Exhibit 99
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First Mid-Illinois Bancshares, Inc. had a successful first quarter with diluted earnings per share increasing to $.59 per share as compared to $.54 per share for the first quarter of 2006, a 9% increase. Net income increased to $2,594,000 as compared to $2,404,000 in the first quarter of 2006. The consolidated financial statements include the results of Peoples State Bank of Mansfield since the acquisition date of May 1, 2006.
Growth in both net interest income and non-interest income were the primary contributors to the increase in earnings. Net interest income increased to $7,677,000 as compared to $7,140,000 for the first quarter of 2006. This was the result of higher loan and deposit balances than the first quarter of last year. Loan balances on March 31, 2007 were $709 million as compared to $642 million on March 31, 2006. Deposit balances increased to $778 million from $654 million last March. The primary portion of the growth came from the Peoples acquisition. Since December 31, 2006, loan balances have declined primarily as a result of seasonal paydowns on agricultural loans.
The growth in loans and deposits has offset a decline in the Company’s net interest margin. The Company’s year-to-date net interest margin was 3.45% on a tax-equivalent basis as compared to 3.70% for the first quarter of last year as short-term interest rates remain higher than longer-term rates and intense competition for loans and deposits has led to reduced margins.
Non-interest income increased to $3,832,000 for the first quarter of 2007 as compared to $3,133,000 for the same period in 2006. Trust revenues increased as a result of the growth in trust assets and new business underwritten through The Checkley Agency, Inc. which led to a $123,000 increase in insurance commissions. Also, we sold securities that resulted in a gain of $139,000 during the quarter as market opportunities and investment portfolio liquidity factored in the decision to sell.
Non-interest expense increased to $7,531,000 compared with $6,529,000 for the first quarter of 2006. This increase is primarily attributed to costs associated with the three locations in Mansfield, Mahomet, and Weldon acquired in the Peoples acquisition. The Company now has 28 banking centers in 20 communities in Illinois.
Our provision for loan losses amounted to $186,000 for the first three months of 2007 as compared to $193,000 last year. Net charge-offs declined to $31,000 in the first quarter of 2007 compared to $113,000 for the same period last year. Non-performing loans were $4 million on March 31, 2007 as compared with $3 million on March 31, 2006 with the increase primarily due to the addition of one commercial real estate borrower with whom we believe that we are adequately collateralized.
I am happy to announce the hiring of two outstanding individuals to join our Trust and Wealth Management Division. Charles A. “Chuck” Lefebvre will join the organization on May 1 to lead this area of our business. Chuck was a partner with the Champaign law firm of Thomas, Mamer & Haughey, specializing in trusts and estate planning matters. Chuck is a member of the Illinois State Bar Association Elder Law section and received both his bachelor’s degree and his law degree from the University of Illinois. In addition, Bradley L. Beesley has joined our organization as Senior Wealth Management Officer. Brad most recently managed the wealth management division of another area bank. Brad received his bachelor’s degree from Millikin University and his MBA from Eastern Illinois University. I am pleased to bring in leaders to the Company with this level of knowledge, experience, and commitment to serving our customers.
Our 2007 annual meeting of stockholders will be held at 4:00 p.m. on May 23, 2007 in the main lobby of First Mid-Illinois Bank & Trust, N.A., 1515 Charleston Avenue, Mattoon, Illinois. All shareholders are invited to attend. On behalf of the Board, management and entire staff of the Company, I thank you for your continued support and look forward to visiting with as many of you as possible at the annual meeting.
