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8-K - 8-K - FIRST MID BANCSHARES, INC.form8k_072414.htm
EX-99.2 - PRESS RELEASE - FIRST MID BANCSHARES, INC.exhibit99-2_072414x8k.htm

Exhibit 99.1
QUARTERLY REPORT TO STOCKHOLDERS
2014 SECOND QUARTER

First Mid Announces:

* NASDAQ Global Exchange Listing Begins
* Record Quarterly Earnings and Earnings Per Share
* Strength in Asset Quality Metrics
* Trust and Brokerage Assets Top $1 Billion
Community Banking and SBA Lending Awards

I mentioned in our last quarterly report that First Mid-Illinois Bancshares, Inc. had been approved for listing on The NASDAQ Stock Market LLC (“NASDAQ”) under the ticker symbol “FMBH”. First Mid did begin trading on NASDAQ on May 12, 2014. This marked a historic event for the Company and another step in our ongoing strategy to enhance long-term shareholder value. We believe that utilizing this platform can increase the universe of potential investors and liquidity in the stock. We learned that our stock was added to the Russell MicroCap Index at the end of June. The Russell MicroCap is comprised of the smallest 1,000 stocks in the Russell 2,000 Index plus the next smallest 1,000 stocks.

The primary tenet of enhancing shareholder value is ensuring that our financial performance continues to be strong. We have completed the first half of 2014 and I am pleased to report that the financial results for First Mid were solid with an increase in earnings and earnings per share, strong asset quality ratios, and an increase in book value per share. Net income for the first six months of 2014 was $7,636,000 compared to $7,193,000 for the same period last year. Diluted earnings per share were $.91 per share for the first six months of 2014 compared to $.84 for the first six months of 2013. For the second quarter of 2014, net income was $4,029,000 compared to $3,665,000 for the second quarter of 2013, while diluted earnings per share for the second quarter 2014 was $.48 compared to $.43 for the same period last year. Net income for the second quarter of 2014 was the highest that we have ever had for a quarter. The quarterly performance included one-time security gains and was strong from an operating perspective.

Based upon the strength of our performance, the Board of Directors increased the common stock dividend paid for the first half of 2014. Our common stock dividends paid through June 30, 2014 were $.26 per share compared to $.21 for the same period last year.

Year-to-date net income increased due to higher net interest income with growth in loans and an increase in the net interest margin, lower provision for loan loss expense with a reduction in net charge-offs and decreased non-performing assets, and increased fee income. Comparing the second quarter of 2014 to the second quarter last year, net income increased due to greater net interest income, reduced provision expense, and higher gains recognized on the sale of securities.

Year-to-date net interest income totaled $25.4 million compared to $24.5 million for the same period last year while the second quarter was $12.8 million compared to $12.3 million for the second quarter of 2013. Loan balances have increased over the past year with total loans at $1.02 billion as of June 30, 2014 compared to $983 million at year-end 2013 and $916 million as of June 30, 2013. The growth in loans has been a mixture of commercial operating, commercial real estate, and agricultural real estate across our market area. Deposit balances have also increased since year-end at $1.291 billion as of June 30, 2014 compared to $1.288 billion at December 31, 2013 and $1.271 billion at June 30, 2013. With changing the mix of balance sheet assets from investments to higher-yielding loans and maintaining our low deposit costs, we continue to see an improvement in the net interest margin. The year-to-date net interest margin on a tax equivalent basis was 3.53% for the first six months of 2014 compared to 3.42% for the same period in 2013. The quarterly trend in net interest margin was also positive as the margin for the second quarter of 2014 was 3.54% compared to 3.44% for the second quarter of 2013.

Our year-to-date provision for loan losses declined to $451,000 for the first six months of 2014 compared to $732,000 for the first six months of 2013 while the provision for the second quarter of 2014 was $128,000 compared to $252,000 for the second quarter of 2013. During the first half of 2014, our net charge-offs were $19,000 compared to $377,000 for the same period last year. Also, our non-performing loans and other real estate owned declined to $5.2 million at June 30, 2014 compared to $7.0 million at December 31, 2013 and $7.8 million at June 30, 2013. The continued positive trend in these two metrics allowed us to reduce the provision for loan losses in 2014. We also continue to have a strong coverage ratio of the allowance for loan losses to the level of non-performing loans of 283% as of June 30, 2014.




