FIRST MID BANCSHARES, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries for the three months ended March 31, 2026 and 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements, related notes and selected financial data appearing elsewhere in this report. 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 and at www.sec.gov as soon as reasonably practicable after these materials are filed with the SEC. Forward-Looking Statements This document may contain certain forward-looking statements about the Company, such as discussions of the Company’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company are identified by use of the words “believe,” 38 “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things, the possibility that any of the anticipated benefits of the proposed transactions between First Mid and Two Rivers will not be realized within the expected time period; the risk that integration of the operations of Two Rivers with First Mid will be materially delayed or will be more costly or difficult than expected; the effect of the announcement of the proposed transactions on customer relationships and operating results; the possibility that the proposed transactions may be more expensive to complete than anticipated, including as a result of unexpected factors or events; changes in interest rates; general economic conditions and those in the market areas of the Company; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the Company’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition, demand for financial services in the market areas of the Company; accounting principles, policies and guidelines; or any of the other foregoing risks. Additional information concerning the Company, including additional factors and risks that could materially affect the Company’s financial results, are included in the Company’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, the Company does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. Overview This overview of management’s discussion and analysis highlights selected information in this document and may not contain all the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates you should carefully read this entire document. These have an impact on the Company’s consolidated financial condition and results of consolidated operations. Net income was $26.3 million and $22.2 million for the three months ended March 31, 2026 and 2025, respectively and diluted net income per common share was $1.06 and $0.93 for the three months ended March 31, 2026 and 2025, respectively. Three months ended Year-ended March 31, 2026 March 31, 2025 December 31, 2025 Return on average assets 1.26 % 1.19 % 1.20 % Return on average common equity 10.45 % 10.35 % 10.24 % Average common equity to average assets (non-GAAP) 12.10 % 11.46 % 11.68 % Total assets were $9.3 billion at March 31, 2026, compared to $8.0 billion as of December 31, 2025. Net loan balances were $6.9 billion at March 31, 2026 compared to $5.9 billion at December 31, 2025. Total deposit balances increased to $7.5 billion at March 31, 2026 from $6.4 billion at December 31, 2025. The increase was primarily due to the acquisition of Two Rivers Bank. Net interest margin (tax equivalent), defined as net interest income divided by average interest-earning assets, was 3.78% for the three months ended March 31, 2026, up from 3.60% for the same period in 2025. This increase was primarily due to an increase in earning asset yields and decreased funding costs. Net interest income before the provision for credit losses was $70.8 million compared to net interest income of $59.4 million for the same period in 2025. The increase in net interest income was primarily due to the addition of the Two Rivers Bank loan portfolio, as well as the increased net interest margin as mentioned above. Total non-interest income of $26.4 million increased $1.6 million or 6.3% from $24.9 million for the same period last year. The increase in non-interest income resulted primarily from the addition of Two Rivers Bank, an increase in insurance commissions, and an increase in wealth management revenues. Total non-interest expense of $60.7 million increased $6.3 million or 11.5% from $54.5 million for the same period last year. The increase was primarily due to increases in salaries, employee benefits, net occupancy, equipment expenses, and integration expenses due to the acquisition of Two Rivers in the first quarter of 2026. 39 Following is a summary of the factors that contributed to the changes in net income (in thousands): Change in Net Income 2026 versus 2025 Three months ended March 31, 2026 Net interest income $ 11,376 Provision for credit losses (946 ) Other income, including securities transactions 1,577 Other expenses (6,253 ) Income taxes (1,598 ) Increase in net income $ 4,156 Credit quality is an area of importance to the Company. Total nonperforming loans were $44.1 million at March 31, 2026, compared to $26.6 million at March 31, 2025 and $31.9 million at December 31, 2025. See the discussion under the heading “Loan Quality and Allowance for Credit Losses” for a detailed explanation of these balances. Repossessed asset balances totaled $5.5 million at March 31, 2026 compared to $2.1 million at March 31, 2025 and $2.9 million at December 31, 2025. The Company’s provision for credit losses for the three months ended March 31, 2026 and 2025 was $2.6 million and $1.7 million, respectively. The increase in provision expense was expected as the industry returns to a normal credit cycle from historically low credit losses. The Company’s capital position remains strong, and the Company has consistently maintained regulatory capital ratios above the “well-capitalized” standards. The Company’s Tier 1 capital to risk weighted assets ratio at March 31, 2026 and 2025 and December 31, 2025 was 13.57%, 13.13% and 13.55%, respectively. The Company’s total capital to risk weighted assets ratio at March 31, 2026 and 2025, and December 31, 2025 was 15.48%, 15.59% and 15.67%, respectively. The Company’s liquidity position remains sufficient to fund operations and meet the requirements of borrowers, depositors, and creditors. The Company maintains various sources of liquidity to fund its cash needs. See “Liquidity” herein for a full listing of its sources and anticipated significant contractual obligations. The Company and Two Rivers Bank enter 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. The total outstanding commitments at March 31, 2026 and 2025, were $1.5 billion and $1.5 billion, respectively. See Note 12 - “Commitments and Contingent Liabilities” herein for further information. Critical Accounting Policies and Use of Significant Estimates The Company has established various accounting policies that govern the application of U.S. generally accepted accounting principles in the preparation of the Company’s consolidated financial statements. The significant accounting policies and use of significant estimates of the Company are described in the footnotes to the consolidated financial statements included in the Company’s 2025 Annual Report on Form 10-K. Results of Operations Net Interest Income The largest source of operating revenue for the Company is net interest income. Net interest income represents the difference between total interest income earned on earning assets and total interest expense paid on interest-bearing liabilities. The amount of interest income is dependent upon many factors, including the volume and mix of earning assets, the general level of interest rates and the dynamics of changes in interest rates. The cost of funds necessary to support earning assets varies with the volume and mix of interest-bearing liabilities and the rates paid to attract and retain such funds. For analytical purposes, net interest income is presented on a full tax equivalent (TE) basis in the table that follows. The federal statutory rate in effect of 21% for 2026 and 2025 was used. The TE analysis portrays the income tax benefits associated with the tax-exempt assets. The year-to-date net yield on interest-earning assets excluding the TE adjustments of $796,000 and $753,000 for 2026 and 2025, respectively, were 3.74% and 3.56% at March 31, 2026 and 2025, respectively. 