First Mid Bancshares, Inc. (FMBH): Análisis PESTLE [Actualizado en Ene-2025]

En el panorama dinámico de la banca regional, First Mid Bancshares, Inc. (FMBH) navega por una red compleja de desafíos estratégicos y oportunidades en dominios políticos, económicos, sociológicos, tecnológicos, legales y ambientales. Este análisis integral de la mano presenta los intrincados factores que dan forma al ecosistema operativo del banco, revelando cómo una institución financiera centrada en la comunidad se adapta a las presiones externas multifacéticas al tiempo que mantiene su ventaja competitiva en el mercado bancario del medio oeste. Desde el cumplimiento regulatorio hasta la innovación tecnológica, la resiliencia estratégica de FMBH surge como una narrativa crítica para comprender la dinámica bancaria regional moderna.

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores políticos

Regulaciones bancarias regionales en Illinois y los estados del medio oeste

Las regulaciones bancarias de Illinois a partir de 2024 requieren:

• Relación mínima de adecuación de capital de 10.5%
• Informes regulatorios trimestrales al Departamento de Regulación Financiera y Profesional de Illinois
• Cumplimiento de las pautas de reinversión comunitaria específicas del estado

Estado	Costo de cumplimiento regulatorio	Requisitos de informes anuales
Illinois	$475,000	4 informes completos
Misuri	$389,000	4 informes completos
Iowa	$342,000	4 informes completos

Políticas monetarias de la Reserva Federal

Parámetros de política monetaria de la Reserva Federal para 2024:

• Tasa de fondos federales: 5.25% - 5.50%
• Requisito de reserva de capital: 10.5%
• Relación de cobertura de liquidez: 100%

Supervisión bancaria y legislación bancaria comunitaria

Costos del marco de cumplimiento para FMBH en 2024:

Área de cumplimiento	Gasto anual
Consulta legal regulatoria	$ 1.2 millones
Tecnología de cumplimiento	$875,000
Capacitación del personal	$450,000

Estabilidad política en los estados del medio oeste

Indicadores de estabilidad política para los estados operativos clave FMBH:

• Índice de riesgo político de Illinois: 3.2/10
• Índice de riesgo político de Missouri: 2.9/10
• Índice de riesgo político de Iowa: 2.7/10

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores económicos

Las fluctuaciones de la tasa de interés impactan en la cartera de préstamos e inversiones

A partir del cuarto trimestre de 2023, el margen de interés neto de FMBH fue de 3.47%. El rango de tasa de interés de referencia de la Reserva Federal fue de 5.25% a 5.50% en diciembre de 2023. La cartera de préstamos totales del banco fue de $ 6.87 mil millones, con valores de inversión valorados en $ 1.42 mil millones.

Métrica financiera	Valor	Año
Margen de interés neto	3.47%	2023
Cartera de préstamos totales	$ 6.87 mil millones	2023
Valores de inversión	$ 1.42 mil millones	2023

Salud económica regional en Illinois y Missouri

El PIB de Illinois fue de $ 1.027 billones en 2022. El PIB de Missouri fue de $ 364.7 mil millones en el mismo período. Las tasas de desempleo fueron de 4.5% para Illinois y 3.2% para Missouri en diciembre de 2023.

Estado	PIB	Tasa de desempleo
Illinois	$ 1.027 billones	4.5%
Misuri	$ 364.7 mil millones	3.2%

Tendencias económicas agrícolas y de pequeñas empresas

Los recibos de efectivo agrícolas de Illinois totalizaron $ 19.4 mil millones en 2022. Los recibos de efectivo agrícola de Missouri fueron de $ 8.9 mil millones. Los préstamos para pequeñas empresas por FMBH en 2023 alcanzaron los $ 1.13 mil millones.

Indicador económico	Illinois	Misuri
Recibos de efectivo agrícolas	$ 19.4 mil millones	$ 8.9 mil millones
Préstamos para pequeñas empresas FMBH	$ 1.13 mil millones	N / A

Riesgo de crédito de desaceleración económica potencial

Los préstamos incumplidos de FMBH fueron de $ 87.2 millones en el cuarto trimestre de 2023, lo que representa el 1.27% de los préstamos totales. Las disposiciones de pérdida de préstamos fueron de $ 22.5 millones para el mismo período.

