☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

As of ~~August~~November 8, 2022, ~~20,454,903~~20,463,261 common shares, $4.00 par value, were outstanding.

(In thousands, except share data)	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Assets
Cash and due from banks:
Non-interest bearing	$	116,335		$	90,907		$	141,130		$	90,907
Interest bearing		14,354			76,335			12,429			76,335
Federal funds sold		6,855			1,360			7,395			1,360
Cash and cash equivalents		137,544			168,602			160,954			168,602
Certificates of deposit		1,715			2,450			1,470			2,450
Investment securities:
Available-for-sale, at fair value		1,349,948			1,421,422			1,230,788			1,421,422
Held-to-maturity, at amortized cost (estimated fair value of $2,972 and $7,035 at June 30, 2022 and December 31, 2021, respectively)		2,972			7,030
Held-to-maturity, at amortized cost (estimated fair value of $2,930 and $7,035 at September 30, 2022 and December 31, 2021, respectively)								2,930			7,030
Equity securities, at fair value		308			397			317			397
Loans held for sale		1,286			2,748			467			2,748
Loans		4,647,377			3,992,775			4,719,823			3,992,775
Less allowance for credit losses		(59,075	)		(54,655	)		(58,777	)		(54,655	)
Net loans		4,588,302			3,938,120			4,661,046			3,938,120
Interest receivable		23,323			19,868			25,975			19,868
Other real estate owned		4,209			4,984			4,322			4,984
Premises and equipment, net		90,766			81,484			90,659			81,484
Goodwill		140,465			111,853			140,094			111,853
Intangible assets, net		32,406			29,523			30,803			29,523
Bank owned life insurance		149,917			132,375			150,831			132,375
Right of use lease assets		15,649			15,116			15,194			15,116
Other assets		122,112			50,610			135,533			50,610
Total assets	$	6,660,922		$	5,986,582		$	6,651,383		$	5,986,582
Liabilities and stockholders’ equity
Deposits:
Non-interest bearing	$	1,369,756		$	1,246,673		$	1,334,686		$	1,246,673
Interest bearing		3,949,222			3,709,813			4,148,512			3,709,813
Total deposits		5,318,978			4,956,486			5,483,198			4,956,486
Securities sold under agreements to repurchase		174,934			146,268			220,707			146,268
Interest payable		1,662			1,346			3,007			1,346
FHLB borrowings		376,286			86,446			176,232			86,446
Other borrowings		10,000			—			5,000			—
Junior subordinated debentures, net		19,279			19,195			19,322			19,195
Subordinated debt, net		94,476			94,400			94,515			94,400
Lease liabilities		15,884			15,322			15,425			15,322
Other liabilities		23,155			33,225			33,262			33,225
Total liabilities		6,034,654			5,352,688			6,050,668			5,352,688
Stockholders’ equity:
Common stock ($4 par value; authorized 30,000,000 shares; issued 21,077,504 and 18,708,746 shares in 2022 and 2021, respectively; outstanding 20,448,799 and 18,080,303 shares in 2022 and 2021, respectively)		86,310			76,835
Common stock ($4 par value; authorized 30,000,000 shares; issued 21,083,341 and 18,708,746 shares in 2022 and 2021, respectively; outstanding 20,454,636 and 18,080,303 shares in 2022 and 2021, respectively)								86,334			76,835
Additional paid-in capital		426,562			340,419			426,767			340,419
Retained earnings		260,080			234,162			273,335			234,162
Deferred compensation		974			2,517			1,518			2,517
Accumulated other comprehensive loss		(128,240	)		(831	)		(167,663	)		(831	)
Less treasury stock, at cost (628,705 shares in 2022 and 628,443 shares in 2021)		(19,418	)		(19,208	)		(19,576	)		(19,208	)
Total stockholders’ equity		626,268			633,894			600,715			633,894
Total liabilities and stockholders’ equity	$	6,660,922		$	5,986,582		$	6,651,383		$	5,986,582

See accompanying notes to unaudited condensed consolidated financial statements.

	Three months ended June 30,					Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
(In thousands, except per share data)	2022		2021			2022		2021		2022		2021		2022		2021
Interest income:
Interest and fees on loans	$	43,555	$	40,795		$	83,463	$	76,681	$	49,278	$	43,292	$	132,741	$	119,973
Interest on investment securities		7,623		5,739			14,793		10,581		7,302		5,835		22,095		16,416
Interest on certificates of deposit investments		9		14			21		28		8		14		29		42
Interest on federal funds sold		7		—			7		—		38		—		45		—
Interest on deposits with other financial institutions		89		87			144		161		128		122		272		283
Total interest income		51,283		46,635			98,428		87,451		56,754		49,263		155,182		136,714
Interest expense:
Interest on deposits		2,523		2,262			4,671		4,746		4,915		2,234		9,586		6,980
Interest on securities sold under agreements to repurchase		137		57			204		127		428		52		632		179
Interest on FHLB borrowings		640		445			916		819		1,926		359		2,842		1,178
Interest on other borrowings		5		—			5		—		1		—		6		—
Interest on junior subordinated debentures		166		139			312		279		241		137		553		416
Interest on subordinated debentures		986		985			1,972		1,969		986		985		2,958		2,954
Total interest expense		4,457		3,888			8,080		7,940		8,497		3,767		16,577		11,707
Net interest income		46,826		42,747			90,348		79,511		48,257		45,496		138,605		125,007
Provision for credit losses		907		(560	)		3,859		11,576		142		1,103		4,001		12,679
Net interest income after provision for credit losses		45,919		43,307			86,489		67,935		48,115		44,393		134,604		112,328
Other income:
Wealth management revenues		5,473		5,016			11,448		9,942		4,843		4,204		16,291		14,146
Insurance commissions		5,641		4,988			12,745		10,845		4,158		3,932		16,903		14,777
Service charges		2,236		1,539			4,292		2,903		2,445		1,838		6,737		4,741
Securities gains, net		2		73			2		77		79		11		81		88
Mortgage banking revenue, net		289		1,691			770		3,100		355		1,477		1,125		4,577
ATM / debit card revenue		3,214		3,141			6,112		5,840		3,101		3,060		9,213		8,900
Bank owned life insurance		877		761			1,721		1,398		913		813		2,634		2,211
Other		827		1,075			2,594		1,928		897		1,024		3,491		2,952
Total other income		18,559		18,284			39,684		36,033		16,791		16,359		56,475		52,392
Other expense:
Salaries and employee benefits		25,768		24,908			50,107		48,395		24,877		21,092		74,984		69,487
Net occupancy and equipment expense		6,073		5,482			12,228		10,452		5,903		5,382		18,131		15,834
Net other real estate owned expense		218		1,966			185		2,044		58		1,507		243		3,551
FDIC insurance		436		478			862		930		479		268		1,341		1,198
Amortization of intangible assets		1,633		1,295			3,155		2,515		1,598		1,414		4,753		3,929
Stationery and supplies		325		235			636		551		361		299		997		850
Legal and professional		1,885		1,639			3,619		3,041		1,770		1,878		5,389		4,919
ATM / debit card		670		1,074			1,748		1,912		1,243		618		2,991		2,530
Marketing and donations		706		507			1,579		1,009		739		679		2,318		1,688
Other		3,801		8,429			7,821		12,764		4,521		3,184		12,342		15,948
Total other expense		41,515		46,013			81,940		83,613		41,549		36,321		123,489		119,934
Income before income taxes		22,963		15,578			44,233		20,355		23,357		24,431		67,590		44,786
Income taxes		5,205		3,357			9,859		4,025		5,418		6,105		15,277		10,130
Net income	$	17,758	$	12,221		$	34,374	$	16,330	$	17,939	$	18,326	$	52,313	$	34,656
Per share data:
Basic net income per common share	$	0.87	$	0.68		$	1.73	$	0.92	$	0.88	$	1.01	$	2.61	$	1.94
Diluted net income per common share		0.86		0.68			1.72		0.92		0.88		1.01		2.60		1.94
Cash dividends declared per common share		0.220		0.205			0.440		0.410		0.230		0.220		0.670		0.630

See accompanying notes to unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss) (unaudited)

	Three months ended June 30,						Six months ended June 30,						Three months ended September 30,						Nine months ended September 30,
(In thousands)	2022			2021			2022			2021			2022			2021			2022			2021
Net income	$	17,758		$	12,221		$	34,374		$	16,330		$	17,939		$	18,326		$	52,313		$	34,656
Other comprehensive income/(loss)
Unrealized gains (losses) on available-for-sale securities, net of taxes of $22,142 and $(1,529) for three months ended June 30, 2022 and 2021, respectively and $52,040 and $3,374 for six months ended June 30, 2022 and 2021, respectively		(54,211	)		3,746			(127,408	)		(8,259	)
Less: reclassification adjustment for realized gains (losses) included in net income, net of taxes of $1 and $21 for three months ended June 30, 2022 and 2021, respectively and $1 and $22 for six months ended June 30, 2022 and 2021, respectively		(1	)		(52	)		(1	)		(55	)
Other comprehensive income/(loss), net of taxes		(54,212	)		3,694			(127,409	)		(8,314	)
Unrealized gains (losses) on available-for-sale securities, net of taxes of $16,079 and $1,282 for three months ended September 30, 2022 and 2021, respectively and $68,119 and $4,655 for nine months ended September 30, 2022 and 2021, respectively														(39,367	)		(3,140	)		(166,775	)		(11,400	)
Less: reclassification adjustment for realized gains (losses) included in net income, net of taxes of $23 and $3 for three months ended September 30, 2022 and 2021, respectively and $24 and $26 for nine months ended September 30, 2022 and 2021, respectively														(56	)		(8	)		(57	)		(62	)
Other comprehensive loss, net of taxes														(39,423	)		(3,148	)		(166,832	)		(11,462	)
Comprehensive income/(loss)	$	(36,454	)	$	15,915		$	(93,035	)	$	8,016		$	(21,484	)	$	15,178		$	(114,519	)	$	23,194

See accompanying notes to unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(In thousands)	Common Stock		Additional Paid-In- Capital		Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total			Common Stock			Additional Paid-In- Capital			Retained Earnings			Deferred Compensation		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
March 31, 2022	$	86,264	$	426,148	$	246,805		$	468		$	(74,028	)	$	(19,272	)	$	666,385
June 30, 2022																				$	86,310		$	426,562		$	260,080		$	974	$	(128,240	)	$	(19,418	)	$	626,268
Net income																					—			—			17,939			—		—			—			17,939
Other comprehensive loss, net tax																					—			—			—			—		(39,423	)		—			(39,423	)
Cash dividends on common stock (.230/share)																					—			—			(4,684	)		—		—			—			(4,684	)
Forfeiture of 267 restricted shares pursuant to the 2017 stock incentive plan																					(1	)		(8	)		—			—		—			—			(9	)
Issuance of 6,104 common shares pursuant to the employee stock purchase plan																					25			160			—			—		—			—			185
Deferred compensation																					—			—			—			166		—			(158	)		8
Vested restricted shares/units compensation expense																					—			53			—			378		—			—			431
September 30, 2022																				$	86,334		$	426,767		$	273,335		$	1,518	$	(167,663	)	$	(19,576	)	$	600,715

June 30, 2021																				$	76,797		$	340,452		$	206,934		$	1,742	$	8,781		$	(18,640	)	$	616,066
Net income		—		—		17,758			—			—			—			17,758			—			—			18,326			—		—			—			18,326
Other comprehensive loss, net tax		—		—		—			—			(54,212	)		—			(54,212	)		—			—			—			—		(3,148	)		—			(3,148	)
Cash dividends on common stock (.220/share)		—		—		(4,483	)		—			—			—			(4,483	)		—			—			(3,965	)		—		—			—			(3,965	)
Issuance of 6,439 common shares pursuant to the deferred compensation plan		26		224		—			—			—			—			250
Issuance of 5,177 common shares pursuant to the employee stock purchase plan		20		149		—			—			—			—			169
Deferred compensation		—		—		—			146			—			(146	)		—
Vested restricted shares/units compensation expense		—		41		—			360			—			—			401
June 30, 2022	$	86,310	$	426,562	$	260,080		$	974		$	(128,240	)	$	(19,418	)	$	626,268

March 31, 2021	$	76,652	$	338,897	$	198,408		$	1,597		$	5,087		$	(18,757	)	$	601,884
Net income		—		—		12,221			—			—			—			12,221
Other comprehensive income, net tax		—		—		—			—			3,694			—			3,694
Cash dividends on common stock (.205/share)		—		—		(3,695	)		—			—			—			(3,695	)
Issuance of 3,719 common shares pursuant to the dividend reinvestment plan		15		146		—			—			—			—			161
Issuance of 4,902 common shares pursuant to the deferred compensation plan		20		151		—			—			—			—			171
Issuance of 25,000 common shares pursuant to the acquisition of BBM & Associates, Inc., net proceeds		100		1,009		—			—			—			—			1,109
Issuance of 2,597 common shares pursuant to the employee stock purchase plan		10		73		—			—			—			—			83
Issuance of 1 common shares pursuant to the dividend reinvestment plan																					—			1			—			—		—			—			1
Issuance of 1,952 common shares pursuant to the deferred compensation plan																					7			71			—			—		—			—			78
Issuance costs pursuant to the acquisition of Delta Bancshares Company																					—			(144	)		—			—		—			—			(144	)
Issuance of 2,700 common shares pursuant to the employee stock purchase plan																					11			93			—			—		—			—			104
Deferred compensation		—		—		—			(117	)		—			117			—			—			—			—			121		—			(121	)		—
Tax benefit related to deferred compensation distributions		—		176		—			—			—			—			176			—			(355	)		—			—		—			—			(355	)
Vested restricted shares/units compensation expense		—		—		—			262			—			—			262			—			—			—			262		—			—			262
June 30, 2021	$	76,797	$	340,452	$	206,934		$	1,742		$	8,781		$	(18,640	)	$	616,066
September 30, 2021																				$	76,815		$	340,118		$	221,295		$	2,125	$	5,633		$	(18,761	)	$	627,225

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

(In thousands)	Common Stock		Additional Paid-In- Capital			Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Loss			Treasury Stock			Total			Common Stock			Additional Paid-In- Capital			Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Loss			Treasury Stock			Total
December 31, 2021	$	76,835	$	340,419		$	234,162		$	2,517		$	(831	)	$	(19,208	)	$	633,894		$	76,835		$	340,419		$	234,162		$	2,517		$	(831	)	$	(19,208	)	$	633,894
Net income		—		—			34,374			—			—			—			34,374			—			—			52,313			—			—			—			52,313
Other comprehensive loss, net tax		—		—			—			—			(127,409	)		—			(127,409	)		—			—			—			—			(166,832	)		—			(166,832	)
Cash dividends on common stock (.440/share)		—		—			(8,456	)		—			—			—			(8,456	)
Cash dividends on common stock (.670/share)																						—			—			(13,140	)		—			—			—			(13,140	)
Issuance of 8,378 common shares pursuant to the deferred compensation plan		34		297			—			—			—			—			331				34			297			—			—			—			—			331
Issuance of 54,834 restricted shares pursuant to 2017 stock incentive plan		219		2,040			—			—			—			—			2,259
Issuance of 54,567 restricted shares pursuant to 2017 stock incentive plan																						218			2,032			—			—			—			—			2,250
Issuance of 4,950 common shares pursuant to 2017 stock incentive plan		20		179			—			—			—			—			199			20			179			—			—			—			—			199
Issuance of 8,326 common shares pursuant to the employee stock purchase plan		33		260			—			—			—			—			293
Issuance of 14,430 common shares pursuant to the employee stock purchase plan																						58			420			—			—			—			—			478
Issuance of 2,292,270 common shares pursuant to the acquisition of Delta Bancshares, Co., net proceeds		9,169		83,003			—			—			—			—			92,172			9,169			83,003			—			—			—			—			92,172
Issuance costs pursuant to acquisition of Delta Bancshares Company		—		(29	)		—			—			—			—			(29	)		—			(29	)		—			—			—			—			(29	)
Purchase of 262 shares of treasury stock		—		—			—			—			—			(11	)		(11	)		—			—			—			—			—			(11	)		(11	)
Deferred compensation		—		—			—			(2,372	)		—			(199	)		(2,571	)		—			—			—			(2,206	)		—			(357	)		(2,563	)
Grant of restricted units pursuant to 2017 stock incentive plan		—		1,529			—			—			—			—			1,529			—			1,529			—			—			—			—			1,529
Release of restricted units pursuant to 2017 stock incentive plan		—		(1,216	)		—			—			—			—			(1,216	)		—			(1,216	)		—			—			—			—			(1,216	)
Vested restricted shares/units compensation expense		—		80			—			829			—			—			909			—			133			—			1,207			—			—			1,340
June 30, 2022	$	86,310	$	426,562		$	260,080		$	974		$	(128,240	)	$	(19,418	)	$	626,268
September 30, 2022																					$	86,334		$	426,767		$	273,335		$	1,518		$	(167,663	)	$	(19,576	)	$	600,715

(In thousands)	Common Stock		Additional Paid-In- Capital			Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Income			Treasury Stock			Total			Common Stock		Additional Paid-In- Capital			Retained Earnings			Deferred Compensation			Accumulated Other Comprehensive Income			Treasury Stock			Total
December 31, 2020	$	71,449	$	297,806		$	197,726		$	2,980		$	17,095		$	(18,828	)	$	568,228		$	71,449	$	297,806		$	197,726		$	2,980		$	17,095		$	(18,828	)	$	568,228
Net income		—		—			16,330			—			—			—			16,330			—		—			34,656			—			—			—			34,656
Other comprehensive loss, net tax		—		—			—			—			(8,314	)		—			(8,314	)		—		—			—			—			(11,462	)		—			(11,462	)
Cash dividends on common stock (.410/share)		—		—			(7,122	)		—			—			—			(7,122	)
Cash dividends on common stock (.630/share)																						—		—			(11,087	)		—			—			—			(11,087	)
Issuance of 8,615 common shares pursuant to the dividend reinvestment plan		32		300			—			—			—			—			332			32		301			—			—			—			—			333
Issuance of 5,541 common shares pursuant to the deferred compensation plan		23		166			—			—			—			—			189
Issuance of 7,493 common shares pursuant to deferred compensation plan																						30		238			—			—			—			—			268
Issuance of 27,750 restricted shares pursuant to the 2017 stock incentive plan		111		832			—			—			—			—			943			111		831			—			—			—			—			942
Issuance of 2,375 common shares pursuant to the 2017 stock incentive plan		10		75			—			—			—			—			85			10		75			—			—			—			—			85
Issuance of 1,262,246 common shares pursuant to the acquisition of LINCO Bancshares, Inc., net proceeds		5,049		39,142			—			—			—			—			44,191
Issuance of 1,262,246 common shares pursuant to acquisition of LINCO Bancshares, Inc., net proceeds																						5,049		39,142			—			—			—			—			44,191
Issuance of 25,000 common shares pursuant to the acquisition of BBM & Associates, Inc., net proceeds		100		1,009			—			—			—			—			1,109			100		1,009			—			—			—			—			1,109
Issuance costs pursuant to the acquisition of Delta Bancshares Company																						—		(144	)		—			—			—			—			(144	)
Issuance of 8,439 common shares pursuant to the employee stock purchase plan		23		135			—			—			—			—			158			34		228			—			—			—			—			262
Deferred compensation		—		—			—			(1,762	)		—			188			(1,574	)		—		—			—			(67	)		—			67			0
Tax benefit related to deferred compensation distributions		—		355			—			—			—			—			355
Grant of restricted units pursuant to 2017 stock incentive plan		—		1,216			—			—			—			—			1,216			—		1,216			—			—			—			—			1,216
Release of restricted units pursuant to 2017 stock incentive plan		—		(584	)		—			—			—			—			(584	)		—		(584	)		—			—			—			—			(584	)
Vested restricted shares/units compensation expense		—		—			—			524			—			—			524			—		—			—			(788	)		—			—			(788	)
June 30, 2021	$	76,797	$	340,452		$	206,934		$	1,742		$	8,781		$	(18,640	)	$	616,066
September 30, 2021																					$	76,815	$	340,118		$	221,295		$	2,125		$	5,633		$	(18,761	)	$	627,225

See accompanying notes to unaudited condensed consolidated financial statements.

	Six months ended June 30,						Nine months ended Sepetember 30,
(In thousands)	2022			2021			2022			2021
Cash flows from operating activities:
Net income	$	34,374		$	16,330		$	52,313		$	34,656
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		3,859			11,576			4,001			12,679
Depreciation, amortization and accretion, net		7,653			6,549			11,502			10,131
Change in cash surrender value of bank owned life insurance		(1,720	)		(1,398	)		(2,634	)		(2,211	)
Stock-based compensation expense		909			524			1,342			786
Operating lease payments		(1,517	)		(1,467	)		(2,286	)		(2,161	)
Gain on investment securities, net		(2	)		(77	)		(81	)		(88	)
Loss on sales and write downs of other real estate owned, net		69			3,043			103			6,870
Loss on sale of loans		76			0
Loss (gain) on sale of other assets		85			(151	)		76			(154	)
Gain on sale of loans held for sale, net		(712	)		(2,355	)		(1,060	)		(3,426	)
(Increase) decrease in accrued interest receivable		(1,683	)		3,128			(4,335	)		195
Decrease in accrued interest payable		(127	)		(1,186	)
Increase (decrease) in accrued interest payable								1,207			(519	)
Origination of loans held for sale		(34,438	)		(75,532	)		(53,591	)		(113,630	)
Proceeds from sale of loans held for sale		36,612			73,830			56,932			117,083
Increase in other investment		(460	)		(414	)
(Increase) decrease in other investment								6			(442	)
Increase in other assets		(13,402	)		(43,138	)		(10,187	)		(18,326	)
(Decrease) increase in other liabilities		(9,465	)		12,102
Increase in other liabilities								952			5,236
Net cash provided by operating activities		20,111			1,364			54,260			46,679
Cash flows from investing activities:
Proceeds from maturities of certificates of deposit investments		735			245			1,225			245
Purchases of certificates of deposit investments								(245	)		(245	)
Proceeds from sales of securities available-for-sale		0			611			27,396			611
Proceeds from maturities of securities available-for-sale		82,525			131,720			117,799			182,803
Proceeds from maturities of securities held-to-maturity		5,000			0			5,000			—
Purchases of securities available-for-sale		(10,768	)		(370,962	)		(10,768	)		(552,294	)
Net (increase) decrease in loans		(236,593	)		173,989			(309,664	)		16,683
Purchases of premises and equipment		(2,760	)		(1,562	)		(3,874	)		(2,367	)
Proceeds from sales of other real property owned		782			8,418			821			8,602
Investment in banked owned life insurance		0			(30,000	)		—			(30,000	)
Net cash provided by acquisition		67,323			24,409			67,323			27,061
Net cash used in investing activities		(93,756	)		(63,132	)		(104,987	)		(348,901	)
Cash flows from financing activities:
Net (decrease) increase in deposits		(197,885	)		56,128
Net increase (decrease) in deposits								(33,665	)		305,368
Increase in federal funds purchased		10,000			0			5,000			—
Decrease in repurchase agreements		(6,857	)		(55,543	)
Increase (decrease) in repurchase agreements								38,916			(57,046	)
Proceeds from FHLB advances		325,000			5,000			365,000			5,000
Repayment of FHLB advances		(80,000	)		(14,000	)		(320,000	)		(14,000	)
Proceeds from issuance of common stock		823			432			1,008			1,724
Direct expenses related to capital transactions		(29	)		0			(29	)		(144	)
Purchase of treasury stock		(11	)		0			(11	)		—
Dividends paid on common stock		(8,454	)		(6,789	)		(13,140	)		(10,755	)
Net cash provided by (used in) financing activities		42,587			(14,772	)
Net cash provided by financing activities								43,079			230,147
Decrease in cash and cash equivalents		(31,058	)		(76,540	)		(7,648	)		(72,075	)
Cash and cash equivalents at beginning of period		168,602			417,281			168,602			417,281
Cash and cash equivalents at end of period	$	137,544		$	340,741		$	160,954		$	345,206

See accompanying notes to unaudited condensed consolidated financial statements.

		Six months ended June 30,				Nine months ended September 30,
(In thousands)		2022		2021		2022		2021
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	7,764	$	8,454	$	14,916	$	11,483
Income taxes			18,880		9,996		22,463		14,306
Supplemental disclosures of noncash investing and financing activities
Loans transferred to other real estate		$	198	$	197	$	383	$	237
Fixed assets transferred to real estate owned			0		3,971
Initial recognition of right-of-use assets			715		0		715		—
Initial recognition of lease liabilities			715		0		715		—
Dividends reinvested in common stock			0		332		—		333
Net tax benefit related to option and deferred compensation plans			0		355
Supplemental disclosures of purchases of capital stock
Fair value of assets acquired		$	750,063	$	1,170,699	$	750,063	$	1,170,699
Consideration paid:
Cash paid	��		15,150		103,500		15,150		103,500
Common stock issued			92,172		44,191		92,172		44,191
Total consideration paid			107,322		147,691		107,322		147,691
Fair value of liabilities assumed		$	642,741	$	1,023,008	$	642,741	$	1,023,008

The unaudited condensed consolidated financial statements include the accounts of First Mid Bancshares, Inc. (“Company”) and its wholly owned subsidiaries: First Mid Bank & Trust, N.A. (“First Mid Bank”), First Mid Wealth Management Company, First Mid Insurance Group, Inc. (“First Mid Insurance”), and First Mid Captive, Inc. The Company’s wholly owned subsidiary Jefferson Bank and Trust Company (“Jefferson Bank”), was merged into First Mid Bank on June 11, 2022. All significant intercompany balances and transactions have been eliminated in consolidation. The financial information reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of the interim periods ended ~~June~~September 30, 2022 and 2021, and all such adjustments are of a normal recurring nature. Certain amounts in the prior year’s consolidated financial statements may have been reclassified to conform to the ~~June~~September 30, 2022 presentation and there was no impact on net income or stockholders’ equity. The results of the interim period ended ~~June~~September 30, 2022 are not necessarily indicative of the results expected for the year ending December 31, 2022. The Company operates as a one-segment entity for financial reporting purposes. The 2021 year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and do not include all the information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements and related footnote disclosures although the Company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K.

The COVID-19 outbreak is an unprecedented event that provides significant economic uncertainty for a broad spectrum of industries. The Company is focused on supporting its customers, communities and employees during this unique operating environment. Throughout this document, the Company describes the impact COVID-19 is having, actions taken as a result of COVID-19, and certain risks to the Company that COVID-19 creates or exacerbates, as well as management's outlook on the current COVID-19 situation.

On July 28, 2021, the Company and Brock Sub LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of the Company (“Delta Merger Sub”), entered into an Agreement and Plan of Merger (the “Delta Merger Agreement”) with Delta Bancshares Company, a Missouri corporation (“Delta”), pursuant to which, among other things, the Company agreed to acquire 100% of the issued and outstanding shares of Delta pursuant to a business combination whereby Delta merged with and into Merger Sub, whereupon the separate corporate existence of Delta ceased and Merger Sub continued as the surviving company and a wholly-owned subsidiary of First Mid (the “Delta Merger”). The Delta Merger was completed on February 14, 2022.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Delta Merger, each share of common stock, par value $10.00 per share, of Delta issued and outstanding immediately prior to the effective time of the Delta Merger (other than shares held in treasury by Delta) converted into and became the right to receive cash and shares of common stock, par value $4.00 per share, of the Company and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration paid by the Company at the closing of the Delta Merger to Delta’s shareholders and option holders was approximately $15.15 million in cash and 2,292,270 shares of Company common stock. Delta’s outstanding stock options vested upon consummation of the Delta Merger, and all outstanding Delta options that were unexercised prior to the effective time of the Delta Merger were cashed out.

