Attached files
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| 8-K - 8-K - FIRST MID BANCSHARES, INC. | form8k_042413.htm |
Exhibit 99
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We have started 2013 well with an increase in earnings, a stronger capital position, and continued good asset quality ratios. Net income for the first quarter of 2013 was $3,528,000 compared to $3,390,000 for the first quarter of 2012. Diluted earnings per share was the same for both periods at $.41 per share.
The increase in earnings was the result of greater net interest income with growth in the balance sheet (loans, investments, and deposits) over the past year, a reduction in credit costs with further improvement in our level of non-performing assets, growth in mortgage banking revenue, and operating expenses which were nearly the same as 2012.
Net interest income for the first quarter of 2013 amounted to $12.2 million compared to $12.1 million for the first quarter of last year. Since March 31, 2012, loan balances increased $62 million, investment balances increased $52 million, and deposit balances increased $77 million. The balance sheet shows a decline in total loan balances since year-end, as we have experienced seasonal paydowns in agricultural loans. The growth in the balance sheet over the past year has offset a decline in the net interest margin as the margin for the first quarter was 3.40% compared to 3.50% for the first quarter last year on a tax-equivalent basis. I have mentioned in the past that the flat yield curve and historically low level of interest rates provide an environment that squeezes the spread between yields obtained on assets and those paid on liabilities. This has been the case for many banking companies for several quarters. We monitor and manage our margin closely. It has held up longer than many competitors but the prolonged period of low rates is starting to impact our profitability. Given the environment, I am pleased with the increase in overall net interest income for the first quarter.
I mentioned that our credit costs were lower including the provision for loan losses which was $135,000 less than the first quarter of last year. Our total non-performing assets (non-performing loans and other real estate owned) declined to $9.4 million at March 31, 2013 compared to $11.0 million on March 31, 2012. Our net loan charge-offs for the first quarter were $272,000 compared to $442,000 for the first quarter of last year. The improvement in these two metrics has allowed us to reduce the provision for loan losses. We continue to have a strong coverage ratio of allowance for loan losses to the level of non-accrual loans of 147%.
Total non-interest income of $4.6 million was virtually the same as the first quarter last year. Mortgage banking income increased from $236,000 for the first quarter of 2012 to $286,000 for the first quarter of this year as we continued to have greater refinance activity and an increase in new purchase activity. Revenues from our trust and brokerage areas also increased from the first quarter of last year while insurance revenues declined due to lower contingency income received from carriers based upon claims experience.
Another contributing factor to performance for the first quarter of 2012 was keeping total operating expenses at the same level as the first quarter of 2012. Despite increased regulatory and operating costs, total non-interest expense for the first quarter was $10.6 million, the same as the first quarter of last year.
With the increase in earnings, our capital ratios have also increased and remain quite strong. At March 31, 2012, our Tier 1 Capital ratio was 14.89% which is well in excess of the regulatory minimums to be considered well-capitalized. This capital position provides First Mid the ability to respond to opportunities that may lie ahead.
We continue to refresh and implement our Excellence 2015 plan. This initiative has as its core objective broad-based initiatives that will benefit all of our stakeholders before April 2015, the 150th anniversary of First Mid-Illinois Bank & Trust, N.A. During the quarter, we finalized plans to begin an enterprise risk management project to ensure that our risk management systems in the various business lines are aligned to our enterprise-wide strategy and that we have the proper forward-looking measurements to identify and manage risk proactively. We also announced plans to add a new facility in Decatur to further serve our customers in that region and we are placing more emphasis on communication between business lines to ensure our customers have the opportunity to learn about the full complement of First Mid's products and services. We are pleased with the progress we are making through the Excellence 2015 initiative.
We have seen some glimmers of positivity with slight economic growth and a high but stable unemployment rate over the past few months. However, many economists continue to predict sluggish economic conditions for 2013 as businesses and consumers are hesitant to invest capital for new projects in this environment. Combined with the flat yield curve I mentioned previously, this continues to make for a difficult environment for bank profitability.
We have a plan that is working, a strong team that is incredibly committed to this institution and all of our stakeholders, and we have strategic strengths that give us confidence that, despite the headwinds that our industry faces, we are well-positioned for the years to come.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
Very Truly Yours,
William S. Rowland
Chairman and Chief Executive Officer
April 24, 2013
First Mid-Illinois Bancshares, Inc.