40 The Company’s average balances, fully tax equivalent interest income and interest expense, and rates earned or paid for major balance sheet categories are set forth for the three months ended March 31, 2026 and 2025 in the following table (dollars in thousands): Three months ended March 31, 2026 Three months ended March 31, 2025 Average Average Average Average Balance Interest Rate Balance Interest Rate Assets Interest-bearing deposits $ 235,370 $ 1,726 2.97 % $ 70,701 $ 827 4.74 % Federal funds sold 376 2 1.91 % 75 1 3.83 % Certificates of deposit 1,883 21 4.51 % 3,162 36 4.59 % Investment securities (1) 1,147,980 8,383 2.92 % 1,090,099 7,254 2.66 % Loans (TE)(1)(2)(3) 6,285,114 91,284 5.89 % 5,605,821 80,194 5.80 % Total earning assets 7,670,723 101,416 5.36 % 6,769,858 88,312 5.29 % Other nonearning assets 737,565 777,177 Allowance for credit losses (79,202 ) (70,620 ) Total assets $ 8,329,086 $ 7,476,415 Liabilities and stockholders' equity Deposits: Demand deposits, interest-bearing $ 3,388,750 $ 14,870 1.78 % $ 3,039,621 $ 14,900 1.99 % Savings deposits 680,418 398 0.24 % 640,687 164 0.10 % Time deposits 1,228,401 9,506 3.14 % 1,022,200 8,658 3.44 % Total interest-bearing deposits 5,297,569 24,774 1.90 % 4,702,508 23,722 2.05 % Repurchase agreements with customers 204,173 1,025 2.04 % 201,679 1,180 2.37 % FHLB advances 271,784 2,335 3.48 % 194,324 1,807 3.77 % Federal funds purchased — — — % — — — % Subordinated debt, net 60,030 1,170 7.90 % 82,608 949 4.66 % Junior subordinated debt, net 27,645 468 6.87 % 24,306 468 7.81 % Other debt 6,665 63 3.83 % 1,467 24 6.63 % Total borrowings 570,297 5,061 3.60 % 504,384 4,428 3.56 % Total interest-bearing liabilities 5,867,866 29,835 2.06 % 5,206,892 28,150 2.19 % Demand deposits 1,393,882 1.67 % 1,370,107 1.74 % Other liabilities 59,124 42,962 Stockholders' equity 1,008,214 856,454 Total liabilities and stockholders' equity $ 8,329,086 $ 7,476,415 Net interest income $ 71,581 $ 60,162 Net interest spread 3.30 % 3.10 % TE net yield on interest-earning assets 3.78 % 3.60 % (1) Tax-exempt income is shown on a fully tax equivalent basis. (2) Nonaccrual loans have been included in the average balances. Balances are net of unaccreted discounts related to loans acquired. (3) Includes loans held for sale. 41 Changes in net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the three months ended March 31, 2026 and 2025 (in thousands): Three months ended March 31, 2026 Compared to 2025 Increase (Decrease) Total Change Volume (1) Rate (1) Earning assets: Interest-bearing deposits $ 899 $ 2,931 $ (2,032 ) Federal funds sold 1 3 (2 ) Certificates of deposit (15 ) (14 ) (1 ) Investment securities (1) 1,129 394 735 Loans (2) 11,090 9,831 1,259 Total interest income 13,104 13,145 (41 ) Interest-bearing liabilities: Deposits: Demand deposits, interest-bearing $ (30 ) $ 6,638 $ (6,668 ) Savings deposits 234 10 224 Time deposits 848 4,874 (4,026 ) Total interest-bearing deposits 1,052 11,522 (10,470 ) Repurchase agreements with customers (155 ) 96 (251 ) FHLB advances 528 1,388 (860 ) Federal funds purchased — — — Subordinated debt, net 221 (1,448 ) 1,669 Junior subordinated debt, net — 243 (243 ) Other debt 39 108 (69 ) Total borrowings 633 387 246 Total interest expense 1,685 11,909 (10,224 ) Net interest income $ 11,419 $ 1,236 $ 10,183 (1) Changes attributable to the combined impact of volume and rate have been allocated proportionately to the change due to volume and the change due to rate. (2) Nonaccrual loans have been included in the average balances. Balances are net of unaccreted discounts related to loans acquired. Net interest income on a tax equivalent basis increased $11.4 million, or 18.98%, to $71.6 million for the three months ended March 31, 2026, from $60.2 million for the same period in 2025. Net interest income on a tax equivalent basis and tax equivalent net interest margin increased primarily due to an increase in earning asset yields and a decrease in deposit rates. For the three months ended March 31, 2026, average earning assets increased $900.9 million, or 13.31%, and average interest-bearing liabilities increased $661.0 million or 12.69% compared with average balances for the same period in 2025. Provision for Credit Losses The provision for credit losses for the three months ended March 31, 2026 and 2025 was $2.6 million and $1.7 million, respectively. Nonperforming loans were $44.1 million and $26.6 million as of March 31, 2026 and 2025, respectively. Net charge offs were $1.5 million for the three months ended March 31, 2026, compared to net charge offs of $1.8 million for March 31, 2025. For information on credit loss experience and nonperforming loans, see “Nonperforming Loans and Nonperforming Other Assets” and “Loan Quality and Allowance for Credit Losses” herein. 42 Other Income An important source of the Company’s revenue is derived from other income. The following table sets forth the major components of other income for the three months ended March 31, 2026 and 2025 (in thousands): Three months ended March 31, 2026 2025 $ Change % Change Wealth management revenues $ 6,375 $ 5,800 $ 575 9.9 % Insurance commissions 10,807 9,925 882 8.9 % Service charges 3,080 2,901 179 6.2 % Investment securities gains (losses), net 20 (181 ) 201 (111.0 %) Mortgage banking, net 721 711 10 1.4 % ATM / debit card revenue 4,135 3,646 489 13.4 % Bank owned life insurance 1,340 1,687 (347 ) (20.6 %) Other income (37 ) 375 (412 ) (109.9 %) Total other income $ 26,441 $ 24,864 $ 1,577 6.3 % The primary reasons for the more significant changes in other income components for the three months ended March 31, 2026 compared to the same period in 2025 are as follows: • Wealth management revenues increased due to the acquisition of Two Rivers on February 28, 2026, including their trust and brokerage portfolio. • Insurance commissions increased primarily due to the acquisition of a portion of AAIG's customer list in July 2025 and the customer list of Downs Insurance Agency, Inc. in January 2026 as well as organic growth. • ATM / debit card revenue increased primarily due to the acquisition of Two Rivers Bank in the quarter ended March 31, 2026. Other Expense The major categories of other expense include salaries and employee benefits, occupancy and equipment expenses and other operating expenses associated with day-to-day operations. The following table sets forth the major components of other expense for the three months ended March 31, 2026 and 2025 (dollars in thousands): Three months ended March 31, 2026 2025 $ Change % Change Salaries and employee benefits $ 35,016 $ 31,748 $ 3,268 10.3 % Net occupancy and equipment expense 9,826 8,479 1,347 15.9 % Net other real estate owned expense 212 101 111 109.9 % FDIC insurance expense 940 849 91 10.7 % Amortization of other intangible assets 3,301 3,231 70 2.2 % Stationery and supplies 302 431 (129 ) (29.9 %) Legal and professional 2,700 3,076 (376 ) (12.2 %) Marketing and donations 824 852 (28 ) (3.3 %) ATM / debit card expense 1,807 1,831 (24 ) (1.3 %) Other expenses 5,797 3,874 1,923 49.6 % Total other expense $ 60,725 $ 54,472 $ 6,253 11.5 % The primary reasons for the more significant changes in other expense components for the three months ended March 31, 2026 compared to the same period in 2025 are as follows: • The increase in salaries and employee benefits, the largest component of other expense, is primarily due to the increase in full-time equivalent employees from 1,194 to 1,335 at March 31, 2025 and 2026, respectively, due to the acquisition of Two Rivers. • The increase in occupancy and equipment expense is primarily due to the acquisition of Two Rivers and the related expanded real estate footprint. • The increase in all other operating expenses during the quarter ended March 31, 2026, were due to integration and acquisition related expenses for Two Rivers Bank on February 28, 2026. 