Delta’s wholly owned bank subsidiary, Jefferson Bank, was merged with and into First Mid Bank during the second quarter of 2022. At the time of the bank merger, Jefferson Bank’s banking offices became branches of First Mid Bank.

On September 25, 2020, the Company and Eval Sub Inc., a wholly owned subsidiary of the Company ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with LINCO Bancshares, Inc., the former parent of Providence Bank ("LINCO"), and the sellers as defined therein, pursuant to which, among other things, the Company agreed to acquire 100% of the issued and outstanding shares of LINCO pursuant to a business combination whereby Merger Sub merged with and into LINCO, whereupon the separate corporate existence of Merger Sub ceased and LINCO continued as the surviving company and a wholly owned subsidiary of the Company (the "LINCO Merger").

Subject to the terms and conditions of the Merger Agreement, at the effective time of the LINCO Merger, each share of common stock, par value $1.00 per share, of LINCO issued and outstanding immediately prior to the effective time of the LINCO Merger (other than shares held in treasury by LINCO) was converted into and become the right to receive, cash or shares of common stock, par value $4.00 per share, of the Company and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration payable by the Company at the closing of the Merger was $103.5 million in cash and 1,262,246 shares of the Company’s common stock, provided that the shareholders of LINCO collectively elected pursuant to the Merger Agreement to receive varying amounts of cash or shares of common stock of the Company as consideration in the Merger. In addition, immediately prior to the closing of the proposed merger, LINCO paid a special dividend to its shareholders in the aggregate amount of $13 million.

The LINCO Merger closed on February 22, 2021, and Providence Bank merged into First Mid Bank on May 15, 2021.

The Company maintains a website at www.firstmid.com. All periodic and current reports of the Company and amendments to these reports filed with the Securities and Exchange Commission (“SEC”) can be accessed, free of charge, through this website as soon as reasonably practicable after these materials are filed with the SEC.

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

On September 10, 2021, First Mid Bank completed an acquisition of loans in the St. Louis Metro market totaling $208 million. There were no loans purchased with deteriorated credit. First Mid Bank also assumed $215 million of related customer deposits and recorded a core deposit intangible asset of approximately $4.9 million that is being amortized on an accelerated basis over ten years.

At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the First Mid-Illinois Bancshares, Inc. 2017 Stock Incentive Plan (“SI Plan”). The SI Plan was implemented to succeed the Company’s 2007 Stock Incentive Plan, which had a ten-year term. The SI Plan is intended to provide a means whereby directors, employees, consultants and advisors of the Company and its subsidiaries may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company and its subsidiaries, thereby advancing the interests of the Company and its stockholders. Accordingly, directors and selected employees, consultants and advisors may be provided the opportunity to acquire shares of common stock of the Company on the terms and conditions established in the SI Plan.

Following the stockholders’ approval at the 2021 annual meeting of the Company, a maximum of 399,983 shares of common stock may be issued under the SI Plan. There have been 0no stock options awarded under any Company plan since 2008. The Company has awarded 61,400 and ~~27,750~~30,125 shares of restricted stock during 2022 and 2021, respectively, and 37,150 and 35,400 restricted stock units during 2022 and 2021, respectively.

A maximum of 600,000 shares of common stock may be issued under the ESPP.As of ~~June 30, 2022, 40,010 shares have been issued pursuant to the ESPP.~~ During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, ~~8,326~~14,430 shares and 8,439 shares, respectively, were issued pursuant to the ESPP.

First Mid Captive, Inc. (the “Captive"), a wholly owned subsidiary of the Company which was formed and began operations in December 2019, is a Nevada-based captive insurance company. The Captive insures against certain risks unique to operations of the Company and its subsidiaries for which insurance may not be currently available or economically feasible in today's insurance marketplace. The Captive pools resources with several other similar insurance company subsidiaries of financial institutions to spread a limited amount of risk among themselves. The Captive is subject to regulations of the State of Nevada and undergoes periodic examinations by the Nevada Division of Insurance. It has elected to be taxed under Section 831(b) of the Internal Revenue Code. Pursuant to Section 831(b), if gross premiums do not exceed $~~2,300,000,~~2,450,000, then the Captive is taxable solely on its investment income. The Captive is included in the Company's consolidated financial statements and its federal income return.

First Mid Bank has purchased life insurance policies on certain senior management. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts that are probable at settlement.

Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), establishes a revenue recognition model for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. Most of the Company’s revenue-generating transactions are not subject to ASC 606, including revenue generated from financial instruments, such as loans and investment securities, and revenue related to mortgage servicing activities, which are subject to other accounting standards. A description of the revenue-generating activities that are within the scope of ASC 606, and included in other income in the Company’s condensed consolidated statements of income are as follows:

Trust revenues. The Company generates fee income from providing fiduciary services through its subsidiary, First Mid Wealth Management Company. Fees are billed in arrears based upon the preceding period account balance. Revenue from farm management services is recorded when the service is complete, for example when crops are sold.

Brokerage commissions. Revenue is recorded at the beginning of each quarter through billing to customers based on the account asset size on the last day of the previous quarter. If a withdrawal of funds takes place, a prorated refund may occur; this is reflected within the same quarter as the original billing occurred. All performance obligations are met within the same quarter that the revenue is recorded.

Insurance commissions. The Company’s insurance agency subsidiary, First Mid Insurance, receives commissions on premiums of new and renewed business policies. First Mid Insurance records commission revenue on direct bill policies as the cash is received. For agency bill policies, First Mid Insurance retains its commission portion of the customer premium payment and remits the balance to the carrier. In both cases, the entire performance obligation is held by the carriers.

Service charges on deposits. The Company generates revenue from fees charged for deposit account maintenance, overdrafts, wire transfers, and check fees. The revenue related to deposit fees is recognized at the time the performance obligation is satisfied.

ATM/debit card revenue. The Company generates revenue through service charges on the use of its ATM machines and interchange income from the use of Company issued credit and debit cards. The revenue is recognized at the time the service is used and the performance obligation is satisfied.

Other income. Treasury management fees and lock box fees are received and recorded after the service performance obligation is completed. Merchant bank card fees are received from various vendors; however, the performance obligation is with the vendors. The Company records gains on the sale of loans and the sale of OREO properties after the transactions are complete and transfer of ownership has occurred.

As each of the Company’s facilities is in markets with similar economies, no disaggregation of revenue is necessary.

The components of accumulated other comprehensive loss included in stockholders’ equity as of ~~June~~September 30, 2022 and December 31, 2021 are as follows (in thousands):

	Unrealized Losses on Securities			Unrealized Losses on Securities
June 30, 2022
September 30, 2022
Net unrealized losses on securities available-for-sale	$	(180,619	)	$	(236,142	)
Tax benefit		52,379			68,479
Balance at June 30, 2022	$	(128,240	)
Balance at September 30, 2022				$	(167,663	)

December 31, 2021
Net unrealized losses on securities available-for-sale	$	(1,170	)	$	(1,170	)
Tax benefit		339			339
Balance at December 31, 2021	$	(831	)	$	(831	)

Amounts reclassified from accumulated other comprehensive loss and the affected line items in the statements of income during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, were as follows (in thousands):

	Amounts Reclassified from Other Comprehensive Income													Amounts Reclassified from Other Comprehensive Income
	Three months ended June 30,						Six months ended June 30,							Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021			Affected Line Item in the Statements of Income	2022			2021			2022			2021			Affected Line Item in the Statements of Income
Realized gains on available-for-sale securities	$	2		$	73		$	2		$	77		Securities (loss) gains, net	$	79		$	11		$	81		$	88		Securities (loss) gains, net
Tax effect		(1	)		(21	)		(1	)		(22	)	Income taxes		(23	)		(3	)		(24	)		(26	)	Income taxes
Total reclassifications out of accumulated other comprehensive income	$	1		$	52		$	1		$	55		Net reclassified amount	$	56		$	8		$	57		$	62		Net reclassified amount

See “Note 3 – Investment Securities” for more detailed information regarding unrealized losses on available-for-sale securities.

Accounting Standards Update 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). In March 2022, FASB issued ASU 2022-02. The amendments in this update eliminate the accounting guidance and related disclosures for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty and requiring an entity to disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and are applied prospectively, except with respect to the recognition and measurement of TDRs, where an entity has the option to apply a modified retrospective transition method. Early adoption of the amendments in this update is permitted. An entity may elect to early adopt the amendments regarding TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The adoption of this accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

Basic net income per common share available to common stockholders is calculated as net income less preferred stock dividends divided by the weighted average number of common shares outstanding. Diluted net income per common share available to common stockholders is computed using the weighted average number of common shares outstanding, increased by the Company’s stock options, unless anti-dilutive.

The components of basic and diluted net income per common share available to common stockholders for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 were as follows:

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Basic net income per common share
Available to common stockholders:
Net income	$	17,758,000	$	12,221,000	$	34,374,000	$	16,330,000	$	17,939,000	$	18,326,000	$	52,313,000	$	34,656,000
Weighted average common shares outstanding		20,448,799		18,067,190		19,875,516		17,685,679		20,454,669		18,083,126		20,070,687		17,819,619
Basic earnings per common share	$	0.87	$	0.68	$	1.73	$	0.92	$	0.88	$	1.01	$	2.61	$	1.94

Diluted net income per common share
Available to common stockholders:
Net income applicable to diluted earnings per share	$	17,758,000	$	12,221,000	$	34,374,000	$	16,330,000	$	17,939,000	$	18,326,000	$	52,313,000	$	34,656,000
Weighted average common shares outstanding		20,448,799		18,067,190		19,875,516		17,685,679		20,454,669		18,083,126		20,070,687		17,819,619
Dilutive potential common shares: restricted stock awarded		80,724		53,020		71,711		53,020		80,546		53,020		74,748		53,020
Diluted weighted average common shares outstanding		20,529,523		18,120,210		19,947,227		17,738,699		20,535,215		18,136,146		20,145,435		17,872,639
Diluted earnings per common share	$	0.86	$	0.68	$	1.72	$	0.92	$	0.88	$	1.01	$	2.60	$	1.94

There were 0no shares excluded when computing diluted earnings per share for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 because they were anti-dilutive.

The amortized cost, gross unrealized gains and losses and estimated fair values for available-for-sale and held-to-maturity securities by major security type at ~~June~~September 30, 2022 and December 31, 2021 were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
June 30, 2022
September 30, 2022
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	261,387	$	8	$	(24,548	)	$	236,847	$	256,478	$	—	$	(33,747	)	$	222,731
Obligations of states and political subdivisions		385,688		678		(58,544	)		327,822		360,622		35		(74,549	)		286,108
Mortgage-backed securities: GSE residential		793,979		37		(95,673	)		698,343		763,882		7		(123,495	)		640,394
Other securities		89,512		29		(2,605	)		86,936		85,948		1		(4,394	)		81,555
Total available-for-sale	$	1,530,566	$	752	$	(181,370	)	$	1,349,948	$	1,466,930	$	43	$	(236,185	)	$	1,230,788
Held-to-maturity:
Other investments	$	2,972	$	0	$	0		$	2,972	$	2,930	$	—	$	—		$	2,930
Total held-to-maturity	$	2,972	$	0	$	0		$	2,972	$	2,930	$	—	$	—		$	2,930
December 31, 2021
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	208,598	$	80	$	(4,863	)	$	203,815	$	208,598	$	80	$	(4,863	)	$	203,815
Obligations of states and political subdivisions		383,991		12,123		(657	)		395,457		383,991		12,123		(657	)		395,457
Mortgage-backed securities: GSE residential		799,456		4,292		(12,710	)		791,038		799,456		4,292		(12,710	)		791,038
Other securities		30,546		671		(105	)		31,112		30,546		671		(105	)		31,112
Total available-for-sale	$	1,422,591	$	17,166	$	(18,335	)	$	1,421,422	$	1,422,591	$	17,166	$	(18,335	)	$	1,421,422
Held-to-maturity:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	5,001	$	5	$	0		$	5,006	$	5,001	$	5	$	—		$	5,006
Other investments		2,029		0		0			2,029		2,029		—		—			2,029
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	7,030	$	5	$	0		$	7,035	$	7,030	$	5	$	—		$	7,035

The Company also had ~~$308,000~~$317,000 and $397,000 of equity securities, at fair value, as of ~~June~~September 30, 2022 and December 31, 2021, respectively. The Company's held-to-maturity securities are annuities for which the risk of loss is minimal. As such, as of ~~June~~September 30, 2022, the Company did not record an allowance for credit losses on its held-to-maturity securities.

Realized gains and losses resulting from sales of securities were as follows during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	Three months June 30,				Six months June 30,				Three months September 30,					Nine months September 30,
	2022		2021		2022		2021		2022			2021		2022			2021
Gross gains	$	2	$	73	$	2	$	77	$	191		$	11	$	193		$	88
Gross losses		0		0		0		0		(112	)		—		(112	)		—

The following table indicates the expected maturities of investment securities classified as available-for-sale presented at fair value, and held-to-maturity presented at amortized cost, at ~~June~~September 30, 2022 and the weighted average yield for each range of maturities (dollars in thousands):

	One year or less			After 1 through 5 years			After 5 through 10 years			After ten years			Total			One year or less			After 1 through 5 years			After 5 through 10 years			After ten years			Total
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	170,756		$	56,145		$	9,946		$	0		$	236,847		$	159,663		$	53,511		$	9,557		$	—		$	222,731
Obligations of state and political subdivisions		22,218			95,449			209,021			1,134			327,822			24,140			75,195			185,717			1,056			286,108
Mortgage-backed securities: GSE residential		6,114			113,107			570,106			9,016			698,343			3,831			90,744			544,195			1,624			640,394
Other securities		19,291			66,746			899			0			86,936			19,480			61,306			769			—			81,555
Total available-for-sale investments	$	218,379		$	331,447		$	789,972		$	10,150		$	1,349,948		$	207,114		$	280,756		$	740,238		$	2,680		$	1,230,788
Weighted average yield		1.54	%		2.46	%		1.77	%		1.69	%		1.89	%		1.56	%		3.17	%		1.76	%		2.88	%		2.03	%
Full tax-equivalent yield		1.65	%		2.75	%		1.95	%		1.82	%		2.09	%		1.68	%		3.44	%		1.93	%		3.40	%		2.21	%
Held to maturity:
Other investments	$	0		$	0		$	0		$	2,972		$	2,972		$	—		$	—		$	—		$	2,930		$	2,930
Total held-to-maturity	$	0		$	0		$	0		$	2,972		$	2,972		$	—		$	—		$	—		$	2,930		$	2,930
Weighted average yield		0	%		0	%		0	%		0	%		0	%		—	%		—	%		—	%		—	%		—	%
Full tax-equivalent yield		0	%		0	%		0	%		0	%		0	%		—	%		—	%		—	%		—	%		—	%

The weighted average yields are calculated based on the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent yields have been calculated using a 21% tax rate. With the exception of obligations of the U.S. Treasury and other U.S. government agencies and corporations, there were no investment securities of any single issuer, the book value of which exceeded 10% of stockholders' equity at ~~June~~September 30, 2022.

Investment securities carried at approximately ~~$724~~$818 million and $590 million at ~~June~~September 30, 2022 and December 31, 2021, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law.

The following table presents the aging of gross unrealized losses and fair value by investment category as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	Less than 12 months					12 months or more					Total					Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2022
September 30, 2022
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	121,758	$	(8,930	)	$	111,991	$	(15,618	)	$	233,749	$	(24,548	)	$	89,341	$	(8,618	)	$	132,392	$	(25,129	)	$	221,733	$	(33,747	)
Obligations of states and political subdivisions		253,771		(55,918	)		7,466		(2,626	)		261,237		(58,544	)		235,842		(57,209	)		37,212		(17,340	)		273,054		(74,549	)
Mortgage-backed securities: GSE residential		505,673		(62,477	)		188,576		(33,196	)		694,249		(95,673	)		260,199		(40,477	)		379,400		(83,018	)		639,599		(123,495	)
Other securities		66,927		(2,529	)		2,489		(76	)		69,416		(2,605	)		64,075		(3,823	)		5,979		(571	)		70,054		(4,394	)
Total	$	948,129	$	(129,854	)	$	310,522	$	(51,516	)	$	1,258,651	$	(181,370	)	$	649,457	$	(110,127	)	$	554,983	$	(126,058	)	$	1,204,440	$	(236,185	)
December 31, 2021
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	48,316	$	(1,927	)	$	139,846	$	(2,936	)	$	188,162	$	(4,863	)	$	48,316	$	(1,927	)	$	139,846	$	(2,936	)	$	188,162	$	(4,863	)
Obligations of states and political subdivisions		61,535		(657	)		0		0			61,535		(657	)		61,535		(657	)		—		—			61,535		(657	)
Mortgage-backed securities: GSE residential		562,699		(11,019	)		46,504		(1,691	)		609,203		(12,710	)		562,699		(11,019	)		46,504		(1,691	)		609,203		(12,710	)
Other securities		7,976		(105	)		0		0			7,976		(105	)		7,976		(105	)		—		—			7,976		(105	)
Total	$	680,526	$	(13,708	)	$	186,350	$	(4,627	)	$	866,876	$	(18,335	)	$	680,526	$	(13,708	)	$	186,350	$	(4,627	)	$	866,876	$	(18,335	)

U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies. At ~~June~~September 30, 2022 there were 14sixteen available-for-sale securities with a fair value of ~~$111,991,000~~$132,392,000 and unrealized losses of ~~$15,618,000~~$25,129,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2021, there were 6six available-for-sale securities with a fair value of $139,846,000 and unrealized losses of $2,936,000 in a continuous unrealized loss position for twelve months or more. There were 0no held-to-maturity U.S. Treasury securities and obligations of U.S. government corporations and agencies in a continuous unrealized loss position for twelve months or more.

Obligations of states and political subdivisions. At ~~June~~September 30, 2022, there were 5thirty-six obligations of states and political subdivisions with a fair value of ~~$7,466,000~~$37,212,000 and unrealized losses of ~~$2,626,000~~$17,340,000 in a continuous unrealized loss position for twelve months or more. At December 31, ~~2021, there~~2021there were 0no obligations of states and political subdivisions in a continuous unrealized loss position for twelve months or more.

Mortgage-backed Securities: GSE Residential. At ~~June~~September 30, 2022, there were ~~NaN~~ninty-one mortgage-backed securities with a fair value of ~~$188,576,000~~$379,400,000 and unrealized losses of ~~$33,196,000~~$83,018,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2021, there were 15fifteen mortgage-backed securities with a fair value of $46,504,000 and unrealized losses of $1,691,000 in a continuous unrealized loss position for twelve months or more.

Other securities. At ~~June~~September 30, 2022, there were 3five other securities with a fair value of ~~$2,489,000~~$5,979,000 and unrealized losses of ~~$76,000~~$571,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2021, there were 0no other securities in a continuous unrealized loss position for twelve months or more.

The Company does not believe any unrealized losses as of ~~June~~September 30, 2022 represents other than temporary impairment ("OTTI"). However, given the uncertainty of the financial markets, the Company may be required to recognize OTTI losses in future periods with respect to its available for sale investment securities portfolio. The amount and timing of any additional OTTI will depend on the decline in the underlying cash flows of the securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced, and the resulting loss recognized in the period the other-than-temporary impairment is identified.

Loans are stated at amortized cost net of an allowance for credit losses. Amortized cost is the unpaid principal net of unearned premiums and discounts, and net deferred origination fees and costs. Deferred loan origination fees are reduced by loan origination costs and are amortized to interest income over the life of the related loan using methods that approximated the effective interest rate method. Interest on substantially all loans is credited to income based on the principal amount outstanding.

A summary of loans at ~~June~~September 30, 2022 and December 31, 2021 follows (in thousands):

	June 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Construction and land development	$	141,218	$	145,156	$	142,951	$	145,156
Agricultural real estate		350,485		279,001		360,875		279,001
1-4 family residential properties		424,217		399,932		436,506		399,932
Multifamily residential properties		331,386		298,974		299,125		298,974
Commercial real estate		1,983,017		1,666,764		2,002,969		1,666,764
Loans secured by real estate		3,230,323		2,789,827		3,242,426		2,789,827
Agricultural loans		142,237		151,344		160,351		151,344
Commercial and industrial loans		1,039,363		834,061		1,066,197		834,061
Consumer loans		94,780		78,538		100,724		78,538
All other loans		151,715		143,738		160,441		143,738
Total gross loans		4,658,418		3,997,508		4,730,139		3,997,508
Less: loans held for sale		1,286		2,748		467		2,748
		4,657,132		3,994,760		4,729,672		3,994,760
Less:
Net deferred loan fees, premiums and discounts		9,755		1,985		9,849		1,985
Allowance for credit losses		59,075		54,655		58,777		54,655
Net loans	$	4,588,302	$	3,938,120	$	4,661,046	$	3,938,120

Loans expected to be sold are classified as held for sale in the consolidated financial statements and are recorded at ~~the lower of aggregate cost or~~ fair value, taking into consideration future commitments to sell the loans. These loans are primarily for 1-4 family residential properties.

Accrued interest on loans, which is excluded from the amortized cost of the balances above, totaled ~~$16.9~~$18.8 million and $14.7 million at ~~June~~September 30, 2022 and December 31, 2021, respectively.

Most of the Company’s business activities are with customers located near the Company's branch locations in Illinois, Missouri, and Texas. At ~~June~~September 30, 2022, the Company’s loan portfolio included ~~$492.6~~$520.9 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, ~~$366.6~~$397.5 million was concentrated in corn and other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased ~~$61.8~~$90.1 million from $430.8 million at December 31, 2021 due to seasonal timing of cash flow requirements. Loans concentrated in corn and other grain farming increased ~~$69.2~~$100.1 million from $297.4 million at December 31, 2021. The Company's underwriting practices include collateralization of loans. Any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio.

In addition, the Company has ~~$203.0~~$209.4 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has ~~$902.0~~$911.0 million of loans to lessors of non-residential buildings, and ~~$494.5~~$470.4 million of loans to lessors of residential buildings and dwellings.

The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the board of directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation and most borrowers are below regulatory thresholds. The Company can occasionally have outstanding balances to one borrower up to but not exceeding the regulatory threshold should underwriting guidelines warrant. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments.

Commercial Real Estate Loans. Commercial real estate loans are generally comprised of loans to small business entities to purchase or expand structures in which the business operations are housed, loans to owners of real estate who lease space to non-related commercial entities, loans for construction and land development, loans to hotel operators, and loans to owners of multi-family residential structures, such as apartment buildings. Commercial real estate loans are underwritten based on historical and projected cash flows of the borrower and secondarily on the underlying real estate pledged as collateral on the debt. For the various types of commercial real estate loans, minimum criteria have been established within the Company’s loan policy regarding debt service coverage while maximum limits on loan-to-value and amortization periods have been defined. Maximum loan-to-value ratios range from 65% to 80% depending upon the type of real estate collateral, while the desired minimum debt coverage ratio is 1.20x. Amortization periods for commercial real estate loans are generally limited to twenty or twenty five years, depending on the loan-to-value. The Company’s commercial real estate portfolio is below the thresholds that would designate a concentration in commercial real estate lending, as established by the federal banking regulators.

Commercial and Industrial Loans. Commercial and industrial loans are primarily comprised of working capital loans used to purchase inventory and fund accounts receivable that are secured by business assets other than real estate. These loans are generally written for one year or less. Also, equipment financing is provided to businesses with these loans generally limited to 80% of the value of the collateral and amortization periods limited to seven years. Commercial loans are often accompanied by a personal guaranty of the principal owners of a business. Like commercial real estate loans, the underlying cash flow of the business is the primary consideration in the underwriting process. The financial condition of commercial borrowers is monitored at least annually with the type of financial information required determined by the size of the relationship. Measures employed by the Company for businesses with higher risk profiles include the use of government- assisted lending programs through the Small Business Administration and U.S. Department of Agriculture.

Agricultural and Agricultural Real Estate Loans. Agricultural loans are generally comprised of seasonal operating lines to cash grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. Agricultural real estate loans are primarily comprised of loans for the purchase of farmland. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop. Loan-to-value ratios on loans secured by farmland generally do not exceed 65% and have amortization periods limited to twenty-five years. Federal government-assistance lending programs through the Farm Service Agency are used to mitigate the level of credit risk when deemed appropriate.

Residential Real Estate Loans. Residential real estate loans generally include loans for the purchase or refinance of residential real estate properties consisting of one-to-four units and home equity loans and lines of credit. The Company sells most of its long-term fixed rate residential real estate loans to secondary market investors. The Company also releases the servicing of these loans upon sale. Residential real estate loans are typically underwritten to conform to industry standards including criteria for maximum debt-to-income and loan-to-value ratios as well as minimum credit scores. Loans secured by first liens on residential real estate held in the portfolio typically do not exceed 80% of the value of the collateral and have amortization periods of twenty-five years or less. The Company does not originate subprime mortgage loans.

Consumer Loans. Consumer loans are primarily comprised of loans to individuals for personal and household purposes such as the purchase of an automobile or other living expenses. Minimum underwriting criteria have been established that consider credit score, debt-to-income ratio, employment history, and collateral coverage. Typically, consumer loans are set up on monthly payments with amortization periods based on the type and age of the collateral.

Other Loans. Other loans consist primarily of loans to municipalities to support community projects such as infrastructure improvements or equipment purchases. Underwriting guidelines for these loans are consistent with those established for commercial loans with the additional repayment source of the taxing authority of the municipality.

The allowance for credit losses represents the Company’s best estimate of the reserve necessary to adequately account for probable losses expected over the remaining contractual life of the assets. The provision for credit losses is the charge against current earnings that is determined by the Company as the amount needed to maintain an adequate allowance for credit losses. In determining the adequacy of the allowance for credit losses, and therefore the provision to be charged to current earnings, the Company relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by the overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by the Company in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and troubled debt restructurings, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates. The Company estimates the appropriate level of allowance for credit losses by evaluating large individually evaluated loans separately from non-individually evaluated loans.

The Company individually evaluates certain loans for impairment. In general, these loans have been internally identified via the Company’s loan grading system as credits requiring management’s attention due to underlying problems in the borrower’s business or collateral concerns. This evaluation considers expected future cash flows, the value of collateral and other factors that may impact the borrower’s ability to make payments when due. For loans greater than $250,000, impairment is individually measured each quarter using one of 3three alternatives: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price, if available; or (3) the fair value of the collateral less costs to sell for collateral dependent loans and loans for which foreclosure is deemed to be probable. A specific allowance is assigned when expected cash flows or collateral are less than the carrying amount of the loan. The carrying value of the loan reflects reductions from prior charge-offs.

Non-individually evaluated loans comprise the vast majority of the Company’s total loan portfolio and include loans in accrual status and those credits not identified as troubled debt restructurings. A small portion of these loans are considered “criticized” due to the risk rating assigned reflecting elevated credit risk due to characteristics, such as a strained cash flow position, associated with the individual borrowers. Criticized loans are those assigned risk ratings of Special Mention, Substandard, or Doubtful.

