First Mid Bancshares, Inc. · NASDAQ:FMBH
First Mid Bancshares — IPO Roadshow (September 2020)
64 slides from First Mid Bancshares's IPO roadshow presentation, Sep 28, 2020
Slide 1: First Mid: for every step of life
September 28, 2020 FIRST MID for every step of life.
Slide 2: Forward Looking Statements
Forward Looking Statements 2 Forward Looking Statements This document may contain certain forward - looking statements about First Mid Bancshares, Inc. (“First Mid”) and LINCO Bancshares, Inc., a Missouri corporation (“LINCO”), such as discussions of First Mid’s and LINCO’s pricing and fee trends, c
Slide 3: Certain Important Information
Certain Important Information 3 Additional Disclosures The Company has filed a registration statement (including a prospectus) with the SEC for the offering to which this presentation relates. Before you invest, you should read the prospectus in the registration statement, preliminary prospectus sup
Slide 4: Terms of Proposed Offering
First Mid Bancshares, Inc. Terms of Proposed Offering Issuer Security Type Ratings Maturity Date Interest Payments Optional Redemption Principal Amount Use of Proceeds Subordinated Notes TBD Kroll: BBB [ ] 2030 Semi - annually on [ ] and [ ] of each year through [ ], 2025, and thereafter on [ ], [ ]
Slide 5: Table of Contents
Table of Contents I. Overview of First Mid Bancshares, Inc. II. Financial Highlights III. Credit / Balance Sheet IV. Acquisition of LINCO Bancshares, Inc. V. Capital VI. Appendix Slides #6 - 16 Slides #17 - 24 Slides #25 - 42 Slides #43 - 55 Slides #56 - 58 Slides #60 - 64 5
Slide 6: Overview of First Mid Bancshares, Inc.
Overview of First Mid Bancshares, Inc. 6
Slide 7: Company Overview
Company Overview 7 First Mid is headquartered in Mattoon with multiple locations and a dedicated team of nearly 900 employees serving central and southern Illinois, metro St . Louis, and the greater Indianapolis area . Our vision is to be a nimble, community - focused organization committed to quali
Slide 8: History and Recognition
History and Recognition First Mid has a proud 155 year history of service to agricultural, small business and retail customers. • First National Bank of Mattoon established in 1865 • The oldest nationally chartered bank in Illinois • First Mid Bancshares, Inc. incorporated in 1981 • Committed to our
Slide 9: Our Branch Footprint
Our Branch Footprint First Mid Bank & Trust currently operates 64 banking centers throughout Illinois and eastern Missouri and a loan production office in the greater Indianapolis area . Clusters of branches are located in and around cities such as St . Louis, Peoria, Champaign, Decatur, and Carbond
Slide 10: Investment Highlights
Investment Highlights A t t r a cti v e F r a n c h ise Growth Strat egy Quality Core Deposits High Quality Loan Portfolio D i v e rsi f i e d Sources of Revenue Conserva t i v e Risk Profile Strong Capital and Liquidity 10 1 Source: S&P Global Market Intelligence • $ 4 . 5 billion community focused
Slide 11: Experienced Management Team
Joseph R. Dively Chairman, Chief Executive Officer & President, First Mid Bancshares, Inc. & First Mid Bank & Trust, N.A . Joe has served on the Board of First Mid Bancshares since 2004. He joined First Mid as a Senior Executive Vice President of the Bank in 2011 and assumed his current role in Janu
Slide 12: COVID-Relief & Support to Our Employees and Customers