Non-interest income for the first six months of 2014 was $9.5 million as compared to $9.3 million for the same period last year. Non-interest income for the second quarter of 2014 was $5.0 million as compared to $4.7 million for the second quarter of 2013. Year-to-date revenues from the trust and wealth management area were $176,000 higher than the first six months of last year as we had greater revenue from our retirement services area and higher brokerage fees. We reached a significant milestone during the second quarter as total trust and brokerage assets reached $1 billion. Fees from electronic services were $145,000 greater than last year as we have seen an increase in the number of electronic transactions. The quarterly trends in revenue are similar to the year-to-date comparisons. The increases in revenue offset the decline in mortgage banking revenue that we have experienced as refinances have slowed with higher interest rates. Year-to-date mortgage banking revenue is $335,000 lower than last year. As with many banks, we expected mortgage revenues would decline from their peak and we are pleased that the strength and diversity of our revenue sources have offset this decline.

Operating expenses for the first six months of 2014 were $22.2 million compared to $21.5 million for the first six months of last year and operating expenses for the second quarter of 2014 were $11.2 million compared to $10.9 million for the second quarter of 2013. Year-to-date salaries and benefits expense increased by $338,000 from the first six months of 2013. Total occupancy costs were $118,000 higher for the first six months of 2014 than the same period last year primarily due to higher building maintenance expenses from weather related costs. Other expenses included NASDAQ listing fee expenses during the second quarter of 2014.

Our regulatory capital ratios remain strong and in excess of the regulatory minimums to be considered well-capitalized. Each of our four regulatory capital ratios increased during the second quarter and were higher at June 30, 2014 compared to December 31, 2013. Our Tier 1 Capital and Total Capital Ratios at June 30, 2014 were slightly below last June primarily due to an increase in risk-weighted assets (which is the denominator of these ratios) due to the growth in loan balances that have a higher capital requirement. I mentioned that our book value per share also increased and was $18.08 at June 30, 2014 compared to $16.54 at year-end and $16.27 last June.

During the second quarter, First Mid received some acknowledgments that are noteworthy and we made a significant addition to our management team. American Banker Magazine ranked First Mid-Illinois Bank and Trust, N.A. as one of the Top 200 community banks in the United States based upon our financial performance. In addition, First Mid-Illinois Bank and Trust, N.A. was recently named the Community Lender of the Year by the U.S. Small Business Administration’s Illinois District Office. Each year the Illinois District Office honors small businesses and small business advocates for their contributions to Illinois’ economy and society. We were honored to receive this award. Also during the quarter, we added a professional to further strengthen our management team. Danielle Niebrugge was hired as Senior Vice-President & Director of Human Resources. Danielle brings eighteen years of experience in human resource and employee benefit management to the company and we are pleased to add someone with her expertise and passion to our exceptional team.

Thank you for your continued support of First Mid-Illinois Bancshares, Inc. and please contact me if you should have any questions.

Sincerely,
Joseph R. Dively
Chairman and Chief Executive Officer
217-258-9520
jdively@firstmid.com

July 24, 2014









Second Quarter 2014 Financial Results
 
 
 
FIRST MID-ILLINOIS BANCSHARES, INC.
 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
 
(In thousands)
(unaudited)
 
 
 
(unaudited)
 
June 30,
 
December 31
 
June 30,
 
2014
 
2013
 
2013
Assets
 
 
 
 
 
Cash and cash equivalents
$
57,535

 
$
65,102

 
$
31,865

Investment securities
439,190

 
488,724

 
535,827

Loans (including loans held for sale)
1,022,251

 
982,804

 
915,813

Less allowance for loan losses
(13,681
)
 
(13,249
)
 
(12,131
)
Net loans
1,008,570

 
969,555

 
903,682

Premises and equipment, net
27,868

 
28,578

 
29,094

Goodwill and intangibles, net
27,915

 
28,240

 
28,573

Other assets
21,774

 
25,299

 
26,074

Total assets
$
1,582,852

 
$
1,605,498

 
$
1,555,115

 
 