To determine the allowance, the loan portfolio is segmented based on similar risk characteristics. The allowance for credit losses is estimated using a discounted cash flow (DCF) methodology. The DCF projects future cash flows over the life of the loan portfolio. Probability of default (PD) and loss given default (LGD) are key components in calculating expected losses in this model. The PD is forecasted using a regression model that determines the likelihood of default with a forward-looking forecast of unemployment rates. The LGD is the percentage of defaulted loans that is ultimately charged off. The allowance is calculated as the net present value of the expected cash flows less the amortized cost basis of the loans. Prior to 2022, the allowance for credit losses was measured on a collective (pool) basis for non-individually evaluated loans with similar risk characteristics. Historical credit loss experience provided the basis for the estimate of expected credit losses. Adjustments to expected losses are made using qualitative factors for relevant to each loan segment including merger & acquisition activity, economic conditions, changes in policies, procedures & underwriting, and concentrations. In addition, a forecast, using reasonable and supportable future conditions, is prepared that is used to estimate expected changes to existing and historical conditions in the current period.

The Company also considers specific current economic events occurring globally, in the U.S. and in its local markets. In March 2020, in response to the COVID-19 outbreak, its significant disruptions in the U.S. economy and impacts on local markets, First Mid Bank offered a 90-day commercial deferral program, primarily to hotel and restaurant borrowers. In accordance with interagency guidance issued in March 2020, these short-term deferrals are not considered troubled debt restructurings. These deferrals were, however, considered in the factors used to estimate the required allowance for credit losses for non-individually evaluated loans. Other COVID-19 related impacts considered included revenue losses of businesses required to restrict or cease services, income loss to workers laid off as a result of COVID-19 restrictions, various federal and state government stimulus programs and additional deferral programs offered by First Mid Bank beginning in April 2020. Other eventsEvents considered include the status of trade agreements with China, scheduled increases in minimum wage and changes to the minimum salary threshold for overtime provisions, current and projected unemployment rates, current and projected grain and oil prices and economies of local markets where customers work and operate.

Within each pool, risk elements are evaluated that have specific impacts to the borrowers within the pool. These, along with the general risks and events, and the specific lending policies and procedures by loan type described above, are analyzed to estimate the qualitative factors used to adjust the historical loss rates.

During the current period, the following assumptions and factors were considered when determining the historical loss rate and any potential adjustments by loan pool.

Construction and Land Development Loans. Historical losses in this segment ~~remained~~remain very low. ~~Current activity in this industry was deemed essential and has continued during COVID-19.~~ While staffing shortages and supply chain disruptions cause risk in this segment, most projects are associated with financially strong borrowers. Due to actual and expected changes in economic and business conditions, the qualitative factor for this segment was increased by 5 ~~basis~~percentage points.

Agricultural Real Estate Loans. Historical losses in the segment remain very low. Farmland values have increased over an extended period of time and there are no indications that this will change in the next year. There was a slight decrease to the qualitative factor for this segment.

1- 4 Family Residential Properties Loans. ~~COVID-19hasimpactedthefinances~~of~~consumersfromlayoffsandfurloughs resultingfromemployers thatmustreduce~~or~~suspendoperations.~~Increased risk in this segment includes consumer ability to make mortgage and rent payments. Some of this impact was offset by governmental actions such as stimulus payments and extended unemployment benefits. First Mid Bank also offered short-term loan payment deferral to borrowers in this segment. There was no change to the qualitative factors for this segment.

Commercial Real Estate Loans. This segment includes the Company's majority of exposure to the hotel ~~industry which has been significantly impacted by COVID-19 events.~~industry. Other impacted industries in this segment include restaurants and retail establishments. The qualitative factors on both non-owner occupied and owner-occupied loans for this segment were increased by 5 ~~basis~~percentage points due to actual and expected changes in economic and business conditions.

Agricultural Loans. Losses in this segment are very low. Commodity prices have been elevated and yields have been strong. The qualitative factor of this segment was decreased slightly.

Commercial and Industrial Loans. ~~The COVID-19 impacts include forced closures and scaled-back services for many industries~~Industries within this segment ~~including~~include retailers, restaurants, and video gaming establishments. ~~Some of this risk was offset by government relief programs as well as, First Mid Bank's payment deferral program. The qualitative factor for this segment was not changed.~~

~~Consumer Loans.~~ The financial status of many borrowers was impacted by COVID-19 events including layoffs and reduced hours. Some of this impact was offset by government stimulus programs, increased paid leave and increased and extended unemployment benefits. Additionally, First Mid Bank has offered a short-term payment deferral program. The qualitative factor for this segment was increased by 5 ~~basis~~percentage points due to actual and expected changes in economic and business conditions.

Consumer Loans. The qualitative factor for this segment was increased by 5 percentage points due to actual and expected changes in economic and business conditions.

Acquired Loans. Prior to January 1, 2020 loans acquired with evidence of credit deterioration since origination and for which it was probable that all contractually required payments would not be collected were considered purchased credit impaired at the time of acquisition. Purchase credit-impaired ("PCI") loans were accounted for under ASC 310-30, Receivables--Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"), and were initially measured at fair value, which included the estimated future credit losses expected to be incurred over the life of the loan.

Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. The cash flows expected to be collected were estimated using current key assumptions, such as default rates, value of underlying collateral, severity and prepayment speeds.

Subsequent to January 1, 2020, loans acquired in a business combination that have experienced more-than-insignificant deterioration in credit quality since origination are considered purchased credit deteriorated (“PCD”) loans. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. This initial allowance for credit losses is allocated to individual PCD loans and added to the purchase price or acquisition date fair values to establish the initial amortized cost basis of the PCD loans. As the initial allowance for credit losses is added to the purchase price, there is no credit loss expense recognized upon acquisition of a PCD loan. Any difference between the unpaid principal balance of PCD loans and the amortized cost basis is considered to relate to noncredit factors and results in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans.

For acquired loans not deemed purchased credit deteriorated at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans. At the acquisition date, an initial allowance for expected credit losses is estimated and recorded as credit loss expense. The subsequent measurement of expected credit losses for all acquired loans is the same as the subsequent measurement of expected credit losses for originated loans.

The following table presents the activity in the allowance for credit losses based on portfolio segment for the three and ~~six~~nine months ended ~~June~~September 30, 2022 (in thousands):

	Construction and Land Development		Agricultural Real Estate		1-4 Family Residential Properties			Commercial Real Estate			Agricultural Loans			Commercial and Industrial		Consumer Loans			Total		Construction and Land Development		Agricultural Real Estate			1-4 Family Residential Properties		Commercial Real Estate			Agricultural Loans			Commercial and Industrial		Consumer Loans			Total
Three months ended June 30, 2022
Three months ended September 30, 2022
Beginning balance	$	1,988	$	1,971	$	3,728		$	30,345		$	1,051		$	17,348	$	2,043		$	58,474	$	2,042	$	2,112		$	3,523	$	28,856		$	886		$	19,496	$	2,160		$	59,075
Provision for credit loss expense		54		141		(178	)		(1,433	)		(72	)		2,117		278			907		1		(674	)		269		(796	)		(246	)		1,271		317			142
Loans charged off		0		0		69			68			93			32		309			571		—		—			45		7			—			389		392			833
Recoveries collected		0		0		42			12			0			63		148			265		100		—			19		8			38			63		165			393
Ending balance	$	2,042	$	2,112	$	3,523		$	28,856		$	886		$	19,496	$	2,160		$	59,075	$	2,143	$	1,438		$	3,766	$	28,061		$	678		$	20,441	$	2,250		$	58,777

Six months ended June 30, 2022
Nine months ended September 30, 2022
Beginning balance	$	1,743	$	1,257	$	2,330		$	26,246		$	983		$	19,241	$	2,855		$	54,655	$	1,743	$	1,257		$	2,330	$	26,246		$	983		$	19,241	$	2,855		$	54,655
Initial allowance on loans purchased with credit deterioration		272		0		3			478			0			94		16			863		272		—			3		478			—			94		16			863
Provision for credit loss expense		29		855		1,086			2,180			(4	)		72		(359	)		3,859		30		181			1,355		1,384			(250	)		1,343		(42	)		4,001
Loans charged off		2		0		141			407			93			35		667			1,345		2		—			186		414			93			424		1,059			2,178
Recoveries collected		0		0		245			359			0			124		315			1,043		100		—			264		367			38			187		480			1,436
Ending balance	$	2,042	$	2,112	$	3,523		$	28,856		$	886		$	19,496	$	2,160		$	59,075	$	2,143	$	1,438		$	3,766	$	28,061		$	678		$	20,441	$	2,250		$	58,777

The following tables present the activity in the allowance for credit losses based on portfolio segment for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and for the year ended December 31, 2021 (in thousands):

		Construction and Land Development			Agricultural Real Estate		1-4 Family Residential Properties			Commercial Real Estate			Agricultural Loans			Commercial and Industrial		Consumer Loans			Total				Construction and Land Development		Agricultural Real Estate			1-4 Family Residential Properties			Commercial Real Estate			Agricultural Loans			Commercial and Industrial		Consumer Loans		Total
Three months ended June 30, 2021
Three months ended September 30, 2021																								Three months ended September 30, 2021
Beginning balance (prior to adoption of ASC 326)		$	2,286		$	1,628	$	3,093		$	25,737		$	881		$	18,954	$	2,839		$	55,418			$	1,795	$	1,665		$	2,570		$	25,664		$	906		$	19,842	$	2,155	$	54,597
Provision for credit loss expense			(468	)		37		(527	)		(86	)		24			934		(474	)		(560	)			314		(408	)		27			(52	)		(90	)		342		970		1,103
Loans charged off			23			0		14			0			0			68		344			449				—		—			45			55			—			1,600		376		2,076
Recoveries collected			0			0		18			13			1			22		134			188				—		—			108			23			—			24		204		359
Ending balance		$	1,795		$	1,665	$	2,570		$	25,664		$	906		$	19,842	$	2,155		$	54,597			$	2,109	$	1,257		$	2,660		$	25,580		$	816		$	18,608	$	2,953	$	53,983

Six months ended June 30, 2021
Nine months ended September 30, 2021																								Nine months ended September 30, 2021
Beginning balance (prior to adoption of ASC 326)		$	1,666		$	1,084	$	2,322		$	19,660		$	1,526		$	13,485	$	2,167		$	41,910			$	1,666	$	1,084		$	2,322		$	19,660		$	1,526		$	13,485	$	2,167	$	41,910
Initial allowance on loans purchased with credit deterioration			261			44		328			646			0			795		0			2,074				261		44			328			646			—			795		—		2,074
Provision for credit loss expense			(109	)		535		90			5,816			(621	)		5,608		257			11,576				205		129			117			5,764			(711	)		5,950		1,225		12,679
Loans charged off			23			0		196			480			0			86		632			1,417				23		—			241			535			—			1,686		1,008		3,493
Recoveries collected			0			2		26			22			1			40		363			454				—		—			134			45			1			64		569		813
Ending balance		$	1,795		$	1,665	$	2,570		$	25,664		$	906		$	19,842	$	2,155		$	54,597			$	2,109	$	1,257		$	2,660		$	25,580		$	816		$	18,608	$	2,953	$	53,983

Twelve months ended December 31, 2021	Twelve months ended December 31, 2021																							Twelve months ended December 31, 2021
Beginning balance (prior to adoption of ASC 326)		$	1,666		$	1,084	$	2,322		$	19,660		$	1,526		$	13,485	$	2,167		$	41,910			$	1,666	$	1,084		$	2,322		$	19,660		$	1,526		$	13,485	$	2,167	$	41,910
Impact of adopting ASC 326			261			44		328			646			0			795		0			2,074				261		44			328			646			—			795		—		2,074
Provision for credit loss expense			21			129		(160	)		6,415			(544	)		7,940		1,350			15,151				21		129			(160	)		6,415			(544	)		7,940		1,350		15,151
Loans charged off			205			0		371			535			0			3,118		1,405			5,634				205		—			371			535			—			3,118		1,405		5,634
Recoveries collected			0			0		211			60			1			139		743			1,154				—		—			211			60			1			139		743		1,154
Ending balance		$	1,743		$	1,257	$	2,330		$	26,246		$	983		$	19,241	$	2,855		$	54,655			$	1,743	$	1,257		$	2,330		$	26,246		$	983		$	19,241	$	2,855	$	54,655

Consistent with regulatory guidance, charge-offs on all loan segments are taken when specific loans, or portions thereof, are considered uncollectible. The Company’s policy is to promptly charge these loans off in the period the uncollectible loss is reasonably determined.

For all loan portfolio segments except 1-4 family residential properties and consumer, the Company promptly charges-off loans, or portions thereof, when available information confirms that specific loans are uncollectible based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For individually evaluated loans that are considered solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

The Company charges-off 1-4 family residential and consumer loans, or portions thereof, when the Company reasonably determines the amount of the loss. The Company adheres to timeframes established by applicable regulatory guidance which provides for the charge-down of 1-4 family first and junior lien mortgages to the net realizable value less costs to sell when the loan is 180 days past due, charge-off of unsecured open-end loans when the loan is 180 days past due, and charge down to the net realizable value when other secured loans are 120 days past due. Loans at these respective delinquency thresholds for which the Company can clearly document that the loan is both well-secured and in the process of collection, such that collection will occur regardless of delinquency status, need not be charged off.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans that were individually evaluated to determine expected credit losses, and the related allowance for credit losses, as of ~~June~~September 30, 2022 (in thousands):

	Collateral								Allowance		Collateral								Allowance
	Real Estate		Business Assets		Other		Total		for Credit Losses		Real Estate		Business Assets		Other		Total		for Credit Losses
Construction and land development	$	466	$	0	$	0	$	466	$	205	$	457	$	—	$	—	$	457	$	230
Agricultural real estate		0		0		74		74		0		—		—		74		74		—
1-4 family residential properties		1,040		148		0		1,188		90		710		147		—		857		83
Multifamily residential properties		1,287		0		0		1,287		0		1,224		—		—		1,224		—
Commercial real estate		8,811		663		0		9,474		503		8,781		653		—		9,434		477
Loans secured by real estate		11,604		811		74		12,489		798		11,172		800		74		12,046		790
Agricultural loans												—		850		—		850		—
Commercial and industrial loans		220		626		0		846		300		314		977		—		1,291		469
Consumer loans		0		0		3	3			0		—		—		2	2			—
Total loans	$	11,824	$	1,437	$	77	$	13,338	$	1,098	$	11,486	$	2,627	$	76	$	14,189	$	1,259

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, collateral support, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Company uses the following definitions for risk ratings which are commensurate with a loan considered “criticized”:

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current sound-worthiness and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing factors, conditions and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered pass rated loans.

The following tables present the credit risk profile of the Company’s loan portfolio on amortized cost basis based on risk rating category and year of origination as of ~~June~~September 30, 2022 (in thousands):

		Term Loans by Origination Year												Revolving					Term Loans by Origination Year												Revolving
Risk rating		2022		2021		2020		2019		2018		Prior		Loans		Total			2022		2021		2020		2019		2018		Prior		Loans		Total
June 30, 2022
September 30, 2022
Construction and land development loans	Construction and land development loans																	Construction and land development loans
Pass		$	24,090	$	50,335	$	24,406	$	27,088	$	2,276	$	12,294	$	0	$	140,489		$	44,523	$	41,588	$	20,108	$	22,670	$	2,042	$	11,388	$	—	$	142,319
Special mention			0		105		0		0		0		0		0		105			—		—		—		—		—		—		—		—
Substandard			0		0		0		0		0		478		0		478			—		—		—		14		—		468		—		482
Total		$	24,090	$	50,440	$	24,406	$	27,088	$	2,276	$	12,772	$	0	$	141,072		$	44,523	$	41,588	$	20,108	$	22,684	$	2,042	$	11,856	$	—	$	142,801
Agricultural real estate loans	Agricultural real estate loans																	Agricultural real estate loans
Pass		$	96,798	$	73,365	$	59,171	$	23,222	$	28,105	$	58,227	$	0	$	338,888		$	120,430	$	66,652	$	58,431	$	24,048	$	27,955	$	53,902	$	—	$	351,418
Special mention			825		0		490		3,499		273		3,248		0		8,335			1,123		—		490		1,295		273		3,195		—		6,376
Substandard			0		0		0		0		1,460		1,476		0		2,936			—		—		—		—		1,459		1,171		—		2,630
Total		$	97,623	$	73,365	$	59,661	$	26,721	$	29,838	$	62,951	$	0	$	350,159		$	121,553	$	66,652	$	58,921	$	25,343	$	29,687	$	58,268	$	—	$	360,424
1-4 family residential property loans	1-4 family residential property loans																	1-4 family residential property loans
Pass		$	45,334	$	93,175	$	85,280	$	30,080	$	33,992	$	74,577	$	47,094	$	409,532		$	77,502	$	89,035	$	82,523	$	28,341	$	31,771	$	66,756	$	46,485	$	422,413
Special mention			0		151		139		40		182		1,149		129		1,790			—		233		2		39		243		1,124		129		1,770
Substandard			255		340		441		366		2,924		8,278		304		12,908			251		297		575		301		2,881		7,867		270		12,442
Total		$	45,589	$	93,666	$	85,860	$	30,486	$	37,098	$	84,004	$	47,527	$	424,230		$	77,753	$	89,565	$	83,100	$	28,681	$	34,895	$	75,747	$	46,884	$	436,625
Commercial real estate loans	Commercial real estate loans																	Commercial real estate loans
Pass		$	359,324	$	538,921	$	341,037	$	287,273	$	223,273	$	513,758	$	0	$	2,263,586		$	460,123	$	529,691	$	327,112	$	255,439	$	215,989	$	470,189	$	—	$	2,258,543
Special mention			2,061		1,457		1,153		1,799		993		15,212		0		22,675			2,055		1,439		1,057		1,533		970		8,604		—		15,658
Substandard			3,865		490		829		1,003		5,655		9,151		0		20,993			3,810		484		810		933		5,563		8,858		—		20,458
Total		$	365,250	$	540,868	$	343,019	$	290,075	$	229,921	$	538,121	$	0	$	2,307,254		$	465,988	$	531,614	$	328,979	$	257,905	$	222,522	$	487,651	$	—	$	2,294,659
Agricultural loans	Agricultural loans																	Agricultural loans
Pass		$	83,601	$	37,086	$	10,637	$	4,013	$	1,765	$	1,288	$	0	$	138,390		$	112,261	$	27,677	$	10,197	$	3,585	$	1,663	$	1,850	$	—	$	157,233
Special mention			1,201		1,317		0		262		81		0		0		2,861			2,099		26		—		62		78		109		—		2,374
Substandard			940		0		0		43		4		168		0		1,155			850		—		—		50		4		—		—		904
Total		$	85,742	$	38,403	$	10,637	$	4,318	$	1,850	$	1,456	$	0	$	142,406		$	115,210	$	27,703	$	10,197	$	3,697	$	1,745	$	1,959	$	—	$	160,511
Commercial and industrial loans	Commercial and industrial loans																	Commercial and industrial loans
Pass		$	227,589	$	319,582	$	184,910	$	77,852	$	77,171	$	296,278	$	0	$	1,183,382		$	403,584	$	220,179	$	183,378	$	68,370	$	70,106	$	273,643	$	—	$	1,219,260
Special mention			229		478		322		1,353		265		382		—		3,029			191		460		343		885		242		568		—		2,689
Substandard			307		455		367		40		109		725		0		2,003			365		551		282		37		176		658		—		2,069
Doubtful			0		300		0		0		0		0		0		300			—		—		—		469		—		—		—		469
Total		$	228,125	$	320,815	$	185,599	$	79,245	$	77,545	$	297,385	$	0	$	1,188,714		$	404,140	$	221,190	$	184,003	$	69,761	$	70,524	$	274,869	$	—	$	1,224,487
Consumer loans	Consumer loans																	Consumer loans
Pass		$	28,818	$	25,791	$	20,595	$	11,516	$	3,428	$	4,328	$	0	$	94,476		$	42,963	$	23,540	$	17,896	$	9,442	$	2,630	$	3,738	$	—	$	100,209
Special mention			0		60		30		32		7		0		0		129			—		52		30		29		6		—		—		117
Substandard			12		119		2		14		46		30		0		223			11		202		144		24		54		22		—		457
Total		$	28,830	$	25,970	$	20,627	$	11,562	$	3,481	$	4,358	$	0	$	94,828		$	42,974	$	23,794	$	18,070	$	9,495	$	2,690	$	3,760	$	—	$	100,783
Total loans	Total loans																	Total loans
Pass		$	865,554	$	1,138,255	$	726,036	$	461,044	$	370,010	$	960,750	$	47,094	$	4,568,743		$	1,261,386	$	998,362	$	699,645	$	411,895	$	352,156	$	881,466	$	46,485	$	4,651,395
Special mention			4,316		3,568		2,134		6,985		1,801		19,991		129		38,924			5,468		2,210		1,922		3,843		1,812		13,600		129		28,984
Substandard			5,379		1,404		1,639		1,466		10,198		20,306		304		40,696			5,287		1,534		1,811		1,359		10,137		19,044		270		39,442
Doubtful			0		300		0		0		0		0		0		300			—		—		—		469		—		—		—		469
Total		$	875,249	$	1,143,527	$	729,809	$	469,495	$	382,009	$	1,001,047	$	47,527	$	4,648,663		$	1,272,141	$	1,002,106	$	703,378	$	417,566	$	364,105	$	914,110	$	46,884	$	4,720,290

The following tables present the credit risk profile of the Company’s loan portfolio based on risk rating category as of December 31, 2021 (in thousands):

		Term Loans by Origination Year												Revolving					Term Loans by Origination Year												Revolving
Risk rating		2021		2020		2019		2018		2017		Prior		Loans		Total			2021		2020		2019		2018		2017		Prior		Loans		Total
December 31, 2021
Construction and land development loans	Construction and land development loans																	Construction and land development loans
Pass		$	38,656	$	34,774	$	23,505	$	34,358	$	3,760	$	9,433	$	0	$	144,486		$	38,656	$	34,774	$	23,505	$	34,358	$	3,760	$	9,433	$	—	$	144,486
Special mention			110		0		0		0		0		0		0		110			110		—		—		—		—		—		—		110
Substandard			0		0		0		483		0		39		0		522			—		—		—		483		—		39		—		522
Total		$	38,766	$	34,774	$	23,505	$	34,841	$	3,760	$	9,472	$	0	$	145,118		$	38,766	$	34,774	$	23,505	$	34,841	$	3,760	$	9,472	$	—	$	145,118
Agricultural real estate loans	Agricultural real estate loans																	Agricultural real estate loans
Pass		$	78,793	$	64,159	$	25,713	$	30,203	$	12,142	$	54,808	$	0	$	265,818		$	78,793	$	64,159	$	25,713	$	30,203	$	12,142	$	54,808	$	—	$	265,818
Special mention			872		259		4,028		384		69		6,087		0		11,699			872		259		4,028		384		69		6,087		—		11,699
Substandard			0		0		392		187		57		1,119		0		1,755			—		—		392		187		57		1,119		—		1,755
Total		$	79,665	$	64,418	$	30,133	$	30,774	$	12,268	$	62,014	$	0	$	279,272		$	79,665	$	64,418	$	30,133	$	30,774	$	12,268	$	62,014	$	—	$	279,272
1-4 family residential property loans	1-4 family residential property loans																	1-4 family residential property loans
Pass		$	78,889	$	94,404	$	35,554	$	44,248	$	30,735	$	52,131	$	42,800	$	378,761		$	78,889	$	94,404	$	35,554	$	44,248	$	30,735	$	52,131	$	42,800	$	378,761
Special mention			234		0		1,934		499		2,601		1,196		41		6,505			234		—		1,934		499		2,601		1,196		41		6,505
Substandard			355		496		1,534		1,302		3,458		7,250		652		15,047			355		496		1,534		1,302		3,458		7,250		652		15,047
Total		$	79,478	$	94,900	$	39,022	$	46,049	$	36,794	$	60,577	$	43,493	$	400,313		$	79,478	$	94,900	$	39,022	$	46,049	$	36,794	$	60,577	$	43,493	$	400,313
Commercial real estate loans	Commercial real estate loans																	Commercial real estate loans
Pass		$	568,200	$	417,334	$	299,973	$	174,448	$	150,811	$	304,585	$	0	$	1,915,351		$	568,200	$	417,334	$	299,973	$	174,448	$	150,811	$	304,585	$	—	$	1,915,351
Special mention			3,185		1,206		1,836		1,295		10,609		8,632		0		26,763			3,185		1,206		1,836		1,295		10,609		8,632		—		26,763
Substandard			2,007		714		6,242		1,179		4,646		8,238		0		23,026			2,007		714		6,242		1,179		4,646		8,238		—		23,026
Total		$	573,392	$	419,254	$	308,051	$	176,922	$	166,066	$	321,455	$	0	$	1,965,140		$	573,392	$	419,254	$	308,051	$	176,922	$	166,066	$	321,455	$	—	$	1,965,140
Agricultural loans	Agricultural loans																	Agricultural loans
Pass		$	105,378	$	17,903	$	5,612	$	2,822	$	924	$	1,316	$	0	$	133,955		$	105,378	$	17,903	$	5,612	$	2,822	$	924	$	1,316	$	—	$	133,955
Special mention			13,725		436		2,648		150		13		64		0		17,036			13,725		436		2,648		150		13		64		—		17,036
Substandard			350		18		0		0		0		125		0		493			350		18		—		—		—		125		—		493
Total		$	119,453	$	18,357	$	8,260	$	2,972	$	937	$	1,505	$	0	$	151,484		$	119,453	$	18,357	$	8,260	$	2,972	$	937	$	1,505	$	—	$	151,484
Commercial and industrial loans	Commercial and industrial loans																	Commercial and industrial loans
Pass		$	279,814	$	167,662	$	119,702	$	76,022	$	22,888	$	302,962	$	0	$	969,050		$	279,814	$	167,662	$	119,702	$	76,022	$	22,888	$	302,962	$	—	$	969,050
Special mention			613		399		1,463		182		477		819		0		3,953			613		399		1,463		182		477		819		—		3,953
Substandard			506		34		133		621		24		1,433		0		2,751			506		34		133		621		24		1,433		—		2,751
Total		$	280,933	$	168,095	$	121,298	$	76,825	$	23,389	$	305,214	$	0	$	975,754		$	280,933	$	168,095	$	121,298	$	76,825	$	23,389	$	305,214	$	—	$	975,754
Consumer loans	Consumer loans																	Consumer loans
Pass		$	27,948	$	19,033	$	16,978	$	5,505	$	4,297	$	1,244	$	0	$	75,005		$	27,948	$	19,033	$	16,978	$	5,505	$	4,297	$	1,244	$	—	$	75,005
Special mention			68		54		38		9		0		0		0		169			68		54		38		9		—		—		—		169
Substandard			585		58		308		678		43		1,596		0		3,268			585		58		308		678		43		1,596		—		3,268
Total		$	28,601	$	19,145	$	17,324	$	6,192	$	4,340	$	2,840	$	0	$	78,442		$	28,601	$	19,145	$	17,324	$	6,192	$	4,340	$	2,840	$	—	$	78,442
Total loans	Total loans																	Total loans
Pass		$	1,177,678	$	815,269	$	527,037	$	367,606	$	225,557	$	726,479	$	42,800	$	3,882,426		$	1,177,678	$	815,269	$	527,037	$	367,606	$	225,557	$	726,479	$	42,800	$	3,882,426
Special mention			18,807		2,354		11,947		2,519		13,769		16,798		41		66,235			18,807		2,354		11,947		2,519		13,769		16,798		41		66,235
Substandard			3,803		1,320		8,609		4,450		8,228		19,800		652		46,862			3,803		1,320		8,609		4,450		8,228		19,800		652		46,862
Total		$	1,200,288	$	818,943	$	547,593	$	374,575	$	247,554	$	763,077	$	43,493	$	3,995,523		$	1,200,288	$	818,943	$	547,593	$	374,575	$	247,554	$	763,077	$	43,493	$	3,995,523

The following table presents the Company’s loan portfolio aging analysis at ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing		30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable		Total Loans > 90 Days and Accruing
June 30, 2022
September 30, 2022
Construction and land development	$	0	$	0	$	449	$	449	$	140,623	$	141,072	$	0	$	340	$	—	$	449	$	789	$	142,012	$	142,801	$	—
Agricultural real estate		0		241		192		433		349,726		350,159		0		393		—		242		635		359,789		360,424		—
1-4 family residential properties		3,294		496		918		4,708		419,522		424,230		0		2,808		537		819		4,164		432,461		436,625		—
Multifamily residential properties	��	4		0		544		548		330,052		330,600		0		—		—		546		546		297,775		298,321		—
Commercial real estate		1,706		160		9,349		11,215		1,965,439		1,976,654		0		1,172		198		4,779		6,149		1,990,189		1,996,338		—
Loans secured by real estate		5,004		897		11,452		17,353		3,205,362		3,222,715		0		4,713		735		6,835		12,283		3,222,226		3,234,509		—
Agricultural loans		226		940		0		1,166		141,240		142,406		0		82		—		881		963		159,548		160,511		—
Commercial and industrial loans		1,357		65		1,332		2,754		1,034,233		1,036,987		0		300		642		1,221		2,163		1,061,870		1,064,033		—
Consumer loans		598		69		95		762		94,066		94,828		0		263		215		319		797		99,986		100,783		—
All other loans		0		0		0		0		151,727		151,727		0		—		—		—		—		160,454		160,454		—
Total loans	$	7,185	$	1,971	$	12,879	$	22,035	$	4,626,628	$	4,648,663	$	0	$	5,358	$	1,592	$	9,256	$	16,206	$	4,704,084	$	4,720,290	$	—
December 31, 2021
Construction and land development	$	159	$	199	$	203	$	561	$	144,557	$	145,118	$	0	$	159	$	199	$	203	$	561	$	144,557	$	145,118	$	—
Agricultural real estate		0		222		1		223		279,049		279,272		0		—		222		1		223		279,049		279,272		—
1-4 family residential properties		2,532		914		2,012		5,458		394,855		400,313		0		2,532		914		2,012		5,458		394,855		400,313		—
Multifamily residential properties		0		0		1,676		1,676		297,266		298,942		0		—		—		1,676		1,676		297,266		298,942		—
Commercial real estate		8,930		640		2,484		12,054		1,654,144		1,666,198		0		8,930		640		2,484		12,054		1,654,144		1,666,198		—
Loans secured by real estate		11,621		1,975		6,376		19,972		2,769,871		2,789,843		0		11,621		1,975		6,376		19,972		2,769,871		2,789,843		—
Agricultural loans		0		10		588		598		150,886		151,484		0		—		10		588		598		150,886		151,484		—
Commercial and industrial loans		381		302		1,156		1,839		830,169		832,008		0		381		302		1,156		1,839		830,169		832,008		—
Consumer loans		388		47		118		553		77,889		78,442		0		388		47		118		553		77,889		78,442		—
All other loans		1,854		0		0		1,854		141,892		143,746		0		1,854		—		—		1,854		141,892		143,746		—
Total loans	$	14,244	$	2,334	$	8,238	$	24,816	$	3,970,707	$	3,995,523	$	0	$	14,244	$	2,334	$	8,238	$	24,816	$	3,970,707	$	3,995,523	$	—

Within all loan portfolio segments, loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date. Impaired loans, excluding certain troubled debt restructured loans, are placed on nonaccrual status. Impaired loans include nonaccrual loans and loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection. It is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status until, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. If the restructured loan is on accrual status prior to being modified, the loan is reviewed to determine if the modified loan should remain on accrual status.

