 MATTOON, Ill., July 30, 2020 GLOBE NEWSWIRE -- First Mid Bancshares, Inc. NASDAQ: FMBH the Company today announced its financial results for the quarter and year-to-date period ended June 30, 2020. Highlights Net income of 10.1 million, or 0.60 diluted EPS Organic loan growth up 8.5 year-over-year, excluding Paycheck Protection Program PPP and loans acquired April 21st the Acquired Loans Strong start with the Acquired Loans and lenders in the St. Louis metro market Continued supporting our communities with 260 million in total loans under the PPPI am proud of the strength and perseverance of the First Mid team as we have played and continue to play a key role in the support and success of the customers and communities we serve, said Joe Dively, Chairman and Chief Executive Officer. Our SBA expertise, along with our commitment to our communities, has allowed us to gain a significant number of new customers through the Paycheck Protection Program that will provide long-term value.We delivered another solid quarter of financial results despite a reserve build for the uncertain macro-economic conditions. The team of commercial lenders and loan relationships we acquired in the second quarter have integrated successfully and are off to a great start. As our markets have either partially or fully reopened, our commercial customers who were most impacted by the shelter-in-place orders are seeing positive trends in their businesses. While it is early in the process, approximately 80 of borrowers who have ended their initial 90-day deferral program have not needed extensions, Dively added.Finally, as you can see from our historical and consistent performance through various cycles, we have a very experienced underwriting team with a laser focus on asset quality. While this may be a headwind to growth during booming economic times, this culture and philosophy outperforms in periods such as the current cycle. When you combine our credit quality with our strong balance sheet and capital, we are uniquely positioned to not only manage the uncertainties that lie ahead, but also to take advantage of all opportunities to enhance shareholder value, Dively concluded.Net Interest Income Net interest income for the second quarter of 2020 increased by 1.7 million, or 5.7 compared to the first quarter of 2020. Interest income increased by 0.8 million and interest expense decreased 0.9 million. The increase in interest income was primarily driven by the growth in balances from the Acquired Loans and PPP loans, partially offset by less securities income, lower loan yields and less accretion income. Total accretion income was 0.5 million, which was a decline of 0.3 million from the previous quarter. Interest expense declined due to the changes made to rates following the Federal Reserve cutting rates in March, including maturing CDs and Federal Home Loan Bank advances.In comparison to the second quarter of 2019, net interest income increased 0.3 million, or 0.9. The increase was primarily attributable to a 2.3 million decline in interest expense, partially offset by lower interest income with accretion income down 2.1 million from the same quarter last year. Net Interest MarginNet interest margin, on a tax equivalent basis, was 3.25 for the second quarter of 2020 compared to 3.51 in the prior quarter. The PPP loans carry a 1 interest rate and were dilutive to the margin by approximately 16 basis points in the quarter. In addition, total accretion of 0.5 million for the second quarter was down from 0.8 million in the prior quarter. Excluding the PPP and accretion income, net interest margin declined by 5 basis points in the quarter with lower yields on earning assets partially offset by lower funding costs. In comparison to the second quarter of 2019, net interest margin decreased 39 basis points. The year-over-year decrease was primarily due to the impact of the PPP loans and a 2.1 million decline in accretion income. Excluding PPP loans and accretion income, net interest margin increased one basis point in the current period compared to the second quarter of 2019.Loan PortfolioTotal loans ended the quarter at 3.21 billion, representing an increase of 461.0 million compared to the prior quarter. The second quarter ending balance included approximately 259.6 million in PPP loans. Excluding the PPP loans and the 183.0 million in Acquired Loans, balances increased organically by approximately 18.4 million. On a year-over-year basis, loans increased 658.7 million, or 25.9. Excluding PPP and Acquired Loans, balances increased 216.1 million, or 8.5. The Company has a diversified loan portfolio. The Company decided to continue to provide additional disclosures on industry segments with escalated monitoring and stress testing from the COVID-19 shelter in place. At