1421 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands, except share data) | March 31 | Dec 31 | ||||
2013 | 2012 | |||||
Assets | ||||||
Cash and due from banks | $ | 27,135 | $ | 38,110 | ||
Federal funds sold and other interest-bearing deposits | 40,069 | 44,602 | ||||
Certificates of deposit investments | 5,424 | 6,665 | ||||
Investment securities: | ||||||
Available-for-sale, at fair value | 535,120 | 508,309 | ||||
Loans | 902,965 | 911,065 | ||||
Less allowance for loan losses | (11,984 | ) | (11,776 | ) | ||
Net loans | 890,981 | 899,289 | ||||
Premises and equipment, net | 29,268 | 29,670 | ||||
Goodwill, net | 25,753 | 25,753 | ||||
Intangible assets, net | 2,991 | 3,161 | ||||
Other assets | 20,972 | 22,473 | ||||
Total assets | $ | 1,577,713 | $ | 1,578,032 | ||
Liabilities and Stockholders’ Equity | ||||||
Deposits: | ||||||
Non-interest bearing | $ | 251,233 | $ | 263,838 | ||
Interest bearing | 1,058,936 | 1,010,227 | ||||
Total deposits | 1,310,169 | 1,274,065 | ||||
Repurchase agreements with customers | 76,372 | 113,484 | ||||
Other borrowings | 5,000 | 5,000 | ||||
Junior subordinated debentures | 20,620 | 20,620 | ||||
Other liabilities | 8,453 | 8,176 | ||||
Total liabilities | 1,420,614 | 1,421,345 | ||||
Stockholders’ Equity: | ||||||
Preferred stock (no par value, authorized 1,000,000 shares; | ||||||
issued 10,427 shares in 2013 and 2012) | 52,035 | 52,035 | ||||
Common stock ($4 par value; authorized 18,000,000 shares; | ||||||
issued 7,686,477 shares in 2013 and 7,682,535 shares in 2012) | 30,813 | 30,730 | ||||
Additional paid-in capital | 32,227 | 31,685 | ||||
Retained earnings | 81,410 | 78,986 | ||||
Deferred compensation | 2,730 | 2,953 | ||||
Accumulated other comprehensive income (loss) | 3,233 | 4,544 | ||||
Treasury stock at cost, 1,754,182 shares in 2013 and | ||||||
and 1,711,646 in 2012 | (45,349 | ) | (44,246 | ) | ||
Total stockholders’ equity | 157,099 | 156,687 | ||||
Total liabilities and stockholders’ equity | $ | 1,577,713 | $ | 1,578,032 | ||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||
(In thousands) | ||||||
For the period ended March 31, | 2013 | 2012 | ||||
Interest income: | ||||||
Interest and fees on loans | $ | 10,435 | $ | 10,960 | ||
Interest on investment securities | 2,741 | 2,952 | ||||
Interest on certificates of deposit | 8 | 18 | ||||
Interest on federal funds sold & other deposits | 18 | 18 | ||||
Total interest income | 13,202 | 13,948 | ||||
Interest expense: | ||||||
Interest on deposits | 796 | 1,427 | ||||
Interest on repurchase agreements with customers | 15 | 45 | ||||
Interest on other borrowings | 57 | 277 | ||||
Interest on subordinated debt | 130 | 146 | ||||
Total interest expense | 998 | 1,895 | ||||
Net interest income | 12,204 | 12,053 | ||||
Provision for loan losses | 480 | 615 | ||||
Net interest income after provision for loan losses | 11,724 | 11,438 | ||||
Non-interest income: | ||||||
Trust revenues | 893 | 860 | ||||
Brokerage commissions | 171 | 142 | ||||
Insurance commissions | 486 | 647 | ||||
Services charges | 1,140 | 1,101 | ||||
Securities gains (losses), net | 353 | 384 | ||||
Mortgage banking revenues | 286 | 236 | ||||
ATM / debit card revenue | 883 | 879 | ||||
Other | 338 | 331 | ||||
Total non-interest income | 4,550 | 4,580 | ||||
Non-interest expense: | ||||||
Salaries and employee benefits | 5,797 | 5,673 | ||||
Net occupancy and equipment expense | 2,043 | 2,010 | ||||
FDIC insurance | 222 | 234 | ||||
Amortization of intangible assets | 170 | 245 | ||||
Legal and professional expense | 548 | 611 | ||||
Other | 1,832 | 1,844 | ||||
Total non-interest expense | 10,612 | 10,617 | ||||
Income before income taxes | 5,662 | 5,401 | ||||
Income taxes | 2,134 | 2,011 | ||||
Net income | $ | 3,528 | $ | 3,390 | ||
Per Share Information | ||||||
For the period ended March 31, | 2013 | 2012 | ||||
Basic earnings per common share | $ | 0.41 | $ | 0.41 | ||
Diluted earnings per common share | $ | 0.41 | $ | 0.41 | ||
Book value per share at Mar 31 | $ | 17.71 | $ | 16.58 | ||
OTCBB market price of stock at Mar 31 | $ | 23.95 | $ | 23.00 | ||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||||
(In thousands) | ||||||
For the period ended March 31, | 2013 | 2012 | ||||
Balance at beginning of period | $ | 156,687 | $ | 140,967 | ||
Net income | 3,528 | 3,390 | ||||
Dividends on preferred stock and common stock | (6,778 | ) | (5,989 | ) | ||
Issuance of preferred and common stock | 463 | 665 | ||||
Purchase of treasury stock | (1,158 | ) | (617 | ) | ||
Deferred compensation and other adjustments | (6 | ) | 72 | |||
Changes in accumulated other comprehensive income | (1,311 | ) | 28 | |||
Balance at end of period | $ | 157,099 | $ | 143,566 | ||
CONSOLIDATED CAPITAL RATIOS | ||||
Primary Capital Measurements | 2013 | 2012 | ||
For the period ended March 31, | ||||
Leverage ratio | 9.78 | % | 9.18 | % |
Tier 1 capital to risk-weighted assets | 14.89 | % | 13.85 | % |
Total capital to risk-weighted assets | 16.06 | % | 14.99 | % |