The Company’s policy is to discontinue the accrual of interest income on all loans for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Interest on loans determined to be troubled debt restructurings is recognized on an accrual basis in accordance with the restructured terms if the loan is in compliance with the modified terms. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal. The Company requires a period of satisfactory performance of not less than six months before returning a nonaccrual loan to accrual status.

The amount of interest income recognized by the Company within the periods stated above was due to loans modified in troubled debt restructurings that remain on accrual status.

The following table presents the amortized cost basis of loans on nonaccrual status and of nonaccrual loans individually evaluated for which no allowance was recorded as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands). There were no loans past due over eighty-nine days that were still accruing.

	June 30, 2022				December 31, 2021				September 30, 2022				December 31, 2021
	Nonaccrual with no Allowance for		Total		Nonaccrual with no Allowance for		Total		Nonaccrual with no Allowance for		Total		Nonaccrual with no Allowance for		Total
	Credit Loss		Nonaccrual		Credit Loss		Nonaccrual		Credit Loss		Nonaccrual		Credit Loss		Nonaccrual
Construction and land development	$	0	$	0	$	25	$	25	$	14	$	14	$	25	$	25
Agricultural real estate		1,268		1,268		237		336		1,347		1,347		237		336
1-4 family residential properties		4,045		4,680		5,252		5,252		4,037		4,222		5,252		5,252
Multifamily residential properties		1,311		1,311		1,982		1,982		1,238		1,238		1,982		1,982
Commercial real estate		7,634		7,975		7,554		7,920		7,969		7,970		7,554		7,920
Loans secured by real estate		14,258		15,234		15,050		15,515		14,605		14,791		15,050		15,515
Agricultural loans		174		174		560		560		856		856		560		560
Commercial and industrial loans		1,229		1,529		936		1,851		1,403		1,872		936		1,851
Consumer loans		98		98		179		179		347		347		179		179
All other loans		0		0		0		0		—		—		—		—
Total loans	$	15,759	$	17,035	$	16,725	$	18,105	$	17,211	$	17,866	$	16,725	$	18,105

Interest income that would have been recorded under the original terms of such nonaccrual loans totaled ~~$94,000~~$168,000 and ~~$319,000~~$407,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

The balance of troubled debt restructurings ("TDRs") at ~~June~~September 30, 2022 and December 31, 2021 was ~~$5.0~~$4.7 million and $5.8 million, respectively. There was $497,000 and $765,000 in specific reserves established with respect to these loans as of ~~June~~September 30, 2022 and December 31, 2021, respectively. As troubled debt restructurings, these loans are included in nonperforming loans. The modification of the terms of these loans included one or a combination of the following: a reduction of stated interest rate of the loan; an extension of the maturity date and change in payment terms; or a permanent reduction of the recorded investment in the loan.

The following table presents the Company’s recorded balance of troubled debt restructurings at ~~June~~September 30, 2022 and December 31, 2021 (in thousands).

Troubled debt restructurings:	June 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Agricultural real estate	$	233	$	245	$	353	$	245
1-4 family residential properties		1,082		1,353		1,056		1,353
Commercial real estate		3,174		3,355		2,956		3,355
Loans secured by real estate		4,489		4,953		4,365		4,953
Agricultural loans		168		228		0		228
Commercial and industrial loans		313		479		321		479
Consumer loans		42		109		40		109
All other loans		—		23		—		23
Total	$	5,012	$	5,792	$	4,726	$	5,792
Performing troubled debt restructurings:
Agricultural real estate	$	233	$	245	$	233	$	245
1-4 family residential properties		659		882		650		882
Commercial real estate		1,978		2,552		1,957		2,552
Loans secured by real estate		2,870		3,679		2,840		3,679
Commercial and industrial loans		37		179		68		179
Consumer loans		39		50		38		50
All other loans		—		23		—		23
Total	$	2,946	$	3,931	$	2,946	$	3,931

The following table presents loans modified as TDRs during the ~~six~~nine months ended ~~June~~September 30, 2022, as a result of various modified loan factors (in thousands). The change in the recorded investment from pre-modification to post- modification was not material.

	June 30, 2022					June 30, 2021					September 30, 2022					September 30, 2021
	Number of		Recorded		Type of	Number of		Recorded		Type of	Number of		Recorded		Type of	Number of		Recorded		Type of
	Modifications		Investment		Modifications	Modifications		Investment		Modifications	Modifications		Investment		Modifications	Modifications		Investment		Modifications
Construction and land development												—	$	—			1	$	492	(c)
Agricultural real estate												2		120	(b)		1		250	(b)
1-4 family residential properties		2	$	79	(b)(c)		1		395	(c)		2	$	63	(b)(c)		2		323	(b)(c)
Commercial real estate		2		199	(b)		1		679	(b)		3		197	(b)		1		681	(b)
Loans secured by real estate		4		278			2		1,074			7		380			5		1,746
Agricultural loans												—		—			1		156	(b)
Commercial and industrial loans												1		35	(b)		6		287	(b)
Consumer loans		0		0			3		24	(b)		—		—			4		54	(b)
Other Loans												—		—			1		24	(b)
Total		4	$	278			5	$	1,098			8	$	415			17	$	2,267

A loan is considered to be in payment default once it is 90 days past due under the modified terms. There were 2two loans modified as troubled debt restructurings during the prior twelve months that experienced defaults for ~~six~~nine months ended ~~June~~September 30, 2022. There was 1one loan modified as troubled debt restructuring during the prior twelve months that experienced defaults as of December 31, 2021.

The balance of real estate owned includes ~~$4,209,000~~$4,322,000 and $4,984,000 of foreclosed real estate properties recorded as a result of obtaining physical possession of the property at ~~June~~September 30, 2022 and December 31, 2021, respectively. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure procedures are in process was ~~$417,000~~$532,000 and $411,000 at ~~June~~September 30, 2022 and December 31, 2021, respectively.

The Company has acquired loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans at acquisition date is as follows (in thousands):

The Company has goodwill from business combinations, intangible assets from branch acquisitions, identifiable intangible assets assigned to core deposit relationships and customer lists of First Mid Wealth Management Company and First Mid Insurance. The following table presents gross carrying value and accumulated amortization by major intangible asset class as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022				December 31, 2021				September 30, 2022				December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Goodwill not subject to amortization (effective 1/1/02)	$	144,225	$	3,760	$	115,613	$	3,760	$	143,854	$	3,760	$	115,613	$	3,760
Intangibles from branch acquisition		3,015		3,015		3,015		3,015		3,015		3,015		3,015		3,015
Core deposit intangibles		45,355		26,227		39,435		24,085		45,355		27,359		39,435		24,085
Other intangibles		20,561		7,672		20,561		6,808		20,561		8,104		20,561		6,808
	$	213,156	$	40,674	$	178,624	$	37,668	$	212,785	$	42,238	$	178,624	$	37,668

During the first quarter of 2022, goodwill of $28.6 million was provisionally recorded for the acquisition and merger of Delta Bancshares Company. This goodwill was subsequently adjusted to $28.2 million to reflect proper tax treatment of the Delta assets and liabilities. All this goodwill was assigned to the banking unit of the Company.

During the second quarter of 2021, goodwill of $1.4 million was recorded for the acquisition of certain assets used by BBM & Associates Inc., in connection with its trucking insurance business. All this goodwill was assigned to First Mid Insurance.

Goodwill of $8.9 million was provisionally recorded for the acquisition and merger of LINCO Bancshares, Inc. (“LINCO”) during the first quarter of 2021. All this goodwill was assigned to the banking units of the Company. This goodwill was subsequently adjusted to $5.4 million to reflect adjustments made to finalize the purchase accounting.

The following table provides a reconciliation of the purchase price paid for the acquisition of Delta and the amount of goodwill recorded (in thousands):

Unallocated purchase price				$	29,791				$	29,791
Less purchase accounting adjustments:
Fair value of securities	$	(2,836	)			$	(2,836	)
Fair value of loans, net		(3,399	)				(3,399	)
Fair value of premises and equipment		3,508					3,508
Fair value of time deposits		(1,759	)				(1,759	)
Fair value of FHLB advances		(75	)				(75	)
Core deposit intangible		5,920					5,920
Other assets		(623	)				(253	)
Other liabilities		444					444
					1,180					1,550
				$	28,611				$	28,241

The following table provides a reconciliation of the purchase price paid for the acquisition of LINCO and the amount of goodwill recorded (in thousands):

The Company has mortgage servicing rights acquired in previous acquisitions. The following table summarizes the activity pertaining to mortgage servicing rights included in intangible assets as of ~~June~~September 30, 2022, ~~June~~September 30, 2021 and December 31, 2021 (in thousands):

	June 30, 2022				June 30, 2021			December 31, 2021			September 30, 2022			September 30, 2021			December 31, 2021
Beginning balance	$	420		��	$	516		$	516		$	420		$	516		$	516
Fair market value adjustment		107				318			544
Adjustment to valuation reserve												108			474			544
Mortgage servicing rights amortized		(149	)			(355	)		(629	)		(184	)		(528	)		(629	)
Interest only strip		11				(6	)		(11	)		6			(7	)		(11	)
Ending balance	$	389			$	473		$	420		$	350		$	455		$	420

Total amortization expense for ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 was as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,				Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Core deposit intangibles	$	1,153	$	728	$	2,142	$	1,438	$	1,131	$	809	$	3,273	$	2,247
Customer list intangibles		432		389		864		722		432		432		1,296		1,154
Mortgage servicing rights		48		178		149		355		35		173		184		528
	$	1,633	$	1,295	$	3,155	$	2,515	$	1,598	$	1,414	$	4,753	$	3,929

Aggregate amortization expense for the current year and estimated amortization expense for each of the five succeeding years is shown in the table below (in thousands):

Aggregate amortization expense:
For period 01/01/22 - 06/30/22	$	3,155
For period 01/01/22 - 09/30/22			$	4,753
Estimated amortization expense:
For period 07/01/22 - 12/31/22		3,165
For period 10/01/22 - 12/31/22				1,521
For year ended 12/31/23		5,799		5,782
For year ended 12/31/24		5,291		5,274
For year ended 12/31/25		4,741		4,724
For year ended 12/31/26		3,852		3,835

In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” codified within ASC 350, the Company performed testing of goodwill for impairment as of September 30, ~~2021~~2022 and determined that, as of that date, goodwill was not impaired. Management also concluded that the remaining amounts and amortization periods were appropriate for all intangible assets.

Securities sold under agreements to repurchase were ~~$174.9~~$220.7 million at ~~June~~September 30, 2022, increase of ~~$28.6~~$74.4 million from $146.3 million at December 31, 2021. The increase during the first ~~six~~nine months of 2022 was primarily due to changes in business cash flow needs. All the transactions have overnight maturities with a weighted average rate of ~~0.53%~~1.13%.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third-party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained, while mitigating the potential of over-collateralization in the event of counterparty default.

Collateral pledged by class for repurchase agreements are as follows (in thousands):

	June 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
US Treasury securities and obligations of U.S. government corporations and agencies	$	49,277	$	53,782	$	56,030	$	53,782
Mortgage-backed securities: GSE: residential		125,657		92,486		164,677		92,486
Total	$	174,934	$	146,268	$	220,707	$	146,268

FHLB borrowings, before net premiums of ~~$428,000,~~$374,000, were ~~$375.9~~$175.9 million and $86 million at ~~June~~September 30, 2022 and December 31, 2021, respectively. At ~~June~~September 30, 2022 the advances were as follows:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or comparable assets or liabilities which use observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in active markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Available-for-Sale Securities. The fair value of available-for-sale securities is determined by various valuation methodologies. Where quoted market prices are available in an active market, securities are classified within Level 1. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independent sources of market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Fair value determinations for Level 3 measurements of securities are the responsibility of the Treasury function of the Company. The Company contracts with a pricing specialist to generate fair value estimates on a monthly basis. The Treasury function of the Company challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States, analyzes the changes in fair value and compares these changes to internally developed expectations and monitors these changes for appropriateness.

Derivatives. The fair value of derivatives is based on models using observable market data as of the measurement date and are therefore classified in Level 2 of the valuation hierarchy.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	Fair Value Measurements Using								Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)		Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2022
September 30, 2022
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	236,847	$	0	$	236,847	$	0	$	222,731	$	—	$	222,731	$	—
Obligations of states and political subdivisions		327,822		0		327,822		0		286,108		—		286,108		—
Mortgage-backed securities		698,343		0		698,343		0		640,394		—		640,394		—
Other securities		86,936		0		86,936		0		81,555		—		81,555		—
Total available-for-sale securities		1,349,948		0		1,349,948		0		1,230,788		—		1,230,788		—
Equity securities		308		308		0		0		317		317		—		—
Derivative assets: interest rate swaps		3,163		0		3,163		0		4,501		—		4,501		—
Total assets	$	1,353,419	$	308	$	1,353,111	$	0	$	1,235,606	$	317	$	1,235,289	$	—

Derivative liabilities: interest rate swaps	$	2,553	$	0	$	2,553	$	0	$	3,296	$	—	$	3,296	$	—
December 31, 2021
Available-for-sale securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	203,815	$	0	$	203,815	$	0	$	203,815	$	—	$	203,815	$	—
Obligations of states and political subdivisions		395,457		0		395,358		99		395,457		—		395,358		99
Mortgage-backed securities		791,038		0		791,038		0		791,038		—		791,038		—
Other securities		31,112		0		31,112		0		31,112		—		31,112		—
Total available-for-sale securities		1,421,422		0		1,421,323		99		1,421,422		—		1,421,323		99
Equity securities		397		397		0		0		397		397		—		—
Derivative assets: interest rate swaps		809		0		809		0		809		—		809		—
Total assets	$	1,422,628	$	397	$	1,422,132	$	99	$	1,422,628	$	397	$	1,422,132	$	99

Derivative liabilities: interest rate swaps	$	1,476	$	0	$	1,476	$	0	$	1,476	$	—	$	1,476	$	—

The change in fair value of assets measured on a recurring basis using significant unobservable inputs (Level 3) for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 is summarized as follows (in thousands):

	Obligation of State and Political Subdivisions										Obligation of State and Political Subdivisions
	Three months ended				Six months ended						Three months ended				Nine months ended
	June 30, 2022		June 30, 2021		June 30, 2022			June 30, 2021			September 30, 2022		September 30, 2021		September 30, 2022			September 30, 2021
Beginning balance	$	0	$	614	$	99		$	794		$	—	$	615	$	99		$	794
Transfers into Level 3		0		0		0			0			—		—		—			—
Transfers out of Level 3		0		0		0			0			—		—		—			—
Total gains or losses:
Included in net income		0		1		0			2			—		1		—			3
Included in other comprehensive income (loss)		0		0		0			0			—		—		—			—
Purchases, issuances, sales and settlements:
Purchases		0		0		0			0			—		—		—			—
Issuances		0		0		0			0			—		—		—			—
Sales		0		0		0			0			—		—		—			—
Settlements		0		0		(99	)		(181	)		—		—		(99	)		(181	)
Ending balance	$	0	$	615	$	0		$	615		$	—	$	616	$	—		$	616
Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	0	$	0	$	0		$	0		$	—	$	—	$	—		$	—

Following is a description of the valuation methodologies used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.

Collateral Dependent Loans. Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for determining the amount of impairment and estimating fair value include using the fair value of the collateral for collateral dependent loans.

If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. Individually evaluated loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using the fair value method.

Management establishes a specific allowance for individually evaluated loans that have an estimated fair value that is below the carrying value. The total carrying amount of loans for which a change in specific allowance has occurred as of ~~June~~September 30, 2022 was ~~$4,504,000~~$3,937,000 and a fair value of ~~$3,406,000~~$2,678,000 resulting in specific loss exposures of ~~$1,098,000.~~$1,259,000.

When there is little prospect of collecting principal or interest, loans, or portions of loans, may be charged-off to the allowance for credit losses. Losses are recognized in the period an obligation becomes uncollectible. The recognition of a loss does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan even though partial recovery may be affected in the future.

Foreclosed Assets Held For Sale. Other real estate owned acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for credit losses. Due to the subjective nature of establishing the fair value when the asset is acquired, the actual fair value of the other real estate owned, or foreclosed asset could differ from the original estimate. If it is determined that fair value declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense. Operating costs associated with the assets after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense. The total carrying amount of other real estate owned as of ~~June~~September 30, 2022 was ~~$4,209,000.~~$4,322,000. Other real estate owned included in the total carrying amount and measured at fair value on a nonrecurring basis during the period amounted to ~~$1,680,000~~$213,000.

Mortgage Servicing Rights. As of ~~June~~September 30, 2022, mortgage servicing rights had a carrying value of ~~$319,000~~$350,000 and a fair value of ~~$389,000~~$599,000 resulting in a valuation reserve of $0. The fair value used to determine the valuation reserve for mortgage servicing rights was estimated using the discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the fair value hierarchy.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	Fair Value Measurements Using								Fair Value Measurements Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)		Fair Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2022
September 30, 2022
Collateral dependent loans	$	3,406	$	0	$	0	$	3,406	$	2,678	$	—	$	—	$	2,678
Foreclosed assets held for sale		1,680		0		0		1,680		213		—		—		213
Mortgage servicing rights		389		0		0		389		599		—		—		599
December 31, 2021
Collateral dependent loans	$	6,750	$	0	$	0	$	6,750	$	6,750	$	—	$	—	$	6,750
Foreclosed assets held for sale		2,068		0		0		2,068		2,068		—		—		2,068
Mortgage servicing rights		420		0		0		420		420		—		—		420

The following table presents quantitative information about unobservable inputs used in Level 3 fair value measurements other than goodwill at ~~June~~September 30, 2022 and December 31, 2021.

June 30, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
September 30, 2022								Fair Value		Valuation Technique	Unobservable Inputs	Range	Weighted Average
Collateral dependent loans	$	3,406	Third party valuations	Discount to reflect realizable value	0% - 40%	20%		$	2,678	Third party valuations	Discount to reflect realizable value	0% - 40%	20%
Foreclosed assets held for sale		1,680	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%			213	Third party valuations	Discount to reflect realizable value less estimated selling costs	0% - 40%	35%
Mortgage servicing rights		389	Third party valuations	PSA standard prepayment model rate	126 - 437		135		599	Third party valuations	PSA standard prepayment model rate	131 - 438		142

The following tables present estimated fair values of the Company’s financial instruments at ~~June~~September 30, 2022 and December 31, 2021 in accordance with ASC 825 (in thousands):

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2022
September 30, 2022
Financial assets
Cash and due from banks	$	130,689	$	130,689	$	130,689	$	0	$	0	$	153,559	$	153,559	$	153,559	$	—	$	—
Federal funds sold		6,855		6,855		6,855		0		0		7,395		7,395		7,395		—		—
Certificates of deposit investments		1,715		1,715		0		1,715		0		1,470		1,470		—		1,470		—
Available-for-sale securities		1,349,948		1,349,948		0		1,349,948		0		1,230,788		1,230,788		—		1,230,788		—
Held-to-maturity securities		2,972		2,972		2,972		0		0		2,930		2,930		2,930		—		—
Equity securities		308		308		308		0		0		317		317		317		—		—
Loans held for sale		1,286		1,286		0		1,286		0		467		467		—		467		—
Loans net of allowance for credit losses		4,588,302		4,441,169		0		0		4,441,169		4,661,046		4,459,663		—		—		4,459,663
Interest receivable		23,323		23,323		0		23,323		0		25,975		25,975		—		25,975		—
Federal Reserve Bank stock		17,050		17,050		0		17,050		0		17,050		17,050		—		17,050		—
Federal Home Loan Bank stock		8,684		8,684		0		8,684		0		5,843		5,843		—		5,843		—
Financial liabilities
Deposits	$	5,318,978	$	5,321,281	$	0	$	4,666,356	$	654,925	$	5,483,198	$	5,483,500	$	—	$	4,799,644	$	683,856
Other borrowings		10,000		10,000		10,000		0		0		5,000		5,000		5,000		—		—
Securities sold under agreements to repurchase		174,934		174,859		0		174,859		0		220,707		220,538		—		220,538		—
Interest payable		1,662		1,662		0		1,662		0		3,007		3,007		—		3,007		—
Federal Home Loan Bank borrowings		376,286		372,350		0		372,350		0		176,232		171,008		—		171,008		—
Subordinated debt, net		94,476		91,832		0		91,832				94,515		87,977		—		87,977
Junior subordinated debentures, net		19,279		18,440		0		18,440		0		19,322		17,134		—		17,134		—

December 31, 2021
Financial assets
Cash and due from banks	$	167,242	$	167,242	$	167,242	$	0	$	0	$	167,242	$	167,242	$	167,242	$	—	$	—
Federal funds sold		1,360		1,360		1,360		0		0		1,360		1,360		1,360		—		—
Certificates of deposit investments		2,450		2,450		0		2,450		0		2,450		2,450		—		2,450		—
Available-for-sale securities		1,421,422		1,421,422		0		1,421,323		99		1,421,422		1,421,422		—		1,421,323		99
Held-to-maturity securities		7,030		7,034		2,029		5,005		0		7,030		7,034		2,029		5,005		—
Equity securities		397		397		397		0		0		397		397		397		—		—
Loans held for sale		2,748		2,748		0		2,748		0		2,748		2,748		—		2,748		—
Loans net of allowance for credit losses		3,938,120		3,889,870		0		0		3,889,870		3,938,120		3,889,870		—		—		3,889,870
Interest receivable		19,868		19,868		0		19,868		0		19,868		19,868		—		19,868		—
Federal Reserve Bank stock		13,845		13,845		0		13,845		0		13,845		13,845		—		13,845		—
Federal Home Loan Bank stock		6,484		6,484		0		6,484		0		6,484		6,484		—		6,484		—
Financial liabilities
Deposits	$	4,956,486	$	4,956,738	$	0	$	4,394,434	$	562,304	$	4,956,486	$	4,956,738	$	—	$	4,394,434	$	562,304
Securities sold under agreements to repurchase		146,268		146,274		0		146,274		0		146,268		146,274		—		146,274		—
Interest payable		1,346		1,346		0		1,346		0		1,346		1,346		—		1,346		—
Federal Home Loan Bank borrowings		86,446		86,248		0		86,248		0		86,446		86,248		—		86,248		—
Subordinated debt, net		94,400		94,400		0		94,400		0		94,400		94,400		—		94,400		—
Junior subordinated debentures, net		19,195		15,012		0		15,012		0		19,195		15,012		—		15,012		—

On July 28, 2021, the Company and Brock Sub LLC, a newly formed Delaware limited liability company and wholly-owned subsidiary of the Company (“Delta Merger Sub”), entered into an Agreement and Plan of Merger (the “Delta Merger Agreement”) with Delta Bancshares Company, a Missouri corporation (“Delta”), pursuant to which, among other things, the Company agreed to acquire 100% of the issued and outstanding shares of Delta pursuant to a business combination whereby Delta merged with and into Delta Merger Sub, whereupon the separate corporate existence of Delta ceased and Delta Merger Sub continued as the surviving company and a wholly-owned subsidiary of First Mid (the “Delta Merger”). The Delta Merger was completed on February 14, 2022.

Subject to the terms and conditions of the Delta Merger Agreement, at the effective time of the Delta Merger, each share of common stock, par value $10.00 per share, of Delta issued and outstanding immediately prior to the effective time of the Delta Merger (other than shares held in treasury by Delta) converted into and became the right to receive cash and shares of common stock, par value $4.00 per share, of the Company and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration paid by the Company at the closing of the Delta Merger to Delta’s shareholders and option holders was approximately $15.15 million in cash and 2,292,270 shares of Company common stock. Delta’s outstanding stock options vested upon consummation of the Delta Merger, and all outstanding Delta options that were unexercised prior to the effective time of the Delta Merger were cashed out.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations ("ASC 805"),” and accordingly the assets and liabilities were recorded at their estimated fair values as of the date of acquisition. Fair values are subject to refinement for up to one year after the closing date of February 14, 2022 as additional information regarding the closing date fair values become available. The total consideration paid was used to determine the amount of goodwill resulting from the transaction. As the total consideration paid exceeded the net assets acquired, goodwill of ~~$28.6~~$28.2 million was recorded for the acquisition. Goodwill recorded in the transaction, which reflects the synergies and economies of scale expected from combining operations and the enhanced revenue opportunities from the Company’s service capabilities, is not tax deductible, and was all assigned to the banking segment of the Company.

