Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
The financial performance of First Mid-Illinois Bancshares, Inc. was good during the first nine months of 2007 with diluted earnings per share increasing 4% to $1.15 per share compared to $1.11 per share during the same period in 2006. Net income increased to $7,470,000 for the first nine months of 2007 compared to $7,359,000 for the first nine months of 2006. All share and per share information for current and prior periods presented in this report have been adjusted to reflect the three-for-two stock split in the form of a 50% stock dividend completed in June 2007.
Growth in both non-interest income and net interest income were the primary contributors to the increase in earnings. It is important to note for year-to-year comparisons that the consolidated financial statements include the results of Peoples State Bank of Mansfield since acquisition date of May 1, 2006. Non-interest income increased to $10,991,000 for the first nine months of 2007 as compared to $9,824,000 for the same period in 2006. Growth in customer deposit account balances led to an increase in service charge income. In addition, insurance revenues increased by $230,000 as a result of new business underwritten through The Checkley Agency, Inc., and decreased policy claims. In addition, fees received on ATM and debit cards increased as a result of an increase in the number of electronic transactions.
Net interest income increased to $23,228,000 as compared to $22,748,000 for the first nine months of 2006. This was the result of growth in loan and investment balances. Loan balances on September 30, 2007 were $742 million as compared to $727 million on September 30, 2006 with the majority of the growth in commercial real estate loans. Deposit balances at September 30, 2007 were the same as last September at $791 million. However, $43 million in brokered deposits were allowed to mature during that time and were replaced by customer deposits. The growth in loans 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 3.57% for the first nine months of last year.
Non-interest expense increased to $22,458,000 for the first nine months of 2007 compared with $20,947,000 for the first nine months of 2006. This increase is primarily attributed to having the costs associated with the three locations acquired in the Peoples acquisition for the full year of 2007. I would also like to mention that we recently closed facilities in Deland and the in-store facility in the Sullivan IGA due to the proximity to other First Mid locations. This did not and is not expected to have a material impact on the financial statements.
We continue to stress the importance of credit quality. Our net charge-offs for the first nine months of 2007 were $338,000 as compared to $652,000 last year; but, we have seen an increase in the level of non-performing loans. Non-performing loans were $7.1 million on September 30, 2007 as compared to $3.6 million on September 30, 2006. This increase was primarily due to insufficient cash flow on commercial real estate loans to one borrower which totaled $3 million. We believe we are adequately collateralized on these credits and are actively working with the borrower on repayment plans.
We also continue to provide our shareholders with liquidity for their First Mid investments through our ongoing share repurchase program. During the first nine months of 2007, we repurchased approximately 193,000 shares at a total cost of $5.3 million. This program has proven to be a solid way of increasing shareholder value, as well as providing a supplement to open-market liquidity for our shareholders. Any shareholder who would like to sell their stock should contact Lee Ann Perry, Manager of Shareholder Services at (217) 258-0493.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
/s/ William S. Rowland
Sincerely,
William S. Rowland
Chairman and Chief Executive Officer
October 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) | | Sep 30 | | | Dec 31 | |
| | | 2007 | | | 2006 | |
| | | | | | | |
Assets | | | | | | |
| Cash and due from banks | | $ | 22,406 | | | $ | 20,266 | |
| Federal funds sold and other interest-bearing deposits | | | 12,973 | | | | 1,570 | |
| Investment securities: | | | | | | | | |
| Available-for-sale, at fair value | | | 188,783 | | | | 184,266 | |
| Held-to-maturity, at amortized cost (estimated fair value of $1,211 and | | | | | | | | |
| $1,346 at September 30, 2007 and December 31, 2006, respectively | | | 1,198 | | | | 1,323 | |
| Loans | | | 742,050 | | | | 723,568 | |