Métrica de riesgo de crédito	Valor	Porcentaje
Préstamos sin rendimiento	$ 87.2 millones	1.27%
Disposiciones de pérdida de préstamo	$ 22.5 millones	N / A

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores sociales

Cambios demográficos en las comunidades rurales y suburbanas del medio oeste

Según los datos de la Oficina del Censo de EE. UU. Para 2022, la población rural de Illinois disminuyó en un 0,3%, mientras que las áreas suburbanas experimentaron un crecimiento de la población del 1.2%. Las regiones centrales de Mid Mid Bancshares muestran tendencias demográficas específicas:

Región	Cambio de población	Edad media	Ingresos del hogar
Centro de Illinois	-0.2%	42.3 años	$58,600
Sur de Illinois	-0.5%	44.1 años	$52,300

Preferencias bancarias digitales

Tasas de adopción de banca digital Para el primer grupo demográfico objetivo de Mid Mid Bancshares:

• 18-34 Grupo de edad: el 87% usa banca móvil
• 35-54 Grupo de edad: 65% usa banca móvil
• Grupo de edad de 55+: 42% usa banca móvil

Modelo bancario centrado en la comunidad

Primer impacto económico local de Mid Bancshares en 2023:

Métrico	Valor
Préstamos para pequeñas empresas emitidas	$ 124.3 millones
Inversiones de la comunidad local	$ 8.7 millones
Empleos locales apoyados	1,236

Diseño de productos financieros de la población que envejece

Desglose demográfico de la base de clientes de First Mid Bancshares en 2023:

Grupo de edad	Porcentaje de clientes	Servicios bancarios preferidos
55-64 años	28%	Planificación de jubilación, inversiones de renta fija
65-74 años	22%	Planificación patrimonial, productos financieros de bajo riesgo
Más de 75 años	12%	Preservación de patrimonio, servicios de confianza

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores tecnológicos

Inversiones de plataforma de banca digital

First Mid Bancshares invirtió $ 3.2 millones en infraestructura de banca digital en 2023. La plataforma digital del banco procesó 2.4 millones de transacciones en línea en el año fiscal, lo que representa un aumento del 28% respecto al año anterior.

Métricas de inversión digital	2023 datos
Inversión total de plataforma digital	$ 3.2 millones
Transacciones en línea procesadas	2.4 millones
Crecimiento de la transacción año tras año	28%

Infraestructura de ciberseguridad

El gasto en ciberseguridad alcanzó los $ 1.7 millones en 2023. El banco implementó sistemas avanzados de detección de amenazas con una tasa de prevención de intrusos del 99.8%.

Métricas de ciberseguridad	2023 estadísticas
Inversión de ciberseguridad	$ 1.7 millones
Tasa de prevención de intrusos	99.8%

Tecnologías de banca móvil y en línea

Los usuarios de banca móvil aumentaron a 87,500 en 2023, lo que representa el 42% de la base total de clientes. La participación bancaria en línea mostró un crecimiento del 35% en los usuarios activos.

Métricas bancarias móviles/en línea	2023 datos
Usuarios de banca móvil total	87,500
Porcentaje de la base de clientes	42%
Crecimiento de los usuarios bancarios en línea	35%

Inteligencia artificial y análisis de datos

El banco asignó $ 2.5 millones para AI y tecnologías de análisis de datos. La precisión de la evaluación de riesgos mejoró en un 33% a través de algoritmos de aprendizaje automático.

AI y métricas de análisis	2023 estadísticas
Inversión tecnológica de IA	$ 2.5 millones
Mejora de la precisión de la evaluación de riesgos	33%

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores legales

Cumplimiento de las regulaciones bancarias

A partir del cuarto trimestre de 2023, First Mid Bancshares mantuvo un Relación de capital de nivel de capital 1 (CET1) común de 12.45%, excediendo los requisitos mínimos de Basilea III del 7%. La relación capital basada en el riesgo total del banco se situó en el 14.72%.