quarter end, the more vulnerable sectors due to COVID-19, excluding PPP loans, were: 1 Retail ShoppingStrip centers, which represented 4.2 of outstanding loans, 2 Hotels, which represented 4.1 of outstanding loans, and 3 Restaurants, which represented 3.0 of outstanding loans. Most of the largest borrowers in the hotel and restaurant sector own and operate multiple businesses across various industries providing a diverse cash flow stream to support their loans and have provided personal guarantees. The Company began offering a 90-day principal and interest deferral program primarily for the hotel and restaurant sector in late March. Subsequently, the Company offered a principal deferral program to select borrowers upon request primarily in the commercial real estate market. In addition, the Company offered a residential mortgage and consumer principal and interest deferral program. As of July 17th, 2020, approximately 80, or 141.3 million, of the 177.5 million in deferred loans that reached the end of the original deferral period were not extended to a new deferral period. After reaching a peak of approximately 424.0 million in deferrals, the Company had total outstanding deferrals of 282.6 million, or 8.8 of total outstanding loans on July 17th, 2020.The Company will continue to monitor and grant additional deferrals based upon the facts and circumstances of each borrowers financial position. These loan deferrals and modifications have been executed consistent with the CARES Act and are not included in our non-performing loans. Asset Quality The Companys asset quality measures continue to reflect a strong credit culture. The allowance for loan losses, excluding 259.6 million of PPP loans, was 1.30 of total loans. Also, the remaining fair value mark on certain acquired loans represents seven basis points in addition to the current allowance. The ratio of non-performing loans to total loans was 0.72, and the allowance for loan losses to non-performing loans was 166.2. Non-performing loans declined 1.4 million to 23.1 million at quarter end. Non-performing assets to total assets declined to 0.57. Net charge-offs were 0.6 million during the second quarter compared to 1.2 million in the prior quarter. Provision expense was recorded in the amount of 6.1 million in the second quarter reflecting 5.5 million of a reserve build above the 0.6 million in net charge-offs. This reserve build was recorded under Accounting Standards Update 2016-13 known as the current expected credit loss model. The Companys required allowance for credit loss was calculated using a combination of, among other things, historical loss experience and the uncertainty of future macro-economic conditions.DepositsTotal deposits ended the quarter at 3.39 billion, which represented an increase of 477.2 million from the prior quarter. The increase includes approximately 160.0 million of funding under the depository agreement setup for the acquired loans. The Companys average rate on cost of funds was 0.43 for the quarter compared to 0.60 in the first quarter and 0.76 in the second quarter of 2019. Total interest-bearing deposit costs declined by 17 basis points in the first quarter 2020 and declined by 32 basis points year-over-year. Noninterest IncomeNoninterest income for the second quarter of 2020 was 13.9 million compared to 16.5 million in the first quarter and 13.6 million in the second quarter of last year. The decrease compared to first quarter was primarily driven by the timing of insurance revenues, which are seasonally higher in the first quarter. Excluding insurance revenues, noninterest income was essentially flat in the second quarter 2020. In addition, the current period included a negative 0.2 million mortgage servicing rights valuation adjustment.In comparison to the second quarter of 2019, noninterest income increased 0.3 million, or 2.2 with increases in insurance, wealth management, and mortgage banking more than offsetting declines in services charges and late fees recorded in other income. The Companys fee businesses continue to provide significant diversification and are a valuable and consistent income generator. Our First Mid Wealth Management division ended the quarter with 4.1 billion in assets under management. Noninterest Expenses Noninterest expense for the second quarter totaled 26.1 million compared to 27.7 million in the first quarter and 30.2 million in the second quarter last year. The current quarter was lower than the first quarter primarily due to the seasonality of our business lines as well as the deferral of loan origination costs related to the PPP loans. The second quarter of 2019 included 2.4 million of costs related to the Soy Capital acquisition and integration versus 0.1 million of acquisition costs in the current period. 