Primeiro Mid Bancshares, Inc. (FmbH): Análise de Pestle [Jan-2025 Atualizado]

No cenário dinâmico do setor bancário regional, o primeiro Mid Bancshares, Inc. (FMBH) navega em uma complexa rede de desafios e oportunidades estratégicas entre domínios políticos, econômicos, sociológicos, tecnológicos, legais e ambientais. Essa análise abrangente de pestles revela os fatores complexos que moldam o ecossistema operacional do banco, revelando como uma instituição financeira focada na comunidade se adapta às pressões externas multifacetadas, mantendo sua vantagem competitiva no mercado bancário do Centro-Oeste. Da conformidade regulatória à inovação tecnológica, a resiliência estratégica da FMBH surge como uma narrativa crítica para entender a dinâmica bancária regional moderna.

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores Políticos

Regulamentos bancários regionais em Illinois e Estados do Centro -Oeste

Os regulamentos bancários de Illinois a partir de 2024 exigem:

• Índice de adequação de capital mínima de 10,5%
• Relatórios regulatórios trimestrais ao Departamento de Regulamento Financeiro e Profissional de Illinois
• Conformidade com as diretrizes de reinvestimento da comunidade específicas do estado

Estado	Custo de conformidade regulatória	Requisitos de relatórios anuais
Illinois	$475,000	4 relatórios abrangentes
Missouri	$389,000	4 relatórios abrangentes
Iowa	$342,000	4 relatórios abrangentes

Políticas monetárias do Federal Reserve

Parâmetros de política monetária do Federal Reserve para 2024:

• Taxa de fundos federais: 5,25% - 5,50%
• Requisito de reserva de capital: 10,5%
• Taxa de cobertura de liquidez: 100%

Supervisão bancária e legislação bancária comunitária

Custos da estrutura de conformidade para FMBH em 2024:

Área de conformidade	Despesas anuais
Consulta Legal Regulatória	US $ 1,2 milhão
Tecnologia de conformidade	$875,000
Treinamento da equipe	$450,000

Estabilidade política nos estados do meio -oeste

Indicadores de estabilidade política para os principais estados operacionais da FMBH:

• Índice de Risco Político de Illinois: 3.2/10
• Índice de Risco Político do Missouri: 2.9/10
• Índice de Risco Político de Iowa: 2.7/10

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores Econômicos

As flutuações das taxas de juros impactam no portfólio de empréstimos e investimentos

A partir do quarto trimestre 2023, a margem de juros líquidos da FMBH era de 3,47%. O intervalo de juros de referência do Federal Reserve foi de 5,25% a 5,50% em dezembro de 2023. A carteira total de empréstimos do banco foi de US $ 6,87 bilhões, com títulos de investimento avaliados em US $ 1,42 bilhão.

Métrica financeira	Valor	Ano
Margem de juros líquidos	3.47%	2023
Portfólio total de empréstimos	US $ 6,87 bilhões	2023
Títulos de investimento	US $ 1,42 bilhão	2023

Saúde Econômica Regional em Illinois e Missouri

O PIB de Illinois foi de US $ 1,027 trilhão em 2022. O PIB do Missouri foi de US $ 364,7 bilhões no mesmo período. As taxas de desemprego foram de 4,5% para Illinois e 3,2% para o Missouri em dezembro de 2023.

Estado	PIB	Taxa de desemprego
Illinois	US $ 1,027 trilhão	4.5%
Missouri	US $ 364,7 bilhões	3.2%

Tendências econômicas agrícolas e de pequenas empresas

Os recibos de caixa agrícola de Illinois totalizaram US $ 19,4 bilhões em 2022. As receitas agrícolas do Missouri foram de US $ 8,9 bilhões. Os empréstimos para pequenas empresas da FMBH em 2023 atingiram US $ 1,13 bilhão.