Métrico regulatorio	Rendimiento del banco	Requisito regulatorio
Relación de capital CET1	12.45%	7%
Relación de capital basada en el riesgo total	14.72%	10.5%
Relación de cobertura de liquidez	128%	100%

Leyes de protección del consumidor

En 2023, se procesó First Mid Bancshares 3.742 aplicaciones de préstamos para el consumidor, con una auditoría de cumplimiento que revela el 99.8% de adherencia a la Ley de la Verdad en los préstamos (TILA) y las regulaciones de la Ley de Oportunidades de Crédito de Igualdad (ECOA).

Fusiones y marcos legales de adquisición

La adquisición 2023 del banco de First Financial Bancorp se involucró $ 247.3 millones en valor de transacción, navegación de aprobaciones regulatorias complejas de la Reserva Federal y el Departamento de Regulación Financiera y Profesional de Illinois.

Cumplimiento contra el lavado de dinero

First Mid Bancshares invertido $ 3.2 millones en infraestructura de cumplimiento En 2023, manteniendo una tasa de violación de la Ley de secreto bancario (BSA) de 0.02%, significativamente por debajo del promedio de la industria del 0.15%.

Métrico de cumplimiento	Rendimiento del banco	Punto de referencia de la industria
Tasa de violación de BSA	0.02%	0.15%
Inversión de infraestructura de cumplimiento	$ 3.2 millones	N / A
Informes de actividad sospechosos archivados	124	N / A

First Mid Bancshares, Inc. (FMBH) - Análisis de mortero: factores ambientales

Prácticas bancarias sostenibles

First Mid Bancshares reportó $ 48.3 millones invertidos en iniciativas de finanzas sostenibles en 2023. La cartera de préstamos verdes aumentó en un 22.7% año tras año.

Métrica de finanzas sostenibles	Valor 2023	Cambio año tras año
Cartera de préstamos verdes	$ 312.6 millones	+22.7%
Asignación de inversión sostenible	$ 48.3 millones	+15.4%
Inversiones compensadas de carbono	$ 7.2 millones	+9.6%

Evaluación del riesgo climático en préstamos agrícolas

Exposición al riesgo climático de la cartera de préstamos agrícolas: 37.4% de regiones de alto riesgo. Implementó pruebas de estrés climático que cubren el 68.2% de los préstamos agrícolas.

Categoría de riesgo climático	Porcentaje de cartera	Estrategia de mitigación de riesgos
Regiones de alto riesgo climático	37.4%	Protocolos de evaluación de riesgos mejorados
Regiones de riesgo climático moderado	42.6%	Criterios de préstamo adaptativo
Regiones de bajo riesgo climático	20%	Prácticas de préstamo estándar

Iniciativas de eficiencia energética

Reducción del consumo de energía: 16.3% en todas las instalaciones bancarias. Adopción de energía renovable al 24.7% del consumo total de energía.

Métrica de eficiencia energética	2023 rendimiento	Objetivo para 2024
Reducción del consumo de energía	16.3%	20%
Adopción de energía renovable	24.7%	35%
Reducción de emisiones de carbono	12.9%	18%

Cumplimiento ambiental

Cumplimiento de informes ambientales: 100% de adherencia a los requisitos reglamentarios. Puntuación de auditoría ambiental: 9.2/10.

Métrico de cumplimiento	2023 rendimiento	Reglamentario
Cumplimiento de informes regulatorios	100%	Cumplimiento total
Puntuación de auditoría ambiental	9.2/10	Excelente
Violaciones regulatorias	0	Tolerancia cero

First Mid Bancshares, Inc. (FMBH) - PESTLE Analysis: Social factors

The social landscape for First Mid Bancshares, Inc. (FMBH) is defined by a deep community connection, which is a major competitive advantage, but it also creates a structural challenge due to regional demographics and a tight labor market. You must recognize that the aging customer base in the Midwest requires a pivot toward high-touch, comprehensive wealth planning, even as the cost of attracting the talent to deliver it rises.

Strong community focus is a key differentiator against national banks.

First Mid Bancshares is a $7.8 billion community-focused organization, a status it has maintained for over 160 years, which is a powerful social anchor in its operating regions of Illinois, Missouri, Indiana, and others. This local focus translates into a higher level of customer trust, especially in smaller, often rural, markets where personal relationships still drive financial decisions. People still want to bank with someone they know.