	Acquired			Fair Value			As Recorded by			Acquired			Fair Value			As Recorded by
(In thousands)	Book Value			Adjustments			Jefferson Bank			Book Value			Adjustments			Jefferson Bank
Assets
Cash and due from banks	$	82,473		$	0		$	82,473		$	82,473		$	—		$	82,473
Investment securities		184,959			(2,836	)		182,123			184,959			(2,836	)		182,123
Loans		426,433			(7,924	)		418,509			426,433			(7,924	)		418,509
Allowance for credit losses		(5,388	)		4,525			(863	)		(5,388	)		4,525			(863	)
Premises and equipment		5,522			3,508			9,030			5,522			3,508			9,030
Goodwill		14			28,597			28,611			14			28,227			28,241
Core deposit intangible		0			5,920			5,920			—			5,920			5,920
Bank owned life insurance		15,822						15,822			15,822						15,822
Right of use asset		0			717			717			—			717			717
Other assets		9,061			(1,340	)		7,721			9,061			(970	)		8,091
Total assets acquired	$	718,896		$	31,167		$	750,063		$	718,896		$	31,167		$	750,063

Liabilities
Deposits	$	558,619		$	1,759		$	560,378		$	558,619		$	1,759		$	560,378
Securities sold under agreements to repurchase		35,523			0			35,523			35,523			—			35,523
FHLB advances		45,000			75			45,075			45,000			75			45,075
Lease liability		0			717			717			—			717			717
Other liabilities		2,209			(1,161	)		1,048			2,209			(1,161	)		1,048
Total liabilities assumed		641,351			1,390			642,741			641,351			1,390			642,741
Net assets acquired	$	77,545		$	29,777		$	107,322		$	77,545		$	29,777		$	107,322

Consideration paid
Cash							$	15,150								$	15,150
Common stock								92,172									92,172
							$	107,322								$	107,322

The Company has recognized approximately ~~$1.75~~$2.4 million, pre-tax, of acquisition costs for the Delta Merger. Of this amount, ~~$1.5~~$2.1 million was recognized during 2022. These costs are included in salaries and benefits, legal and professional and other expense. Of the $7.9 million adjustment to loans, $8.2 million is being accreted to interest income over the remaining term of the loans. The remaining $300,000 was the elimination of deferred fees and unearned discounts previously recorded by Jefferson Bank. The Company also recorded approximately $863,000 directly to the allowance for credit losses for loans identified as PCD. Of the $426 million of loans acquired, approximately $18.8 million was identified as PCD.

The differences between fair value and acquired value of the assumed time deposits of $1.8 million and the assumed FHLB advances of $75,000, are being amortized to interest expense over the remaining life of the liabilities. The core deposit intangible asset, with a fair value of $5.9 million, is being amortized on an accelerated basis over its estimated life of 10 years.

The following unaudited pro forma condensed combined financial information presents the results of operations of the Company, including the effects of the purchase accounting adjustments and acquisition expenses, had the Delta Merger taken place at the beginning of the period (dollars in thousands, except per share data):

	Three months ended June 30, 2022		Three months ended June 30, 2021		Six months ended June 30, 2022		Six months ended June 30, 2021		Three months ended September 30, 2022		Three months ended September 30, 2021		Nine months ended September 30, 2022		Nine months ended September 30, 2021

Net interest income	$	-	$	49,600	$	93,267	$	90,812	$	48,257	$	51,270	$	141,524	$	142,082
Provision for loan losses		-		3,140		3,859		15,726		142		1,253		4,001		16,979
Non-interest income		-		18,519		39,801		36,545		16,791		16,595		56,592		53,139
Non-interest expense		-		48,846		84,141		89,845		41,549		39,408		125,690		129,253
Income before taxes		-		16,133		45,068		21,786		23,357		27,204		68,425		48,989
Income tax expense (benefit)		-		3,560		10,062		4,371
Net income (loss)	$	-	$	12,573	$	35,006	$	17,415
Income tax expense										5,418		6,767		15,480		11,138
Net income									$	17,939	$	20,437	$	52,945	$	37,851

Earnings per share
Basic	$	0.00	$	0.62	$	1.76	$	0.87	$	0.88	$	1.00	$	2.64	$	1.88
Diluted		0.00		0.62		1.75		0.87		0.88		1.00		2.63		1.88

Basic weighted average shares o/s		-		20,359,460		19,875,516		19,977,949		20,454,669		20,375,396		20,070,687		20,111,889
Diluted weighted average shares o/s		-		20,412,480		19,947,227		20,030,969		20,535,215		20,428,416		20,145,435		20,164,909

On September 25, 2020, the Company and Eval Sub Inc., a newly formed Illinois corporation and wholly-owned subsidiary of the Company ("Eval Merger Sub"), entered into an Agreement and Plan of Merger (the "LINCO Merger Agreement") with LINCO Bancshares, Inc., a Missouri corporation ("LINCO"), and the sellers as defined therein, pursuant to which, among other things, the Company agreed to acquire 100% of the issued and outstanding shares of LINCO pursuant to a business combination whereby Eval Merger Sub merged with and into LINCO, whereupon the separate corporate existence of Merger Sub ceased and LINCO continued as the surviving company and a wholly-owned subsidiary of the Company (the "LINCO Merger"). The LINCO Merger closed on February 22, 2021.

Subject to the terms and conditions of the LINCO Merger Agreement, at the effective time of the LINCO Merger, each share of common stock, par value $1.00 per share, of LINCO issued and outstanding immediately prior to the effective time of the LINCO Merger (other than shares held in treasury by LINCO) was converted into and become the right to receive, cash or shares of common stock, par value $4.00 per share, of the Company and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration paid by the Company at the closing of the LINCO Merger was $103.5 million in cash and 1,262,246 shares of the Company’s common stock. In addition, immediately prior to the closing of the proposed merger, LINCO paid a special dividend to its shareholders in the aggregate amount of $13 million.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations ("ASC 805"),” and accordingly the assets and liabilities were recorded at their estimated fair values as of the date of acquisition. Fair values are subject to refinement for up to one year after the closing date of February 22, 2021 as additional information regarding the closing date fair values become available. The total consideration paid was used to determine the amount of goodwill resulting from the transaction. As the total consideration paid exceeded the net assets acquired, goodwill of $5.4 million was recorded for the acquisition. Goodwill recorded in the transaction, which reflects the synergies and economies of scale expected from combining operations and the enhanced revenue opportunities from the Company’s service capabilities, is not tax deductible, and was all assigned to the banking segment of the Company.

	Acquired			Fair Value			As Recorded by			Acquired			Fair Value			As Recorded by
(In thousands)	Book Value			Adjustments			Providence Bank			Book Value			Adjustments			Providence Bank
Assets
Cash and due from banks	$	130,561		$	0		$	130,561		$	130,561		$	—		$	130,561
Investment securities		119,234			264			119,498			119,234			264			119,498
Loans		838,377			(9,401	)		828,976			838,377			(9,401	)		828,976
Allowance for credit losses		(8,656	)		6,583			(2,073	)		(8,656	)		6,583			(2,073	)
Other real estate owned		8,435			915			9,350			8,435			915			9,350
Premises and equipment		23,440			6,360			29,800			23,440			6,360			29,800
Goodwill		20,503			(15,054	)		5,449			20,503			(15,054	)		5,449
Core deposit intangible		123			2,025			2,148			123			2,025			2,148
Right of use asset		0			794			794			—			794			794
Other assets		43,697			2,499			46,196			43,697			2,499			46,196
Total assets acquired	$	1,175,714		$	(5,015	)	$	1,170,699		$	1,175,714		$	(5,015	)	$	1,170,699

Liabilities
Deposits	$	988,329		$	2,081		$	990,410		$	988,329		$	2,081		$	990,410
Securities sold under agreements to repurchase		0			0			0			—			—			—
FHLB advances		26,941			975			27,916			26,941			975			27,916
Other borrowings		0			0			0			—			—			—
Lease liability		0			794			794			—			794			794
Other liabilities		4,498			(610	)		3,888			4,498			(610	)		3,888
Total liabilities assumed		1,019,768			3,240			1,023,008			1,019,768			3,240			1,023,008
Net assets acquired	$	155,946		$	(8,255	)	$	147,691		$	155,946		$	(8,255	)	$	147,691

Consideration paid
Cash							$	103,500								$	103,500
Common stock								44,191									44,191
							$	147,691								$	147,691

The Company has recognized approximately $9 million, pre-tax, of acquisition costs for the LINCO acquisition. Of this amount, $8.5 million was recognized during the first ~~six~~nine months of 2021. These costs are included in salaries and benefits, legal and professional and other expense. Of the $9.4 million adjustment to loans, $11.1 million is being accreted to interest income over the remaining term of the loans. The remaining $1.7 million was the elimination of deferred fees and unearned discounts previously recorded by Providence Bank. The Company also recorded approximately $2 million directly to the allowance for credit losses for loans identified as PCD. Of the $838 million of loans acquired, approximately $64.6 million was identified as PCD.

The differences between fair value and acquired value of the assumed time deposits of $2.1 million and the assumed FHLB advances of $975,000, are being amortized to interest expense over the remaining life of the liabilities. The core deposit intangible asset, with a fair value of $2.1 million, is being amortized on an accelerated basis over its estimated life of 10 years.

The following unaudited pro forma condensed combined financial information presents the results of operations of the Company, including the effects of the purchase accounting adjustments and acquisition expenses, had the LINCO acquisition taken place at the beginning of the period (dollars in thousands, except per share data):

	Six months ended June 30, 2021		Nine months ended September 30, 2021

Net interest income	$	86,217	$	131,713
Provision for loan losses		11,776		12,879
Non-interest income		37,145		53,504
Non-interest expense		87,812		124,133
Income before taxes		23,774		48,205
Income tax expense (benefit)		4,947
Net income (loss)	$	18,827
Income tax expense				11,052
Net income			$	37,153

Earnings per share
Basic	$	1.06	$	2.08
Diluted		1.06		2.08

Basic weighted average shares o/s		17,685,679		17,819,619
Diluted weighted average shares o/s		17,738,699		17,872,639

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842). As of ~~June~~September 30, 2022, substantially all the Company's leases are operating leases for real estate property for bank branches, ATM locations, and office space.

These leases are generally for periods of 1 to 25 years with various renewal options. The Company elected the optional transition method permitted by Topic 842. Under this method, the Company recognizes and measures leases that exist at the application date and prior comparative periods are not adjusted. In addition, the Company elected the package of practical expedients:

The Company has also elected the practical expedient, which may be elected separately or in conjunction with the package noted above, to use hindsight in determining the lease term and in assessing the right-of-use assets. This expedient must be applied consistently to all leases. Lastly, the Company has elected to use the practical expedient to include both lease and non-lease components as a single component and account for it as a lease. In addition, the Company has elected to not include short-term leases (i.e. leases with terms of twelve months or less) or equipment leases (primarily copiers) deemed immaterial, on the consolidated balance sheets.

For leases in effect at January 1, 2019 and for leases commencing thereafter, the Company recognizes a lease liability and a right-of-use asset, based on the present value of lease payments over the lease term. The discount rate used in determining present value was the Company's incremental borrowing rate which is the FHLB fixed advance rate based on the remaining lease term as of January 1, 2019, or the commencement date for leases subsequently entered into.

The following table contains supplemental balance sheet information related to leases (dollars in thousands):

	June 30, 2022			June 30, 2021			December 31, 2021			September 30, 2022			September 30, 2021			December 31, 2021
Operating lease right-of-use assets	$	15,649		$	16,753		$	15,116		$	15,194		$	16,120		$	15,116
Operating lease liabilities		15,884			16,919			15,322			15,425			16,315			15,322
Weighted-average remaining lease term (in years)		6.9			6.2			6.6			6.1			6.7			6.6
Weighted-average discount rate		2.66	%		2.63	%		2.70	%		2.68	%		2.64	%		2.70	%

Certain of the Company's leases contain options to renew the lease; however, not all renewal options are included in the calculation of lease liabilities as they are not reasonably certain to be exercised. The Company's leases do not contain residual value guarantees or material variable lease payments. The Company does not have any other material restrictions or covenants imposed by leases that would impact the Company's ability to pay dividends or cause the Company to incur additional financial obligations.

Year ending December 31,	Year ending December 31,				Year ending December 31,
	2022	$	1,597		2022	$	760
	2023		2,635		2023		2,948
	2024		2,285		2024		2,599
	2025		1,877		2025		2,163
	2026		1,805		2026		2,052
Thereafter	Thereafter		7,706		Thereafter		8,063
Total lease payments	Total lease payments		17,905		Total lease payments		18,585
Less imputed interest	Less imputed interest		(2,021	)	Less imputed interest		(3,160	)
Total lease liability	Total lease liability	$	15,884		Total lease liability	$	15,425

The components of lease expense for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 were as follows (in thousands):

	Three months ended June 30,						Six months ended June 30,						Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Operating lease cost	$	639		$	745		$	1,268		$	1,448		$	893		$	604		$	2,268		$	2,052
Short-term lease cost		15			100			42			133			21			11			63			96
Variable lease cost		300			105			566			249			43			373			502			622
Total lease cost		954			950			1,876			1,830			957			988			2,833			2,770
Income from subleases		(90	)		(167	)		(190	)		(320	)		(109	)		(132	)		(299	)		(452	)
Net lease cost	$	864		$	783		$	1,686		$	1,510		$	848		$	856		$	2,534		$	2,318

As the Company elected not to separate lease and non-lease components, the variable lease cost primarily represents variable payment such as common area maintenance and copier expense. The Company does not have any material sub-lease agreements. Cash paid for amounts included in the measurement of lease liabilities was (in thousands):

The Company utilizes an interest rate swap, designated as a fair value hedge, to mitigate the risk of changing interest rates on the fair value of a fixed rate commercial real estate loan. For derivative instruments that are designed and qualify as a fair value hedge, the gain or loss on the derivative instrument, as well as the offsetting loss or gain in the hedged asset attributable to the hedged risk, is recognized in current earnings.

The following table provides the outstanding notional balances and fair values of outstanding derivatives designated as hedging instruments as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	Balance Sheet Location	Weighted Average Remaining Maturity (Years)	Notional Amount		Estimated Value			Balance Sheet Location	Weighted Average Remaining Maturity (Years)	Notional Amount		Estimated Value
June 30, 2022
September 30, 2022
Fair value hedges:
Interest rate swap agreements	Other liabilities	6.8	$	13,671	$	(2,553	)	Other liabilities	6.6	$	13,610	$	(3,296	)

December 31, 2021
Fair value hedges:
Interest rate swap agreements	Other liabilities	7.3	$	13,900	$	(1,476	)	Other liabilities	7.3	$	13,900	$	(1,476	)

The effects of the fair value hedges on the Company's income statement during the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 were as follows (in thousands):

		Three months ended June 30,				Six months ended June 30,						Three months ended September 30,					Nine months ended September 30,
Derivative	Location of Gain (Loss) on Derivatives	2022		2021		2022		2021			Location of Gain (Loss) on Derivatives	2022		2021			2022		2021
Interest rate swap agreements	Interest income on loans	$	492	$	151	$	1,277	$	(591	)	Interest income on loans	$	595	$	(38	)	$	1,871	$	(629	)

		Three months ended June 30,						Six months ended June 30,						Three months ended September 30,					Nine months ended September 30,
Derivative	Location of Gain (Loss) on Hedged Items	2022			2021			2022			2021		Location of Gain (Loss) on Hedged Items	2022			2021		2022			2021
Interest rate swap agreements	Interest income on loans	$	(492	)	$	(151	)	$	(1,277	)	$	591	Interest income on loans	$	(595	)	$	38	$	(1,871	)	$	629

As of ~~June~~September 30, 2022, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustment for fair value hedges (in thousands):

Line Item in the Balance Sheet in Which

the Hedge Item is Included

Carrying Amount of the

Hedged Asset

Cumulative Amount of Fair Value Hedging

Adjustment Included in the Carrying

Amount of the Hedged Asset

Carrying Amount of the

Hedged Asset

Cumulative Amount of Fair Value Hedging

Adjustment Included in the Carrying

Amount of the Hedged Asset

Loans

13,061

(610

)

12,406

(1,205

)

The following amounts represent the notional amounts and gross fair value of derivative contracts not designated as hedging instruments outstanding during the ~~six~~nine months ended ~~June~~September 30, 2022 (dollars in thousands):

June 30, 2022	Balance Sheet Location	Weighted Average Remaining Maturity (Years)	Notional Amount		Estimated Value
September 30, 2022								Balance Sheet Location	Weighted Average Remaining Maturity (Years)	Notional Amount		Estimated Value
Interest rate swap agreements	Other assets	5.5	$	39,975	$	3,163		Other assets	5.3	$	39,511	$	4,501
Interest rate swap agreements	Other liabilities	5.5		39,975		(3,163	)	Other liabilities	5.3		39,511		(4,501	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of the Company and its subsidiaries as of, and for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021. This discussion and analysis should be read in conjunction with the consolidated financial statements, related notes and selected financial data appearing elsewhere in this report.

This document may contain certain forward-looking statements, such as discussions of the Company’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the company, are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things, changes in interest rates; general economic conditions and those in the market areas of the Company; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition, demand for financial services in the market areas of the Company’s; accounting principles, policies and guidelines; the ~~severity, magnitude and duration of the COVID-19 pandemic, the~~ direct and indirect impact of ~~such~~the COVID-19 pandemic, including responses to the pandemic by the U.S., state and local governments, customers' businesses, the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the company’s liquidity and capital positions, impair the ability of the company’s borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses, and the impact of the COVID-19 pandemic on the Company’s financial results, including possible lost revenue and increased expenses (including cost of capital), as well as possible goodwill impairment charges. Additional information concerning the Company, including additional factors and risks that could materially affect the Company financial results, are included in the Company filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

The COVID-19 outbreak is, and continues to be, an unprecedented event that provides significant economic uncertainty for a broad spectrum of industries. The spread of this outbreak has caused significant disruptions in the U.S. economy and some of these impacts will be long lasting. As it continues to evolve it is not clear when or how the pandemic-driven contraction will recover. The Company is focused on supporting its customers, communities, and employees during this unique operating environment. Following is a description of certain impacts COVID-19 is having, certain actions taken because of COVID-19, and certain risks to the Company that COVID-19 creates or exacerbates, as well as management's outlook on the current COVID-19~~situation.~~

Lending operations and accommodations to customers. Beginning i~~n March~~April 3, 2020, ~~First~~with ~~Mid~~the ~~Bankoffered~~a~~90-daycommercialdeferral program,primarily~~to~~hotelandrestaurantborrowers.Subsequently, additional deferrals were offered on an individual case basis and a broader program was offered to residential and consumer customers. As~~passage of ~~June 30, 2022~~, ~~there were no deferrals outstanding~~ ~~through these programs. In~~the ~~accordance~~initial ~~with~~Paycheck ~~interagency~~Protection ~~guidance~~Program ~~issued~~(“PPP”), inadministered ~~March~~by ~~2020,~~the ~~these~~Small ~~short-termdeferralsarenot considered troubled debtrestructurings.~~

~~Beginning~~ ~~April~~3,~~2020,withthepassage~~of~~theinitialPaycheckProtectionProgram(“PPP”),administered~~by~~theSmall~~Business Administration (“SBA”), the Company actively participated in assisting existing and new customers with applications for resources through the program. PPP loans have a two to five-year term and earn interest at 1%. The Company believes that most of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. As of ~~June~~September 30, 2022, the Company has outstanding 1815 PPP loans totaling $~~1.2~~0.5 million with the SBA. It is the Company’s understanding that loans funded through the PPP program are fully guaranteed by the U.S. government and as such do not represent a credit risk.

Capital and liquidity. The Company’s current allowance for credit losses could absorb net charge offs greater than the total of all net charge offs over the last 20 years. The Company’s aggregate net charge offs over the last 20 years through ~~June~~September 30, 2022, were ~~$36.2~~$36.7 million. Current capital levels also support the Company's recent loan stress testing of the most vulnerable industry sectors impacted by COVID-19.

The Company maintains access to multiple sources of liquidity. Currently, the Company's total liquidity sources could provide ~~$2.4~~$2.2 billion of total available capacity as of ~~June~~September 30, 2022.

Management's outlook. The Company's current financial position is strong and the fundamental earning capabilities of its currently existing operations is solid. While the Company does not currently anticipate any material changes or deficiencies to its capital or liquidity sources, uncertainties about duration and overall effects on the economy could result in more adverse effects than expected.

This overview of management’s discussion and analysis highlights selected information in this document and may not contain all the information that is important to you. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates which have an impact on the Company’s financial condition and results of operations you should carefully read this entire document.

Net income was ~~$34,374,000~~$52,313,000 and ~~$16,330,000~~$34,656,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively. Diluted net income per common share was ~~$1.72~~$2.60 and ~~$0.92~~$1.94 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

The following table shows the Company’s annualized performance ratios for ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, compared to the performance ratios for the year ended December 31, 2021:

	Six months ended						Year ended			Nine months ended						Year ended
	June 30, 2022			June 30, 2021			December 31, 2021			September 30, 2022			September 30, 2021			December 31, 2021
Return on average assets		1.07	%		0.59	%		0.90	%		1.07	%		0.82	%		0.90	%
Return on average common equity		10.48	%		5.44	%		8.38	%		10.71	%		7.58	%		8.38	%
Average equity to average assets		10.18	%		10.90	%		10.72	%		9.98	%		10.83	%		10.72	%

Total assets were $6.7 billion at ~~June~~September 30, 2022, compared to $6.0 billion as of December 31, 2021. From December 31, 2021 to ~~June~~September 30, 2022, cash and interest-bearing deposits decreased ~~$31.1~~$7.6 million, net loan balances increased ~~$650.2~~$722.9 million and investment securities decreased ~~$75.6~~$194.8 million. Net loan balances were ~~$4.59~~$4.66 billion at ~~June~~September 30, 2022 compared to $3.94 billion at December 31, 2021. The increase was primarily due to the acquisition of Jefferson Bank during the first quarter of 2022.

Net interest margin, on a tax equivalent basis, defined as net interest income divided by average interest-earning assets, was ~~3.13%~~3.16% for the ~~six~~nine months ended ~~June~~September 30, 2022, down from ~~3.18%~~3.25% for the same period in 2021. This decrease was primarily due to slightly lower yields on loans offset by an increase rate on interest-bearing deposits and ~~investments.~~borrowings. Net interest income before the provision for loan losses was ~~$90.3~~$138.6 million compared to net interest income of ~~$79.5~~$125.0 million for the same period in 2021. The increase in net interest income was primarily due to organic growth and the acquisition of Jefferson Bank during the first quarter of 2022.

Total non-interest income of ~~$39.7~~$56.5 million increased ~~$3.7~~$4.1 million or ~~10.1%~~7.8% from ~~$36.0~~$52.4 million for the same period last year. The increase in non-interest income resulted primarily from an increase in wealth management revenues, insurance commissions, and income from Jefferson Bank.

Total non-interest expense of ~~$81.9~~$123.5 million ~~decreased $1.7~~increased $3.6 million or ~~2.0%~~3.0% from ~~$83.6~~$119.9 million for the same period last year. The ~~decreased~~increased was primarily due to variable costs tied to the increased revenues, inflationary impacts, and expenses from the acquisition of Delta during the first ~~six~~nine months of ~~2022, compared to greater expenses from the acquisition of LINCO during the first six months of 2021.~~2022.

Following is a summary of the factors that contributed to the changes in net income (in thousands):

	Change in Net Income						Change in Net Income
	2022 versus 2021						2022 versus 2021
	Three months ended June 30, 2022			Six months ended June 30, 2022			Three months ended September 30, 2022			Nine months ended September 30, 2022
Net interest income	$	4,079		$	10,837		$	2,761		$	13,598
Provision for credit losses		(1,467	)		7,717			961			8,678
Other income, including securities transactions		275			3,651			432			4,083
Other expenses		4,498			1,673			(5,228	)		(3,555	)
Income taxes		(1,848	)		(5,834	)		687			(5,147	)
Increase in net income	$	5,537		$	18,044
Increase (decrease) in net income							$	(387	)	$	17,657

Credit quality is an area of importance to the Company. Total nonperforming loans were ~~$20.0~~$20.8 million at ~~June~~September 30, 2022, compared to ~~$30.4~~$27.7 million at ~~June~~September 30, 2021 and $22.0 million at December 31, 2021. See the discussion under the heading “Loan Quality and Allowance for Loan Losses” for a detailed explanation of these balances. Repossessed asset balances totaled ~~$4.2~~$4.3 million at ~~June~~September 30, 2022 compared to ~~$7.2~~$5.6 million at ~~June~~September 30, 2021 and $5.0 million at December 31, 2021.

The Company’s provision for credit losses for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 was ~~$3,859,000~~$4.0 million and ~~$11,576,000,~~$12.7 million, respectively. The provision expense during the first ~~six~~nine months of 2022 included recording an initial provision for credit losses for Jefferson Bank of $2 million. Provision expense during the first ~~six~~nine months of 2021 included recording an initial provision for credit losses for Providence Bank loans of $11.5 million. Total loans past due 30 days or more were ~~0.47%~~0.34% of loans at ~~June~~September 30, 2022 compared to ~~1.35%~~0.54% at ~~June~~September 30, 2021, and 0.62% of loans at December 31, 2021. Loans secured by both commercial and residential real estate comprised approximately ~~69.3%~~68.6% of the loan portfolio as of ~~June~~September 30, 2022 and 69.8% as of December 31, 2021.

The Company’s capital position remains strong, and the Company has consistently maintained regulatory capital ratios above the “well-capitalized” standards. The Company’s Tier 1 capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at ~~June~~September 30, 2022 and 2021 and December 31, 2021 was ~~12.16%~~12.28%, ~~10.92%~~12.53% and 12.51%, respectively. The Company’s total capital to risk weighted assets ratio calculated under the regulatory risk-based capital requirements at ~~June~~September 30, 2022 and 2021, and December 31, 2021 was ~~15.05%~~15.11%, ~~13.91%~~15.87% and 15.79%, respectively. The decrease in Tier 1 capital and total to risk weighted assets ratio from December 31, 2021 was primarily due to the acquisition of Delta and dividends paid to shareholders, offset by net income added to retained earnings.

On March 27, 2020, the federal banking regulatory agencies, issued an interim final rule which provided an option to delay the estimated impact on regulatory capital of ASU 2016-13, which was effective January 1, 2020. The initial impact of adoption of ASU 2016-13, as well as 25% of the quarterly increases in the allowance for credit losses subsequent to adoption of ASU 2016-13 ("CECL adjustments"), was be delayed for two years. The cumulative amount of these adjustments is being phased out of the regulatory capital calculation over a three-year period, with 75% of the adjustments included in 2022, 50% of the adjustments included in 2023 and 25% of the adjustments included in 2024. After five years, the temporary delay of ASU 2016-13 adoption will be fully reversed. The Company has elected this option.

