First Mid Bancshares reported record quarterly earnings for the three months ended Sept. 30, 2026, alongside solid deposit growth and improved measures of criticized loans. Loan balances declined, however, as customer payoffs—particularly in commercial real estate—outpaced growth elsewhere.
The company also highlighted a pending acquisition of Evergreen Bancshares, which it says would extend its presence in Missouri, Illinois and Indiana. Separately, First Mid sold a portfolio of low-yielding securities after quarter-end, a move that will affect fourth-quarter results.
Quarterly performance
- Net interest income was $79.4 million, down $300,000 from the second quarter. Higher interest income was outweighed by increased funding costs, including deposit-pricing competition, and lower average loan balances.
- Compared with the third quarter of 2025, net interest income rose $13 million, or 19.6%. The company attributed the increase mainly to organic growth in earning assets and the addition of Two Rivers Bank & Trust. Higher deposit balances also contributed to increased interest expense.
- Net interest margin was 3.76% on a tax-equivalent basis, down 3 basis points from the prior quarter. Asset yields improved by 6 basis points, but the average cost of funds rose more.
- First Mid characterized earnings as a quarterly record but did not provide the earnings amount in the material included here.
Loans and asset quality
- Total loans ended the quarter at $6.85 billion, down $85.8 million from June 30. The decline was driven by elevated payoffs and disciplined pricing, with the largest effect in commercial real estate after a borrower sold part of a mult-location business and paid down its loan. Other loan portfolios grew on a diversified basis.
- Criticized assets fell $45.9 million during the quarter. Special-mention loans declined $37.6 million to $101.5 million, while substandard loans fell $8.3 million to $131.6 million.
- Non-performing loans edged up $1.8 million to $43.1 million. First Mid also described net charge-offs as negligible for the quarter.
Securities sale and acquisitions
- On Oct. 26, First Mid sold investment securities with a 1.51% weighted-average yield for a $14.8 million loss, generating $175.8 million in cash. The loss will appear in fourth-quarter results. The company expects to reinvest the proceeds at higher rates and estimates an earn-back period of less than two years.
- First Mid said its pending acquisition of Evergreen Bancshares and its subsidiary, American Bank of Freedom, would deepen its presence in Missouri, Illinois and Indiana and better position the company to move beyond $10 billion in assets. The results announcement did not provide transaction terms or a closing timetable.
- The company also pointed to the acquisition of Winship Farm Management as part of its effort to diversify revenue and grow fee-based businesses.
The securities sale means First Mid expects to absorb a one-time loss in the fourth quarter in exchange for cash it plans to reinvest at higher yields. The Evergreen transaction, if completed, would expand the bank’s regional footprint and take it past the $10 billion asset mark identified by management.