COVID - 19 Relief & Support to Our Employees and Customers • Executed pandemic plan already tested and in place. • Implemented preventative and personal hygiene measures per CDC guidelines. • Protected the safety of employees by closing all branch lobby locations from April 1 st through June 15 th w
Slide 13: Capital Management and Acquisitions
Capital Management and Acquisitions $1 . 0 $0 . 5 $ - $1 . 5 $ 2 . 0 $ 2 . 5 $ 3 . 0 $ 3 . 5 1998 ($ B il) May 1999 Acquired 4 branches from Bank One Corp. April 2001 Acquired American Bank of Illinois January 2002 Acquired The Checkley Agency, Inc., an Insurance Broker May 2006 Acquired Mansfield B
Slide 14: Experienced Growth Through Recent M&A Transactions
Experienced Growth Through Recent M&A Transactions St i f el B a nk T r a n sacti o n Date Closed 8 / 1 4 / 1 5 Closed 9 / 0 8 / 1 6 Closed 5 / 0 1 / 1 8 Closed 1 1 / 1 5 / 18 Closed 4 / 2 1 / 2 0 An n ou nc ed 9/28/20 T r a n sacti o n Value $16 Million $89 Million $72 Million $70 Million - - - $14
Slide 15: Acquisition of Loan Book and Team
Acquisition of Loan Book and Team Deepened St. Louis Metro market presence with acquisition of $183 million in loans, $60 million in deposits and a talented lending team On April 21 st , 2020 O v e r view Highlights of the Deal Completed a strategic acquisition of a talented team of lenders and thei
Slide 16: Providing Shareholder Value
Providing Shareholder Value $1.42 $1.44 $1.51 $1.57 $1.67 $1.04 $1.07 $1.29 $1.62 $1.73 $1.85 $1.81 $2.05 $2.13 $2.52 $2.87 $0.30 $0.33 $0.35 $0.38 $0.38 $0.38 $0.38 $0.40 $0.42 $0.46 $0.55 $0.59 $0.62 $0.66 $0.70 $0.76 $8.49 $9.18 $8.28 $9.36 $10.09 $10.91 $9.38 $11.24 $12.68 $11.75 $15.63 $15.09 $
Slide 17: Financial Highlights / Performance Summary
Financial Highlights / Performance Summary 17
Slide 18: Q2'2020 Summary
Q2’2020 Summary Consistent Solid Performance • Net income of $10.1 million, or $0.60 diluted EPS, compared to $10 million in Q1’20 and $11 million in Q2’19 • Provision for loans and lease losses of $6.1 million, an increase from $5.5 million in Q1’20 and $91k in Q2’19. The higher provision in Q2’20
Slide 19: Preliminary September 30, 2020 Quarter Observations on Asset Quality
Preliminary September 30, 2020 Quarter Observations on Asset Quality 1. Overall asset quality ratios expected to be similar as Q2 2020 results 2. Provision expense for the quarter expected to be approximately $3.0 million - $4.0 million 3. Reserve build expected to be approximately 7 - 12 basis poin
Slide 20: Quality Core Deposit Franchise
Quality Core Deposit Franchise June 30, 2020 Balance % Non - Interest bearing demand deposits $ 817,622 24.1% Interest bearing demand deposits $ 938,710 27.7% Savings deposits $ 474,545 14.0% Money Market $ 625,361 18.5% Time Deposits $ 529,588 15.6% Total Deposits $ 3,385,827 100% Deposit Compositi
Slide 21: Diversified Non-Interest Income
28% 30% 8% 9% 16% Wealth Management Revenues Mortgage Banking Revenues Services Charges Other Non - Interest Income Diversified Non - Interest Income 22% 13% 35% 3% 20% 7% June 30, 2010 26% 21 10% 28% 5% 22% 9% June 30, 2015 June 30, 2020 Insurance Revenues ATM/Debit Card Revenue NII/Revenue: 24.4%
Slide 22: Diversified Solutions and Sources of Revenue: Wealth Management