 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
Deposits:
 
 
 
 
 
Non-interest bearing
$
226,544

 
$
235,448

 
$
231,526

Interest bearing
1,064,353

 
1,052,168

 
1,039,608

Total deposits
1,290,897

 
1,287,616

 
1,271,134

Repurchase agreements with customers
95,159

 
119,187

 
94,694

Other borrowings
10,000

 
20,000

 
12,500

Junior subordinated debentures
20,620

 
20,620

 
20,620

Other liabilities
7,552

 
8,694

 
7,220

  Total liabilities
1,424,228

 
1,456,117

 
1,406,168

  Total stockholders’ equity
158,624

 
149,381

 
148,947

Total liabilities and stockholders’ equity
$
1,582,852

 
$
1,605,498

 
$
1,555,115

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'EQUITY
(in thousands)(unaudited)
 
 
 
 
Six months ended
 
June 30,
 
2014
 
2013
Balance at beginning of period
$
149,381

 
156,687

Net income
7,636

 
7,193

Dividends on preferred stock and common stock
(3,731
)
 
(3,456
)
Issuance of preferred and common stock
1,148

 
1,157

Purchase of treasury stock
(902
)
 
(1,593
)
Deferred compensation and other adjustments
10

 
52

Changes in accumulated other comprehensive income
5,082

 
(11,093
)
Balance at end of period
$
158,624

 
$
148,947





Second Quarter 2014 Financial Results
 
 
 
 
 
FIRST MID-ILLINOIS BANCSHARES, INC.
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
(In thousands, except per share data)(unaudited)
 
 
 
 
 
 
 
 
Three months ended
 
Six months ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Interest income:
 
 
 
 
 
 
 
Interest and fees on loans
$
11,039

 
$
10,390

 
$
21,851

 
$
20,825

Interest on investment securities
2,545

 
2,798

 
5,068

 
5,539

Interest on federal funds sold & other deposits
16

 
18

 
43

 
44

Total interest income
13,600

 
13,206

 
26,962

 
26,408

Interest expense:
 
 
 
 

 
 
Interest on deposits
583

 
664

 
1,192

 
1,460

Interest on repurchase agreements with customers
10

 
10

 
22

 
25

Interest on other borrowings
66

 
60

 
134

 
117

Interest on subordinated debt
129

 
131

 
255

 
261

Total interest expense
788

 
865

 
1,603

 
1,863

Net interest income
12,812

 
12,341

 
25,359

 
24,545

Provision for loan losses
128

 
252

 
451

 
732

Net interest income after provision for loan losses
12,684

 
12,089

 
24,908

 
23,813

Non-interest income:
 
 
 
 
 
 
 
Trust revenues
848

 
806

 
1,781

 
1,699

Brokerage commissions
233

 
218

 
483

 
389

Insurance commissions
441

 
410

 
999

 
896

Service charges
1,353

 
1,215

 
2,497

 
2,355

Securities gains (losses), net
543

 
482

 
734

 
835

Mortgage banking revenues
158

 
305

 
256

 
591

ATM / debit card revenue
1,002

 
947

 
1,975

 
1,830

Other
412

 
331

 
746

 
669

Total non-interest income
4,990

 
4,714

 
9,471

 
9,264

Non-interest expense:
 
 
 
 
 
 
 
Salaries and employee benefits
6,054

 
5,972

 
12,107

 
11,769

Net occupancy and equipment expense
2,114

 
2,102

 
4,263

 
4,145

Amortization of intangible assets
163

 
171

 
325

 
341

Legal and professional expense
677

 
614

 
1,239

 
1,162

Other
2,206

 
2,059

 
4,240

 
4,113

Total non-interest expense
11,214

 
10,918

 
22,174

 
21,530

Income before income taxes
6,460

 
5,885

 
12,205

 
11,547

Income taxes
2,431

 
2,220

 
4,569

 
4,354

Net income
$
4,029

 
$
3,665

 
$
7,636

 
$
7,193

 
 
 
 
 
 
 
 
Per Share Information
 
 
 
 
 
 
 
Basic earnings per common share
$
0.49

 
$
0.43

 
$
0.92

 
$
0.84

Diluted earnings per common share
$
0.48

 
$
0.43

 
$
0.91

 
$
0.84

Dividends per common share
$
0.26

 
$
0.21

 
$
0.26

 
$
0.21






Second Quarter 2014 Financial Results
 
 
 
FIRST MID-ILLINOIS BANCSHARES, INC.
 
