025 and December 31, 2024 (in thousands): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Fair Value (Level 1) (Level 2) (Level 3) March 31, 2025 Collateral dependent loans $ 12,561 $ — $ — $ 12,561 Foreclosed assets held for sale 71 — — 71 December 31, 2024 Collateral dependent loans $ 16,604 $ — $ — $ 16,604 Foreclosed assets held for sale 48 — — 48 Sensitivity of Significant Unobservable Inputs The following table presents quantitative information about unobservable inputs used in Level 3 fair value measurements other than goodwill at March 31, 2025 and December 31, 2024. March 31, 2025 Fair Value Valuation Technique Unobservable Inputs Range Weighted Average Collateral dependent loans $ 12,561 Third party valuations Discount to reflect realizable value less estimated selling costs 0 %- 40 % 20 % Foreclosed assets held for sale 71 Third party valuations Discount to reflect realizable value less estimated selling costs 0 %- 40 % 35 % December 31, 2024 Fair Value Valuation Technique Unobservable Inputs Range Weighted Average Collateral dependent loans $ 16,604 Third party valuations Discount to reflect realizable value 0 %- 40 % 20 % Foreclosed assets held for sale 48 Third party valuations Discount to reflect realizable value less estimated selling costs 0 %- 40 % 35 % 29 The following tables present estimated fair values of the Company’s financial instruments at March 31, 2025 and December 31, 2024 in accordance with ASC 825 (in thousands): Carrying Amount Fair Value Level 1 Level 2 Level 3 March 31, 2025 Financial assets Cash and due from banks $ 201,394 $ 201,394 $ 201,394 $ — $ — Federal funds sold 76 76 76 — — Certificates of deposit 2,520 2,520 — 250 — Available-for-sale securities 1,039,727 1,039,727 — 1,033,968 5,759 Held-to-maturity securities 2,285 2,285 2,285 — — Equity securities 4,471 4,471 4,471 — — Loans held for sale 3,644 3,644 — 3,644 — Loans net of allowance for credit losses 5,625,163 5,363,390 — — 5,363,390 Interest receivable 37,453 37,453 — 37,453 — Federal Reserve Bank stock 19,855 19,855 — 19,855 — Federal Home Loan Bank stock 8,191 8,191 — 8,191 — Financial liabilities Deposits $ 6,130,380 $ 6,048,725 $ — $ 5,067,726 $ 980,999 Securities sold under agreements to repurchase 219,772 219,772 — 219,772 — Interest payable 6,625 6,625 — 6,625 — Federal Home Loan Bank borrowings 195,000 193,995 — 193,995 — Subordinated debt, net 79,535 78,799 — 78,799 — Junior subordinated debentures, net 24,335 21,486 — 21,486 — December 31, 2024 Financial assets Cash and due from banks $ 121,141 $ 121,141 $ 121,141 $ — $ — Federal funds sold 75 75 75 — — Certificates of deposit 3,500 3,500 — 3,500 — Available-for-sale securities 1,063,292 1,063,292 — 1,057,533 5,759 Held-to-maturity securities 2,279 2,279 2,279 — — Equity securities 4,439 4,439 4,439 — — Loans held for sale 6,614 6,614 — 6,614 — Loans net of allowance for credit losses 5,595,666 5,314,756 — — 5,314,756 Interest receivable 38,639 38,639 — 38,639 — Federal Reserve Bank stock 19,855 19,855 — 19,855 — Federal Home Loan Bank stock 9,501 9,501 — 9,501 — Financial liabilities Deposits $ 6,057,096 $ 5,977,113 $ — $ 5,069,853 $ 907,260 Securities sold under agreements to repurchase 204,122 204,122 — 204,122 — Interest payable 5,280 5,280 — 5,280 — Federal Home Loan Bank borrowings 242,520 240,125 — 240,125 — Subordinated debentures 87,472 86,062 — 86,062 — Junior subordinated debentures 24,280 21,411 — 21,411 — Note 8 -- Leases As of March 31, 2025, substantially all the Company's leases are operating leases for real estate property for bank branches, ATM locations, and office space. For leases in effect at January 1, 2019 and for leases commencing thereafter, the Company recognizes a lease liability and a right-of-use asset, based on the present value of lease payments over the lease term. The discount rate used in determining present value was the Company's incremental borrowing rate which is the FHLB fixed advance rate based on the remaining lease term as of January 1, 2019, or the commencement date for leases subsequently entered into. The Company has elected to not include short-term leases (i.e. leases with terms of twelve months or less) or leases (primarily copiers) deemed immaterial, on the consolidated balance sheets. 