| Less allowance for loan losses | | | (6,136 | ) | | | (5,876 | ) |
| Net loans | | | 735,914 | | | | 717,692 | |
| Premises and equipment, net | | | 15,761 | | | | 16,293 | |
| Goodwill, net | | | 17,363 | | | | 17,363 | |
| Intangible assets, net | | | 4,519 | | | | 5,148 | |
| Other assets | | | 21,691 | | | | 16,638 | |
Total assets | | $ | 1,020,608 | | | $ | 980,559 | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
| Deposits: | | | | | | | | |
| Non-interest bearing | | $ | 114,759 | | | $ | 121,405 | |
| Interest bearing | | | 676,142 | | | | 649,190 | |
| Total deposits | | | 790,901 | | | | 770,595 | |
| Repurchase agreements with customers | | | 58,892 | | | | 66,693 | |
| Other borrowings | | | 64,000 | | | | 37,800 | |
| Junior subordinated debentures | | | 20,620 | | | | 20,620 | |
| Other liabilities | | | 7,113 | | | | 9,065 | |
Total liabilities | | | 941,526 | | | | 904,773 | |
| Stockholders’ Equity: | | | | | | | | |
| Common stock ($4 par value; authorized18,000,000 shares; issued | | | | | | | | |
| 7,120,368 shares in 2007 and 8,552,886 shares in 2006) | | | 28,503 | | | | 22,808 | |
| Additional paid-in capital | | | 23,147 | | | | 21,261 | |
| Retained earnings | | | 48,400 | | | | 68,625 | |
| Deferred compensation | | | 2,531 | | | | 2,629 | |
| Accumulated other comprehensive income (loss) | | | 237 | | | | 19 | |
| Treasury stock at cost, 746,874 shares in 2007 and 2,121,269 | | | | | | | | |
| in 2006 | | | (23,736 | ) | | | (39,556 | ) |
Total stockholders’ equity | | | 79,082 | | | | 75,786 | |
Total liabilities and stockholders’ equity | | $ | 1,020,608 | | | $ | 980,559 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
| (In thousands) (unaudited) | | | | | | |
For the nine months ended September 30, | | 2007 | | | 2006 | |
| | | | | | | |
Interest income: | | | | | | |
| Interest and fees on loans | | $ | 37,565 | | | $ | 34,169 | |
| Interest on investment securities | | | 6,774 | | | | 5,937 | |
| Interest on federal funds sold & other deposits | | | 180 | | | | 208 | |
| Total interest income | | | 44,519 | | | | 40,314 | |
Interest expense: | | | | | | | | |
| Interest on deposits | | | 16,230 | | | | 13,091 | |
| Interest on repurchase agreements with customers | | | 1,800 | | | | 1,665 | |
| Interest on other borrowings | | | 2,084 | | | | 1,890 | |
| Interest on subordinated debt | | | 1,177 | | | | 920 | |
| Total interest expense | | | 21,291 | | | | 17,566 | |
Net interest income | | | 23,228 | | | | 22,748 | |
| Provision for loan losses | | | 598 | | | | 575 | |
Net interest income after provision for loan losses | | | 22,630 | | | | 22,173 | |
Non-interest income: | | | | | | | | |
| Trust revenues | | | 1,924 | | | | 1,801 | |
| Brokerage commissions | | | 371 | | | | 418 | |
| Insurance commissions | | | 1,573 | | | | 1,343 | |
| Services charges | | | 4,152 | | | | 3,897 | |
| Securities gains (losses), net | | | 211 | | | | 66 | |
| Mortgage banking revenues | | | 400 | | | | 288 | |
| Other | | | 2,360 | | | | 2,011 | |
| Total non-interest income | | | 10,991 | | | | 9,824 | |
Non-interest expense: | | | | | | | | |
| Salaries and employee benefits | | | 12,218 | | | | 11,391 | |
| Net occupancy and equipment expense | | | 3,644 | | | | 3,570 | |
| Amortization of intangible assets | | | 629 | | | | 545 | |
| Other | | | 5,967 | | | | 5,441 | |
| Total non-interest expense | | | 22,458 | | | | 20,947 | |
| Income before income taxes | | | 11,163 | | | | 11,050 | |
| Income taxes | | | 3,693 | | | | 3,691 | |
Net income | | $ | 7,470 | | | $ | 7,359 | |
| | | | | | | | | |
Per Share Information (unaudited) | | | | | | | | |
For the nine months ended September 30, | | 2007 | | | 2006 | |
| Basic earnings per share | | $ | 1.17 | | | $ | 1.13 | |
| Diluted earnings per share | | $ | 1.15 | | | $ | 1.11 | |
| Book value per share at June 30 | | $ | 12.53 | | | $ | 11.69 | |
| Market price of stock at June 30 | | $ | 25.70 | | | $ | 27.67 | |
| | | | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |
| (In thousands) (unaudited) | | | | | | |
For the nine months ended September 30, | | 2007 | | | 2006 | |
| | | | | | | |
| Balance at beginning of period | | $ | 75,786 | | | $ | 72,326 | |
| Net income | | | 7,470 | | | | 7,359 | |
| Dividends on stock | | | (1,182 | ) | | | (1,128 | ) |
| Issuance of stock | | | 1,464 | | | | 1,481 | |
| Purchase of treasury stock | | | (5,299 | ) | | | (5,303 | ) |
| Deferred compensation and other adjustments | | | 625 | | | | 408 | |
| Changes in accumulated other comprehensive income (loss) | | | 218 | | | | 587 | |
Balance at end of period | | $ | 79,082 | | | $ | 75,730 | |