The Company’s liquidity position remains sufficient to fund operations and meet the requirements of borrowers, depositors, and creditors. The Company maintains various sources of liquidity to fund its cash needs. See the discussion under the heading “Liquidity” for a full listing of sources and anticipated significant contractual obligations.

The Company enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. The total outstanding commitments at ~~June~~September 30, 2022 and 2021, were $1.2 billion and ~~$961 million,~~$1.0 billion, respectively. The increase in outstanding commitments was primarily due to the acquisition of Jefferson Bank.

Federal Deposit Insurance Corporation Insurance Coverage. As FDIC-insured institutions, First Mid Bank and Jefferson Bank are required to pay deposit insurance premium assessments to the FDIC. Several requirements with respect to the FDIC insurance system have affected results, including insurance assessment rates.

The Company expensed ~~$862,000~~$1,341,000 and ~~$930,000~~$1,198,000 for the assessment during the first ~~six~~nine months of 2022 and 2021, respectively.

The Company has established various accounting policies that govern the application of U.S. generally accepted accounting principles in the preparation of the Company’s consolidated financial statements. The significant accounting policies of the Company are described in the footnotes to the consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K. Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities; management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and assumptions, which could have a material impact on the carrying values of assets and liabilities and the results of operations of the Company.

Investment in Debt and Equity Securities. The Company classifies its investments in debt and equity securities as either held-to-maturity or available-for-sale in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” which was codified into ASC 320. Securities classified as held-to-maturity are recorded at amortized cost. Available-for-sale securities are carried at fair value. Fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting the financial position, results of operations and cash flows of the Company.

If the estimated value of investments is less than the cost or amortized cost, the Company evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred and the Company determines that the impairment is other-than-temporary, a further determination is made as to the portion of impairment that is related to credit loss. The impairment of the investment that is related to the credit loss is expensed in the period in which the event or change occurred. The remainder of the impairment is recorded in other comprehensive income (loss).

Loans. Loans are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase discounts and premiums, fair value hedge accounting adjustments and deferred loan fees and costs. Accrued interest is reported separately and is included in interest receivable in the consolidated balance sheets.

Allowance for Credit Losses - Loans. The Company believes the allowance for credit losses for loans is the critical accounting policy that requires the most significant judgments and assumptions used in the preparation of its consolidated financial statements. The allowance for credit losses for loans represents the best estimate of losses inherent in the existing loan portfolio. An estimate of potential losses inherent in the loan portfolio are determined and an allowance for those losses is established by considering factors including historical loss rates, expected cash flows and estimated collateral values. In assessing these factors, the Company uses relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

The Company estimates the appropriate level of allowance for credit losses for individually evaluated loans by evaluating them separately. A specific allowance is assigned to an impaired loan when expected cash flows or collateral are less than the carrying amount of the loan.

Allowance for Credit Losses - Off-Balance Sheet Credit Exposures. The Company estimates expected credit losses over the contractual period that the Company is exposed to credit risk via a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is included in other liabilities in the consolidated balance sheets.

Other Real Estate Owned. Other real estate owned acquired through loan foreclosure is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. The adjustment at the time of foreclosure is recorded through the allowance for loan losses. Due to the subjective nature of establishing the fair value when the asset is acquired, the actual fair value of the other real estate owned or foreclosed asset could differ from the original estimate. If it is determined that fair value temporarily declines subsequent to foreclosure, a valuation allowance is recorded through noninterest expense.

Operating costs associated with the assets after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and posted to other noninterest expense.

Mortgage Servicing Rights. The Company has elected to ~~measure~~record mortgage servicing rights under the amortization method. Using this method, servicing rights are amortized in proportion to and over the period of estimated net servicing income. The amortized assets are assessed for impairment based on fair value at each reporting date. Impairment is determined by stratifying rights into tranches based on predominant characteristics, such as interest rate, loan type and investor type.

Impairment is recognized through a valuation reserve, to the extent that fair value is less than the carrying amount of the servicing assets. Fair value in excess of the carrying amount of servicing assets is not recognized.

Deferred Income Tax Assets/Liabilities. The Company’s net deferred income tax asset arises from differences in the dates that items of income and expense enter our reported income and taxable income. Deferred tax assets and liabilities are established for these items as they arise. From an accounting standpoint, deferred tax assets are reviewed to determine if they are realizable based on the historical level of taxable income, estimates of future taxable income and the reversals of deferred tax liabilities. In most cases, the realization of the deferred tax asset is based on future profitability. If the Company were to experience net operating losses for tax purposes in a future period, the realization of deferred tax assets would be evaluated for a potential valuation reserve.

Additionally, the Company reviews its uncertain tax positions annually under FASB Interpretation No. 48 (FIN No. 48), “Accounting for Uncertainty in Income Taxes,” codified within ASC 740. An uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely to be recognized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. A significant amount of judgment is applied to determine both whether the tax position meets the "more likely than not" test as well as to determine the largest amount of tax benefit that is greater than 50% likely to be recognized. Differences between the position taken by management and that of taxing authorities

could result in a reduction of a tax benefit or increase to tax liability, which could adversely affect future income tax expense.

Impairment of Goodwill and Intangible Assets. Core deposit and customer relationships, which are intangible assets with a finite life, are recorded on the Company’s consolidated balance sheets. These intangible assets were capitalized as a result of past acquisitions and are being amortized over their estimated useful lives of up to 15 years. Core deposit intangible assets, with finite lives will be tested for impairment when changes in events or circumstances indicate that its carrying amount may not be recoverable. Core deposit intangible assets were tested for impairment as of September 30, 2021 as part of the goodwill impairment test and no impairment was identified.

As a result of the Company’s acquisition activity, goodwill, an intangible asset with an indefinite life, is reflected on the consolidated balance sheets. Goodwill is evaluated for impairment annually, unless there are factors present that indicate a potential impairment, in which case, the goodwill impairment test is performed more frequently than annually.

Fair Value Measurements. The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Company estimates the fair value of a financial instrument using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, the Company estimates fair value. The Company’s valuation methods consider factors such as liquidity and concentration concerns. Other factors such as model assumptions, market dislocations, and unexpected correlations can affect estimates of fair value. Imprecision in estimating these factors can impact the amount of revenue or loss recorded.

SFAS No. 157, “Fair Value Measurements”, which was codified into ASC 820, establishes a framework for measuring the fair value of financial instruments that considers the attributes specific to particular assets or liabilities and establishes a three-level hierarchy for determining fair value based on the transparency of inputs to each valuation as of the fair value measurement date.

At the end of each quarter, the Company assesses the valuation hierarchy for each asset or liability measured. From time to time, assets or liabilities may be transferred within hierarchy levels due to changes in availability of observable market inputs to measure fair value at the measurement date. Transfers into or out of hierarchy levels are based upon the fair value at the beginning of the reporting period. A more detailed description of the fair values measured at each level of the fair value hierarchy can be found in Note 7 – Fair Value of Assets and Liabilities.

The largest source of revenue for the Company is net interest income. Net interest income represents the difference between total interest income earned on earning assets and total interest expense paid on interest-bearing liabilities. The amount of interest income is dependent upon many factors, including the volume and mix of earning assets, the general level of interest rates and the dynamics of changes in interest rates. The cost of funds necessary to support earning assets varies with the volume and mix of interest-bearing liabilities and the rates paid to attract and retain such funds.

Net interest income is the excess of interest received from earning assets over interest paid on interest-bearing liabilities. For analytical purposes, net interest income is presented on a full tax equivalent ("TE") basis in the table that follows. The federal statutory rate in effect of 21% for 2022 and 2021 was used. The TE analysis portrays the income tax benefits associated with the tax-exempt assets. The year-to-date net yield on interest-earning assets excluding the TE adjustments of ~~$1,569,000~~$2,373,000 and ~~$1,207,000~~$1,876,000 for 2022 and 2021, respectively were ~~3.09%~~3.11% and ~~3.18%~~3.21% at ~~June~~September 30, 2022 and 2021, respectively.

The Company’s average balances, fully tax equivalent interest income and interest expense, and rates earned or paid for major balance sheet categories are set forth for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 in the following table (dollars in thousands):

	Three months ended June 30, 2022								Three months ended June 30, 2021								Three months ended September 30, 2022								Three months ended September 30, 2021
	Average					Average			Average					Average			Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-bearing deposits with other financial institutions	$	52,006		$	89		69.00	%	$	341,907		$	87		0.10	%	$	22,130		$	128		2.29	%	$	277,844		$	122		0.17	%
Federal funds sold		4,660			6		0.52	%		1,328			—		0.00	%		7,152			38		2.11	%		1,341			—		0.00	%
Certificates of deposit		1,912			10		2.10	%		2,690			15		2.24	%		1,417			8		2.24	%		2,453			13		2.10	%
Investment securities:
Taxable		1,098,389			5,346		1.95	%		890,660			4,046		1.82	%		1,047,335			5,106		1.95	%		976,817			3,961		1.62	%
Tax-exempt (1)		337,261			2,882		3.42	%		270,791			2,143		3.17	%		318,870			2,780		3.49	%		312,796			2,373		3.03	%
Loans net of unearned income (TE) (2)		4,481,593			43,749		3.92	%		3,873,035			40,956		4.24	%		4,666,157			49,498		4.21	%		3,824,988			43,463		4.51	%
Total earning assets		5,975,821			52,082		3.50	%		5,380,411			47,247		3.52	%		6,063,061			57,558		3.77	%		5,396,239			49,932		3.67	%
Cash and due from banks		114,362								91,497								122,616								100,475
Premises and equipment		89,605								87,494								90,715								82,057
Other assets		442,860								341,570								458,854								344,014
Allowance for loan losses		(58,744	)							(55,656	)							(59,319	)							(55,373	)
Total assets	$	6,563,904							$	5,845,316							$	6,675,927							$	5,867,412
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	2,656,507		$	1,804		0.28	%	$	2,173,498		$	1,027		0.19	%	$	2,545,619		$	3,570		0.56	%	$	2,336,601		$	1,177		0.20	%
Savings deposits		684,708			124		0.07	%		640,479			123		0.08	%		674,524			149		0.09	%		606,129			111		0.07	%
Time deposits		646,565			595		0.37	%		788,375			1,112		0.57	%		672,187			1,197		0.71	%		673,833			946		0.56	%
Total interest-bearing deposits		3,987,780			2,523		0.25	%		3,602,352			2,262		0.25	%		3,892,330			4,916		0.50	%		3,616,563			2,234		0.25	%
Securities sold under agreements to repurchase		178,632			137		0.31	%		177,002			57		0.13	%		207,079			428		0.82	%		160,686			52		0.13	%
FHLB advances		230,636			640		1.11	%		112,622			445		1.58	%		355,554			1,926		2.15	%		112,715			359		1.26	%
Federal funds purchased		1,341			5		1.50	%		—			—		—	%		272			1		1.46	%		—			—		—	%
Subordinated Debt		94,451			986		4.19	%		94,302			985		4.19	%		94,491			986		4.14	%		94,338			985		4.14	%
Junior subordinated debt		19,252			166		3.46	%		19,083			139		2.92	%		19,294			241		4.96	%		19,125			137		2.84	%
Other debt		55			—		—	%		—			—		—	%
Total borrowings		524,367			1,934		1.48	%		403,009			1,626		1.62	%		676,690			3,582		2.10	%		386,864			1,533		1.57	%
Total interest-bearing liabilities		4,512,147			4,457		0.40	%		4,005,361			3,888		0.39	%		4,569,020			8,498		0.74	%		4,003,427			3,767		0.37	%
Non interest-bearing demand deposits		1,363,548					0.30	%		1,164,128					0.30	%		1,418,028					0.56	%		1,179,915					0.29	%
Other liabilities		43,900								64,808								47,131								56,107
Stockholders' equity		644,309								611,019								641,748								627,963
Total liabilities and equity	$	6,563,904							$	5,845,316							$	6,675,927							$	5,867,412
Net interest income				$	47,625							$	43,359							$	49,060							$	46,165
Net interest spread							3.10	%							3.13	%							3.03	%							3.30	%
Impact of non interest-bearing funds							0.10	%							0.09	%							0.18	%							0.08	%
TE net yield on interest-bearing assets							3.20	%							3.22	%							3.21	%							3.38	%

Six months ended June 30, 2022

Six months ended June 30, 2021

Average

Average

Average

Average

Balance

Interest

Rate

Balance

Interest

Rate

Assets

Interest-bearing deposits with other financial institutions

$
93,361

$
144

0.31
%

$
310,296

$
161

0.10
%
Federal funds sold

4,190

7

0.36
%

1,322

—

0.03
%
Certificates of deposit

2,074

21

2.03
%

2,692

29

2.14
%
Investment securities:

Taxable

1,105,354

10,251

1.85
%

826,603

7,295

1.77
%
Tax-exempt (1)

359,318

5,749

3.20
%

259,498

4,159

3.21
%
Loans net of unearned income (TE) (2)

4,332,925

83,825

3.90
%

3,676,486

77,014

4.22
%
Total earning assets

5,897,222

99,997

3.41
%

5,076,897

88,658

3.51
%
Cash and due from banks

114,309

87,964

Premises and equipment

86,760

77,941

Other assets

405,621

319,034

Allowance for loan losses

(58,604
)

(51,220
)

Total assets

$
6,445,308

$
5,510,616

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$
2,633,667

$
3,125

0.24
%

$
2,025,759

$
1,913

0.19
%
Savings deposits

671,447

243

0.07
%

610,224

259

0.09
%
Time deposits

630,940

1,303

0.42
%

706,568

2,574

0.73
%
Total interest-bearing deposits

3,936,054

4,671

0.24
%

3,342,551

4,746

0.29
%
Securities sold under agreements to repurchase

176,076

204

0.23
%

187,776

127

0.14
%
FHLB advances

173,561

916

1.06
%

107,381

819

1.54
%
Federal funds purchased

696

5

1.45
%

—

—

—
%
Subordinated debt

94,432

1,972

4.21
%

94,284

1,969

4.21
%
Junior subordinated debentures

19,231

312

3.27
%

19,062

279

2.95
%
Other debt

28

—

—
%

—

—

—
%
Total borrowings

464,024

3,409

1.48
%

408,503

3,194

1.58
%
Total interest-bearing liabilities

4,400,078

8,080

0.37
%

3,751,054

7,940

0.43
%
Non interest-bearing demand deposits

1,346,645

0.28
%

1,099,295

0.33
%
Other liabilities

42,628

59,604

Stockholders' equity

655,957

��

600,663

Total liabilities and equity

$
6,445,308

$
5,510,616

Net interest income

$
91,917

$
80,718

Net interest spread

3.04
%

3.08
%
Impact of non interest-bearing funds

0.09
%

0.10
%
TE net yield on interest-earning assets

3.13
%

3.18
%

	Nine months ended September 30, 2022								Nine months ended September 30, 2021
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
Assets
Interest-bearing deposits with other financial institutions	$	69,356		$	272		0.52	%	$	299,360		$	283		0.13	%
Federal funds sold		5,188			45		1.17	%		1,329			—		0.03	%
Certificates of deposit		1,852			29		2.06	%		2,612			42		2.16	%
Investment securities:
Taxable		1,085,604			15,357		1.89	%		877,306			11,256		1.71	%
Tax-exempt (1)		345,886			8,529		3.29	%		277,379			6,532		3.14	%
Loans net of unearned income (TE) (2)		4,445,223			133,323		4.01	%		3,726,531			120,477		4.32	%
Total earning assets		5,953,109			157,555		3.54	%		5,184,517			138,590		3.57	%
Cash and due from banks		117,109								92,180
Premises and equipment		88,093								79,328
Other assets		423,585								327,463
Allowance for loan losses		(58,845	)							(52,619	)
Total assets	$	6,523,051							$	5,630,869
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	2,603,995		$	6,695		0.34	%	$	2,130,511		$	3,090		0.19	%
Savings deposits		672,484			392		0.08	%		608,844			370		0.08	%
Time deposits		644,840			2,500		0.52	%		695,536			3,520		0.68	%
Total interest-bearing deposits		3,921,319			9,587		0.33	%		3,434,891			6,980		0.27	%
Securities sold under agreements to repurchase		186,524			632		0.45	%		178,647			179		0.13	%
FHLB advances		234,892			2,842		1.62	%		109,178			1,178		1.44	%
Federal funds purchased		553			6		1.45	%		—			—		—	%
Subordinated debt		94,452			2,958		4.19	%		94,302			2,954		4.19	%
Junior subordinated debentures		19,252			553		3.84	%		19,084			416		2.91	%
Other debt		18			—		—	%		—			—		—	%
Total borrowings		535,691			6,991		1.74	%		401,211			4,727		1.58	%
Total interest-bearing liabilities		4,457,010			16,578		0.50	%		3,836,102			11,707		0.41	%
Non interest-bearing demand deposits		1,370,701					0.38	%		1,126,464					0.32	%
Other liabilities		44,170								58,440
Stockholders' equity		651,170								609,863
Total liabilities and equity	$	6,523,051							$	5,630,869
Net interest income				$	140,977							$	126,883
Net interest spread							3.04	%							3.16	%
Impact of non interest-bearing funds							0.12	%							0.09	%
TE net yield on interest-earning assets							3.16	%							3.25	%

Changes in net interest income may also be analyzed by segregating the volume and rate components of interest income and interest expense. The following table summarizes the approximate relative contribution of changes in average volume and interest rates to changes in net interest income for the three and ~~six~~nine months ended ~~June~~September 30, 2022, compared to the same period in 2021 (in thousands):

	Three months ended June 30, 2022 compared to 2021 Increase / (Decrease)									Six months ended June 30, 2022 compared to 2021 Increase / (Decrease)									Three months ended September 30, 2022 compared to 2021 Increase / (Decrease)									Nine months ended September 30, 2022 compared to 2021 Increase / (Decrease)
	Total									Total									Total									Total
	Change			Volume (1)			Rate (1)			Change			Volume (1)			Rate (1)			Change			Volume (1)			Rate (1)			Change			Volume (1)			Rate (1)
Earning assets:
Interest-bearing deposits	$	2		$	(507	)	$	509		$	(17	)	$	(330	)	$	313		$	6		$	(810	)	$	816		$	(11	)	$	(478	)	$	467
Federal funds sold		6			—			6			7			1			6			38			—			38			45			3			42
Certificates of deposit investments		(5	)		(4	)		(1	)		(8	)		(7	)		(1	)		(5	)		(10	)		5			(13	)		(11	)		(2	)
Investment securities:
Taxable		1,300			995			305			2,956			2,607			349			1,145			300			845			4,101			2,841			1,260
Tax-exempt (2)		739			558			181			1,590			1,597			(7	)		407			47			360			1,997			1,677			320
Loans (2) (3)		2,793			18,632			(15,839	)		6,811			21,296			(14,485	)		6,035			22,254			(16,219	)		12,846			26,201			(13,355	)
Total interest income	$	4,835		$	19,674		$	(14,839	)	$	11,339		$	25,164		$	(13,825	)	$	7,626		$	21,781		$	(14,155	)	$	18,965		$	30,233		$	(11,268	)
Interest-bearing liabilities:
Interest-bearing deposits
Demand deposits	$	777		$	268		$	509		$	1,212		$	646		$	566		$	2,393		$	113		$	2,280		$	3,605		$	792		$	2,813
Savings deposits		1			46			(45	)		(16	)		71			(87	)		38			11			27			22			22			—
Time deposits		(517	)		(175	)		(342	)		(1,271	)		(256	)		(1,015	)		251			(16	)		267			(1,020	)		(241	)		(779	)
Securities sold under agreements to repurchase		80			—			80			77			(23	)		100			376			19			357			453			8			445
FHLB advances		195			976			(781	)		97			749			(652	)		1,567			1,180			387			1,664			1,501			163
Federal funds purchased		5			5			—			5			5			—			1			5			—			6			6			—
Subordinated debt		1			1			—			3			3			—			1			1			—			4			4			—
Junior subordinated debentures		27			1			26			33			3			30			104			1			103			137			4			133
Other debt		—			—			—			—			—			—
Total interest expense		569			1,122			(553	)		140			1,198			(1,058	)		4,731			1,314			3,421			4,871			2,096			2,775
Net interest income	$	4,266		$	18,552		$	(14,286	)	$	11,199		$	23,966		$	(12,767	)	$	2,895		$	20,467		$	(17,576	)	$	14,094		$	28,137		$	(14,043	)

Tax equivalent net interest income increased ~~$11.2~~$14.1 million, or ~~13.9%~~11.1%, to ~~$91.9~~$141.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022, from ~~$80.7~~$126.9 million for the same period in 2021. Net interest income increased primarily due to the acquisition of Jefferson Bank during the first quarter of 2022. The net interest margin decreased primarily due to slightly lower interest rates on loans and ~~investments.~~investments and an increase in deposit and borrowing rates.

For the ~~six~~nine months ended ~~June~~September 30, 2022, average earning assets increased ~~$820~~$768.6 million, or ~~16.2%~~14.8%, and average interest-bearing liabilities increased ~~$649.0~~$620.9 million or ~~17.3%~~16.2% compared with average balances for the same period in 2021.

•Net interest margin decreased to ~~3.13%~~3.16% for the first ~~six~~nine months of 2022 from ~~3.18%~~3.25% for the first ~~six~~nine months of 2021.

The provision for loan losses for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 was ~~$3.9~~$4.0 million and ~~$11.6~~$12.7 million, respectively. The provision expense during the first three months of 2022 included recording an initial provision for credit losses for Jefferson Bank of $2 million. The provision expense during the first ~~six~~nine months of 2021 included recording an initial provision for credit losses for Providence Bank loans of $11.5 million. Net charge-offs were ~~$303,000~~$742,000 for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to net charge offs of ~~$963,000~~$2,680,000 for ~~June~~September 30, 2021. Nonperforming loans were ~~$20.0~~$20.8 million and ~~$30.4~~$27.7 million as of ~~June~~September 30, 2022 and 2021, respectively. For information on loan loss experience and nonperforming loans, see discussion under the “Nonperforming Loans” and “Loan Quality and Allowance for Loan Losses” sections below.

An important source of the Company’s revenue is other income. The following table sets forth the major components of other income for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (in thousands):

	Three months ended June 30,										Six months ended June 30,										Three months ended September 30,										Nine months September 30,
	2022		2021		$ Change			% Change			2022		2021		$ Change			% Change			2022		2021		$ Change			% Change			2022		2021		$ Change			% Change
Wealth management revenues	$	5,473	$	5,016	$	457			9.1	%	$	11,448	$	9,942	$	1,506			15.1	%	$	4,843	$	4,204	$	639			15.2	%	$	16,291	$	14,146	$	2,145			15.2	%
Insurance commissions		5,641		4,988		653			13.1	%		12,745		10,845		1,900			17.5	%		4,158		3,932		226			5.7	%		16,903		14,777		2,126			14.4	%
Service charges		2,236		1,539		697			45.3	%		4,292		2,903		1,389			47.8	%		2,445		1,838		607			33.0	%		6,737		4,741		1,996			42.1	%
Security gains, net		2		73		(71	)		-97.3	%		2		77		(75	)		-97.4	%		79		11		68			618.2	%		81		88		(7	)		-8.0	%
Mortgage banking revenue, net		289		1,691		(1,402	)		-82.9	%		770		3,100		(2,330	)		-75.2	%		355		1,477		(1,122	)		-76.0	%		1,125		4,577		(3,452	)		-75.4	%
ATM / debit card revenue		3,214		3,141		73			2.3	%		6,112		5,840		272			4.7	%		3,101		3,060		41			1.3	%		9,213		8,900		313			3.5	%
Bank owned life insurance		877		761		116			15.2	%		1,721		1,398		323			23.1	%		913		813		100			12.3	%		2,634		2,211		423			19.1	%
Other		827		1,075		(248	)		-23.1	%		2,594		1,928		666			34.5	%		897		1,024		(127	)		-12.4	%		3,491		2,952		539			18.3	%
Total other income	$	18,559	$	18,284	$	275			1.5	%	$	39,684	$	36,033	$	3,651			10.1	%	$	16,791	$	16,359	$	432			2.6	%	$	56,475	$	52,392	$	4,083			7.8	%

Following are explanations of the changes in these other income categories for the three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to the same period in 2021:

First Mid Bank generally releases the servicing rights on loans sold into the secondary market.

The following table sets forth the major components of other expense for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 (dollars in thousands):

	Three months ended June 30,										Six months ended June 30,										Three months September 30,										Nine months September 30,
	2022		2021		$ Change			% Change			2022		2021		$ Change			% Change			2022		2021		$ Change			% Change			2022		2021		$ Change			% Change
Salaries and employee benefits	$	25,768	$	24,908	$	860			3.5	%	$	50,107	$	48,395	$	1,712			3.5	%	$	24,877	$	21,092	$	3,785			17.9	%	$	74,984	$	69,487	$	5,497			7.9	%
Net occupancy and equipment expense		6,073		5,482		591			10.8	%		12,228		10,452		1,776			17.0	%		5,903		5,382		521			9.7	%		18,131		15,834		2,297			14.5	%
Net other real estate owned expense		218		1,966		(1,748	)		-88.9	%		185		2,044		(1,859	)		-90.9	%		58		1,507		(1,449	)		-96.2	%		243		3,551		(3,308	)		-93.2	%
FDIC insurance		436		478		(42	)		-8.8	%		862		930		(68	)		-7.3	%		479		268		211			78.7	%		1,341		1,198		143			11.9	%
Amortization of intangible assets		1,633		1,295		338			26.1	%		3,155		2,515		640			25.4	%		1,598		1,414		184			13.0	%		4,753		3,929		824			21.0	%
Stationery and supplies		325		235		90			38.3	%		636		551		85			15.4	%		361		299		62			20.7	%		997		850		147			17.3	%
Legal and professional		1,885		1,639		246			15.0	%		3,619		3,041		578			19.0	%		1,770		1,878		(108	)		-5.8	%		5,389		4,919		470			9.6	%
Marketing and donations		706		507		199			39.3	%		1,579		1,009		570			56.5	%		739		679		60			8.8	%		2,318		1,688		630			37.3	%
ATM/debit card expense		670		1,074		(404	)		-37.6	%		1,748		1,912		(164	)		-8.6	%		1,243		618		625			101.1	%		2,991		2,530		461			18.2	%
Other operating expenses		3,801		8,429		(4,628	)		-54.9	%		7,821		12,764		(4,943	)		-38.7	%		4,521		3,184		1,337			42.0	%		12,342		15,948		(3,606	)		-22.6	%
Total other expense	$	41,515	$	46,013	$	(4,498	)		-9.8	%	$	81,940	$	83,613	$	(1,673	)		-2.0	%	$	41,549	$	36,321	$	5,228			14.4	%	$	123,489	$	119,934	$	3,555			3.0	%

Following are explanations for the changes in these other expense categories for the three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to the same period in 2021:

Total income tax expense amounted to ~~$9.9~~$15.3 million ~~(22.5%~~(22.8% effective tax rate) for the ~~six~~nine months ended ~~June~~September 30, 2022, compared to ~~$4.0~~$10.1 million ~~(19.8%~~(22.6% effective tax rate) for the same period in 2021. The increase in effective rate is related to increased pre-tax net income while permanent items were relatively stable.

The Company files U.S. federal and state of Illinois, Indiana, Missouri and Texas income tax returns. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2019.

