3/8/25

First Mid Bancshares, Inc. (FMBH) is a well-established regional bank headquartered in Illinois with a strong presence across community banking, wealth management, and insurance. With over 150 years of history, the company has expanded its operations steadily, mainly through acquisitions, strengthening its financial foundation and market reach.

For investors who prioritize dividends, FMBH offers a reliable income stream supported by a well-capitalized balance sheet and consistent profitability. The question is—does it have what it takes to be a long-term holding in a dividend-focused portfolio? Let’s take a closer look.

Key Dividend Metrics

📌 Dividend Yield: 2.63% (forward)
📌 Annual Dividend: $0.96 per share
📌 5-Year Average Dividend Yield: 2.71%
📌 Payout Ratio: 28.48% (leaves plenty of room for growth)
📌 Dividend Growth Streak: Steady and reliable over time
📌 Ex-Dividend Date: February 13, 2025
📌 Last Dividend Paid: February 28, 2025

Dividend Overview

FMBH offers a dividend yield of 2.63%, which may not be the highest in the financial sector, but it’s in line with its historical range. Looking at the five-year average yield of 2.71%, the current yield suggests that the stock price has risen relative to past payouts.

What stands out is the company’s commitment to increasing its dividend over time. The forward annual dividend of $0.96 per share marks an increase from the previous year’s $0.94, reflecting consistent, measured growth. With a payout ratio of just 28.48%, there’s still plenty of room for future increases without straining the company’s finances.

Dividend Growth and Safety

Investors looking for sustainable dividends should focus on both growth and safety, and FMBH checks both boxes.

Dividend Growth

FMBH has a solid track record of dividend growth. It may not be the fastest-growing dividend stock out there, but it has shown steady, gradual increases. This signals a management team that prioritizes shareholder returns while maintaining financial discipline.

Dividend Safety

A safe dividend comes down to earnings coverage and cash flow strength. FMBH’s payout ratio of 28.48% is well below concerning levels, meaning the company isn’t stretching itself to pay dividends.

Other indicators of dividend safety include:

• Earnings per share (EPS) of $3.30 over the trailing twelve months, which more than covers the dividend.
• Strong operating cash flow of $124.42 million, ensuring that dividend payments are well-funded.
• A history of consistent and responsible dividend increases, avoiding the risk of cuts during economic downturns.

With these factors in place, FMBH’s dividend appears well-supported and positioned for continued growth.

 

Chart Analysis

Price Movement and Trend

The price of First Mid Bancshares (FMBH) has been on a rollercoaster over the past year. It saw a strong rally starting around mid-year, pushing past previous resistance levels and peaking above $42.50. However, that momentum started fading towards the end of the year, leading to a gradual decline.

Currently, the stock is trading at $36.53, which is slightly below both the 50-day moving average (blue line) and sitting right around the 200-day moving average (purple line). This is a key level to watch because the 200-day moving average often acts as long-term support or resistance.

The recent pullback has brought the stock back to levels seen earlier in the year, which could indicate either a healthy consolidation or the beginning of a more extended downtrend.

Moving Averages and Technical Signals

One of the more notable aspects of this chart is the behavior of the moving averages. The 50-day moving average is sloping downward, showing that short-term momentum has weakened. Meanwhile, the 200-day moving average is still trending upward but flattening out, meaning that the long-term uptrend is losing steam.

The price recently tested the 50-day moving average but failed to hold above it, suggesting that short-term traders may still be selling into strength. If the price starts dipping below the 200-day moving average and stays there, it could signal further downside pressure.

Volume and Market Participation

Volume spikes often tell a story about investor sentiment. Looking at the volume bars, there were a couple of major spikes, particularly in July and October, which likely corresponded to significant buying and selling events. More recently, volume has been relatively steady but not particularly strong, meaning there isn’t a huge push from either buyers or sellers at this moment.

Lower volume during a price decline can sometimes indicate that sellers are running out of steam. However, it can also mean that there isn’t enough enthusiasm from buyers to reverse the trend. If volume starts picking up again near these key moving averages, it could provide a better sense of where the stock is headed next.

Relative Strength Index (RSI) and Momentum

The RSI at the bottom of the chart shows a gradual decline, currently sitting in the lower range. It hasn’t yet reached extreme oversold territory (below 30), but it is trending in that direction. This suggests that momentum is still weak, and the stock could see further selling pressure before finding a solid support level.

A bounce from RSI levels near 30 would be a potential reversal signal, but if it continues trending lower, it could indicate that more downside is ahead.

Recent Candle Action and Buying Pressure

Looking at the last few candles, the stock has been struggling to hold above the $37 range, with wicks forming on the top side of the candles. This shows that sellers are stepping in on any short-term strength, preventing a sustained move higher.

The most recent candle has a relatively small body with a slightly longer lower wick, which suggests some buying interest at the lows. However, without stronger follow-through, this could just be a temporary pause before another leg down.

Key Levels to Watch

• Support at $35.50 – $36.00: This is a zone where the price could find a short-term bottom, as it has previously seen buying interest here.
• Resistance around $37.50 – $38.00: The stock has struggled to stay above this level recently, so it will need to break through with strong volume to regain bullish momentum.
• 200-day moving average at $36.50: If the stock starts closing consistently below this level, it could be a sign that longer-term investors are losing confidence.

 

Analyst Ratings

In recent months, First Mid Bancshares (FMBH) has received a mix of analyst upgrades and downgrades, reflecting different perspectives on the company’s performance and future outlook.