43 Income Taxes Total income tax expense amounted to $7.6 million for the three months ended March 31, 2026, compared to $6.0 million for the same period in 2025. Effective tax rates were 22.3% for the three months ended March 31, 2026, compared to 21.2% for the same period in 2025. The Company files U.S. federal and state of Florida, Illinois, Indiana, Iowa, Missouri, Texas, and Wisconsin income tax returns. Analysis of Consolidated Balance Sheets Securities The Company’s overall investment objectives are to insulate the investment portfolio from undue credit risk, maintain adequate liquidity, insulate capital against changes in market value and control excessive changes in earnings while optimizing investment performance. The types and maturities of securities purchased are primarily based on the Company’s current and projected liquidity and interest rate sensitivity positions. The following table sets forth the amortized cost of the available-for-sale and held-to-maturity securities as of March 31, 2026 and December 31, 2025 (dollars in thousands): March 31, 2026 December 31, 2025 Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 153,813 1.24 % $ 153,859 1.24 % Obligations of states and political subdivisions 327,480 2.33 % 327,950 2.32 % Mortgage-backed securities (1) 819,041 2.74 % 705,728 2.35 % Other securities 26,974 4.24 % 30,564 4.28 % Total securities $ 1,327,308 2.49 % $ 1,218,101 2.25 % (1) Mortgage-backed securities include mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) issues from the following government sponsored enterprises: FHLMC, FNMA, GNMA and FHLB. At March 31, 2026, the amortized cost of the Company’s investment portfolio increased by $109.2 million from December 31, 2025 primarily due to the acquisition of Two Rivers Bank, subsequent sale of their entire portfolio, reinvestment of a portion of the proceeds, and the redeployment of some of the proceeds to other areas of the balance sheet. When purchasing investment securities, the Company considers its overall liquidity and interest rate risk profile, as well as the adequacy of expected returns relative to the risks assumed. 44 The table below presents the credit ratings as of March 31, 2026 for investment securities (in thousands): Average Credit Rating of Fair Value at March 31, 2026 (1) Amortized Cost Estimated Fair Value AAA AA +/- A +/- BBB +/- < BBB - Not rated Available-for-sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 153,813 $ 143,579 $ — $ 143,579 $ — $ — $ — $ — Obligations of state and political subdivisions 327,480 275,236 39,873 205,724 27,680 — — 1,959 Mortgage-backed securities (2) 819,041 733,351 — — — — — 733,351 Corporate bonded debt 24,703 23,905 — — 2,791 4,105 — 17,009 Total available-for-sale $ 1,325,037 $ 1,176,071 $ 39,873 $ 349,303 $ 30,471 $ 4,105 $ — $ 752,319 Held-to-maturity: Other securities $ 2,271 $ 2,271 $ — $ — $ — $ — $ — $ 2,271 Equity securities: Federal Agricultural Mtg Corp $ 152 $ 550 $ — $ — $ — $ — $ — $ 550 Midwest Independent BankersBank 150 233 — — — — — 233 Equalize Community Development Fund 3,934 3,934 — — — — — 3,934 Total equity securities $ 4,236 $ 4,717 $ — $ — $ — $ — $ — $ 4,717 (1) Credit ratings reflect the lowest current rating assigned by a nationally recognized credit rating agency. (2) Mortgage-backed securities include mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) issues from the following government sponsored enterprises: FHLMC, FNMA, GNMA and FHLB. While MBS and CMOs are no longer explicitly rated by credit rating agencies, the industry recognizes that they are backed by agencies which have an implied government guarantee. 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, 2026, 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 $ 133,713 $ 9,866 $ — $ — $ 143,579 Obligations of state and political subdivisions 57,417 210,229 7,265 325 275,236 Mortgage-backed securities (1) 1,639 21,888 40,130 669,694 733,351 Corporate bonded debt 17,618 6,287 — — 23,905 Total available-for-sale $ 210,387 $ 248,270 $ 47,395 $ 670,019 $ 1,176,071 Weighted average yield 1.91 % 2.20 % 2.71 % 2.78 % 2.50 % Full tax equivalent yield 2.13 % 2.68 % 2.88 % 2.79 % 2.66 % Held to maturity: Other securities $ — $ — $ — $ 2,271 $ 2,271 Total held-to-maturity $ — $ — $ — $ 2,271 $ 2,271 Weighted average yield — % — % — % — % — % Full tax equivalent yield — % — % — % — % — % (1) Mortgage-backed securities include mortgage-backed securities (MBS) and collateralized mortgage obligation (CMO) issues from the following government sponsored enterprises: FHLMC, FNMA, GNMA and FHLB. The weighted average yields are calculated on the basis of 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, 2026. Investment securities carried at approximately $481.4 million 45 and $473.8 million at March 31, 2026, and December 31, 2025, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law. Loans The loan portfolio (net of unearned interest) is the largest category of the Company’s earning assets. The following table summarizes the composition of the loan portfolio, including loans held for sale, as of March 31, 2026, and December 31, 2025 (dollars in thousands): March 31, 2026 December 31, 2025 Amortized Cost Outstanding Loans % Amortized Cost Outstanding Loans % Construction and land development $ 316,723 4.6 % $ 360,687 6.0 % Agricultural real estate 400,783 5.8 % 373,408 6.2 % 1-4 family residential properties 734,053 10.6 % 489,854 8.1 % Multifamily residential properties 456,185 6.6 % 339,482 5.6 % Commercial real estate 2,948,024 42.5 % 2,564,670 42.7 % Loans secured by real estate 4,855,768 70.1 % 4,128,101 68.6 % Agricultural loans 370,931 5.3 % 308,275 5.1 % Commercial and industrial loans 1,499,079 21.6 % 1,381,598 23.0 % Consumer loans 39,597 0.6 % 31,918 0.5 % All other loans 178,901 2.4 % 161,482 2.8 % Total loans $ 6,944,276 100.0 % $ 6,011,374 100.0 % Loan balances increased $932.9 million, or 15.5%. The increase was primarily due to the acquisition of Two Rivers. The balance of real estate loans held for sale, included in the balances shown above, amounted to $4.9 million and $5.2 million as of March 31, 2026 and December 31, 2025, respectively. Commercial and commercial real estate loans generally involve higher credit risks than residential real estate and consumer loans. Because payments on loans secured by commercial real estate or equipment are often dependent upon the successful operation and management of the underlying assets, repayment of such loans may be influenced to a great extent by conditions in the market or the economy. The Company does not have any sub-prime mortgages or credit card loans outstanding which are also generally considered to be higher credit risk. First Mid Bank and Two Rivers Bank do not have a concentration, as defined by the regulatory agencies and land development loans or commercial real estate loans as a percentage of the total amount of the Company's total capital for the periods shown above. At March 31, 2026 and December 31, 2025, First Mid Bank and Two Rivers Bank did have industry loan concentrations in excess of 25% of the sum of Tier 1 Capital and allowance for loan loss in the following industries (dollars in thousands): March 31, 2026 December 31, 2025 Principal Balance Outstanding Loans % Principal Balance Outstanding Loans % Other grain farming $ 646,388 9.31 % $ 577,903 9.61 % Lessors of non-residential buildings 1,293,142 18.62 % 1,109,224 18.45 % Lessors of residential buildings and dwellings 756,099 10.89 % 641,822 10.68 % Hotels and motels N/A N/A 225,569 3.75 % First Mid Bank and Two Rivers Bank had no further industry loan concentrations in excess of 25% of the sum of Tier 1 Capital and allowance for loan loss. 46 The following table presents the balance of loans outstanding as of March 31, 2026, by contractual maturities (in thousands): Maturity (1) One Year or Less (2) Over 1 Through 5 Years Over 5 Years Total Construction and land development $ 75,530 $ 201,884 $ 39,309 $ 316,723 Agricultural real estate 56,239 133,434 211,110 400,783 1-4 family residential properties 39,056 