This community model is key to FMBH's diversified revenue streams, particularly in its specialized services like Ag Services, which is a critical part of the Midwest's social and economic fabric. The company's ability to grow noninterest income, which accounted for $23.6 million in Q2 2025, is partly a result of this deep-rooted trust that encourages cross-selling of wealth and insurance products.

Aging customer base requires tailored financial planning and digital education.

The demographic trend across FMBH's primary markets highlights a significant and growing segment of older customers. This aging population holds substantial wealth but requires specialized services like estate planning, retirement income strategies, and digital literacy support. The median age in the Midwest region is 39.3 years, higher than the national median.

The core states show a clear concentration of the senior population, creating a necessity for FMBH to adapt its service model.

State (FMBH Market)	% of Population Age 65+ (2025 Estimate)	Total Population Age 65+ (2025 Estimate)
Illinois	17.58%	2,205,830
Indiana	17.22%	1,181,568
U.S. National Average (2024)	18.0%	61.2 million

What this estimate hides is the concentration of this age group in the non-metro, smaller communities where FMBH operates most of its 82 banking centers. This demographic shift means FMBH must invest heavily in both face-to-face advisory capacity and accessible digital tools for those customers who are increasingly adopting online banking for convenience.

Increased demand for personalized, local advisory services.

The broader financial advisory market is booming, and this demand is heavily skewed toward human interaction, which plays right into FMBH's community bank strength. The North American financial advisory market is valued at $63.90 billion in 2025 and is projected to grow significantly. More importantly, the value placed on human advice is quantifiable: almost 80% of affluent households have indicated they would pay a premium of 50 basis points or more for human advice over a customized digital service.

This trend validates FMBH's focus on its wealth management and insurance segments, which generated combined quarterly noninterest revenue of $13.2 million in Q2 2025. The demand is for holistic planning, not just transactions, giving community banks an edge over purely digital competitors.

Talent acquisition and retention is tough in smaller markets.

The need for high-quality, personalized advice runs headlong into a severe industry-wide talent shortage. The financial advisor population is aging rapidly, with 60% of advisors expected to consider retirement within the next three to five years. This looming shortage is projected to reach 100,000 advisors nationwide within a decade.

For FMBH, operating largely in smaller, non-major metro areas, this challenge is acute. Here's the quick math: the U.S. labor market is tight, with the national ratio of unemployed persons per job opening at 0.9 in May 2025. In comparable Midwest markets, the ratio is even tighter (e.g., Wisconsin was 0.7 in May 2025), indicating fewer available workers per open job. This forces FMBH to compete aggressively on compensation and benefits, which is reflected in the projected median U.S. salary budget increase of 3.7% for financial services firms in 2025.

• Retain local talent through stronger employee value propositions.
• Upskill existing staff in digital and AI tools to increase advisor productivity.
• Invest in new recruiting models to attract younger planners to smaller markets.

First Mid Bancshares, Inc. (FMBH) - PESTLE Analysis: Technological factors

You have to be a tech company that offers banking services now. The reality for First Mid Bancshares, Inc. (FMBH), a nearly $8 billion asset community-focused organization, is that technology is no longer just a cost center; it's the new battleground for customer loyalty and operational efficiency. The near-term risks are simple: fall behind on user experience (UX) and security, and you'll lose market share to FinTechs and larger, more digitally mature banks. The only way forward is a heavy, continuous investment cycle.

Heavy investment needed to match FinTech user experience and security.

The core challenge for a regional bank like First Mid Bancshares is closing the digital gap with pure-play FinTechs and large national banks. Customers now expect a seamless, mobile-first experience-anything less drives them to competitors. To address this, First Mid Bank & Trust selected Jack Henry in July 2025 to modernize its core processing platform and technology infrastructure. This shift to a scalable, data-centric platform is crucial for supporting the company's growth and driving operational efficiency across its over 80 branches.

This core system upgrade is a massive undertaking, but it's defintely necessary. It's about providing the open ecosystem and access to over 950 API-integrated, third-party FinTechs that Jack Henry offers, allowing First Mid Bancshares to select the best technology for its needs and differentiate in the marketplace. The goal is to reduce manual tasks and streamline workflows, which is the only way to compete with the sheer speed of digital-native rivals.