Diversified Solutions and Sources of Revenue $ 5 , 4 2 5 , 0 00 $ 5 , 9 0 5 , 0 00 $ 8 , 4 6 0 , 0 00 $15,570,000 $3 , 5 00 , 000 $5 , 5 00 , 000 $7 , 5 00 , 000 $9 , 5 00 , 000 $11,500,000 $13,500,000 $15,500,000 2 0 16 2 0 17 2 0 18 2 0 19 • Complementary Wealth Management, Trust Operations, and A
Slide 23: Diversified Solutions and Sources of Revenue: Insurance
Diversified Solutions and Sources of Revenue $ 3 , 4 5 4 , 0 00 $ 3 , 8 8 0 , 0 00 $5,592,000 $ 1 6 , 0 2 9 , 0 0 0 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 2 0 16 2 0 17 2 0 18 2 0 19 • Largest community bank - owned insurance agent in Illinois
Slide 24: Financial Performance
Financial Performance $ 1 0 , 9 8 1 $ 1 1 , 6 7 0 $ 1 1 , 9 7 6 $ 9 , 9 99 $ 1 0 , 1 3 7 $0.66 $0.70 $0.72 $0.60 $0.60 $ - $0 .2 5 $0 .5 0 $0 .7 5 $1 .0 0 $1 .2 5 $1 .5 0 $1 .7 5 $ - $2 , 0 0 0 $4 , 0 0 0 $6 , 0 0 0 $8 , 0 0 0 $10 ,000 $12 ,000 2 0 1 9 Q2 2 0 2 0 Q2 Reported Net Income ($000s) & Dil
Slide 25: Credit / Balance Sheet
Credit / Balance Sheet 25
Slide 26: Diversified Loan Portfolio
Diversified Loan Portfolio June 30, 2020 Balance % Commercial Real Estate (Nonfarm/Nonresidential) $ 1,123,540 35.1% Commercial & Industrial Loans $ 811,169 25.3% 1 - 4 Family Residential Properties $ 342,036 10.7% Agricultural Real Estate $ 251,382 7.8% Construction & Land Development $ 180,934 5.6
Slide 27: Diversified Loan Portfolio Mix
35% 25% 11% 8% 5% 4% CRE (nonfarm/nonresidential) 1 - 4 Family Ag Real Estate Ag Loans M ul t i - Fa mi l y C&LD Cons u m er All Other Loans Diversified Loan Portfolio Mix 33% 16% 25% 9% 7% 3% 3% 3% 6% 1% A historical comparison of First Mid’s loan portfolio mix. 3% 4% June 30, 2010 35% 27 23% 16% 1
Slide 28: Diverse Geographic Lending Region
Diverse Geographic Lending Region 28 Decat u r Region Metro / St . Louis Region Pe o ria Region S o u thern Regio n Sullivan Central Region First Mid’s loan portfolio is geographically dispersed across our footprint As of June 30, 2020 Balance % Central Region $ 630,677 19.7% Champaign/Decatur Regio
Slide 29: Ag Loan Portfolio Highlights
16% 13% 8% 12% 4% 48% Central Region Champaign/Decatur Metro/St. Louis Region Peoria Region Southern Region Sullivan Region Ag Loan Portfolio Highlights 63% 35% Ag Portfolio Mix Ag Loans by Geography 2% 1% Ag Real Estate Grain Operations Beef Cattle Farms Specialty Farms • Totaled $400.4 million or
Slide 30: Ag Real Estate: Asset Characteristics
Ag Real Estate: Asset Characteristics NOTE: (1) National Council of Real Estate Investment Fiduciaries (NCREIF) Farmland is a recession - resistant asset that has consistently generated positive returns with minimal volatility during financial downturns Why Farmland? • Exceptionally good portfolio a
Slide 31: Ag Lending: Historical Characteristics
Ag Lending: Historical Characteristics NOTE: (1) Macrotrends The price of both corn and soybean have grown by ~85% and ~90% respectively since January 2000. Future crop price accretion is anticipated to be driven by the increase in global food demand and decrease in farmland supply. Historical Corn
Slide 32: COVID-19 Relief & Support Update
First Mid is committed to providing the support needed throughout the communities we serve during the pandemic. COVID - 19 Relief & Support Update Over 2,500 Total Loans Funded Fee Income Generated Small Business Customers Assisted Paycheck Protection Program (“PPP”) Q2’20 Update Beginning April 1st
Slide 33: COVID-Loan Monitoring