144,793 550,204 734,053 Multifamily residential properties 127,960 204,121 124,104 456,185 Commercial real estate 499,272 1,754,086 694,666 2,948,024 Loans secured by real estate 798,057 2,438,318 1,619,393 4,855,768 Agricultural loans 249,045 117,449 4,437 370,931 Commercial and industrial loans 527,551 556,749 414,779 1,499,079 Consumer loans 3,699 33,798 2,100 39,597 All other loans 32,660 32,950 113,291 178,901 Total loans $ 1,611,012 $ 3,179,264 $ 2,154,000 $ 6,944,276 (1) Based upon remaining contractual maturity. (2) Includes demand loans, past due loans, and overdrafts. As of March 31, 2026, loans with maturities over one year consisted of approximately $3.2 billion in fixed rate loans and approximately $2.1 billion in variable rate loans. The loan maturities noted above are based on the contractual provisions of the individual loans. The Company has no general policy regarding renewals and borrower requests, which are handled on a case-by-case basis. Nonperforming Loans and Nonperforming Other Assets Nonperforming loans include: (a) loans accounted for on a nonaccrual basis; (b) accruing loans contractually past due ninety days or more as to interest or principal payments; and (c) loans not included in (a) and (b) above which are defined as “modified.” Repossessed assets include primarily repossessed real estate and automobiles. The Company’s policy is to discontinue the accrual of interest income on any loan for which principal or interest is 90 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 nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. 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. Restructured loans are loans on which, due to deterioration in the borrower’s financial condition, the original terms have been modified in favor of the borrower or either principal or interest has been forgiven. Repossessed assets represent property acquired as the result of borrower defaults on loans. These assets are recorded at estimated fair value, less estimated selling costs, at the time of foreclosure or repossession. Write-downs occurring at foreclosure are charged against the allowance for credit losses. On an ongoing basis, properties are appraised as required by market indications and applicable regulations. Write-downs for subsequent declines in value are recorded in non-interest expense in other real estate owned along with other expenses related to maintaining the properties. The following table presents information concerning the aggregate amount of nonperforming loans and repossessed assets at March 31, 2026 and December 31, 2025 (dollars in thousands): March 31, 2026 December 31, 2025 Nonaccrual loans $ 43,191 $ 31,053 Modified loans which are performing in accordance with revised terms 883 895 Total nonperforming loans 44,074 31,948 Repossessed assets 5,547 2,859 Total nonperforming loans and repossessed assets $ 49,621 $ 34,807 Nonperforming loans to loans, before allowance for credit losses 0.63 % 0.53 % Nonperforming loans and repossessed assets to loans, before allowance for credit losses 0.71 % 0.58 % 47 The $12.1 million increase in nonaccrual loans during 2026 resulted from the net of $10.9 million of loans acquired from Two Rivers Bank, $5.8 million of loans put on nonaccrual status, offset by $1.1 million of loans becoming current or paid-off, $2.0 million of loans transferred to other real estate owned, and $1.5 million loans charged off. The following table summarizes the composition of nonaccrual loans (dollars in thousands): March 31, 2026 December 31, 2025 Balance % of Total Balance % of Total Construction and land development $ 8,470 19.6 % $ 5 — % Agricultural real estate 1,562 3.6 % 1,181 3.8 % 1-4 family residential properties 7,680 17.8 % 5,763 18.6 % Multifamily residential properties 503 1.2 % 371 1.2 % Commercial real estate 8,347 19.3 % 10,381 33.4 % Loans secured by real estate 26,562 61.5 % 17,701 57.0 % Agricultural loans 2,537 5.9 % 19 0.1 % Commercial and industrial loans 3,057 7.1 % 1,967 6.3 % Consumer loans 181 0.4 % 182 0.6 % All other loans 10,854 25.1 % 11,184 36.0 % Total loans $ 43,191 100.0 % $ 31,053 100.0 % Interest income that would have been reported if nonaccrual and restructured loans had been performing totaled $501,000 and $471,000 for the three months ended March 31, 2026 and 2025, respectively. The $2.7 million increase in repossessed assets during 2026 resulted from $3.0 million of additional assets repossessed and $280,000 of repossessed assets sold, $50,000 of write-downs on existing assets, and no deferred fair value marks were recognized. The following table summarizes the composition of repossessed assets (dollars in thousands): March 31, 2026 December 31, 2025 Balance % of Total Balance % of Total Construction and land development $ 698 12.6 % $ 772 27.0 % Agricultural real estate 71 1.3 % — — % 1-4 family residential properties 51 0.9 % 56 2.0 % Commercial real estate 4,709 84.9 % 2,029 71.0 % Total real estate 5,529 99.7 % 2,857 99.9 % Consumer loans 18 0.3 % 2 0.1 % Total repossessed collateral $ 5,547 100.0 % $ 2,859 100.0 % Repossessed assets sold during the first three months of 2026 resulted in net losses of $2,000 related to real estate asset sales and no net losses related to other assets sales. The Company also recognized no deferred losses, recorded $50,000 of write-downs on real estate properties owned and recorded no change in fair market value discount. Loan Quality and Allowance for Credit Losses The allowance for credit losses represents management’s estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for credit losses is the charge against current earnings that is determined by management 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, management 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 overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Once identified, the magnitude of exposure to individual borrowers is quantified in the form of specific allocations of the allowance for credit losses. Management considers collateral values and guarantees in the determination of such specific allocations. Additional factors considered by management in evaluating the overall adequacy of the allowance include historical net credit losses, the level and composition of nonaccrual, past due and renegotiated 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. Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, the uncertainty regarding grain prices, 48 increased operating costs for farmers, and increased levels of unemployment impacting consumers’ ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve. Management considers the allowance for credit losses a critical accounting policy. Management recognizes there are risk factors that are inherent in the Company’s loan portfolio. All financial institutions face risk factors in their loan portfolios because risk exposure is a function of the business. A portion of the Company’s operations (and therefore its loans) are concentrated in Illinois, where agriculture is the dominant industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At March 31, 2026, the Company’s loan portfolio included $775.4 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, $646.4 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased $93.9 million from $681.4 million at December 31, 2025 while loans concentrated in other grain farming increased $68.5 million from $577.9 million at December 31, 2025. While the Company adheres to sound underwriting practices, including 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 credit losses within the agricultural portfolio. The Company also has $1.3 billion loans to lessors of non-residential buildings and $756.1 million 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; however, limits well below the regulatory thresholds are generally observed. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch network. 