Stephens cuts First Mid-Illinois Bancshares target to $41

Published 02/05/2025, 13:08
Stephens cuts First Mid-Illinois Bancshares target to $41

On Friday, Stephens analyst Terry McEvoy adjusted the price target for First Mid-Illinois Bancshares (NASDAQ: NASDAQ:FMBH) to $41.00, down from the previous $43.00. The $826 million market cap bank, currently trading at $34.44, received an Equal Weight rating from the firm. McEvoy’s assessment followed First Mid-Illinois Bancshares’ first-quarter performance, which surpassed consensus expectations due to positive net interest income trends and reduced credit costs. However, the company did face some challenges in fee income.According to InvestingPro, analysts have set price targets ranging from $40 to $48, suggesting potential upside from current levels.

The bank’s loan and deposit balances for the first quarter of 2025 exceeded forecasts, which, along with successful efforts to lower deposit rates, resulted in a net interest margin (NIM) of 3.60%, compared to Stephens’ estimate of 3.44%. Trading at 9.91x earnings and maintaining 14 consecutive years of dividend increases, the bank has demonstrated consistent shareholder returns. On the downside, operating fee income was reported at $25 million, approximately 8% lower than the consensus estimate.

McEvoy also noted that First Mid-Illinois Bancshares is actively looking to expand through acquisitions, specifically targeting banking partners with assets in the range of $1 billion to $2 billion. The recent successful conversion of their retail online systems has laid the groundwork for future branch consolidations. Furthermore, the company is on schedule for a core systems conversion set for October 2025.

The adjusted price target reflects a broader trend of lower bank stock valuations, as indicated by McEvoy’s commentary. This new target is intended to align with the current market conditions and the bank’s recent financial performance.

In other recent news, First Mid Bancshares has announced an extension of its revolving credit facility with The Northern Trust (NASDAQ:NTRS) Company. The company’s $15 million loan, originally set to mature, will now be extended by one year to April 3, 2026. This extension, outlined in a Form 8-K filed with the SEC, highlights the ongoing cooperation between First Mid Bancshares and The Northern Trust Company. The extension provides the bank with additional financial flexibility to manage its capital requirements effectively over a longer period. While the full terms of the amendment were not disclosed, this move aligns with First Mid Bancshares’ strategic objectives and commitment to maintaining a stable financial foundation. Investors and stakeholders can refer to Exhibit 10.1 of the 8-K filing for detailed information on the amendment’s terms. This credit extension could support the company’s ongoing operations and future growth initiatives.

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