All Other Loans 88.7% Vulnerable Industries 11.3% COVID - 19 Loan Monitoring Industry Detail as of June 30, 2020 % of Loan Portfolio Retail Shopping / Strip Centers 4.2% Hotels 4.1% Restaurants 3.0% Total 11.3% Note: Balances above exclude Paycheck Protection Program Loans Most of the largest borrow
Slide 34: Food Service Loan Detail
Food Service Loan Detail Hotel & Food Service Loan Portfolios Food Service Type Principal Bal. ($000s) % of Total Loans Limited - Service Restaurants $56 , 32 1 1.9% Full - Service Restaurants $22 , 25 8 0.8% Drinking Places (Alcoholic Beverages) $4 , 98 8 0.2% Snack and Nonalcoholic Locations $4 ,
Slide 35: CRE Loan Portfolio: Industry Detail
CRE Loan Portfolio: Industry Detail CRE Portfolio • 35% of total loan portfolio • 36% owner occupied and 64% non - owner occupied • No one industry type makes up more than 11% of total portfolio • Only 3% of CRE loans are considered classified 35 CRE Owner - Occupied Loans by Industry Industry Type
Slide 36: C&I Loan Portfolio: Industry Detail
C&I Loan Portfolio: Industry Detail C&I Portfolio • 25% of total loan portfolio • No one industry type makes up more than 5% of total loan portfolio • Only 6% of C&I loans are considered classified • Regulatory balances include ~$250M of PPP loans 36 Industry Type Balance ($000) % of C&I Loans % of
Slide 37: Strong Credit Culture
Strong Credit Culture 0.06% 0.10% 0.22% 0.06% 0.07% 0.17% 0.13% 0.09% 0.28% 0.25% 0.39% 0.29% 0.23% 0.08% 0.02% 0.04% 0.04% 0.24% 0.11% 0.22% 0.15% 0.15% 0. 2 0% 0. 4 0% 0. 8 0% Earnings & Dividends/Share 1.00% Net Charge - Offs (Recoveries) as a % of Average Loans 0.00% 2000 2001 2002 2003 2004 200
Slide 38: Historically Low Loan Losses
First Mid’s historical Net Loan Losses to Avg Loans are significantly less than Peer over the last 15 years 0. 0 0% 0. 2 0% 0. 4 0% 1. 8 0% 1. 6 0% 1. 4 0% 1. 2 0% 1. 0 0% 0. 8 0% 0. 6 0% First Mid P e e r FMBH average 17bps Peer average 42bps Historically Low Loan Losses 38 Source: UBPR Data throug
Slide 39: Non-Performing Loans
Non - Performing Loans Construction & Land Dev., 0.2% CRE (Owner Occupied), 10.1% CRE (Non - Owner O c cupi e d , 23.6% C&I, 21.2% Ag Loans, 4.0% Ag RE, 1.6% Residential R/E (Owner Occupied), 19.7% Residential R/E (Non - Owner Occupied), 16.5% HELOC S , 1.2% Consumer, 1.8% Non - Performing Loans by
Slide 40: Adoption of CECL
Effective January 1, 2020, First Mid adopted the new impairment model known as the current expected credit loss (“CECL”). Adoption of CECL CECL calls for a number of quantitative inputs and qualitative considerations including economic inputs, exposure to high risk industries, portfolio credit chara
Slide 41: Significant Reserve Build Post CECL
Significant Reserve Build Post CECL 102.27% 110.49% 96.74% 134.39% 166.18% 0 .0 0 % 25. 00% 50. 00% 75. 00% 100 .00% 125 .00% 150 .00% 175 .00% 2 0 1 9 Q2 2 0 1 9 Q3 2 0 1 9 Q4 2 0 2 0 Q1 2 0 2 0 Q2 Allowance / NPLs 1.04% 1.02% 1.00% 1.20% 1.30% 0 .0 0 % 0 .2 0 % 0 .4 0 % 0 .6 0 % 0 .8 0 % 1 .0 0 %
Slide 42: Securities Portfolio
1 - 5 Years, 60% 6 - 10 Years, 19% > 10 Years, 3% > 1 Year, 17% Securities Portfolio Govt. A ge n c i e s , 17% 42 NOTE: Data as of June 30, 2020 Agency MBS, 54% M uni c i p a l , 27% U.S. Treasury Securities, 0% Securities Portfolio Mix Corporate, 1% CD's, 0% ($000s) Book Value Unrealized Gain or L
Slide 43: Acquisition of LINCO Bancshares, Inc.