Sincerely,
/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
April 25, 2007
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
CONDENSED CONSOLIDATED BALANCE SHEETS |
| | | | (unaudited) | | | | |
| (in thousands, except share data) | | | Mar 31 | | | Dec 31 | |
| | | | 2007 | | | 2006 | |
| | | | | | | | |
Assets | | | | | | | |
| Cash and due from banks | | $ | 19,003 | | $ | 20,266 | |
| Federal funds sold and other interest-bearing deposits | | | 20,293 | | | 1,570 | |
| Investment securities: | | | | | | | |
| Available-for-sale, at fair value | | | 178,011 | | | 184,266 | |
| Held-to-maturity, at amortized cost (estimated fair value of $1,215 and | | | | | | | |
| $1,346 at March 31, 2007 and December 31, 2006, respectively | | | 1,198 | | | 1,323 | |
| Loans | | | 709,173 | | | 723,568 | |
| Less allowance for loan losses | | | (6,031 | ) | | (5,876 | ) |
| Net loans | | | 703,142 | | | 717,692 | |
| Premises and equipment, net | | | 16,038 | | | 16,293 | |
| Goodwill, net | | | 17,363 | | | 17,363 | |
| Intangible assets, net | | | 4,931 | | | 5,148 | |
| Other assets | | | 15,398 | | | 16,638 | |
Total assets | | $ | 975,377 | | $ | 980,559 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
| Deposits: | | | | | | | |
| Non-interest bearing | | $ | 119,425 | | $ | 121,405 | |
| Interest bearing | | | 658,827 | | | 649,190 | |
| Total deposits | | | 778,252 | | | 770,595 | |
| Repurchase agreements with customers | | | 48,300 | | | 66,693 | |
| Other borrowings | | | 44,500 | | | 37,800 | |
| Junior subordinated debentures | | | 20,620 | | | 20,620 | |
| Other liabilities | | | 7,226 | | | 9,065 | |
Total liabilities | | | 898,898 | | | 904,773 | |
| Stockholders’ Equity: | | | |
| Common stock ($4 par value; authorized18,000,000 shares; issued | | | | | | | |
| 5,733,311 shares in 2007 and 5,701,924 shares in 2006) | | | 22,933 | | | 22,808 | |
| Additional paid-in capital | | | 22,137 | | | 21,261 | |
| Retained earnings | | | 71,226 | | | 68,625 | |
| Deferred compensation | | | 2,731 | | | 2,629 | |
| Accumulated other comprehensive income | | | 118 | | | 19 | |
| Treasury stock at cost, 1,486,370 shares in 2007 and 1,414,179 | | | | | | | |
| in 2006 | | | (42,666 | ) | | (39,556 | ) |
Total stockholders’ equity | | | 76,479 | | | 75,786 | |
Total liabilities and stockholders’ equity | | $ | 975,377 | | $ | 980,559 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (In thousands) (unaudited) | | | | | | | |
For the three months ended March 31, | | | 2007 | | | 2006 | |
| | | | | | | | |
Interest income: | | | | | | | |
| Interest and fees on loans | | $ | 12,172 | | $ | 10,286 | |
| Interest on investment securities | | | 2,269 | | | 1,553 | |
| Interest on federal funds sold & other deposits | | | 85 | | | 20 | |
| Total interest income | | | 14,526 | | | 11,859 | |
Interest expense: | | | | | | | |
| Interest on deposits | | | 5,290 | | | 3,449 | |
| Interest on repurchase agreements with customers | | | 577 | | | 481 | |
| Interest on other borrowings | | | 587 | | | 599 | |
| Interest on subordinated debt | | | 395 | | | 190 | |
| Total interest expense | | | 6,849 | | | 4,719 | |
Net interest income | | | 7,677 | | | 7,140 | |
| Provision for loan losses | | | 186 | | | 193 | |
Net interest income after provision for loan losses | | | 7,491 | | | 6,947 | |
Non-interest income: | | | | | | | |
| Trust revenues | | | 717 | | | 609 | |
| Brokerage commissions | | | 112 | | | 92 | |
| Insurance commissions | | | 699 | | | 576 | |
| Services charges | | | 1,270 | | | 1,150 | |
| Securities gains (losses), net | | | 139 | | | (1 | ) |
| Mortgage banking revenues | | | 121 | | | 67 | |
| Other | | | 774 | | | 640 | |
| Total non-interest income | | | 3,832 | | | 3,133 | |
Non-interest expense: | | | | | | | |
| Salaries and employee benefits | | | 4,076 | | | 3,563 | |
| Net occupancy and equipment expense | | | 1,217 | | | 1,136 | |
| Amortization of intangible assets | | | 217 | | | 138 | |
| Other | | | 2,021 | | | 1,692 | |
| Total non-interest expense | | | 7,531 | | | 6,529 | |
| Income before income taxes | | | 3,792 | | | 3,551 | |
| Income taxes | | | 1,198 | | | 1,147 | |
Net income | | $ | 2,594 | | $ | 2,404 | |
| | | | | | | | |
Per Share Information (unaudited) | | | | | | | |
For the three months ended March 31, | | | 2007 | | | 2006 | |
| Basic earnings per share | | $ | 0.61 | | $ | 0.55 | |
| Diluted earnings per share | | $ | 0.59 | | $ | 0.54 | |
| Book value per share at December 31 | | $ | 18.01 | | $ | 16.65 | |
| Market price of stock at December 31 | | $ | 41.45 | | $ | 40.00 | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY |
| (In thousands) (unaudited) | | | | | | | |
For the three months ended March 31, | | | 2007 | | | 2006 | |
| | | | | | | | |
| Balance at beginning of period | | $ | 75,786 | | $ | 72,326 | |
| Net income | | | 2,594 | | | 2,404 | |
| Dividends on stock | | | 7 | | | - | |
| Issuance of stock | | | 827 | | | 783 | |
| Purchase of treasury stock | | | (3,008 | ) | | (3,307 | ) |
| Deferred compensation and other adjustments | | | 174 | | | 195 | |
| Changes in accumulated other comprehensive income (loss) | | | 99 | | | (148 | ) |
Balance at end of period | | $ | 76,479 | | $ | 72,253 | |
