First Mid Bancshares' $0.24 Dividend: A Steady Hand in Volatile Markets

The declaration of a $0.24 per share quarterly dividend by First Mid Bancshares (FMBH) underscores the resilience of this regional financial institution amid macroeconomic turbulence. This payout, consistent with the $0.24 dividend per quarter maintained throughout 2024, reflects a disciplined financial strategy rooted in robust earnings growth, prudent risk management, and a conservative dividend policy. To assess its significance, let us dissect the numbers.

Financial Foundations: Earnings Power and Margin Expansion

First Mid’s Q1 2025 results reveal a company in commanding form. Net income surged to $22.2 million ($0.93 diluted EPS), a $0.13 jump from the prior quarter. The adjusted net income (excluding nonrecurring tech expenses) hit $23.1 million ($0.96 diluted EPS), marking a 9% sequential rise. This outperformance is underpinned by a 3.60% net interest margin, up 19 basis points from Q4 2024. The margin expansion stems from higher earning asset yields and disciplined cost management, with noninterest expenses dropping to $54.5 million—excluding one-time costs—to yield an improved 58.9% efficiency ratio.

Loan and deposit growth further bolsters confidence. Total loans rose to $5.70 billion, a 0.5% quarterly increase, while deposits hit $6.13 billion, up 1.2%. Strategic use of brokered deposits allowed the bank to capitalize on falling rates, with time deposits surging $75.4 million. Meanwhile, asset quality remains a bright spot: nonperforming loans (NPLs) fell to $26.6 million, or 0.47% of total loans, with a 263.4% allowance coverage ratio.

Dividend Analysis: Stability Amid Sector Volatility

The $0.24 dividend declaration represents a 4.3% increase from the $0.23 per share paid quarterly in 2023. This adjustment aligns with FMBH’s earnings trajectory: net income rose 14.5% year-over-year in 2024 to $78.9 million, fueling the dividend’s upward shift.

Crucially, FMBH’s dividend payout ratio of 28.7% (2023) remains far below the financial services sector average of 44%, signaling ample room to sustain or grow payouts. The bank’s capital ratios—15.59% total capital to risk-weighted assets and a 10.73% leverage ratio—also reflect a “well capitalized” position, shielding it from shocks.

Risks and Considerations

While FMBH’s fundamentals are strong, challenges lurk. Interest rate cuts, if abrupt, could compress net interest margins. Additionally, regulatory scrutiny of regional banks and economic slowdowns might pressure loan portfolios. However, FMBH’s diversified loan book—spanning construction, agriculture, and commercial sectors—and its $25.53 tangible book value per share (up 4.4% year-over-year) provide buffers.

Conclusion: A Conservative Anchor for Income Investors

First Mid Bancshares’ $0.24 dividend declaration is no mere formality. It reflects a 14.5% net income growth since 2023, a 35 basis-point annual margin expansion, and a $70.1 million allowance for credit losses—all of which fortify its ability to sustain payouts. With a dividend yield of ~2.8% (versus a sector average of ~3.1%) and a payout ratio half that of peers, FMBH offers a low-risk, steady income stream for conservative investors.

The bank’s focus on capital preservation—evident in its “well capitalized” status and disciplined credit underwriting—aligns with a world where volatility is the norm. For those prioritizing reliability over high yield, FMBH’s dividend policy, backed by $22.2 million in Q1 earnings and a 58.9% efficiency ratio, merits serious consideration. In a sector prone to boom-and-bust cycles, this is a dividend machine built to last.

Final Take: First Mid Bancshares’ dividend is not just a payment—it’s a testament to its ability to thrive in uncertainty. For income-focused investors, this is a rare blend of stability and growth potential.

Disclosure: The analysis is based on publicly available financial statements and does not constitute investment advice. Individual circumstances may vary.