 
 
 
 
SELECTED FINANCIAL HIGHLIGHTS
As Of
 
(unaudited)
 
 
 
(unaudited)
 
June 30,
 
December 31,
 
June 30,
 
2014
 
2013
 
2013
SHARE AND PER COMMON SHARE DATA
 
 
 
 
 
Book value per common share
$18.08
 
$16.54
 
$16.27
Tangible book value per common share
$13.34
 
$11.75
 
$11.48
Common shares outstanding
5,896,331

 
5,883,780

 
5,954,966

Market price of stock
$20.80
 
$22.00
 
$22.29
 
 
 
 
 
 
REGULATORY CAPITAL RATIOS
 
 
 
 
 
Leverage ratio
10.43
%
 
10.12
%
 
9.97
%
Total capital to risk-weighted assets
15.81
%
 
15.58
%
 
16.21
%
Tier 1 capital to risk-weighted assets
14.58
%
 
14.37
%
 
15.03
%
Common equity tier 1 capital to risk weighted assets
8.11
%
 
7.78
%
 
8.01
%
Preferred stockholders' equity
$52,030,000
 
$52,035,000
 
$52,035,000
Common stockholders' equity
$106,594,000
 
$97,346,000
 
$96,912,000
 
 
 
 
 
 
ASSET QUALITY
 
 
 
 
 
Allowance for loan losses to non-performing loans
283.1
%
 
204.8
%
 
177.5
%
Allowance for loan losses to total loans outstanding
1.34
%
 
1.35
%
 
1.33
%
Total YTD net charge-offs (1)
$19,000
 
$720,000
 
$377,000
Total non-performing loans and other real estate owned
$5,229,000
 
$7,037,000
 
$7,849,000
 
 
 
 
 
 


 
Quarter ended
 
Six months ended
 
June 30,

 
March 31,

 
June 30,

 
June 30,

 
June 30,

(unaudited)
2014

 
2014
 
2013

 
2014

 
2013

PERFORMANCE RATIOS (1)
 
 
 
 
 
 
 
 
 
Return on average assets (2)
1.02
%
 
0.91
%
 
0.94
%
 
0.96
%
 
0.91
%
Return on average common equity (2)
11.30
%
 
9.96
%
 
9.69
%
 
10.84
%
 
9.45
%
Net interest margin (3)
3.54
%
 
3.50
%
 
3.44
%
 
3.53
%
 
3.42
%
 
 
 
 
 
 
 
 
 
 

(1) Financial information is provided as of the date listed except Performance Ratios and Total Net charge-offs which are as of the period ending on the date listed
(2) Annualized net income for period
(3) On a tax equivalent basis (TE), assuming a federal income tax rate of 35%





Corporate Profile

FIrst Mid-Illinois Bancshares, Inc. is the parent company of First Mid-Illinois Bank & Trust, N.A. ("First Mid Bank"), Mid-Illinois Data Services, Inc., and First Mid Insurance Group. Our mission is to satisfy the broad financial needs of our customers, provide value for our shareholders, career opportunities for employees, and contribute to the well-being of our communities. We distinguish ourselves by our actions and by our results. Our talented team is comprised of over 400 men and women who take great pride in First Mid, their work and their ability to serve our customers.

First Mid Bank was first chartered in 1865 and has since grown into a more than $1.5 billion community-focused organization that provides financial services through a network of 37 banking centers in 25 communities.

More information about the Company is available on our website at www.firstmid.com. Our stock is traded in The NASDAQ Stock Market LLC under the ticker symbol "FMBH."





















Note Concerning Forward-looking Statements
This presentation 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 1955. 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 those described in Item 1A - "Risk Factors" and other sections of the Company's Annual Report on Form 10-K and the Company's other filings with the SEC. Furthermore, 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.



First Mid-Illinois Bancshares, Inc.
1421 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com