Acquisition of LINCO Bancshares, Inc. 43
Slide 44: Transaction Highlights
Transaction Highlights Creates a $5.3 billion (excluding PPP loans) Midwest Community Bank with deep community ties matching First Mid’s culture and like - minded commitment to customers, communities, and shareholders Accelerates growth in the St. Louis metro market consistent with our long - standi
Slide 45: LINCO Bancshares, Inc. Company Overview
LINCO Bancshares, Inc. Company Overview • $ 1 . 2 Billion in assets bank chartered in 1888 • Headquartered in Columbia, Missouri • 14 Branch locations with half situated around the St . Louis market, 2 in Columbia, MO 3 in Jefferson City, MO and 1 in Grapevine, TX • Loan production office in Indiana
Slide 46: Transaction Overview & Assumptions
• First Mid shareholder approval is not needed; LINCO shareholders to approve shortly after announcement • Anticipated closing in Q1 2021 with conversion likely during Q2 2021 • Subject to customary regulatory approvals Transaction Overview & Assumptions • Transaction value (1) of $144.9 million • C
Slide 47: Pro Forma Franchise
Pro Forma Franchise 1) Holding Company level data as of June 30, 2020 Combined Company to operate 77 locations throughout Illinois, Missouri, Indiana and Texas Locations 63 14 77 Assets $4,458M $1,184M $5,642M Loans $3,205M $911M $4,116M Deposits $3,386M $908M $4,294M FMBH (1) LINCO (1) Pro Forma •
Slide 48: Pro Forma Deposit Composition
Pro Forma Deposit Composition Pro forma institution moves into top 20 in deposit market share in the St. Louis MSA market First Mid Providence Pro Forma C ompo s ition C ompo s ition C ompo s ition Deposit Type ($000) % of Total Deposit Type ($000) % of Total Deposit Type ($000) % of Total Non - int
Slide 49: Pro Forma Loan Composition
Pro Forma Loan Composition As of June 30, 2020 First Mid Providence Pro Forma Composition Composition C ompo s ition Loan Type ($000) % of Total Loan Type ($000) % of Total Loan Type ($000) % of Total CRE 1 , 123 , 54 0 35 . 1 % CRE 227 , 06 9 24 . 6 % CRE 1,350,609 32 . 7 % C&I 811 , 16 9 25 . 3 %
Slide 50: Extensive Due Diligence
Extensive Due Diligence First Mid’s Senior Management team completed multiple diligence sessions with LINCO over the last year First Mid is an experienced and disciplined acquirer of community banks with a long history and successful track record of both growth and earnings In - depth diligence proc
Slide 51: Thorough Review of Loan Portfolio Risks Amidst Ongoing Pandemic
Thorough Review of Loan Portfolio Risks Amidst Ongoing Pandemic At Risk Industry Exposure (excludes PPP Loans) Significant loan portfolio analysis and stress testing was completed during diligence by First Mid Senior Management to evaluate vulnerable sectors affected by the global pandemic Re t a i
Slide 52: COVID-Relief & Support: Deferrals
COVID - 19 Relief & Support During the pandemic First Mid and LINCO provided payment deferrals to more than 1,000 customers totaling $627 million at the peak. As of August 31 st over 60% of those customer accounts have resumed normal payment. 52 Providence Deferral Detail First Mid Deferral Detail 9
Slide 53: Addressing COVID
Addressing COVID - 19 Management teams at First Mid and LINCO were proactive from the onset of pandemic, shifting branch traffic to drive - thru, by appointment and online services to maintain customer service while providing social distancing measures to the benefit of our employees and customers.