📈 Upgrades:

• 🎯 Stephens Inc. upgraded FMBH from “Equal-Weight” to “Overweight.” The firm pointed to the company’s strong financial performance and strategic acquisitions, which they believe will drive long-term earnings growth.

📉 Downgrades:

• ⚖️ DA Davidson lowered its rating from “Buy” to “Neutral.” While they raised their price target, the downgrade was based on concerns about potential loan growth challenges and increasing competition in the banking sector.
• ⚠️ Keefe, Bruyette & Woods moved FMBH to “Market Perform,” citing cautious sentiment around regional economic conditions and their possible impact on the bank’s asset quality.

🎯 Consensus Price Target:

The average 12-month price target for FMBH is around $45.43, reflecting a mix of optimism about its financial stability and caution over macroeconomic factors that could affect growth.

Earnings Report Summary

First Mid Bancshares wrapped up the fourth quarter of 2024 on a solid note, posting a net income of $19.2 million, which translates to earnings per share of $0.80. After adjusting for one-time items, that number edged up to $20.9 million, or $0.87 per share. The results reflect a steady financial performance, even with some economic uncertainties in play.

One of the highlights of the quarter was the improvement in net interest income, which ticked up by $1.4 million compared to the previous quarter. That helped push the net interest margin to 3.41%, giving the company a little more breathing room on the profitability side.

On the lending front, total loans grew to $5.67 billion, a slight but meaningful increase of 1% over the prior quarter. Deposits, however, dipped slightly, ending at $6.06 billion. While the decline in deposits isn’t ideal, it’s not uncommon in a higher-rate environment where customers explore alternatives for better returns on their cash.

Outside of traditional banking, the company’s wealth management and insurance divisions had a strong showing. Revenue from these segments climbed more than 11%, helping to diversify earnings beyond interest-related income.

Asset quality remained stable, with credit losses holding steady at 1.24%. That’s an encouraging sign, especially given the uncertainty surrounding regional banks in the current economy.

For income-focused investors, the dividend remains intact. The board declared a regular quarterly payout of $0.24 per share, signaling confidence in the company’s ability to generate consistent cash flow.

All in all, the quarter showed steady progress, with growing loan balances, improved margins, and a well-supported dividend. There are still some challenges ahead, particularly with deposit trends, but First Mid Bancshares appears to be managing the environment well.

Financial Health and Stability

A dividend is only as strong as the company behind it. Looking at FMBH’s financials, there are plenty of reasons for confidence.

Profitability and Efficiency

• Profit margin of 24.7%, showing strong earnings power
• Operating margin of 36.48%, a sign of solid cost control
• Return on equity (ROE) of 9.62%, indicating effective use of shareholder capital
• Return on assets (ROA) of 1.04%, which is typical for a regional bank

These numbers suggest that FMBH is running efficiently and generating consistent profits, which is crucial for sustaining dividends.

Balance Sheet Strength

• Total cash holdings of $127.67 million, providing liquidity
• Total debt of $577.54 million, a reasonable level for a financial institution
• Book value per share of $35.42, close to the stock’s current trading price

While debt is always a factor to watch, banks operate differently than other industries. FMBH’s financial position looks stable, with enough cash flow to support operations and shareholder returns.

Valuation and Stock Performance

At $36.53 per share, FMBH trades at a price-to-earnings (P/E) ratio of 11.07 based on trailing earnings and 10.59 on a forward basis. These valuations are reasonable for a regional bank with steady profitability.

Looking at other valuation metrics:

• The price-to-book ratio of 1.04 suggests the stock is fairly valued relative to its net assets.
• The price-to-sales ratio of 2.74 indicates a reasonable valuation compared to revenue.

FMBH’s stock has traded between $28.86 and $43.86 over the past year, with both the 50-day and 200-day moving averages hovering around $37.44. This suggests the stock is trading slightly below its recent trend.

With a beta of 0.87, FMBH is less volatile than the broader market, making it an attractive option for investors who prefer stability.

Risks and Considerations

No investment comes without risks, and regional banks face a unique set of challenges. Here are a few factors dividend investors should keep in mind.

Interest Rate Sensitivity

As a bank, FMBH’s profitability is closely tied to interest rates. If the Federal Reserve lowers rates, it could compress net interest margins, reducing earnings and potentially slowing dividend growth.

Regional Economic Conditions

Unlike national banks, regional banks are more exposed to the economies of the areas they operate in. If the Midwest experiences economic difficulties, it could impact loan demand, credit quality, and overall profitability.

Competition and Industry Pressures

The banking industry is becoming increasingly competitive, not just from other regional banks but also from large national institutions and fintech disruptors. FMBH needs to stay competitive in terms of technology, customer experience, and service offerings.

Loan and Deposit Growth

Sustained earnings growth depends on the ability to attract new deposits and issue quality loans. Any signs of slowing deposit growth or increasing loan defaults would be red flags for investors.

Final Thoughts

First Mid Bancshares offers a well-balanced mix of income, stability, and steady growth, making it a solid choice for dividend investors who prefer a regional bank with a proven track record. While the dividend yield isn’t sky-high, its reliability, low payout ratio, and room for growth make it an appealing option for those looking for consistent income.

With strong profitability, a solid balance sheet, and a reasonable valuation, FMBH appears well-positioned for continued success. However, investors should keep an eye on interest rates, regional economic conditions, and competition in the banking sector.

For those seeking a steady dividend payer with a history of responsible growth, FMBH presents a compelling case.