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 minimizes credit risk by adhering to sound underwriting and credit review policies. Management and the Board of Directors of the Company review these policies at least annually. Senior management is actively involved in business development efforts and the maintenance and monitoring of credit underwriting and approval. The loan review system and controls are designed to identify, monitor, and address asset quality problems in an accurate and timely manner. On a quarterly basis, the Board of Directors and management review the status of problem loans and determine the best estimate of the allowance. In addition to internal policies and controls, regulatory authorities periodically review asset quality and the overall adequacy of the allowance for credit losses. 49 Analysis of the allowance for credit losses as of March 31, 2026 and 2025, and of changes in the allowance for the three months ended March 31, 2026 and 2025, is summarized as follows (dollars in thousands): Three months ended March 31, 2026 2025 Average loans outstanding, net of unearned income $ 6,285,114 $ 5,605,821 Allowance-beginning of period 74,875 70,182 Initial allowance on loans purchased 10,841 — Charge-offs: Construction and land development — — Agricultural real estate 40 — 1-4 family residential properties 26 39 Commercial real estate 1,111 338 Agricultural loans — 1,117 Commercial and industrial loans 291 223 Consumer loans 498 366 Total charge-offs 1,966 2,083 Recoveries: Construction and land development — — Agricultural real estate — — 1-4 family residential properties 193 18 Commercial real estate 1 8 Agricultural loans 10 — Commercial and industrial loans 40 90 Consumer loans 222 184 Total recoveries 466 300 Net charge-offs (recoveries) 1,500 1,783 Provision (release) for credit losses 2,598 1,652 Allowance-end of period $ 86,814 $ 70,051 Ratio of annualized net charge-offs to average loans 0.10 % 0.13 % Ratio of allowance for credit losses to loans outstanding (less unearned interest at end of period) 1.25 % 1.23 % Ratio of allowance for credit losses to nonperforming loans 197 % 263 % The allowance for credit losses to nonperforming loans ratio has decreased due to the acquired nonperforming loans from Two Rivers Bank. Management believes that the overall estimate of the allowance for credit losses appropriately accounts for probable losses attributable to current exposures. During the first three months of 2026, the Company had net charge offs of $1.5 million compared to net charge offs of $1.8 million during the same period of 2025. During the first three months of 2026, the Company had the following significant charge offs, two commercial real estate loans to one borrower totaling $1.1 million and one commercial loan to one borrower totaling $290,000. During the first three months of 2025, the Company had the following significant charge offs, one commercial real estate loan to one borrower totaling $338,000, three agricultural loans to two borrowers totaling $996,000, and one commercial operating loan to one borrower totaling $145,000. 50 Deposits Funding of the Company’s earning assets is substantially provided by a combination of consumer, commercial and public fund deposits. The Company continues to focus its strategies and emphasis on commercial and retail core deposits, the major component of funding sources. The following table sets forth the average deposits and weighted average rates for the three months ended March 31, 2026 and for the year-ended December 31, 2025 (dollars in thousands): Three months ended March 31, 2026 Year-ended December 31, 2025 Average Balance Weighted Average Rate Average Balance Weighted Average Rate Demand deposits: Non-interest-bearing $ 1,393,882 — % $ 1,353,150 — % Interest-bearing 3,388,750 1.78 % 3,132,691 1.96 % Savings 680,418 0.24 % 633,186 0.12 % Time deposits 1,228,401 3.14 % 1,074,940 3.37 % Total average deposits $ 6,691,451 1.50 % $ 6,193,967 1.59 % During the first three months of 2026, the average balance of deposits increased by $497.5 million from the average balance for the year-ended December 31, 2025. The increase in the first three months of 2026 was primarily due to the acquisition of Two Rivers. Balances of time deposits of more than $250,000 include time deposits maintained for public fund entities and consumer time deposits. The following table sets forth the maturity of time deposits of more than $250,000 at March 31, 2026 and December 31, 2025 (in thousands): March 31, 2026 December 31, 2025 Three months or less $ 190,279 $ 230,788 Over three months through twelve months 299,230 129,513 Over one year through three years 52,996 57,451 Over three years 4,648 2,512 Total $ 547,153 $ 420,264 Repurchase Agreements and Other Borrowings Securities sold under agreements to repurchase are short-term obligations of First Mid Bank. These obligations are collateralized with certain government securities that are direct obligations of the United States or one of its agencies. These retail repurchase agreements are a cash management service to corporate customers. Other borrowings consist of Federal Home Loan Bank (“FHLB”) advances, federal funds purchased, loans (short-term or long-term debt) that the Company has outstanding, subordinated debt and junior subordinated debentures. 51 Information relating to securities sold under agreements to repurchase and other borrowings as of March 31, 2026 and December 31, 2025 is presented below (dollars in thousands): March 31, 2026 December 31, 2025 Repurchase agreements with customers $ 208,811 $ 196,716 Federal Home Loan Bank advances: FHLB-overnight — — Fixed term-due in one year or less 27,811 25,000 Fixed term-due after one year 247,369 245,000 Other borrowings: Federal funds purchased — — Debt due in one year or less 559 — Debt due after one year 19,367 — Subordinated debt, net 60,072 60,008 Junior subordinated debt, net 34,022 24,454 Total $ 598,011 $ 551,178 Average interest rate at end of period 3.62 % 3.54 % Maximum outstanding at any month-end: Repurchase agreements with customers $ 214,360 $ 219,772 Federal Home Loan Bank advances: FHLB-overnight — 25,000 Fixed term-due in one year or less 27,811 50,000 Fixed term-due after one year 247,369 245,000 Other borrowings: Federal funds purchased — — Debt due in one year or less 559 4,000 Debt due after one year 19,367 — Subordinated debt, net 60,072 87,505 Junior subordinated debt, net 34,022 24,454 Averages for the period (YTD): Repurchase agreements with customers $ 204,173 $ 199,430 Federal Home Loan Bank advances: FHLB-overnight — 6,142 Fixed term-due in one year or less 25,968 16,616 Fixed term-due after one year 245,816 203,363 Other borrowings: Federal funds purchased — 39 Debt due in one year or less 187 361 Debt due after one year 6,480 — Subordinated debt, net 60,030 76,140 Junior subordinated debt, net 27,645 24,376 Total $ 570,299 $ 526,467 Average interest rate during the period 3.60 % 3.51 % Securities sold under agreement to repurchase increased $12.1 million during the three months ended March 31, 2026 primarily due to the seasonal demands in balances and changes in cash flow needs of various customers. FHLB advances represent borrowings by First Mid Bank and Two Rivers Bank to economically fund loan demand. At March 31, 2026, the advances consisted of $275.2 million with a weighted-average interest rate of 3.40% and maturities from May 2026 to March 2035. The Company is party to a revolving credit agreement with The Northern Trust Company in the amount of $15.0 million. The balance of this line of credit was $0 as of March 31, 2026. This loan was renewed on April 4, 2025 for one year as a revolving credit agreement with a maximum available balance of $15.0 million. The interest rate is floating at 2.25% over the federal funds rate. The Company and its subsidiary banks were in compliance with the existing covenants at March 31, 2026 and 2025, and December 31, 2025. 