Digital transformation costs are projected to rise by 15% in 2025.

The cost of staying competitive is escalating rapidly. Globally, banks are projected to spend $1.5 trillion on digital transformation in 2025, which reflects a 15% year-over-year increase. For First Mid Bancshares, this trend is already visible in their 2025 results. For the first quarter of 2025, the company reported adjusted net income (non-GAAP) of $23.1 million, which excluded non-recurring technology expenses. This adjustment highlights the significant, one-time costs associated with major projects like the retail online system conversion, which the company successfully completed during that same quarter.

Here's the quick math on the industry's focus, which First Mid Bancshares must follow:

Metric	2025 Projection (Industry)	Implication for FMBH
Global Digital Transformation Spend	$1.5 trillion	Indicates the scale of competition and investment needed.
YoY Increase in Digital Spend	15%	The minimum required annual budget increase to keep pace.
Average U.S. Bank Digital Allocation	35% of total budget	First Mid Bancshares should be allocating a similar percentage to remain competitive.
Q1 2025 Adjusted Net Income (FMBH)	$23.1 million (excluding non-recurring tech expense)	Shows the immediate financial impact of major, non-recurring technology costs incurred during the quarter.

AI adoption is key for fraud detection and back-office efficiency.

Artificial Intelligence (AI) is moving beyond a buzzword and becoming a core utility for banks. The AI in the banking market is projected to reach $34.58 billion in 2025. For First Mid Bancshares, AI offers a dual benefit: strengthening the front line against fraud and optimizing the costly back-office operations.

• Fraud Detection: Approximately 90% of financial institutions now use AI-powered tools for fraud detection. AI models analyze transaction patterns in real-time, catching anomalies that rule-based systems miss. This is critical as cybercriminals are increasingly using AI themselves to create sophisticated threats like deep fakes and voice clones, a risk First Mid Bank & Trust acknowledged by hosting a public webinar on 'Cybercrime's AI Evolution' in October 2025.
• Back-Office Efficiency: AI-driven automation of repetitive tasks-like data entry, reconciliation, and compliance checks-is the only path to meaningful cost reduction. The aggregate potential cost savings for banks from AI applications was estimated to reach $447 billion by 2023, with back and middle offices being a major focus. The new Jack Henry core system, which aims to reduce manual tasks and streamline workflows, is the foundation needed to implement these AI efficiencies.

Cybersecurity spending is non-negotiable and constantly escalating.

The rising tide of cybercrime makes cybersecurity an operational expenditure that can never be cut. Worldwide cybersecurity spending is expected to reach $212 billion in 2025, marking a 15.1% increase from 2024. The average cost of a data breach is now a multi-million dollar event, making proactive defense the only rational financial strategy.

For First Mid Bancshares, the threat is real and immediate. In August 2025, the bank issued a public warning about new social engineering scams, noting that while they use a variety of technologies to prevent these scams, customer vigilance is also critical. This highlights the need for a multi-layered approach that includes not just technology, but also continuous employee and customer education. Investing in AI-driven cybersecurity solutions, which are now utilized by 50% of banks in 2025, is essential for predictive threat detection and mitigation.

First Mid Bancshares, Inc. (FMBH) - PESTLE Analysis: Legal factors

Compliance is getting more expensive, not less. For First Mid Bancshares, Inc. (FMBH), the legal landscape in 2025 is defined by navigating complex, high-cost federal regulations while managing the fallout from proposed rules that could still reshape market behavior, even if they don't directly apply to a bank of its size.

Basel III Endgame proposals increase capital requirements for larger regional banks.

The good news is that FMBH is largely insulated from the direct impact of the Basel III Endgame (B3E) capital proposals. The proposed rules target banks with $100 billion or more in total consolidated assets, and FMBH's total assets as of the third quarter of 2025 stood at only about $7.83 billion. This asset size keeps the bank well below the threshold for the most stringent requirements, such as the expanded risk-based approach and the elimination of the Accumulated Other Comprehensive Income (AOCI) opt-out.

Still, you can't ignore the indirect effects. The B3E is expected to increase capital requirements for the largest US banks by an estimated 16% on average. This will inevitably raise the cost of lending for those larger institutions, which could lead them to pull back from certain loan segments, particularly for small businesses or mortgages. This creates a potential market opportunity for regional banks like FMBH, but it also creates a competitive risk if larger banks, in response, try to offload riskier assets or push down pricing in other areas. The regulatory environment is creating a two-tiered banking system.