30 The following table contains supplemental balance sheet information related to leases (dollars in thousands): March 31, 2025 March 31, 2024 December 31, 2024 Operating lease right-of-use assets $ 13,817 $ 14,318 $ 13,861 Operating lease liabilities 14,255 14,624 14,190 Weighted-average remaining lease term (in years) 4.8 4.8 4.7 Weighted-average discount rate 3.46 % 3.22 % 3.22 % Certain of the Company's leases contain options to renew the lease; however, not all renewal options are included in the calculation of lease liabilities as they are not reasonably certain to be exercised. The Company's leases do not contain residual value guarantees or material variable lease payments. The Company does not have any other material restrictions or covenants imposed by leases that would impact the Company's ability to pay dividends or cause the Company to incur additional financial obligations. Maturities of lease liabilities are as follows (in thousands): Year ending December 31, 2025 $ 2,385 2026 3,070 2027 2,842 2028 2,187 2029 1,718 Thereafter 3,684 Total lease payments 15,886 Less imputed interest ( 1,631 ) Total lease liability $ 14,255 The components of lease expense for the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three months ended March 31, 2025 2024 Operating lease cost $ 826 $ 846 Short-term lease cost 31 35 Variable lease cost 343 138 Total lease cost 1,200 1,019 Income from subleases ( 80 ) ( 104 ) Net lease cost $ 1,120 $ 915 As the Company elected not to separate lease and non-lease components, the variable lease cost primarily represents variable payment such as common area maintenance and copier expense. The Company does not have any material sub-lease agreements. Cash paid for amounts included in the measurement of lease liabilities was (in thousands): March 31, 2025 March 31, 2024 Operating cash flows from operating leases $ 822 $ 836 Note 9 – Derivatives The Company utilizes an interest rate swap, designated as a fair value hedge, to mitigate the risk of changing interest rates on the fair value of a fixed rate commercial real estate loan. For derivative instruments that are designed and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain in the hedged asset attributable to the hedged risk, is recognized in current earnings. 31 Derivatives Designated as Hedging Instruments The following table provides the outstanding notional balances and fair values of outstanding derivatives designated as hedging instruments as of March 31, 2025 and December 31, 2024 (in thousands): Balance Sheet Location Weighted Average Remaining Maturity (Years) Notional Amount Estimated Value March 31, 2025 Fair value hedges: Interest rate swap agreements Other liabilities 4.1 $ 12,416 $ ( 1,744 ) December 31, 2024 Fair value hedges: Interest rate swap agreements Other liabilities 4.3 $ 12,486 $ ( 2,006 ) The effects of the fair value hedges on the Company's income statement during the three months ended March 31, 2025 and 2024 were as follows (in thousands): Three months ended March 31, Derivative Location of Gain (Loss) on Derivatives 2025 2024 Interest rate swap agreements Interest income on loans $ ( 263 ) $ 155 Three months ended March 31, Derivative Location of Gain (Loss) on Hedged Items 2025 2024 Interest rate swap agreements Interest income on loans $ 263 $ ( 155 ) As of March 31, 2025, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges (in thousands): Line Item in the Balance Sheet in Which the Hedge Item is Included Carrying Amount of the Hedged Asset Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Asset Loans $ 11,736 $ ( 680 ) Derivatives Not Designated as Hedging Instruments The following amounts represent the notional amounts and gross fair value of derivative contracts not designated as hedging instruments outstanding during the three months ended March 31, 2025 (dollars in thousands): March 31, 2025 Balance Sheet Location Weighted Average Remaining Maturity (Years) Notional Amount Estimated Value Interest rate swap agreements Other assets 3.8 $ 28,543 $ 2,424 Interest rate swap agreements Other liabilities 3.8 28,543 ( 2,424 ) Note 10 – Regulatory Capital The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Bank holding companies follow minimum regulatory requirements established by the Board of Governors of the Federal Reserve System (“Federal Reserve System”), First Mid Bank follows similar minimum regulatory requirements established for banks by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation, as applicable. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and its subsidiary bank to maintain minimum capital amounts and ratios (set forth in 32 the table below). Management believes that, as of March 31, 2025 and December 31, 2024, the Company and First Mid Bank, as applicable, met all capital adequacy requirements. To be categorized as well-capitalized, total risk-based capital, Tier 1 risk-based capital, common equity Tier 1 risk-based capital and Tier 1 leverage ratios must be maintained as set forth in the following table (dollars in thousands): Actual Required Minimum For Capital Adequacy Purposes To Be Well-Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio March 31, 2025 Total capital (to risk-weighted assets) Company $ 946,668 15.59 % $ 637,686 > 10.50 % N/A N/A First Mid Bank 883,533 14.58 % 636,317 > 10.50 % $ 606,016 > 10.00 % Tier 1 capital (to risk-weighted assets) Company 797,700 13.13 % 516,222 > 8.50 % N/A N/A First Mid Bank 814,100 13.43 % 515,114 > 8.50 % 484,813 > 8.00 % Common equity tier 1 capital (to risk-weighted assets) Company 773,365 12.73 % 425,124 > 7.00 % N/A N/A First Mid Bank 814,100 13.43 % 424,211 > 7.00 % 393,911 > 6.50 % Tier 1 capital (to average assets) Company 797,700 10.73 % 297,369 > 4.00 % N/A N/A First Mid Bank 814,100 11.00 % 296,019 > 4.00 % 370,024 > 5.00 % December 31, 2024 Total capital (to risk-weighted assets) Company $ 935,189 15.37 % $ 639,015 > 10.50 % N/A N/A First Mid Bank 880,621 14.51 % 637,089 > 10.50 % $ 606,752 > 10.00 % Tier 1 capital (to risk-weighted assets) Company 780,096 12.82 % 517,298 > 8.50 % N/A N/A First Mid Bank 813,000 13.40 % 515,739 > 8.50 % 485,401 > 8.00 % Common equity tier 1 capital (to risk-weighted assets) Company 755,816 12.42 % 426,010 > 7.00 % N/A N/A First Mid Bank 813,000 13.40 % 424,726 > 7.00 % 394,389 > 6.50 % Tier 1 capital (to average assets) Company 780,096 10.33 % 301,976 > 4.00 % N/A N/A First Mid Bank 813,000 10.82 % 300,596 > 4.00 % 375,745 > 5.00 % The Company's risk-weighted assets, capital, and capital ratios for March 31, 2025 are computed in accordance with Basel III capital rules which were effective January 1, 2015. As of March 31, 2025 , the Company and First Mid Bank had capital ratios above the required minimums for regulatory capital adequacy, and First Mid Bank had capital ratios that qualified it for treatment as well-capitalized under the regulatory framework for prompt corrective action with respect to banks. 33 Note 11 – Commitments First Mid Bank enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. Each of these instruments involves, to varying degrees, elements of credit, interest rate and liquidity risk in excess of the amounts recognized in the consolidated balance sheets. The Company uses the same credit policies and requires similar collateral in approving lines of credit and commitments and issuing letters of credit as it does in making loans. The exposure to credit losses on financial instruments is represented by the contractual amount of these instruments. However, the Company does not anticipate any losses from these instruments. The off-balance sheet financial instruments whose contract amounts represent credit risk at March 31, 2025 and December 31, 2024 were as follows (in thousands): March 31, 2025 December 31, 2024 Unused commitments and lines of credit: Commercial real estate $ 377,353 $ 323,979 Commercial operating 658,451 649,082 Home equity 106,730 105,867 Other 341,909 332,113 Total $ 1,484,443 $ 1,411,041 Standby letters of credit $ 20,125 $ 16,909 Commitments to originate credit represent approved commercial, residential real estate and home equity loans that generally are expected to be funded within ninety days . Lines of credit are agreements by which the Company agrees to provide a borrowing accommodation up to a stated amount as long as there is no violation of any condition established in the loan agreement. Both commitments to originate credit and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the lines and some commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of customers to third parties. Standby letters of credit are primarily issued to facilitate trade or support borrowing arrangements and generally expire in one year or less . The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit facilities to customers. The maximum amount of credit that would be extended under letters of credit is equal to the total off-balance sheet contract amount of such instrument. The Company's deferred revenue under standby letters of credit was nominal.