The Company’s overall investment objectives are to insulate the investment portfolio from undue credit risk, maintain adequate liquidity, insulate capital against changes in market value and control excessive changes in earnings while optimizing investment performance. The types and maturities of securities purchased are primarily based on the Company’s current and projected liquidity and interest rate sensitivity positions. The following table sets forth the amortized cost of the available-for-sale and held-to-maturity securities as of ~~June~~September 30, 2022 and December 31, 2021 (dollars in thousands)

	June 30, 2022					December 31, 2021					September 30, 2022					December 31, 2021
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	261,387		1.28	%	$	213,599		1.22	%	$	256,478		2.17	%	$	213,599		1.22	%
Obligations of states and political subdivisions		385,688		2.39	%		383,991		2.40	%		360,622		2.34	%		383,991		2.40	%
Mortgage-backed securities: GSE residential		793,979		1.70	%		799,456		1.58	%		763,882		1.69	%		799,456		1.58	%
Other securities		92,484		3.17	%		32,575		4.30	%		88,878		3.24	%		32,575		4.30	%
Total securities	$	1,533,538		1.89	%	$	1,429,621		1.80	%	$	1,469,860		2.03	%	$	1,429,621		1.80	%

At ~~June~~September 30, 2022, the Company’s investment portfolio increased by ~~$103.9~~$40.2 million from December 31, 2021 primarily due to securities added with the acquisition of Jefferson Bank. When purchasing investment securities, the Company considers its overall liquidity and interest rate risk profile, as well as the adequacy of expected returns relative to the risks assumed. The table below presents the credit ratings as of ~~June~~September 30, 2022 for investment securities (in thousands):

					Average Credit Rating of Fair Value at June 30, 2022 (1)																Average Credit Rating of Fair Value at September 30, 2022 (1)
	Amortized Cost		Estimated Fair Value		AAA		AA +/-		A +/-		BBB +/-		< BBB -		Not rated		Amortized Cost		Estimated Fair Value		AAA		AA +/-		A +/-		BBB +/-		< BBB -		Not rated
Available-for-sale:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	261,387	$	236,847	$	236,102	$	—	$	—	$	—	$	—	$	745	$	256,478	$	222,731	$	26,132	$	196,599	$	—	$	—	$	—	$	—
Obligations of state and political subdivisions		385,688		327,822		55,196		243,588		28,499		—		—		539		360,622		286,108		35,130		206,311		44,131		—		—		536
Mortgage-backed securities (2)		793,979		698,343		1,001		—		—		—		—		697,342		763,882		640,394		990		—		—		—		—		639,404
Other securities		89,512		86,936		4,277		14,799		26,278		4,880		—		36,702		85,948		81,555		—		11,934		29,647		3,820		—		36,154
Total available-for-sale	$	1,530,566	$	1,349,948	$	296,576	$	258,387	$	54,777	$	4,880	$	—	$	735,328	$	1,466,930	$	1,230,788	$	62,252	$	414,844	$	73,778	$	3,820	$	—	$	676,094
Held-to-maturity:
Other securities		2,972		2,972												2,972		2,930		2,930												2,930
Total held-to-maturity	$	2,972	$	2,972	$	—	$	—	$	—	$	—	$	—	$	2,972	$	2,930	$	2,930	$	—	$	—	$	—	$	—	$	—	$	2,930
Equity securities:
Federal Agricultural Mtg Corp	$	84	$	308	$	—	$	—	$	—	$	—	$	—	$	308	$	84	$	317	$	—	$	—	$	—	$	—	$	—	$	317

The loan portfolio is the largest category of the Company’s earning assets. The following table summarizes the composition of the loan portfolio at amortized cost, including loans held for sale, as of ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

		June 30, 2022					December 31, 2021					September 30, 2022					December 31, 2021
		Amortized Cost		% Outstanding Loans			Amortized Cost		% Outstanding Loans			Amortized Cost		% Outstanding Loans			Amortized Cost		% Outstanding Loans
Construction and land development		$	141,072		3.0	%	$	145,118		3.6	%	$	142,801		3.0	%	$	145,118		3.6	%
Agricultural real estate			350,159		7.5	%		279,272		7.0	%		360,424		7.6	%		279,272		7.0	%
1-4 family residential properties			424,230		9.1	%		400,313		10.0	%		436,625		9.2	%		400,313		10.0	%
Multifamily residential properties	��		330,600		7.1	%		298,942		7.5	%		298,321		6.3	%		298,942		7.5	%
Commercial real estate			1,976,654		42.6	%		1,666,198		41.7	%		1,996,338		42.5	%		1,666,198		41.7	%
Loans secured by real estate			3,222,715		69.3	%		2,789,843		69.8	%		3,234,509		68.6	%		2,789,843		69.8	%
Agricultural loans			142,406		3.1	%		151,484		3.8	%		160,511		3.4	%		151,484		3.8	%
Commercial and industrial loans			1,036,987		22.3	%		832,008		20.8	%		1,064,033		22.5	%		832,008		20.8	%
Consumer loans			94,828		2.0	%		78,442		2.0	%		100,783		2.1	%		78,442		2.0	%
All other loans			151,727		3.3	%		143,746		3.6	%		160,454		3.4	%		143,746		3.6	%
Total loans		$	4,648,663		100.0	%	$	3,995,523		100.0	%	$	4,720,290		100.0	%	$	3,995,523		100.0	%

Loan balances increased ~~$653.1~~$724.8 million, or ~~16.3%~~18.1%. The increase included approximately $426.4 million of loans acquired, before purchase accounting adjustments, from Jefferson Bank. The increase was offset by payoffs and PPP forgiveness. The balance of real estate loans held for sale, included in the balances shown above, amounted to ~~$1.3~~$0.5 million and $2.7 million as of ~~June~~September 30, 2022 and December 31, 2021, respectively.

Commercial and commercial real estate loans generally involve higher credit risks than residential real estate and consumer loans. Because payments on loans secured by commercial real estate or equipment are often dependent upon the successful operation and management of the underlying assets, repayment of such loans may be influenced to a great extent by conditions in the market or the economy. The Company does not have any sub-prime mortgages or credit card loans outstanding which are also generally considered to be higher credit risk.

Loans are geographically dispersed in central and southern Illinois, the St. Louis Metro area, central Missouri, and Texas. While these regions have experienced some economic stress during 2022 and 2021, the Company does not consider these locations high risk areas since these regions have not experienced the significant changes in real estate values seen in some other areas in the United States.

The Company does not have a concentration, as defined by the regulatory agencies, in construction and land development loans or commercial real estate loans as a percentage of total risk-based capital for the periods shown above. At ~~June~~September 30, 2022 and December 31, 2021, the Company did have industry loan concentrations that exceeded 25% of total risk-based capital in the following industries (dollars in thousands):

	June 30, 2022					December 31, 2021					September 30, 2022					December 31, 2021
	Principal balance		% Outstanding Loans			Principal balance		% Outstanding Loans			Principal balance		% Outstanding Loans			Principal balance		% Outstanding Loans
Other grain farming	$	366,644		7.89	%	$	297,394		7.44	%	$	397,492		8.42	%	$	297,394		7.44	%
Lessors of non-residential buildings		901,964		19.40	%		696,730		17.44	%		911,040		19.30	%		696,730		17.44	%
Lessors of residential buildings and dwellings		494,458		10.64	%		468,362		11.72	%		470,430		9.97	%		468,362		11.72	%
Hotels and motels		203,023		4.37	%		57,549		1.44	%		209,358		4.44	%		57,549		1.44	%

The Company had no further industry loan concentrations in excess of 25% of total risk-based capital.

The following table presents the balance of loans outstanding as of ~~June~~September 30, 2022, by contractual maturities (in thousands):

	Maturity (1)								Maturity (1)
	One year or less(2)		Over 1 through 5 years		Over 5 years		Total		One year or less(2)		Over 1 through 5 years		Over 5 years		Total
Construction and land development	$	44,267	$	58,108	$	38,697	$	141,072	$	45,056	$	58,207	$	39,538	$	142,801
Agricultural real estate		13,298		125,286		211,575		350,159		9,983		122,970		227,471		360,424
1-4 family residential properties		14,754		112,178		297,298		424,230		14,086		124,684		297,855		436,625
Multifamily residential properties		12,425		250,384		67,791		330,600		17,728		220,709		59,884		298,321
Commercial real estate		83,866		974,884		917,904		1,976,654		86,386		1,016,794		893,158		1,996,338
Loans secured by real estate		168,610		1,520,840		1,533,265		3,222,715		173,239		1,543,364		1,517,906		3,234,509
Agricultural loans		107,845		31,363		3,198		142,406		129,249		27,349		3,913		160,511
Commercial and industrial loans		261,846		484,519		290,622		1,036,987		347,743		432,628		283,662		1,064,033
Consumer loans		9,305		59,275		26,248		94,828		9,411		61,017		30,355		100,783
All other loans		34,578		25,975		91,174		151,727		33,747		25,012		101,695		160,454
Total loans	$	582,184	$	2,121,972	$	1,944,507	$	4,648,663	$	693,389	$	2,089,370	$	1,937,531	$	4,720,290

As of ~~June~~September 30, 2022, loans with maturities over one year consisted of approximately ~~$2.8~~$2.7 billion in fixed rate loans and approximately $1.3 billion in variable rate loans. The loan maturities noted above are based on the contractual provisions of the individual loans. The Company has no general policy regarding renewals and borrower requests, which are handled on a case-by-case basis.

Nonperforming loans include: (a) loans accounted for on a nonaccrual basis; (b) accruing loans contractually past due ninety days or more as to interest or principal payments; and (c) loans not included in (a) and (b) above which are defined as “troubled debt restructurings”. Repossessed assets include primarily repossessed real estate and automobiles.

The Company’s policy is to discontinue the accrual of interest income on any loan for which principal or interest is ninety days past due. The accrual of interest is discontinued earlier when, in the opinion of management, there is reasonable doubt as to the timely collection of interest or principal. Once interest accruals are discontinued, accrued but uncollected interest is charged against current year income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collection of interest or principal.

Restructured loans are loans on which, due to deterioration in the borrower’s financial condition, the original terms have been modified in favor of the borrower or either principal or interest has been forgiven. Repossessed assets represent property acquired as the result of borrower defaults on loans. These assets are recorded at estimated fair value, less estimated selling costs, at the time of foreclosure or repossession. Write-downs occurring at foreclosure are charged against the allowance for loan losses. On an ongoing basis, properties are appraised as required by market indications and applicable regulations. Write-downs for subsequent declines in value are recorded in non-interest expense in other real estate owned along with other expenses related to maintaining the properties.

The following table presents information concerning the aggregate amount of nonperforming loans and repossessed assets at ~~June~~September 30, 2022 and December 31, 2021 (dollars in thousands):

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Nonaccrual loans	$	17,035		$	18,105		$	17,866		$	18,105
Restructured loans which are performing in accordance with revised terms		2,946			3,931			2,946			3,931
Total nonperforming loans		19,981			22,036			20,812			22,036
Repossessed assets		4,209			5,019			4,331			5,019
Total nonperforming loans and repossessed assets	$	24,190		$	27,055		$	25,143		$	27,055
Nonperforming loans to loans, before allowance for loan losses		0.43	%		0.55	%		0.44	%		0.55	%
Nonperforming loans and repossessed assets to loans, before allowance for loan losses		0.52	%		0.68	%		0.53	%		0.68	%

The ~~$1,070,000~~$239,000 decrease in nonaccrual loans during 2022 resulted from the net of ~~$3,943,000~~$6,148,000 of loans put on nonaccrual status offset by ~~$4,596,000~~$5,752,000 of loans becoming current or paid-off, ~~$145,000~~$330,000 of loans transferred to other real estate and ~~$273,000~~$305,000 of loans charged off. The following table summarizes the composition of nonaccrual loans (dollars in thousands):

	June 30, 2022					December 31, 2021					September 30, 2022					December 31, 2021
	Balance		% of Total			Balance		% of Total			Balance		% of Total			Balance		% of Total
Construction and land development	$	—		0.0	%	$	25		0.1	%	$	14		0.1	%	$	25		0.1	%
Agricultural real estate		1,268		7.4	%		336		1.9	%		1,347		7.5	%		336		1.9	%
1-4 family residential properties		4,680		27.5	%		5,252		29.0	%		4,222		23.6	%		5,252		29.0	%
Multifamily residential properties		1,311		7.7	%		1,982		11.0	%		1,238		6.9	%		1,982		11.0	%
Commercial real estate		7,975		46.8	%		7,920		43.7	%		7,970		44.7	%		7,920		43.7	%
Loans secured by real estate		15,234		89.4	%		15,515		85.7	%		14,791		82.8	%		15,515		85.7	%
Agricultural loans		174		1.0	%		560		3.1	%		856		4.8	%		560		3.1	%
Commercial and industrial loans		1,529		9.0	%		1,851		10.2	%		1,872		10.5	%		1,851		10.2	%
Consumer loans		98		0.6	%		179		1.0	%		347		1.9	%		179		1.0	%
Total loans	$	17,035		100.0	%	$	18,105		100.0	%	$	17,866		100.0	%	$	18,105		100.0	%

Interest income that would have been reported if nonaccrual and restructured loans had been performing totaled ~~$94,000~~$168,000 and ~~$319,000~~$407,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively.

The ~~$810,000~~$688,000 decrease in repossessed assets during the first ~~six~~nine months of 2022 resulted from ~~$275,000~~$469,000 of additional assets repossessed and ~~$867,000~~$904,000 of repossessed assets sold, ~~$200,000~~$235,000 of writedowns, and approximately $18,000 of change in fair value premiums and discounts. The following table summarizes the composition of repossessed assets (dollars in thousands):

	June 30, 2022					December 31, 2021					September 30, 2022					December 31, 2021
	Balance		% of Total			Balance		% of Total			Balance		% of Total			Balance		% of Total
Construction and land development	$	2,773		65.9	%	$	3,004		59.9	%	$	2,764		63.8	%	$	3,004		59.9	%
1-4 family residential properties		28		0.7	%		12		0.2	%		12		0.3	%		12		0.2	%
Commercial real estate		1,408		33.5	%		1,968		39.2	%		1,546		35.7	%		1,968		39.2	%
Total real estate		4,209		100.0	%		4,984		99.3	%		4,322		99.8	%		4,984		99.3	%
Consumer loans		—		0.0	%		35		0.7	%		9		0.2	%		35		0.7	%
Total repossessed collateral	$	4,209		100.0	%	$	5,019		100.0	%	$	4,331		100.0	%	$	5,019		100.0	%

Repossessed assets sold during the first ~~six~~nine months of 2022 resulted in net gains of ~~$27,000~~$29,000 related to real estate asset sales and net losses of $1,000 related to other asset sales. The Company also recognized $61,000 of deferred gains and ~~$200,000~~$236,000 of writedowns. Repossessed assets sold during the same period in 2021 resulted in net ~~gains~~losses of ~~$625,000,~~$575,000, of which ~~$1,887,000~~$576,000 of net losses was related to real estate asset sales and $1,000 of net gains was related to other repossessed assets.

The allowance for credit losses represents management’s estimate of the reserve necessary to adequately account for probable losses existing in the current portfolio. The provision for loan losses is the charge against current earnings that is determined by management as the amount needed to maintain an adequate allowance for loan losses. In determining the adequacy of the allowance for loan losses, and therefore the provision to be charged to current earnings, management relies predominantly on a disciplined credit review and approval process that extends to the full range of the Company’s credit exposure. The review process is directed by overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Factors considered by management in evaluating the overall adequacy of the allowance include a migration analysis of the historical net loan losses by loan segment, the level and composition of nonaccrual, past due and renegotiated loans, trends in volumes and terms of loans, effects of changes in risk selection and underwriting standards or lending practices, lending staff changes, concentrations of credit, industry conditions and the current economic conditions in the region where the Company operates.

Management reviews economic factors including the potential for reduced cash flow for commercial operating loans from reduction in sales or increased operating costs, decreased occupancy rates for commercial buildings, reduced levels of home sales for commercial land developments, the uncertainty regarding grain prices, increased operating costs for farmers, and increased levels of unemployment and bankruptcy impacting consumer’s ability to pay. Each of these economic uncertainties was taken into consideration in developing the level of the reserve. Management considers the allowance for loan losses a critical accounting policy.

Management recognizes there are risk factors that are inherent in the Company’s loan portfolio. All financial institutions face risk factors in their loan portfolios because risk exposure is a function of the business. The Company’s operations (and therefore its loans) are concentrated in east central Illinois, an area where agriculture is the dominant industry. Accordingly, lending and other business relationships with agriculture-based businesses are critical to the Company’s success. At ~~June~~September 30, 2022, the Company’s loan portfolio included ~~$492.6~~$520.9 million of loans to borrowers whose businesses are directly related to agriculture. Of this amount, ~~$366.6~~$397.5 million was concentrated in other grain farming. Total loans to borrowers whose businesses are directly related to agriculture increased ~~$61.8~~$90.2 million from $430.8 million at December 31, 2021 while loans concentrated in other grain farming increased ~~$69.3~~$100.1 million from $297.4 million at December 31, 2021. While the Company adheres to sound underwriting practices, including collateralization of loans, any extended period of low commodity prices, drought conditions, significantly reduced yields on crops and/or reduced levels of government assistance to the agricultural industry could result in an increase in the level of problem agriculture loans and potentially result in loan losses within the agricultural portfolio. In addition, the Company has ~~$203.0~~$209.4 million of loans to motels and hotels. The performance of these loans is dependent on borrower specific issues as well as the general level of business and personal travel within the region. While the Company adheres to sound underwriting standards, a prolonged period of reduced business or personal travel could result in an increase in nonperforming loans to this business segment and potentially in loan losses. The Company also has ~~$902.0~~$911.0 million of loans to lessors of non-residential buildings, and ~~$494.5~~$470.4 million of loans to lessors of residential buildings and dwellings.

The structure of the Company’s loan approval process is based on progressively larger lending authorities granted to individual loan officers, loan committees, and ultimately the Board of Directors. Outstanding balances to one borrower or affiliated borrowers are limited by federal regulation; however, limits well below the regulatory thresholds are generally observed. Most of the Company’s loans are to businesses located in the geographic market areas served by the Company’s branch bank system. Additionally, a significant portion of the collateral securing the loans in the portfolio is located within the Company’s primary geographic footprint. In general, the Company adheres to loan underwriting standards consistent with industry guidelines for all loan segments.

The Company minimizes credit risk by adhering to sound underwriting and credit review policies. Management and the board of directors of the Company review these policies at least annually. Senior management is actively involved in business development efforts and the maintenance and monitoring of credit underwriting and approval. The loan review system and controls are designed to identify, monitor and address asset quality problems in an accurate and timely manner. The board of directors and management review the status of problem loans each month and formally determine a best estimate of the allowance for loan losses on a quarterly basis. In addition to internal policies and controls, regulatory authorities periodically review asset quality and the overall adequacy of the allowance for loan losses.

Analysis of the allowance for credit losses as of ~~June~~September 30, 2022 and 2021, and of changes in the allowance for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, is as follows (dollars in thousands):

	Three months ended June 30,						Six months ended June 30,						Three months ended September 30,						Nine months ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021
Average loans outstanding, net of unearned income	$	4,481,593		$	3,873,035		$	4,332,925		$	3,676,486		$	4,481,593		$	3,873,035		$	4,332,925		$	3,726,531
Allowance - beginning of period		58,474			55,418			54,655			41,910			59,075			54,597			54,655			41,910
Initial allowance on loans purchased with credit deterioration		—			—			863			2,074			—			—			863			2,074
Charge-offs:
Construction and land development		—			23			2			23			—			—			2			23
1-4 family residential		69			14			141			196			45			45			186			241
Commercial real estate		68			—			407			480			7			55			414			535
Agricultural		93			—			93			—			—			—			93			—
Commercial and industrial		32			68			35			86			389			1,600			424			1,686
Consumer		309			344			667			632			392			376			1,059			1,008
Total charge-offs		571			449			1,345			1,417			833			2,076			2,178			3,493
Recoveries:
'Construction and land development														100			—			100			—
1-4 family residential		42			18			245			26			19			108			264			134
Commercial real estate		12			13			359			22			8			23			367			45
Agricultural														38			—			38			1
Commercial and industrial		63			22			124			40			63			24			187			64
Consumer		148			134			315			365			165			204			480			569
Total recoveries		265			188			1,043			454			393			359			1,436			813
Net charge-offs (recoveries)		306			261			302			963			440			1,717			742			2,680
Provision for loan losses		907			(560	)		3,859			11,576			142			1,103			4,001			12,679
Allowance-end of period	$	59,075		$	54,597		$	59,075		$	54,597		$	58,777		$	53,983		$	58,777		$	53,983
Ratio of annualized net charge-offs to average loans		0.03	%		0.03	%		0.01	%		0.05	%		0.04	%		0.18	%		0.02	%		0.10	%
Ratio of allowance for credit losses to loans outstanding (at amortized cost)		1.27	%		1.44	%		1.27	%		1.44	%		1.25	%		1.37	%		1.25	%		1.37	%
Ratio of allowance for credit losses to nonperforming loans		296	%		180	%		296	%		180	%		282	%		195	%		282	%		195	%

The increase in the allowance for credit losses to nonperforming loans ratio is primarily due to a decline in nonperforming loans at ~~June~~September 30, 2022 compared to ~~June~~September 30, 2021. The ~~increase~~decrease in allowance for credit losses is primarily due to the day one provision required to be recorded in the 2021 acquisition of loans with Providence Bank which was greater than the day one provision required for the 2022 acquisition of loans with Jefferson ~~Bank and other increases in loan balances.~~Bank.

During the first ~~six~~nine months of 2022, the Company had net charge offs of ~~$303,000~~$742,000 compared to net charge-offs of ~~$963,000~~$2,680,000 in 2021. During the first ~~six~~nine months of 2022, there were significant charge-offs of two commercial real estate loans of one borrower totaling ~~$271,000.~~$271,000, and one commercial operating loan totaling $300,000. During the first ~~six~~nine months of 2021, there were significant charge-offs of one commercial real estate loan to one borrower totaling $480,000 and one commercial loan to a single borrower totaling $1,572,000.

Funding of the Company’s earning assets is substantially provided by a combination of consumer, commercial and public fund deposits. The Company continues to focus its strategies and emphasis on retail core deposits, the major component of funding sources. The following table sets forth the average deposits and weighted average rates for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 and for the year ended December 31, 2021 (dollars in thousands):

	Six months ended June 30, 2022					Six months ended June 30, 2021					Year ended December 31, 2021					Nine months ended September 30, 2022					Nine months ended September 30, 2021					Year ended December 31, 2021
	Average Balance		Weighted Average Rate			Average Balance		Weighted Average Rate			Average Balance		Weighted Average Rate			Average Balance		Weighted Average Rate			Average Balance		Weighted Average Rate			Average Balance		Weighted Average Rate
Demand deposits:
Non-interest-bearing	$	1,346,645	—%			$	1,099,295	—%			$	1,164,877	—%			$	1,370,701	—%			$	1,126,464	—%			$	1,164,877	—%
Interest-bearing		2,633,667		0.24	%		2,025,759		0.19	%		2,217,281		0.19	%		2,603,995		0.34	%		2,130,511		0.19	%		2,217,281		0.19	%
Savings		671,447		0.07	%		610,224		0.09	%		611,379		0.08	%		672,484		0.08	%		608,844		0.08	%		611,379		0.08	%
Time deposits		630,940		0.42	%		706,568		0.73	%		671,056		0.64	%		644,840		0.52	%		695,536		0.68	%		671,056		0.64	%
Total average deposits	$	5,282,699		0.18	%	$	4,441,846		0.22	%	$	4,664,593		0.19	%	$	5,292,020		0.24	%	$	4,561,355		0.21	%	$	4,664,593		0.19	%

During the first ~~six~~nine months of 2022, the average balance of deposits increased by $0.6 billion from the average balance for the year ended December 31, 2021. Average non-interest-bearing deposits increased by ~~$181.8~~$205.8 million, average interest-bearing balances increased by ~~$416.4~~$386.7 million, savings account balances increased ~~$60.1~~$61.1 million and balances of time deposits decreased ~~$40.1~~$26.2 million. These increases were primarily due to deposits added in the acquisition of Jefferson Bank offset by maturing time deposits.

The following table sets forth the high and low month-end balances for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 and for the year ended December 31, 2021 (in thousands):

Six months ended

June 30, 2022

Six months ended

June 30, 2021

Year ended

December 31, 2021

Nine months ended

September 30, 2022

Nine months ended

September 30, 2021

Year ended

December 31, 2021

High month-end balances of total deposits

5,487,305

4,789,451

5,000,084

5,487,305

4,988,562

5,000,084

Low month-end balances of total deposits

4,904,973

3,725,741

4,904,973

3,725,741

Balances of time deposits of $100,000 or more include time deposits maintained for public fund entities and consumer time deposits. The following table sets forth the maturity of time deposits of $100,000 or more at ~~June~~September 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
3 months or less	$	93,288	$	86,790	$	84,822	$	86,790
Over 3 through 6 months		64,265		57,777		66,183		57,777
Over 6 through 12 months		85,273		82,644		99,517		82,644
Over 12 months		113,619		75,568		143,651		75,568
Total	$	356,445	$	302,779	$	394,173	$	302,779

Securities sold under agreements to repurchase are short-term obligations of First Mid Bank. These obligations are collateralized with certain government securities that are direct obligations of the United States or one of its agencies. These retail repurchase agreements are offered as a cash management service to its corporate customers. Other borrowings consist of Federal Home Loan Bank (“FHLB”) advances, federal funds purchased, loans (short-term or long-term debt) that the Company has outstanding and junior subordinated debentures. Information relating to securities sold under agreements to repurchase and other borrowings as of ~~June~~September 30, 2022 and December 31, 2021 is presented below (dollars in thousands):

	June 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Securities sold under agreements to repurchase	$	174,934		$	146,268		$	220,707		$	146,268
Federal Home Loan Bank advances:
Overnight		175,000			—
Fixed term – due in one year or less		145,092			25,113			135,063			25,113
Fixed term – due after one year		56,194			61,333			41,168			61,333
Other borrowings:
Federal funds purchased		10,000			—			5,000			—
Subordinated debt		94,476			94,400			94,515			94,400
Junior subordinated debentures		19,279			19,195			19,322			19,195
Total	$	674,975		$	346,309		$	515,775		$	346,309
Average interest rate at end of period		1.21	%		1.78	%		2.26	%		1.78	%

Maximum outstanding at any month-end:
Securities sold under agreements to repurchase	$	190,314		$	212,503		$	225,707		$	212,503
Federal Home Loan Bank advances:
Overnight		175,000			—			310,000			—
Fixed term – due in one year or less		145,092			30,180			145,092			30,180
Fixed term – due after one year		181,203			97,877			181,203			97,877
Other borrowings:
Federal funds purchased		10,000			—			10,000			—
Subordinated debt		94,476			94,400			94,515			94,400
Junior subordinated debentures		19,279			19,195			19,322			19,195

Averages for the period (YTD):
Securities sold under agreements to repurchase	$	176,076		$	173,762		$	186,524		$	173,762
Federal Home Loan Bank advances:
Overnight		40,801			—			88,478			—
Fixed term – due in one year or less		52,115			22,751			76,861			22,751
Fixed term – due after one year		80,645			84,766			69,553			84,766
Other borrowings:
Federal funds purchased		696			—			553			—
Loans due in one year or less		28			—			18			—
Subordinated debt		94,432			94,321			94,452			94,321
Junior subordinated debentures		19,231			19,105			19,252			19,105
Total	$	464,024		$	394,705		$	535,691		$	394,705
Average interest rate during the period		1.48	%		1.58	%		1.74	%		1.58	%

Securities sold under agreements to repurchase decreased ~~$28.7~~$74.4 million during the first ~~six~~nine months of 2021 primarily due to the cash flow needs of various customers. FHLB advances represent borrowings by First Mid Bank to economically fund loan demand. At ~~June~~September 30, 2022 the fixed term advances, before net premiums of ~~$538,000,~~$374,000, consisted of ~~$375.9~~$175.9 million as follows:

The Company is party to a revolving credit agreement with The Northern Trust Company in the amount of $15 million. There was no balance on this line of credit as of ~~June~~September 30, 2022. This loan was renewed on April 8, 2022 for one year as a revolving credit agreement. The interest rate is floating at 2.25% over the federal funds rate. The Company and First Mid Bank were in compliance with the existing covenants at ~~June~~September 30, 2022 and 2021, and December 31, 2021.