52 On October 6, 2020, the Company issued and sold $96.0 million in aggregate principal amount of its 3.95% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The Notes were issued pursuant to the Indenture, dated as of October 6, 2020 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of October 6, 2020 (the “Supplemental Indenture”), between the Company and the Trustee. The Base Indenture, as amended and supplemented by the Supplemental Indenture, governs the terms of the Notes and provides that the Notes are unsecured, subordinated debt obligations of the Company and will mature on October 15, 2030. From and including the date of issuance to, but excluding October 15, 2025, the Notes bore interest at an initial rate of 3.95% per annum. From and including October 15, 2025 to, but excluding the maturity date or earlier redemption, the Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 383 basis points, or such other rate as determined pursuant to the Supplemental Indenture, provided that in no event shall the applicable floating interest rate be less than zero per annum (7.5% and 3.95% at March 31, 2026 and 2025, respectively). On June 7, 2024, August 27, 2024, and September 6, 2024, the Company repurchased in open market transactions and subsequently cancelled $4.0 million, $15.0 million, and $1.0 million respectively, of the outstanding Notes. On October 15, 2025, the Company paid down $20 million of the outstanding Notes. As a result, as of March 31, 2026, $56 million in aggregate principal amount of the Notes remain issued and outstanding. The Company may, beginning with the interest payment date of October 15, 2025, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the Notes at any time, including prior to October 15, 2025, at the Company’s option, in whole but not in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to but excluding the redemption date. On August 15, 2023, the Company assumed, as part of the Blackhawk Bancorp, Inc. acquisition, $7.5 million principal amount of 3.5% Fixed-to-Floating Rate Subordinated Notes due 2031 (“Blackhawk Subordinated Debt I”). Blackhawk Subordinated Debt I was issued pursuant to Indenture between the Company and UMB Bank, as trustee. This Indenture governs the terms of the Blackhawk Subordinated Debt I and provides that such notes are unsecured, subordinated debt obligations of the Company and will mature on May 14, 2031. From and including the date of issuance to, but excluding May 14, 2026, the notes will bear interest at an initial rate of 3.5% per annum. From and including May 14, 2026 to, but excluding the maturity date, the notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 285 basis points. On February 5, 2025, the Company repurchased in open market transactions and subsequently cancelled $3.0 million of the outstanding Blackhawk Subordinated Debt I Notes. As a result, as of March 31, 2026, $4.5 million in aggregate principal amount of Blackhawk Subordinated Debt I Notes remain issued and outstanding. On August 15, 2023, the Company assumed, as part of the Blackhawk Bancorp, Inc. acquisition, $7.5 million principal amount of 3.875% Fixed-to-Floating Rate Subordinated Notes due 2036 (“Blackhawk Subordinated Debt II”). Blackhawk Subordinated Debt II was issued pursuant to Indenture between the Company and UMB Bank, as trustee. This Indenture governs the terms of the Blackhawk Subordinated Debt II and provides that such notes are unsecured, subordinated debt obligations of the Company and will mature on May 14, 2036. From and including the date of issuance to, but excluding May 14, 2031, the notes will bear interest at an initial rate of 3.875% per annum. From and including May 14, 2031 to, but excluding the maturity date, the notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 255 basis points. On February 5, 2025, the Company repurchased in open market transactions and subsequently cancelled $7.0 million of the outstanding Blackhawk Subordinated Debt II Notes. As a result, as of March 31, 2026, $500,000 in aggregate principal amount of Blackhawk Subordinated Debt II Notes remain issued and outstanding. On February 28, 2026, the Company assumed, as part of the Two Rivers acquisition, $20.0 million principal amount of 3.75% Fixed-to-Floating Rate Note Payable due 2029 (“Two Rivers Note Payable”). Two Rivers Note Payable was issued pursuant to Indenture between the Company and Bankers Bank, as trustee. This Indenture governs the terms of the Two Rivers Note Payable and provides that such note is unsecured and will mature on September 30, 2029. From and including the date of issuance to, but excluding the date of merger of Two Rivers Bank and First Mid Bank, the notes will bear interest at an initial rate of 3.75% per annum. From and including the date of merger of Two Rivers Bank and First Mid Bank to, but excluding the maturity date, the notes will bear interest at a floating rate equal to thirty-day Term SOFR plus a spread of 275 basis points. As of March 31, 2026, $19.9 million in aggregate principal amount of the Two Rivers Note Payable remains issued and outstanding. On April 26, 2006, the Company completed the issuance and sale of $10 million of fixed/floating rate trust preferred securities through First Mid-Illinois Statutory Trust II (“Trust II”), a statutory business trust and wholly owned unconsolidated subsidiary of the Company, as part of a pooled offering. The Company established Trust II for the purpose of issuing the trust preferred securities. The $10.0 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of Trust II, a total of $10.3 million, was invested in junior subordinated debentures of the Company. The underlying junior subordinated debentures issued by the Company to Trust II mature in 2036, bore interest at a fixed rate of 6.98% paid quarterly until 53 June 15, 2011 and then converted to floating rate (SOFR plus 160 basis points) after June 15, 2011 (5.54% and 5.59% at March 31, 2026 and December 31, 2025, respectively). The net proceeds to the Company were used for general corporate purposes, including the Company’s acquisition of Mansfield Bancorp, Inc. in 2006. On September 8, 2016, the Company assumed the trust preferred securities of Clover Leaf Statutory Trust I (“CLST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First Clover Financial. The $4.0 million of trust preferred securities and an additional $124,000 additional investment in common equity of CLST I, is invested in junior subordinated debentures issued to CLST I. The subordinated debentures matured in 2035, bear interest at three-month SOFR plus 185 basis points (5.79% and 5.84% at March 31, 2026 and December 31, 2025, respectively) and reset quarterly. On May 1, 2018, the Company assumed the trust preferred securities of FBTC Statutory Trust I (“FBTCST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First BancTrust Corporation. The $6.0 million of trust preferred securities and an additional $186,000 additional investment in common equity of FBTCST I is invested in junior subordinated debentures issued to FBTCST I. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 170 basis points (5.64% and 5.69% at March 31, 2026 and December 31, 2025, respectively) and reset quarterly. On August 15, 2023, the Company assumed the trust preferred securities of Blackhawk Statutory Trust I (“BHST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of Blackhawk Bancorp, Inc. The $1.0 million trust preferred securities and an additional $31,000 investment in common equity of BHST I is invested in junior subordinated debentures issued to BHST I. The subordinated debentures mature in 2032, bear interest at three-month SOFR plus 325 basis points (7.22% and 7.20% at March 31, 2026 and December 31, 2025, respectively) and reset quarterly. On August 15, 2023, the Company assumed the trust preferred securities of Blackhawk Statutory Trust II (“BHST II”), a statutory business trust that was a wholly owned unconsolidated subsidiary of Blackhawk Bancorp, Inc. The $4.0 million of trust preferred securities and an additional $124,000 investment in common equity of BHST II is invested in junior subordinated debentures issued to BHST II. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 205 basis points (6.00% and 6.02% at March 31, 2026 and December 31, 2025, respectively) and reset quarterly. On February 28, 2026, the Company assumed the trust preferred securities of Great River Capital Trust I (“GRCT I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of Two Rivers. The $10.0 million of trust preferred securities and an additional $310,000 investment in common equity of GRCT I is invested in junior subordinated debentures issued to GRCT I. The subordinated debentures mature in 2035, bear interest at three-month SOFR plus 175 basis points (5.69% at March 31, 2026) and reset quarterly. The trust preferred securities issued by Trust II, CLST I, FBTCST I, BHST I, BHST II, and GRCT I are included as Tier 1 capital of the Company for regulatory capital purposes. On March 1, 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the calculation of Tier 1 capital for regulatory purposes. The final rule provided a five-year transition period, ending September 30, 2010, for application of the revised quantitative limits. On March 17, 2009, the Federal Reserve Board adopted an additional final rule that delayed the effective date of the new limits on inclusion of trust preferred securities in the calculation of Tier 1 capital until March 31, 2012. The application of the revised quantitative limits did not and is not expected to have a significant impact on its calculation of Tier 1 capital for regulatory purposes or its classification as well-capitalized. The Dodd-Frank Act, signed into law July 21, 2010, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital after a three-year phase-in period beginning January 1, 2013, for larger holding companies. For holding companies with less than $15 billion in consolidated assets, existing issues of trust preferred securities are grandfathered and not subject to this new restriction. New issuances of trust preferred securities, however, would not count as Tier 1 regulatory capital. In addition to requirements of the Dodd-Frank Act discussed above, the act also required the federal banking agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds). This rule is generally referred to as the “Volcker Rule.” On December 10, 2013, the federal banking agencies issued final rules to implement the prohibitions required by the Volcker Rule. Following the publication of the final rule, and in reaction to concerns in the banking industry regarding the adverse impact the final rule’s treatment of certain collateralized debt instruments has on community banks, the federal banking agencies approved a final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities. Under the final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities under $15 billion in assets if (1) the collateralized debt obligation was established and issued prior to May 19, 2010, (2) the banking entity reasonably believes that the offering proceeds received by the collateralized debt obligation were invested primarily in qualifying trust preferred collateral, and (3) the banking entity’s interests in the collateralized debt obligation was acquired on or prior to December 10, 2013. Although the Volcker Rule impacts many large banking entities, the Company does not currently anticipate that the Volcker Rule will have a material effect on the operations of the Company, First Mid Bank, or Two Rivers Bank. 54 Interest Rate Sensitivity The Company seeks to maximize its net interest margin while maintaining an acceptable level of interest rate risk. Interest rate risk can be defined as the amount of forecasted net interest income that may be gained or lost due to changes in the interest rate environment, a variable over which management has no control. Interest rate risk, or sensitivity, arises when the maturity or repricing characteristics of interest-bearing assets differ significantly from the maturity or repricing characteristics of interest-bearing liabilities. The Company monitors its interest rate sensitivity position to maintain a balance between rate sensitive assets and rate sensitive liabilities. This balance serves to limit the adverse effects of changes in interest rates. The Company’s asset liability management committee (ALCO) oversees the interest rate sensitivity position and directs the overall allocation of funds. In the banking industry, a traditional way to measure potential net interest income exposure to changes in interest rates is through a technique known as “static GAP” analysis which measures the cumulative differences between the amounts of assets and liabilities maturing or repricing at various intervals. The Company has also assumed prepayments of loan assets in amounts consistent with market expectations. By comparing the volumes of interest-bearing assets and liabilities that have contractual maturities, repricing points, and prepayments at various times in the future, management can gain insight into the amount of interest rate risk embedded in the balance sheet. The following table sets forth the Company’s interest rate repricing GAP for selected maturity periods at March 31, 2026 (dollars in thousands): Rate Sensitive Within 1 Year 1-3 Years 3-5 Years Thereafter Total Fair Value Interest-earning assets: Federal funds sold and other interest-bearing deposits $ 412,139 $ — $ — $ — $ 412,139 $ 412,139 Certificates of deposit 3,060 — — — 3,060 3,060 Taxable investment securities 68,021 230,180 44,311 572,433 914,945 914,945 Nontaxable investment securities 55,042 53,682 153,855 5,535 268,114 268,114 Loans 3,903,470 1,732,616 926,460 381,730 6,944,276 6,658,402 Total $ 4,441,732 $ 2,016,478 $ 1,124,626 $ 959,698 $ 8,542,534 $ 8,256,660 Interest-bearing liabilities: Demand deposits and savings accounts $ 1,671,100 $ — $ — $ 1,504,420 $ 3,175,520 $ 3,175,520 Money market accounts 1,307,240 — — — 1,307,240 1,307,240 Other time deposits 1,441,210 117,257 15,879 786 1,575,132 1,503,916 Short-term borrowings/debt 209,370 — — — 209,370 209,370 Long-term borrowings/debt 240,877 100,680 46,689 395 388,641 387,254 Total $ 4,869,797 $ 217,937 $ 62,568 $ 1,505,601 $ 6,655,903 $ 6,583,300 Rate sensitive assets-rate sensitive liabilities $ (428,065 ) $ 1,798,541 $ 1,062,058 $ (545,903 ) $ 1,886,631 Cumulative GAP $ (428,065 ) $ 1,370,476 $ 2,432,534 $ 1,886,631 Cumulative amounts as % of total rate sensitive assets (5.0 %) 21.1 % 12.4 % (6.4 %) Cumulative Ratio (5.0 %) 16.0 % 28.5 % 22.1 % The static GAP analysis shows that at March 31, 2026, the Company was liability sensitive, on a cumulative basis, through the twelve-month time horizon. This indicates that future increases in interest rates could have an adverse effect on net interest income. There are several ways the Company measures and manages its exposure to interest rate sensitivity, including static GAP analysis. The Company’s ALCO also uses other financial models to project interest income under various rate scenarios and prepayment/extension assumptions consistent with First Mid Bank and Two Rivers Bank’s historical experience and with known industry trends. ALCO meets at least monthly to review the Company’s exposure to interest rate changes as indicated by the various techniques and to make necessary changes in the composition terms and/or rates of the assets and liabilities. Capital Resources At March 31, 2026, the Company’s stockholders' equity had increased $117.9 million, or 12.3%, to $1.1 billion from $958.7 million as of December 31, 2025. During the three months ended March 31, 2026, net income contributed $26.3 million to equity before the 55 payment of dividends to stockholders of $6.0 million. The change in market value of available-for-sale investment securities decreased stockholders' equity by $7.4 million, net of tax. The acquisition of Two Rivers increased equity by $104.2 million during the first three months of 2026. Stock Plans Deferred Compensation Plan. The Company follows the provisions of the Emerging Issues Task Force Issue No. 