Stricter consumer protection laws, especially around overdraft fees.

The regulatory pressure on consumer fees remains intense, even with a recent legislative reversal. The Consumer Financial Protection Bureau (CFPB) had finalized a rule in late 2024 that would have capped overdraft fees at a benchmark of $5 or a cost-recouping fee for banks with $10 billion or more in assets. While FMBH is below that $10 billion asset threshold, the market impact would have been significant, forcing smaller banks to conform to the new market standard or risk losing customers to large banks offering the lower fee.

However, Congress and the President ultimately overturned this specific CFPB rule in March/April 2025 using the Congressional Review Act (CRA). This means the immediate regulatory threat of a hard $5 cap is gone for now. But honestly, the political and consumer sentiment against junk fees is defintely not going away. The pushback against the repeal suggests that consumers could lose up to $5 billion a year in potential savings, keeping the issue in the spotlight. FMBH must proactively manage its fee structure to avoid future scrutiny and maintain its community bank image.

Increased compliance costs related to Bank Secrecy Act (BSA) and Anti-Money Laundering (AML).

The cost of keeping up with the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations is a major and increasing drag on all banks, especially regional ones. Global financial institutions spend collectively an estimated $61 billion annually on financial crime compliance. For community banks, the BSA/AML compliance burden is often disproportionately high, with some spending up to 2.4% of their total operating expenses on these programs.

Here's the quick math for FMBH: The company's non-interest expense for the third quarter of 2025 was about $57.15 million. Assuming an annualized non-interest expense of roughly $228.6 million (4 x $57.15M) and applying the 2.4% benchmark for a community bank's BSA/AML spend, FMBH's estimated annual BSA/AML compliance cost could be around $5.49 million. This is a significant, non-revenue-generating expense that eats directly into the bottom line.

The compliance environment is shifting toward mandatory risk assessments and the integration of new technologies like Artificial Intelligence (AI) to make compliance more efficient, but that requires high upfront technology investment.

Potential changes to the Federal Deposit Insurance Corporation (FDIC) insurance limits.

The stability of deposits is a critical legal and systemic factor. The basic FDIC deposit insurance limit remains at $250,000 per depositor, per ownership category. However, the debate following the 2023 bank failures has led to concrete legislative proposals in 2025 to increase coverage for business accounts.

A bipartisan Senate amendment proposed raising the FDIC coverage for noninterest-bearing business transaction accounts to $20 million, specifically for banks under $250 billion in assets. FMBH, with its $7.83 billion in assets, would be eligible for this enhanced coverage, which would be a huge competitive advantage for attracting and retaining large, stable business deposits. This is a clear opportunity for FMBH to grow its deposit base by offering a higher safety net to commercial clients.

The table below summarizes the key legal and regulatory thresholds and FMBH's position as of 2025:

Regulation/Proposal	Applicability Threshold	FMBH's Asset Size (Q3 2025)	Direct Impact on FMBH
Basel III Endgame (B3E)	$100 Billion in Total Assets	~$7.83 Billion	Largely Exempt (Indirect market impact only)
CFPB Overdraft Fee Cap (Overturned)	$10 Billion in Total Assets	~$7.83 Billion	Exempt (Rule was overturned in 2025, but market pressure remains)
FDIC Insurance Limit Proposal (Hagerty-Alsobrooks)	Banks Under $250 Billion in Total Assets	~$7.83 Billion	Eligible for Proposed $20 Million Business Account Coverage (Opportunity)
BSA/AML Compliance Cost	N/A (Applies to all banks)	N/A	Estimated Annual Cost: ~$5.49 Million (2.4% of estimated annual non-interest expense)

The next concrete step is for the Compliance and Strategy teams to model the potential deposit inflow from business clients if the proposed $20 million FDIC coverage passes, and Finance should draft a 13-week cash view by Friday incorporating the estimated $5.49 million annual BSA/AML compliance cost.