On October 6, 2020, the Company issued and sold $96.0 million in aggregate principal amount of its 3.95% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The Notes were issued pursuant to the Indenture, dated as of October 6, 2020 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of October 6, 2020 (the “Supplemental Indenture”), between the Company and the Trustee. The Base Indenture, as amended and supplemented by the Supplemental Indenture, governs the terms of the Notes and provides that the Notes are unsecured, subordinated debt obligations of the Company and will mature on October 15, 2030. From and including the date of issuance to, but excluding October 15, 2025, the Notes will bear interest at an initial rate of 3.95% per annum. From and including October 15, 2025 to, but excluding the maturity date or earlier redemption, the Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 383 basis points, or such other rate as determined pursuant to the Supplemental Indenture, provided that in no event shall the applicable floating interest rate be less than zero per annum.

The Company may, beginning with the interest payment date of October 15, 2025, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the Notes at any time, including prior to October 15, 2025, at the Company’s option, in whole but not in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to but excluding the redemption date.

On April 26, 2006, the Company completed the issuance and sale of $10 million of fixed/floating rate trust preferred securities through First Mid-Illinois Statutory Trust II (“Trust II”), a statutory business trust and wholly owned unconsolidated subsidiary of the Company, as part of a pooled offering. The Company established Trust II for the purpose of issuing the trust preferred securities. The $10 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of Trust II, a total of $10,310 000, was invested in junior subordinated debentures of the Company. The underlying junior subordinated debentures issued by the Company to Trust II mature in 2036, bore interest at a fixed rate of 6.98% paid quarterly until June 15, 2011 and then converted to floating rate (LIBOR plus 160 basis points, ~~3.43%~~4.89% and 1.80% at ~~June~~September 30, 2022 and December 31, 2021, respectively).

On September 8, 2016, the Company assumed the trust preferred securities of Clover Leaf Statutory Trust I (“CLST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First Clover Financial. The $4,000,000 of trust preferred securities and an additional $124,000 additional investment in common equity of CLST I, is invested in junior subordinated debentures issued to CLST I. The subordinated debentures mature in 2025, bear interest at three-month LIBOR plus 185 basis points ~~(3.68%~~(5.14% and 2.05% at ~~June~~September 30, 2022 and December 31, 2021, respectively) and resets quarterly.

On May 1, 2018, the Company assumed the trust preferred securities of FBTC Statutory Trust I (“FBTCST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First BancTrust Corporation. The $6,000,000 of trust preferred securities and an additional $186,000 additional investment in common equity of FBTCST I is invested in junior subordinated debentures issued to FBTCST I. The subordinated debentures mature in 2035, bear interest at three-month LIBOR plus 170 basis points ~~(3.53%~~(4.99% and 1.90% at ~~June~~September 30, 2022 and December 31, 2021, respectively) and resets quarterly.

The trust preferred securities issued by Trust II, CLST I and FBTCST I are included as Tier 1 capital of the Company for regulatory capital purposes. On March 1, 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the calculation of Tier 1 capital for regulatory purposes. The final rule provided a five-year transition period, ending September 30, 2010, for application of the revised quantitative limits. On March 17, 2009, the Federal Reserve Board adopted an additional final rule that delayed the effective date of the new limits on inclusion of trust preferred securities in the calculation of Tier 1 capital until March 31, 2012. The application of the revised quantitative limits did not and is not expected to have a significant impact on its calculation of Tier 1 capital for regulatory purposes or its classification as well-capitalized. The Dodd-Frank Act, signed into law July 21, 2010, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital after a three-year phase-in period beginning January 1, 2013 for larger holding companies. For holding companies with less than $15 billion in consolidated assets, existing issues of trust preferred securities are grandfathered and not subject to this new restriction.

Similarly, the final rule implementing the Basel III reforms allows holding companies with less than $15 billion in consolidated assets as of December 31, 2009 to continue to count toward Tier 1 capital any trust preferred securities issued before May 19, 2010. New issuances of trust preferred securities, however, would not count as Tier 1 regulatory capital.

In addition to requirements of the Dodd-Frank Act discussed above, the act also required the federal banking agencies to adopt certain rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds). This rule is generally referred to as the “Volcker Rule.” The rules permit the retention of an interest in or sponsorship of covered funds by banking entities under $15 billion in assets (such as the Company) if (1) the collateralized debt obligation was established and issued prior to May 19, 2010, (2) the banking entity reasonably believes that the offering proceeds received by the collateralized debt obligation were invested primarily in qualifying trust preferred collateral, and (3) the banking entity’s interests in the collateralized debt obligation was acquired on or prior to December 10, 2013. The Company does not currently anticipate that the Volcker Rule will have a material effect on the operations of the Company or First Mid Bank. On June 25, 2020, the agencies announced that certain restrictions under the Volcker Rule applicable to large banking entities will be eased commencing October 1, 2020.

The Company seeks to maximize its net interest margin while maintaining an acceptable level of interest rate risk. Interest rate risk can be defined as the amount of forecasted net interest income that may be gained or lost due to changes in the interest rate environment, a variable over which management has no control. Interest rate risk, or sensitivity, arises when the maturity or repricing characteristics of interest-bearing assets differ significantly from the maturity or repricing characteristics of interest- bearing liabilities. The Company monitors its interest rate sensitivity position to maintain a balance between rate sensitive assets and rate sensitive liabilities. This balance serves to limit the adverse effects of changes in interest rates. The Company’s asset liability management committee (ALCO) oversees the interest rate sensitivity position and directs the overall allocation of funds.

In the banking industry, a traditional way to measure potential net interest income exposure to changes in interest rates is through a technique known as “static GAP” analysis which measures the cumulative differences between the amounts of assets and liabilities maturing or repricing at various intervals. By comparing the volumes of interest-bearing assets and liabilities that have contractual maturities and repricing points at various times in the future, management can gain insight into the amount of interest rate risk embedded in the balance sheet. The following table sets forth the Company’s interest rate repricing GAP for selected maturity periods at ~~June~~September 30, 2022 (dollars in thousands):

	Rate Sensitive Within																						Rate Sensitive Within
	1 years			1-2 years			2-3 years			3-4 years			4-5 years			Thereafter			Total		Fair Value		1 years			1-2 years			2-3 years			3-4 years			4-5 years			Thereafter			Total		Fair Value
Interest-earning assets:
Federal funds sold and other interest-bearing deposits	$	21,209		$	—		$	—		$	—		$	—		$	—		$	21,209	$	21,209	$	19,824		$	—		$	—		$	—		$	—		$	—		$	19,824	$	19,824
Certificates of deposit investments		980			735			—		—				—		—				1,715		1,715		980			490			—		—				—			—			1,470		1,470
Taxable investment securities		38,039			103,803			108,185			89,127			83,904			606,421			1,029,479		1,029,479		(4,199	)		98,016			103,842			79,842			98,949			575,251			951,701		951,701
Nontaxable investment securities		(47,711	)		7,181			11,344			9,282			10,563			333,090			323,749		323,749		(66,456	)		4,352			2,210			2,488			7,955			331,785			282,334		282,334
Loans		1,583,891			690,937			648,379			600,806			758,000			366,650			4,648,663		4,501,530		1,712,746			593,399			663,323			636,292			763,967			350,563			4,720,290		4,460,130
Total	$	1,596,408		$	802,656		$	767,908		$	699,215		$	852,467		$	1,306,161		$	6,024,815	$	5,877,682	$	1,662,895		$	696,257		$	769,375		$	718,622		$	870,871		$	1,257,599		$	5,975,619	$	5,715,459
Interest-bearing liabilities:
Savings and NOW accounts	$	552,913		$	190,544		$	190,544		$	190,544		$	190,544		$	822,787		$	2,137,876	$	2,137,876	$	513,595		$	176,705		$	176,705		$	176,705		$	176,705		$	801,483		$	2,021,898	$	2,021,898
Money market accounts		732,356			55,679			55,679			55,679			55,679			203,652			1,158,724		1,158,724		869,506			85,450			85,450			85,450			85,450			231,754			1,443,060		1,443,060
Other time deposits		450,746			121,528			39,517			23,338			17,407			86			652,622		654,925		428,527			190,923			28,666			19,214			15,759			465			683,554		683,856
Short-term borrowings/debt		359,934			—			—			—			—			—			359,934		359,859		225,707			—			—			—			—			—			225,707		225,538
Long-term borrowings/debt		164,371			10,000			20,038			100,632			—			20,000			315,041		307,622		154,385			—			15,034			100,650			—			20,000			290,069		276,119
Total	$	2,260,320		$	377,751		$	305,778		$	370,193		$	263,630		$	1,046,525		$	4,624,197	$	4,619,006	$	2,191,720		$	453,078		$	305,855		$	382,019		$	277,914		$	1,053,702		$	4,664,288	$	4,650,471
Rate sensitive assets – rate sensitive liabilities	$	(663,912	)	$	424,905		$	462,130		$	329,022		$	588,837		$	259,636		$	1,400,618			$	(528,825	)	$	243,179		$	463,520		$	336,603		$	592,957		$	203,897		$	1,311,331
Cumulative GAP		(663,912	)		(239,007	)		223,123			552,145			1,140,982			1,400,618							(528,825	)		(285,646	)		177,874			514,477			1,107,434			1,311,331
Cumulative amounts as % of total Rate sensitive assets		-11.0	%		7.1	%		7.7	%		5.5	%		9.8	%		4.3	%						-8.8	%		4.1	%		7.8	%		5.6	%		9.9	%		3.4	%
Cumulative Ratio		-11.0	%		-4.0	%		3.7	%		9.2	%		18.9	%		23.2	%						-8.8	%		-4.8	%		3.0	%		8.6	%		18.5	%		21.9	%

The static GAP analysis shows that at ~~June~~September 30, 2022, the Company was liability sensitive, on a cumulative basis, through the twelve-month time horizon. This indicates that future increases in interest rates could have an adverse effect on net interest income. There are several ways the Company measures and manages the exposure to interest rate sensitivity, including static GAP analysis. The Company’s ALCO also uses other financial models to project interest income under various rate scenarios and prepayment/extension assumptions consistent with First Mid Bank’s historical experience and with known industry trends. ALCO meets at least monthly to review the Company’s exposure to interest rate changes as indicated by the various techniques and to make necessary changes in the composition terms and/or rates of the assets and liabilities.

At ~~June~~September 30, 2022, the Company’s stockholders' equity decreased ~~$7.6~~$33.2 million or ~~1.2%~~5.2%, to ~~$626.3~~$600.7 million from $633.9 million as of December 31, 2021. During the first ~~six~~nine months of 2022, net income contributed ~~$34.4~~$52.3 million to equity before the payment of dividends to stockholders. The change in market value of available-for-sale investment securities decreased stockholders' equity by ~~$127.4~~$166.8 million, net of tax. Dividends of ~~$8.5~~$13.1 million were paid during the first ~~six~~nine months of 2022. The acquisition of Delta also increased stockholders’ equity $92.1 million.

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Bank holding companies follow minimum regulatory requirements established by the Board of Governors of the Federal Reserve System (“Federal Reserve System”), First Mid Bank follows similar minimum regulatory requirements established for banks by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation, as applicable. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Company and its subsidiary bank to maintain minimum capital amounts and ratios (set forth in the table below). Management believes that, as of ~~June~~September 30, 2022 and December 31, 2021, the Company and First Mid Bank met all capital adequacy requirements.

As permitted by the interim final rule issued on March 27, 2020 by the federal banking regulatory agencies, the Company elected the option to delay the estimated impact on regulatory capital of adopting ASU 2016-13, which was effective January 1, 2020. The initial impact of adoption of ASU 2016-13, as well as 25% of the quarterly increases in allowance for credit losses subsequent to adoption of ASU 2016-13 was delayed for two years. After two years, the cumulative amount of these adjustments is being phased out of the regulatory capital calculation over a three-year period, with 75% of the adjustments included in 2022, 50% of the adjustments included in 2023 and 25% of the adjustments included in 2024. After five years, the temporary delay of ASU 2016-13 adoption will be fully reversed.

To be categorized as well-capitalized, total risk-based capital, Tier 1 risk-based capital, common equity Tier 1 risk-based capital and Tier 1 leverage ratios must be maintained as set forth in the following table (dollars in thousands):

	Actual					Required Minimum For Capital Adequacy Purposes			To Be Well-Capitalized Under Prompt Corrective Action Provisions			Actual					Required Minimum For Capital Adequacy Purposes			To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio	Amount		Ratio	Amount		Ratio			Amount		Ratio	Amount		Ratio
June 30, 2022
September 30, 2022
Total capital (to risk-weighted assets)
Company	$	769,021		15.05	%	$	536,701	> 10.50%	N/A		N/A	$	784,346		15.11	%	$	544,832	> 10.50%	N/A		N/A
First Mid Bank		720,042		14.12	%		535,553	> 10.50%	$	510,050	> 10.00%		730,879		14.13	%		543,116	> 10.50%	$	517,254	> 10.00%
Tier 1 capital (to risk-weighted assets)
Company		621,750		12.16	%		434,472	> 8.50%	N/A		N/A		637,196		12.28	%		441,055	> 8.50%	N/A		N/A
First Mid Bank		667,247		13.08	%		433,543	> 8.50%		408,040	> 8.00%		678,244		13.11	%		439,666	> 8.50%		413,803	> 8.00%
Common equity tier 1 capital (to risk-weighted assets)
Company		602,471		11.79	%		357,800	> 7.00%	N/A		N/A		617,874		11.91	%		363,221	> 7.00%	N/A		N/A
First Mid Bank		667,247		13.08	%		357,035	> 7.00%		331,533	> 6.50%		678,244		13.11	%		362,078	> 7.00%		336,215	> 6.50%
Tier 1 capital (to average assets)
Company		621,750		12.16	%		256,475	> 4.00%	N/A		N/A		637,196		9.52	%		267,799	> 4.00%	N/A		N/A
First Mid Bank		667,247		13.08	%		255,586	> 4.00%		319,482	> 5.00%		678,244		10.17	%		266,839	> 4.00%		333,548	> 5.00%

December 31, 2021
Total capital (to risk-weighted assets)
Company	$	674,310		15.79	%	$	448,344	> 10.50%	N/A		N/A	$	674,310		15.79	%	$	448,344	> 10.50%	N/A		N/A
First Mid Bank		624,150		14.67	%		446,711	> 10.50%	$	425,439	> 10.00%		624,150		14.67	%		446,711	> 10.50%	$	425,439	> 10.00%
Tier 1 capital (to risk-weighted assets)
Company		534,277		12.51	%		362,945	> 8.50%	N/A		N/A		534,277		12.51	%		362,945	> 8.50%	N/A		N/A
First Mid Bank		578,517		13.60	%		361,623	> 8.50%		340,351	> 8.00%		578,517		13.60	%		361,623	> 8.50%		340,351	> 8.00%
Common equity tier 1 capital (to risk-weighted assets)
Company		515,082		12.06	%		298,896	> 7.00%	N/A		N/A		515,082		12.06	%		298,896	> 7.00%	N/A		N/A
First Mid Bank		578,517		13.60	%		297,807	> 7.00%		376,535	> 6.50%		578,517		13.60	%		297,807	> 7.00%		376,535	> 6.50%
Tier 1 capital (to average assets)
Company		534,277		9.05	%		236,151	> 4.00%	N/A		N/A		534,277		9.05	%		236,151	> 4.00%	N/A		N/A
First Mid Bank		578,517		9.83	%		135,337	> 4.00%		294,171	> 5.00%		578,517		9.83	%		135,337	> 4.00%		294,171	> 5.00%

The Company's risk-weighted assets, capital, and capital ratios for ~~June~~September 30, 2022 are computed in accordance with Basel III capital rules which were effective January 1, 2015. See heading "Basel III" in the Overview section of this report for a more detailed description of the Basel III rules. As of ~~June~~September 30, 2022, the Company and First Mid Bank had capital ratios above the required minimums for regulatory capital adequacy, and First Mid Bank had capital ratios that qualified it for treatment as well-capitalized under the regulatory framework for prompt corrective action with respect to banks.

Participants may purchase Company stock under the following four plans of the Company: The Deferred Compensation Plan, the First Retirement and Savings Plan, the Dividend Reinvestment Plan, and the Stock Incentive Plan. For more detailed information on these plans, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

At the Annual Meeting of Stockholders held April 26, 2017, the stockholders approved the 2017 Stock Incentive Plan ("SI Plan"). The SI Plan was implemented to succeed the Company’s 2007 Stock Incentive Plan, which had a ten-year term. The SI Plan is intended to provide a means whereby directors, employees, consultants and advisors of the Company and its Subsidiaries may sustain a sense of proprietorship and personal involvement in the continued development and financial success of the Company and its Subsidiaries, thereby advancing the interests of the Company and its stockholders. Accordingly, directors and selected employees, consultants and advisors may be provided the opportunity to acquire shares of Common Stock of the Company on the terms and conditions established in the SI Plan.

Following the stockholders’ approval at the 2021 annual meeting of the Company, a maximum of 399,983 shares of common stock may be issued under the SI Plan. The Company awarded 61,400 and ~~27,750~~30,125 restricted stock awards during 2022 and 2021, respectively and 37,150 and 35,400 as stock unit awards during 2022 and 2021, respectively.

At the Annual Meeting of Stockholders held April 25, 2018, the stockholders approved the First Mid-Illinois Bancshares, Inc. Employee Stock Purchase Plan (“ESPP”). The ESPP is intended to promote the interests of the Company by providing eligible employees with the opportunity to purchase shares of common stock of the Company at a 15% discount through payroll deductions. The ESPP is also intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. A maximum of 600,000 shares of common stock may be issued under the ESPP. As of ~~June~~September 30, 2022, ~~40,010~~46,114 shares have been issued pursuant to the ESPP. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, ~~8,326~~14,430 shares and ~~3,142~~8,439 shares, respectively, were issued pursuant to the ESPP.

Since August 5, 1998, the Board of Directors has approved repurchase programs pursuant to which the Company may repurchase a total of approximately $76.7 million of the Company’s common stock. During 2022, the Company repurchased 262 shares. All of these shares were a result of shares withheld for taxes on vested employee stock incentives. The Company has approximately $4.4 million in remaining capacity under its existing repurchase program.

Although the Company adopted the repurchase plan, the Company may make discretionary repurchases in the open market or in privately negotiated transactions from time to time. The timing, manner, price and amount of any such repurchases will be determined by the Company at its discretion and will depend upon a variety of factors including economic and market conditions, price, applicable legal requirements and other factors.

Liquidity represents the ability of the Company and its subsidiaries to meet all present and future financial obligations arising in the daily operations of the business. Financial obligations consist of the need for funds to meet extensions of credit, deposit withdrawals and debt servicing. The Company’s liquidity management focuses on the ability to obtain funds economically through assets that may be converted into cash at minimal costs or through other sources. The Company’s other sources of cash include overnight federal fund lines, Federal Home Loan Bank advances, deposits of the State of Illinois, the ability to borrow at the Federal Reserve Bank of Chicago, and the Company’s operating line of credit with The Northern Trust Company.

Management continues to monitor its expected liquidity requirements carefully, focusing primarily on cash flows from:

The following table summarizes significant contractual obligations and other commitments at ~~June~~September 30, 2022 (in thousands):

			Less than						More than				Less than						More than
	Total		1 year		1-3 years		3-5 years		5 years		Total		1 year		1-3 years		3-5 years		5 years
Time deposits	$	652,622	$	450,746	$	161,045	$	40,745	$	86	$	683,554	$	428,527	$	219,589	$	34,973	$	465
Debt		113,755		—		—		3,880		109,875		113,836		—		—		3,901		109,935
Other borrowing		551,220		495,026		30,038		6,156		20,000		396,939		355,770		15,033		6,136		20,000
Operating leases		17,905		2,752		4,575		3,548		7,030		18,586		2,924		4,993		3,994		6,675
Supplemental retirement		1,746		50		100		150		1,446		1,773		50		100		150		1,473
	$	1,337,248	$	948,574	$	195,758	$	54,479	$	138,437	$	1,214,688	$	787,271	$	239,715	$	49,154	$	138,548

For the ~~six~~nine months ended ~~June~~September 30, 2022, net cash of ~~$20.1~~$54.3 million was provided by operating activities, ~~$93.8~~$105.0 million was used in investing activities, and ~~$42.6~~$43.1 million was provided by financing activities. In total, cash and cash equivalents decreased by ~~$31.1~~$7.6 million since year-end 2021.

First Mid Bank enters into financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include lines of credit, letters of credit and other commitments to extend credit. Each of these instruments involves, to varying degrees, elements of credit, interest rate and liquidity risk in excess of the amounts recognized in the consolidated balance sheets. The Company uses the same credit policies and requires similar collateral in approving lines of credit and commitments and issuing letters of credit as it does in making loans. The exposure to credit losses on financial instruments is represented by the contractual amount of these instruments. However, the Company does not anticipate any losses from these instruments. The off-balance sheet financial instruments whose contract amounts represent credit risk at ~~June~~September 30, 2022 and December 31, 2021 were as follows (in thousands):

	June 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Unused commitments and lines of credit:
Commercial real estate	$	130,048	$	118,190	$	154,998	$	118,190
Commercial operating		651,247		529,035		690,461		529,035
Home equity		61,738		59,422		61,842		59,422
Other		296,757		293,339		305,662		293,339
Total	$	1,139,790	$	999,986	$	1,212,963	$	999,986
Standby letters of credit	$	17,774	$	14,403	$	16,107	$	14,403

Commitments to originate credit represent approved commercial, residential real estate and home equity loans that generally are expected to be funded within ninety days. Lines of credit are agreements by which the Company agrees to provide a borrowing accommodation up to a stated amount as long as there is no violation of any condition established in the loan agreement. Both commitments to originate credit and lines of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the lines and some commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company to guarantee the financial performance of customers to third parties. Standby letters of credit are primarily issued to facilitate trade or support borrowing arrangements and generally expire in one year or less. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit facilities to customers. The maximum amount of credit that would be extended under letters of credit is equal to the total off-balance sheet contract amount of such instrument. The Company's deferred revenue under standby letters of credit was nominal.

The Company is also subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition of ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

There has been no material change in the market risk faced by the Company since December 31, 2021. For information regarding the Company’s market risk, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective. Further, there have been no changes in the Company’s internal control over financial reporting during the last fiscal quarter that have materially affected or that are reasonably likely to affect materially the Company’s internal control over financial reporting.

From time to time the Company and its subsidiaries may be involved in litigation that the Company believes is a type common to our industry. None of any such existing claims are believed to be individually material at this time to the Company, although the outcome of any such existing claims cannot be predicted with certainty.

Various risks and uncertainties, some of which are difficult to predict and beyond the Company’s control, could negatively impact the Company. As a financial institution, the Company is exposed to interest rate risk, liquidity risk, credit risk, operational risk, risks from economic or market conditions, and general business risks among others. Adverse experience with these or other risks could have a material impact on the Company’s financial condition and results of operations, as well as the value of its common stock. See the risk factors and “Supervision and Regulation” described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

ISSUER PURCHASES OF EQUITY SECURITIES	ISSUER PURCHASES OF EQUITY SECURITIES									ISSUER PURCHASES OF EQUITY SECURITIES
Period		(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs			(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2022 - April 30, 2022			—	$	—		—	$	4,395,000
May 1, 2022 - May 31, 2022			—		—		—		4,395,000
June 1, 2022 - June 30, 2022			—		—		—		4,395,000
Total			—	$	—		—	$	4,395,000			—	$	—		—	$	4,395,000

See heading “Stock Repurchase Program” for more information regarding stock purchases.

The exhibits required by Item 601 of Regulation S-K and filed herewith are listed in the Exhibit Index that precedes the Signature Page and the exhibits filed.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware	37-1103704
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

1421 Charleston Avenue
Mattoon, Illinois	61938
(Address of principal executive offices)	(Zip code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FMBH	NASDAQ Global Market

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

	2022			2021
	Delta Acquisition			LINCO Acquisition
Purchase price of purchase credit deteriorated loans at acquisition	$	18,796		$	64,647
Allowance for credit losses at acquisition		(863	)		(2,074	)
Non-credit discount/(premium) at acquisition		(523	)		(187	)
Fair value of purchased credit deteriorated loans at acquisition	$	17,410		$	62,386

Unallocated purchase price				$	12,248
Less purchase accounting adjustments:
Fair value of securities	$	264
Fair value of loans, net		(2,818	)
Fair value of other real estate owned		915
Fair value of premises and equipment		6,360
Fair value of time deposits		(2,081	)
Fair value of FHLB advances		(975	)
Core deposit intangible		2,025
Other assets		3,293
Other liabilities		(184	)
					6,799
				$	5,449

Advance		Term (in years)		Interest Rate	Maturity Date
	175,000,000	Overnight		1.63%
	5,000,000		3.0	1.73%	July 12, 2022
	25,000,000	1 Month		1.63%	July 29, 2022
	25,000,000	3 Months		2.10%	September 23, 2022
	25,000,000	3 Months		2.07%	September 30, 2022
	25,000,000	6 Months		2.65%	December 23, 2022
	25,000,000	6 Months		2.74%	December 30, 2022
	5,000,000		8.0	2.40%	January 9, 2023
	5,000,000		4.0	2.44%	May 30, 2023
	5,000,000		1.0	2.00%	May 31, 2023
	5,000,000		3.5	1.51%	July 31, 2023
	5,000,000		3.5	0.77%	September 11, 2023
	5,000,000		5.0	1.54%	July 12, 2024
	10,000,000		5.0	1.45%	December 31, 2024
	5,000,000		5.0	0.91%	March 10, 2025
	5,857,785		10.0	2.64%	December 23, 2025
	5,000,000		10.0	1.15%	October 3, 2029
	5,000,000		10.0	1.12%	October 3, 2029
	10,000,000		10.0	1.39%	December 31, 2029

		June 30, 2022				June 30, 2021
Operating cash flows from operating leases		$	1,517			$	1,467


Exhibit Number		Exhibit Index to Quarterly Report on Form 10-Q Description and Filing or Incorporation Reference

~~10.1~~		Fifth Amendment to the Sixth Amended and Restated Credit Agreement by and between First Mid Bancshares, Inc. and The Northern Trust Company, dated as of April 8, 2022 (incorporated by reference to Exhibit 10.1 to First Mid Bancshares, Inc.’s Current Report on Form 8-K filed with the SEC on April 11, 2022).

~~10.2~~		First Mid Bancshares, Inc. Deferred Compensation Plan, restated as of April 1, 2022 (incorporated by reference to Exhibit 10.1 to First Mid Bancshares, Inc.’s Current Report on Form 8-K filed with the SEC on April 4, 2022).

31.1		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2022 (formatted as Inline XBRL and contained in Exhibits 101)
		*Exhibits omitted pursuant to Item 601(a)(5) of Regulation S-K. Copies of any omitted exhibit will be furnished to the SEC upon request.