First Mid Bancshares (FMBH) 8-K Results of Operations and Financial Condition

Exhibit 99

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The first quarter of 2009 has come and gone and, unfortunately, the nation’s economy has not improved since my last correspondence with you.  Unemployment remains high, asset values are still weak and the banking system remains under a great deal of stress. Moreover, as this letter is being drafted, there are few, if any, indications that economic conditions will improve in the near future.  Because of our role as financial intermediaries, the financial performance of banks is something of a barometer for the overall economy. To one degree or another, the financial performance of all banks is being impacted by the recession and First Mid is no exception.  While our capital ratios are high, our loan loss reserves have increased and our balance sheet remains quite liquid (all in response to deliberate actions we began taking last year to prepare for an extended recession), our profitability is nevertheless down from the first quarter of 2008.

The financial statements that follow provide a “snapshot” of our financial position and of our year-to-date 2009 performance as compared with 2008.  More detail can be found in the first quarter Form 10-Q which we plan to file with the Securities and Exchange Commission on May 8, 2009.   Our first quarter results contained a few items that are worthy of comment.

In February, we strengthened our tier one capital position significantly with the completion of the majority of our planned convertible preferred stock issuance. $22.6 million of preferred stock has been issued to date in 2009 with $2 million more expected to be issued in the second quarter following regulatory approval.

We took a non cash charge to earnings amounting to $870 thousand in the first quarter of 2009 to recognize an other-than-temporary impairment charge on two of our investment securities. These securities, known as trust preferred securities, are pooled community bank debt issuances. We purchased these securities several years ago but they have recently come under pressure from credit and market conditions and we felt the prudent course of action was to write down the carrying value of the securities. The decline in market value of these securities had already been included in capital as required by accounting standards and the change in book value is negligible.

Our provision for loan losses was $604 thousand in the first quarter as compared to $191 thousand last year. Net charge offs remained quite low at $196 thousand (.03% of average loans), but with loan customers under increased stress, it was appropriate to increase both the quarterly provision and the amount of the allowance account.

We also recognized a one-time gain of $1 million on the sale of our merchant card servicing portfolio.  This is an activity we began in the mid 1990s as a way to grow business checking account balances. The program was successful with over 600 businesses participating. It also carried with it, however, a substantial amount of identity theft risk and we concluded that risk could best be managed by an entity that specializes in that endeavor. We will continue to sell these services and develop the deposit relationships but with a lower risk profile.

There are other factors as well which impacted the first quarter performance and I encourage all shareholders to review our Form 10-Q when it becomes available.

While I remain confident in the long term future of the American economy, the future of community banks in general and First Mid in particular, there is no escaping the fact that we are in a difficult period.  Different economists make different predictions as to when economic growth will begin again but, as I am not an economist, I can make no such predictions. What the Board and management will continue to do is to take those actions necessary to keep our balance sheet strong and our risk profile manageable.  In doing so, we will be able to navigate our way through these difficult economic times and position First Mid for future opportunities.  As always, if you wish to speak with me my direct line number is 217/258-0415 and my e-mail address is browland@firstmid.com.

Thank you for your continued support of First Mid-Illinois Bancshares, Inc.

Very Truly Yours,

/s/ William S. Rowland

William S. Rowland

Chairman and Chief Executive Officer

April 29, 2009

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
	2009			2008
Assets
Cash and due from banks	$	49,555		$	17,756
Federal funds sold and other interest-bearing deposits		70,235			68,887
Investment securities:
Available-for-sale, at fair value		211,457			169,476
Held-to-maturity, at amortized cost (estimated fair value of $470
and $609 at March 31, 2009 and December 31, 2008, respectively)		458			599
Loans		710,479			741,938
Less allowance for loan losses		(7,993	)		(7,587	)
Net loans		702,486			734,351
Premises and equipment, net		15,258			14,985
Goodwill, net		17,363			17,363
Intangible assets, net		3,370			3,562
Other assets		22,356			22,721
Total assets	$	1,092,538		$	1,049,700
Liabilities and Stockholders’ Equity
Deposits:
Non-interest bearing	$	119,764		$	119,986
Interest bearing		730,592			686,368
Total deposits		850,356			806,354
Repurchase agreements with customers		69,887			80,708
Other borrowings		37,750			50,750
Junior subordinated debentures		20,620			20,620
Other liabilities		7,989			8,490
Total liabilities		986,602			966,922
Stockholders’ Equity:
Preferred stock (no par value, authorized 1,000,000 shares; issued
4,527 shares in 2009)		22,635			-
Common stock ($4 par value; authorized 18,000,000 shares; issued
7,291,247 shares in 2009 and 7,254,117 shares in 2008)		29,165			29,017
Additional paid-in capital		25,942			25,289
Retained earnings		59,990			58,059
Deferred compensation		2,775			2,787
Accumulated other comprehensive income (loss)		(1,584	)		(416	)
Treasury stock at cost, 1,171,058 shares in 2009
and 1,121,273 in 2008		(32,987	)		(31,958	)
Total stockholders’ equity		105,936			82,778
Total liabilities and stockholders’ equity	$	1,092,538		$	1,049,700

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands) (unaudited)
For the three-month periods ended March 31,	2009			2008
Interest income:
Interest and fees on loans	$	10,863		$	12,354
Interest on investment securities		2,084			2,122
Interest on federal funds sold & other deposits		17			311
Total interest income		12,964			14,787
Interest expense:
Interest on deposits		3,573			4,850
Interest on repurchase agreements with customers		26			368
Interest on other borrowings		445			701
Interest on subordinated debt		316			366
Total interest expense		4,360			6,285
Net interest income		8,604			8,502
Provision for loan losses		604			191
Net interest income after provision for loan losses		8,000			8,311
Non-interest income:
Trust revenues		579			744
Brokerage commissions		79			99
Insurance commissions		745			709
Services charges		1,134			1,321
Securities gains (losses), net		(869	)		151
Mortgage banking revenues		88			108
Other		1,927			838
Total non-interest income		3,683			3,970
Non-interest expense:
Salaries and employee benefits		4,204			4,124
Net occupancy and equipment expense		1,314			1,235
Amortization of intangible assets		192			191
Other		2,673			2,235
Total non-interest expense		8,383			7,785
Income before income taxes		3,300			4,496
Income taxes		1,115			1,574
Net income	$	2,185		$	2,922
Per Share Information (unaudited)
For the three-month periods ended March 31,	2009			2008
Basic earnings per common share	$	.31		$	.47
Diluted earnings per common share	$	.31		$	.46
Book value per share at March 31	$	13.61		$	13.33
Market price of stock at March 31	$	19.90		$	25.50

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands) (unaudited)
For the three-month periods ended March 31,	2009			2008
Balance at beginning of period	$	82,778		$	80,452
Net income		2,185			2,922
Dividends on preferred stock		(253	)		-
Issuance of preferred and common stock		23,331			677
Purchase of treasury stock		(1,042	)		(1,645	)
Deferred compensation and other adjustments		105			71
Changes in accumulated other comprehensive income (loss)		(1,168	)		719
Balance at end of period	$	105,936		$	83,196

CONSOLIDATED CAPITAL RATIOS				Threshold
	As of			for “Well-
First Mid-Illinois Bancshares, Inc.	Mar 31,			Capitalized”
Primary Capital Measurements (unaudited):	2009			Designation
Leverage ratio		10.51	%		5	%
Tier 1 capital to risk-weighted assets		14.13	%		6	%
Total capital to risk-weighted assets		15.15	%		10	%