Indicador econômico	Illinois	Missouri
Recebimentos de caixa agrícolas	US $ 19,4 bilhões	US $ 8,9 bilhões
FMBH empréstimos para pequenas empresas	US $ 1,13 bilhão	N / D

Risco potencial de crédito econômico

Os empréstimos sem desempenho da FMBH foram de US $ 87,2 milhões no quarto trimestre de 2023, representando 1,27% do total de empréstimos. As provisões de perda de empréstimos foram de US $ 22,5 milhões no mesmo período.

Métrica de risco de crédito	Valor	Percentagem
Empréstimos não-desempenho	US $ 87,2 milhões	1.27%
Disposições de perda de empréstimos	US $ 22,5 milhões	N / D

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores sociais

Mudanças demográficas nas comunidades rurais e suburbanas do Centro -Oeste

De acordo com os dados do US Census Bureau de 2022, a população rural de Illinois diminuiu 0,3%, enquanto as áreas suburbanas sofreram um crescimento populacional de 1,2%. As regiões principais do mercado do primeiro Bancshares mostram tendências demográficas específicas:

Região	Mudança de população	Idade mediana	Renda familiar
Central Illinois	-0.2%	42,3 anos	$58,600
Southern Illinois	-0.5%	44,1 anos	$52,300

Preferências bancárias digitais

Taxas de adoção bancária digital Para o primeiro Mid Bancshares, a Demographics do Bancshares:

• 18-34 faixa etária: 87% usam bancos móveis
• 35-54 faixa etária: 65% usam bancos móveis
• 55+ faixa etária: 42% usam bancos móveis

Modelo bancário focado na comunidade

O impacto econômico local de Mid Mid Bancshares em 2023:

Métrica	Valor
Empréstimos para pequenas empresas emitidas	US $ 124,3 milhões
Investimentos da comunidade local	US $ 8,7 milhões
Empregos locais suportados	1,236

Projeto de produto financeiro da população envelhecido

Redução demográfica da base de clientes do First Bancshares em 2023:

Faixa etária	Porcentagem de clientes	Serviços bancários preferidos
55-64 anos	28%	Planejamento de aposentadoria, investimentos de renda fixa
65-74 anos	22%	Planejamento imobiliário, produtos financeiros de baixo risco
75 anos ou mais	12%	Preservação de riqueza, Serviços de confiança

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores tecnológicos

Investimentos da plataforma bancária digital

O primeiro Bancshares Mid investiu US $ 3,2 milhões em infraestrutura bancária digital em 2023. A plataforma digital do banco processou 2,4 milhões de transações on -line no ano fiscal, representando um aumento de 28% em relação ao ano anterior.

Métricas de investimento digital	2023 dados
Investimento total da plataforma digital	US $ 3,2 milhões
Transações on -line processadas	2,4 milhões
Crescimento de transações ano a ano	28%

Infraestrutura de segurança cibernética

Os gastos com segurança cibernética atingiram US $ 1,7 milhão em 2023. O banco implementou sistemas avançados de detecção de ameaças com taxa de prevenção de intrusões de 99,8%.

Métricas de segurança cibernética	2023 Estatísticas
Investimento de segurança cibernética	US $ 1,7 milhão
Taxa de prevenção de intrusões	99.8%

Tecnologias bancárias móveis e online

Os usuários bancários móveis aumentaram para 87.500 em 2023, representando 42% da base total de clientes. O engajamento bancário on -line mostrou um crescimento de 35% em usuários ativos.

Métricas bancárias móveis/online	2023 dados
Total de usuários bancários móveis	87,500
Porcentagem de base de clientes	42%
Crescimento do usuário bancário online	35%

Inteligência artificial e análise de dados

O banco alocou US $ 2,5 milhões para tecnologias de IA e análise de dados. A precisão da avaliação de risco melhorou 33% através de algoritmos de aprendizado de máquina.