Slide 54: COVID-19 Relief & Support Update: PPP Totals
First Mid and LINCO are committed to providing the support needed throughout the communities we serve during the pandemic. COVID - 19 Relief & Support Update Total Loans Funded Fee Income Generated Small Business Customers Assisted Paycheck Protection Program (“PPP”) Totals Beginning in April, First
Slide 55: Estimated Pro Forma Allowance Reserve
Estimated Pro Forma Allowance Reserve Significant CECL Allowance for Credit Loss Coverage FMBH LINCO Pro Forma $2,946,000 $861,000 $3,807,000 Loan Balances (1) 1 Excludes PPP loans of approx. $259 million for FMBH and $62 million for LINCO, as of 6/30/2020 ($ in 000’s) FMBH Allowance for Credit Loss
Slide 56: Capital
Capital 56
Slide 57: Historical & Pro Forma Capital Ratios
Historical & Pro Forma Capital Ratios 8.56% 9.10% 10.61% 9.67% 8.70% 2 .0 0 % 4 .0 0 % 6 .0 0 % 8 .0 0 % 10. 00% 12. 00% TCE / TA (%) (1) 9.91% 11 . 15 % 11.20% 10.43% 9.10% 5 .0 0 % 7 .0 0 % 9 .0 0 % 11. 00% 13. 00% 2 0 17 Pro Forma Leverage Ratio (%) 10.78% 11.81% 14.12% 13 . 46 % 11 . 10 % 11.83%
Slide 58: Pro Forma for Capital Raise: Double Leverage & Interest Coverage
Pro Forma for Capital Raise Double Leverage & Interest Coverage 58 Note: Analysis assumes $80 million holding company subordinated debt offering, 0% down - streamed to the Bank; Illustrative calculation assumes no fees (Dollars in thousands) 2019Y YTD 2Q20 YTD 2Q20 Pro Forma YTD 2Q20 Pro Forma For $
Slide 59: Achievements through Performance:
Achievements through Performance: 59
Slide 60: Appendix
Appendix 60
Slide 61: Selected Income Statement Data
Selected Income Statement Data 61 Selected Income Statement Data ($000s) YTD Q2’2020 2019 2018 2017 2016 2015 Interest income $ 7 0, 2 76 $ 1 4 9 ,7 2 1 $ 1 2 4 ,5 6 5 $ 9 9, 5 55 $75 , 49 6 $ 5 9, 2 51 Interest expense 8, 8 21 2 4 ,0 4 7 1 2 ,8 2 7 6, 4 82 4, 2 92 3, 4 99 Net interest income 61,455
Slide 62: Selected Balance Sheet Data
Selected Balance Sheet Data 62 Selected Balance Sheet Data ($000s) ASSETS Q2’2020 2019 2018 2017 2016 2015 Cash and cash equivalents $ 2 3 8 ,4 8 7 $ 8 5, 0 80 $ 1 4 1 ,4 0 0 $ 8 8, 8 79 $ 1 7 5 ,9 0 2 $ 1 1 5 ,7 8 4 Investment securities 7 2 7, 1 54 7 6 0, 2 15 7 6 9, 2 79 6 4 9, 5 96 7 0 8, 7 22 6
Slide 63: Use of Non-GAAP Financial Measures
Use of Non - GAAP Financial Measures 63 For Quarter: 6 / 30 / 202 0 3/31/2020 12/31/2019 9/30/2019 6/30/2019 Total non - interest expense (adjusted) $26 , 09 8 $27 , 74 8 $27,601 $25,894 $30,187 Less: foreclosed property (ORE) expense 2 46 (30) (172) (188) amortization of intangibles (1,290) ( 1 , 2
Slide 64: Use of Non-GAAP Financial Measures
Use of Non - GAAP Financial Measures 64 As of and for the Quarter Ended: 6/30/2020 12/ 3 1/ 2 019 12/31/2018 12/31/2017 Common stockholders’ equity $549,273 $526,609 $475,864 $307,964 Less: Goodwill and intangibles, net 130,656 133,257 $139,097 70,829 Tangible common equity 418,617 393,352 336,767 2