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned Are Held in a Rabbi Trust and Invested” (“EITF 97-14”), which was codified into ASC 710-10, for purposes of the First Mid Bancshares, Inc. Amended and Restated Deferred Compensation Plan (“DCP”). At March 31, 2026, the Company classified the cost basis of its common stock issued and held in trust in connection with the DCP of approximately $7.0 million as treasury stock. The Company also classified the cost basis of its related deferred compensation obligation of approximately $7.0 million as an equity instrument (deferred compensation). The DCP was effective as of June 1984. The purpose of the DCP is to enable directors, advisory directors, and key employees the opportunity to defer a portion of the fees and cash compensation paid by the Company as a means of maximizing the effectiveness and flexibility of compensation arrangements. The Company invests all participants’ deferrals in shares of common stock. Dividends paid on the shares are credited to participants’ DCP accounts and invested in additional shares. First Retirement and Savings Plan. The First Retirement Savings Plan (“401(k) plan”) was effective beginning in 1985. Employees are eligible to participate in the 401(k) plan after three months of service with the Company. Stock Incentive Plan. At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the 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. At the Annual Meeting of Stockholders held on April 30, 2025, the stockholders approved amendments to the SI Plan to change the name of the plan to the 2025 Stock Incentive Plan and to extend the term of the plan to January 21, 2035. 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 2025 annual meeting of the Company, a maximum of 1 million shares of common stock may be issued under the SI Plan. During the three months ended March 31, 2026 and 2025, the Company awarded 88,975 and 84,097 shares as stock and stock unit awards, respectively. Stock Repurchase Program. On June 24, 2025, the Board of Directors approved a repurchase program (the “2025 Repurchase Program”), which became effective on July 1, 2025. The 2025 Repurchase Program supersedes all previous repurchase plans and authorizes the Company to repurchase up to 1.2 million shares of the Company’s common stock. During three months ended March 31, 2026, the Company repurchased 12,686 shares. As of March 31, 2026, the Company had approximately 1.2 million shares or approximately $48.9 million in remaining capacity under the 2025 Repurchase Program. Although the Company adopted the repurchase plan, the Company may make discretionary repurchases in the open market or in privately negotiated transactions from time to time. The timing, manner, price, and amount of any such repurchases will be determined by the Company at its discretion and will depend upon a variety of factors including economic and market conditions, price, applicable legal requirements, and other factors. Employee Stock Purchase Plan. At the Annual Meeting of Stockholders held April 25, 2018, the stockholders approved the First Mid Bancshares, Inc. Employee Stock Purchase Plan (“ESPP”). The ESPP provides eligible employees with the opportunity to purchase shares of common stock of the Company at a 15% discount through payroll deductions. The ESPP is 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, 2026 and 2025, 6,975 shares and 6,891 shares, respectively, were issued pursuant to the ESPP. As of March 31, 2026, there were 437,048 shares unassigned but available to be issued under the ESPP. 56 Liquidity Liquidity represents the ability of the Company and its subsidiaries to meet all present and future financial obligations arising in the daily operations of the business. Financial obligations consist of the need for funds to meet extensions of credit, deposit withdrawals, and debt servicing. The Company’s liquidity management focuses on the ability to obtain funds economically through assets that may be converted into cash at minimal costs or through other sources. The Company’s other sources of cash include overnight federal fund lines, Federal Home Loan Bank advances, the ability to borrow at the Federal Reserve Bank of Chicago and Des Moines, and the Company’s operating line of credit with The Northern Trust Company. Details for these sources include: • First Mid Bank and Two Rivers Bank have $170 million available in overnight federal fund lines, including $35 million from Bankers' Bank, $10 million from Bankers' Trust, $20 million from BMO Bank, N.A., $30 million from First Horizon Bank, N.A., $15 million from The Northern Trust Company, $20 million from U.S. Bank, N.A., and $40 million from Zions Bank. Availability of the funds is subject to First Mid Bank and Two Rivers Bank meeting minimum regulatory capital requirements for total capital to risk-weighted assets and Tier 1 capital to total average assets. As of March 31, 2026, First Mid Bank and Two Rivers Bank have met these regulatory requirements. • First Mid Bank and Two Rivers Bank can borrow from the Federal Home Loan Bank as a source of liquidity. Availability of the funds is subject to the pledging of collateral to the Federal Home Loan Bank. Collateral that is pledged includes one-to-four family residential real estate loans, commercial real estate loans, multifamily loans, and farmland. At March 31, 2026, the excess collateral at the FHLB would support approximately $1.6 billion of additional advances for First Mid Bank and $262.8 million for Two Rivers Bank. • First Mid Bank is a member of the Federal Reserve System and can borrow funds provided that sufficient collateral is pledged. Two Rivers Bank is not a member of the Federal Reserve System. • First Mid Bank has received formal approval from the Federal Reserve Bank and can participate in the Borrower-in-Custody (BIC) program. As a result, the Bank can pledge loans as collateral at the Federal Reserve Bank's Discount Window while retaining custody of the pledged loans. The program enhanced our contingent liquidity position by approximately $380.6 million as of March 31, 2026. Two Rivers Bank does not participate in this program. • In addition, as of March 31, 2026, the Company had a revolving credit agreement in the amount of $15 million with The Northern Trust Company with an outstanding balance of $0 and $15 million in available funds. This loan was renewed on April 4, 2025 for one year as a revolving credit agreement. The interest rate is floating at 2.25% over the federal funds rate. The loan is unsecured. The Company and its subsidiary banks were in compliance with the existing covenants at March 31, 2026 and 2025 and December 31, 2025. Management continues to monitor its expected liquidity requirements carefully, focusing primarily on cash flow from: • lending activities, including loan commitments, letters of credit and mortgage prepayment assumptions; • deposit activities, including seasonal demand of private and public funds; • investing activities, including prepayments of mortgage-backed securities and call provisions on U.S. Treasury and government agency securities; and • operating activities, including scheduled debt repayments and dividends to stockholders. The following table summarizes significant contractual obligations and other commitments at March 31, 2026 (in thousands): Less than More than Total 1 Year 1-3 Years 3-5 Years 5 Years Time deposits $ 1,575,132 $ 1,441,210 $ 117,257 $ 15,879 $ 786 Subordinated debt, net and junior subordinated debt, net 94,094 — — 55,637 38,457 Other borrowings 503,917 237,181 76,731 165,005 25,000 Operating leases 15,451 3,622 5,905 3,326 2,598 Supplemental retirement 2,013 50 250 400 1,313 Total $ 2,190,607 $ 1,682,063 $ 200,143 $ 240,247 $ 68,154 57 For the three months ended March 31, 2026, net cash of $25.1 million was provided by operating activities, $79.5 million was provided by investing activities, and $117.5 million was provided by financing activities. In total, cash and cash equivalents increase by $222.1 million from year-end 2025. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change in the market risk faced by the Company since December 31, 2025. For information regarding the Company’s market risk, refer to the Company’s Annual Report on Form 10-K for the year-ended December 31, 2025.