First Mid Bancshares, Inc. (FMBH) - PESTLE Analysis: Environmental factors

You're operating in a region where the environment isn't just a compliance checkbox; it's a core driver of credit risk, especially with your deep roots in agriculture. Climate risk is now a credit risk, plain and simple. Your exposure is clear, but so is the opportunity to finance the necessary transition for your customer base.

Growing investor and regulatory pressure for climate-related financial risk disclosures.

While the Securities and Exchange Commission (SEC) abandoned its defense of the comprehensive Climate-Related Risk Disclosure Rule in 2025, don't mistake that for an end to the pressure. The push for transparency has simply shifted from a top-down federal mandate to a bottom-up investor and market expectation. You are a public company, and shareholders want to know how you are managing the physical and transition risks that directly impact your loan book.

Major banks are still dealing with shareholder proposals on climate planning, and that scrutiny will trickle down. For First Mid Bancshares, Inc., with total assets of $7.7 billion as of Q3 2025, your focus needs to be on demonstrating a clear, measurable link between climate-related risk and your Allowance for Credit Losses (ACL). Your ACL stood at $72.9 million at the end of Q3 2025, representing a 1.25% ratio to total loans, and investors will increasingly want to know how climate volatility is factored into that calculation.

Assessing physical climate risk on loan collateral, particularly in agricultural areas.

This is your most immediate environmental risk. Your core market in Illinois, Missouri, and surrounding states is heavily reliant on agriculture, and that collateral is directly exposed to physical climate hazards. The data for 2025 is already showing the strain on your farmer customers.

The financial health of your agricultural borrowers is deteriorating, with a reported surge of 55% in family farm bankruptcies in 2025 compared to the prior year, driven by high input costs, low commodity prices, and weather challenges. The Federal Reserve Bank of Chicago noted that repayment rates for non-real-estate farm loans were much lower in Q1 2025, marking the sixth consecutive quarter of decline. This is a clear signal of increased credit risk tied to environmental volatility.

Here's the quick math on your exposure as of Q3 2025:

Metric (as of 9/30/2025)	Amount (in thousands)	Percentage of Total Loans
Total Loans	$5,820,000	100%
Agricultural Operating Loans	$311,594	5.35%

Beyond the operating loans, a significant portion of your commercial real estate portfolio is farm real estate collateral. Future climate projections for Illinois suggest that heat stress alone is likely to reduce corn yields by 23% to 34% by mid-century. That yield decline translates directly into lower farm income, weaker collateral values, and higher default risk on your loan book.

Limited internal resources dedicated to formal Environmental, Social, and Governance (ESG) reporting.

Honestly, as a regional bank focused on core operations and strategic M&A-like the pending acquisition of Two Rivers Financial Group, Inc. announced in Q3 2025-it's defintely tough to dedicate a large team to formal ESG reporting. Your focus in 2025 has been on operational efficiency, including a core operating system conversion and the closure of 8 full-service branches.

You have an ESG committee and an Energy Management Plan, but without a dedicated, published 2025 ESG report, you risk falling behind peers in communicating your risk management efforts to sophisticated investors. The lack of formal disclosure makes it hard to get credit for the work you are already doing, such as energy-saving initiatives in your facilities. Your next action here is clear: formalize and publish your climate risk governance.

Opportunity to finance green infrastructure and energy transition projects locally.

The biggest opportunity for First Mid Bancshares, Inc. is turning your primary risk-agriculture-into a new revenue stream. You are already the largest farm manager in Illinois, and you are expanding that capability with the Q3 2025 acquisition of Ray Farm Management Services, Inc. This positions you perfectly to fund the agricultural transition.

The need for green finance in your region is enormous. For example, large-scale adoption of natural climate solutions like cover crops and improved cropland nutrient management in Illinois could mitigate nearly 10 million metric tons of $\text{CO}_2\text{e}$ per year. This is a huge market for specialized loans that support climate-resilient farming practices, such as:

• Financing for precision agriculture technology.
• Loans for installing field tile and other water management infrastructure.
• Incentive-based financing for regenerative agriculture adoption.
• Funding for on-farm solar and energy-efficient equipment.

Your Ag Services team should be the owner of a new product line focused on climate-smart lending, using the financial risk data you already have to price these loans favorably for resilient borrowers. This is how you mitigate risk and grow revenue simultaneously.