Métricas de IA e análise	2023 Estatísticas
Investimento em tecnologia da IA	US $ 2,5 milhões
Avaliação de risco Melhoria da precisão	33%

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores Legais

Conformidade com os regulamentos bancários

A partir do quarto trimestre 2023, o primeiro meio de Bancshares manteve um TIER de patrimônio líquido 1 (CET1) Comum de 12,45%, Excedendo os requisitos mínimos de Basileia III de 7%. A taxa total de capital baseada em risco do banco era de 14,72%.

Métrica regulatória	Desempenho do banco	Requisito regulatório
Índice de capital CET1	12.45%	7%
Índice total de capital baseado em risco	14.72%	10.5%
Índice de cobertura de liquidez	128%	100%

Leis de proteção ao consumidor

Em 2023, o primeiro médio de Bancshares processou 3.742 Aplicações de empréstimos ao consumidor, com uma auditoria de conformidade revelando 99,8% de adesão à Lei da Verdade em Empréstimos (TILA) e regulamentos da Lei de Oportunidades de Crédito Igual (ECOA).

Fusões e estruturas legais de aquisição

A aquisição de 2023 do Banco do First Financial Bancorp envolveu US $ 247,3 milhões em valor de transação, Navegando aprovações regulatórias complexas do Federal Reserve e do Departamento de Regulamentação Financeira e Profissional de Illinois.

Conformidade de lavagem de dinheiro

Primeiro Mid Bancshares investiu US $ 3,2 milhões em infraestrutura de conformidade Em 2023, a manutenção da taxa de violação da Lei de Sigilo Banco (BSA) de 0,02%, significativamente abaixo da média da indústria de 0,15%.

Métrica de conformidade	Desempenho do banco	Referência da indústria
Taxa de violação da BSA	0.02%	0.15%
Investimento de infraestrutura de conformidade	US $ 3,2 milhões	N / D
Relatórios de atividades suspeitas arquivadas	124	N / D

Primeiro Mid Bancshares, Inc. (FmbH) - Análise de Pestle: Fatores Ambientais

Práticas bancárias sustentáveis

O First Mid Bancshares registrou US $ 48,3 milhões investidos em iniciativas de financiamento sustentável em 2023. O portfólio de empréstimos verdes aumentou 22,7% ano a ano.

Métrica financeira sustentável	2023 valor	Mudança de ano a ano
Portfólio de empréstimos verdes	US $ 312,6 milhões	+22.7%
Alocação de investimento sustentável	US $ 48,3 milhões	+15.4%
Investimentos de compensação de carbono	US $ 7,2 milhões	+9.6%

Avaliação de risco climático em empréstimos agrícolas

Portfólio de empréstimos agrícolas Exposição ao risco de clima: 37,4% de regiões de alto risco. Implementou testes de estresse climático, cobrindo 68,2% dos empréstimos agrícolas.

Categoria de risco climático	Porcentagem de portfólio	Estratégia de mitigação de risco
Regiões de alto risco climático	37.4%	Protocolos de avaliação de risco aprimorados
Regiões moderadas de risco climático	42.6%	Critérios de empréstimos adaptativos
Regiões de risco climático baixo	20%	Práticas de empréstimos padrão

Iniciativas de eficiência energética

Redução do consumo de energia: 16,3% nas instalações bancárias. Adoção de energia renovável em 24,7% do consumo total de energia.

Métrica de eficiência energética	2023 desempenho	Alvo para 2024
Redução do consumo de energia	16.3%	20%
Adoção de energia renovável	24.7%	35%
Redução de emissões de carbono	12.9%	18%

Conformidade ambiental

Conformidade de relatórios ambientais: 100% de adesão aos requisitos regulatórios. Pontuação de auditoria ambiental: 9.2/10.

Métrica de conformidade	2023 desempenho	Padrão regulatório
Conformidade com relatórios regulatórios	100%	Conformidade total
Pontuação de auditoria ambiental	9.2/10	Excelente
Violações regulatórias	0	Tolerância zero

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.