First Mid Bancshares surges on record earnings, acquisition approval
Regional bank beats expectations by wide margin, gains regulatory green light for Two Rivers deal
First Mid Bancshares shares jumped more than 4% on Thursday after the Illinois regional bank reported record quarterly earnings and secured regulatory approval for its pending acquisition of Two Rivers Financial Group.
The Mattoon-based lender reported fourth-quarter net income of $23.7 million, or $1.06 per diluted share, according to a regulatory filing. That exceeded analyst expectations of 97 cents per share by 9 cents. Revenue of $88.2 million topped consensus estimates by 34.8%.
"We finished off a landmark year with record annual earnings per share and net income," chief executive Joseph E. Dively said in the earnings announcement.
The quarterly results marked a significant acceleration for the $1 billion market cap bank. Net interest income rose 12.9% year-over-year to $66.5 million, while loans grew 3.2% from the previous quarter and 6% from a year earlier. Tangible book value increased 20.3% year-over-year, reflecting strong capital generation.
Operational efficiency also improved, with the bank's efficiency ratio—a measure of operating expenses as a percentage of revenue—narrowing to 57.55% from 58.75% in the prior quarter. A lower ratio typically indicates better operational performance.
Investors cheered the results, sending shares up 4.5% to $42.89 in Thursday trading. The stock is now trading near its 52-week high of $44.32 and well above its 200-day moving average of $37.79.
Perhaps more significant for long-term investors, the bank received regulatory approval for its acquisition of Two Rivers Financial Group. The deal is expected to close in the first quarter of 2026, expanding First Mid's footprint in the Midwest.
The board also declared a quarterly dividend of 25 cents per share, payable February 27, 2026, to shareholders of record as of February 10. The annual dividend yield stands at approximately 2.3%.
Analysts maintain a largely positive outlook on the stock. Seven firms cover the company with an average 12-month price target of $42.80, according to MarketBeat data. First Mid trades at 11.7 times trailing earnings, slightly below the forward price-to-earnings ratio of 12.1.
The strong performance comes amid a challenging environment for regional banks, which have faced pressure from higher interest rates and increased competition for deposits. First Mid's 26% profit margin and return on equity of 9.7% compare favorably to many regional peers.
Insiders own approximately 10.7% of outstanding shares, while institutional investors hold 48%, according to Nasdaq data. The stock's beta of 0.90 indicates it has been slightly less volatile than the broader market.
With the Two Rivers acquisition set to close early this year and the bank delivering record profitability, investors are watching whether First Mid can maintain its momentum through the integration process and what that means for future dividend increases.