Exhibit 99
QUARTERLY REPORT TO STOCKHOLDERS
2015 FIRST QUARTER
First Mid Announces:
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| • | Record Quarterly Earnings |
| |
| • | Growth in Earnings Per Share |
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| • | Receipt of Industry Analyst Performance Awards |
I am pleased to report that 2015 is off to a good start with solid growth in earnings and earnings per share, continued strong asset quality ratios, and an increase in our regulatory capital ratios. Net income for the first quarter of 2015 was the highest net income total that we have ever had for a quarter. First quarter net income increased 12% to $4,039,000 compared to $3,607,000 for the first quarter of 2014. On a per share basis, diluted earnings per share was $.48 per share for the first three months of 2015 compared to $.43 for the same period in 2014.
During the first quarter, First Mid announced the execution of a definitive agreement to acquire 12 Southern Illinois banking centers from Old National Bancorp. The transaction is subject to regulatory approval, a financing contingency and other customary conditions and is expected to close in the third quarter of 2015. The acquisition will move First Mid to over $2 billion in total assets. We are excited about this opportunity and have started the integration planning process to ensure a smooth transition for customers and nearly 100 new employees. We believe the addition of these branches provides a good fit geographically, culturally, and will drive shareholder value.
First Mid-Illinois Bancshares, Inc. was recognized for its financial performance recently. We were selected as a recipient of the Raymond James Community Bankers Cup for 2014. The award recognizes the top 10% exchange-traded community banks that demonstrate superior financial performance. The Community Bankers Cup is awarded based on metrics including non-performing asset levels, five-year core deposit percentage, net interest margin, efficiency ratio, return-on-average-assets, and return-on-average-tangible common equity. Also, Keefe, Bruyette and Woods (KBW) named First Mid-Illinois Bancshares, Inc. one of 25 U.S. Banking Institutions on its 2014 Honor Roll. KBW’s honor roll winners are publicly-traded banking institutions with more than $500 million in total assets that reported 2014 annual net income per share, before extraordinary items, equal to or greater than peak net income per share over the past ten years, and reported consecutive increases in net income per share, before extraordinary items, since 2009 among other criteria. We are proud of our financial performance and pleased to receive these prestigious awards.
2015 year-to-date net income increased due to improvement in several areas including greater net interest income with growth in loans over the past year, reduced provision for loan loss expense with net recoveries for the quarter, increases in mortgage banking and insurance revenues, and lower operating expenses.
Year-to-date net interest income totaled $12.6 million compared to $12.5 million for the same period last year. Loan balances increased over the past year from $992 million on March 31, 2014 to $1.05 billion on March 31, 2015. The growth in loans has been primarily commercial operating and commercial real estate loans across our market area. Loan balances have declined by $8 million since year-end primarily due to seasonal paydowns on agricultural operating loans. The growth in loans and investments from last March increased the level of earning assets resulting in the increase in net interest income. Our funding mix changed slightly over the past year with a decline in deposits offset by growth in customer repurchase agreements. Deposit balances moved from $1.31 billion on March 31, 2014 to $1.28 billion on March 31, 2015 as we did not replace a $10 million brokered CD and we reduced higher-cost CD balances while repurchase agreements increased by $35 million. Since year-end, deposit balances have increased by $7 million with growth in checking and savings account balances. During the first quarter of 2015, the combination of the increase in deposits and decline in loan balances led to a greater amount of liquidity or overnight federal funds sold which resulted in a decrease in the net interest margin. The net interest margin on a tax equivalent basis for the first quarter of 2015 was 3.44% compared to 3.50% for the same period last year.
During the first quarter of 2015, we had net recoveries of previous loan charge-offs of $159,000. We also had net recoveries during the first quarter last year of $31,000. Our non-performing loans and other real estate owned were $4.9 million at March 31, 2015 compared to $6.1 million at March 31, 2014. The continued positive trend in these two metrics allowed us to reduce the provision for loan losses for the first quarter of 2015. Our year-to-date provision for loan losses declined to $265,000 for the first three months of 2015 compared to $323,000 for the first three months of 2014. We also continue to have a strong coverage ratio of the allowance for loan losses to the level of non-performing loans of 303% as of March 31, 2015.
Non-interest income for the first quarter of 2015 was $4.8 million compared to $4.5 million for the same period last year. Mortgage banking revenue increased by $69,000 from last year as we have seen an increase in originations and were aided by lower mortgage rates during the quarter. We implemented new VA and Freddie Mac Home Possible Advantage loan products and have seen initial consumer interest. Insurance commissions were $77,000 higher than last year with greater income from carriers based upon claims experience. Year-to-date service charges were $45,000 higher than last year primarily due to an increase in overdraft income. Revenues from the trust and wealth management area were $15,000 higher than the first three months of last year due to greater brokerage revenue.
Over the past few years we have implemented cost savings initiatives to manage our cost structure and I am pleased that we continue to see results from these efforts. Operating expenses for the first three months of 2015 were lower than the same period last year at $10.8 million compared to $11.0 million last year. Operating expenses were lower during the quarter even though we recorded $128,000 in acquisition costs related to the upcoming branch acquisition. Occupancy expenses decreased $170,000 due to several factors including reduced lease expenses after moving our insurance operations to another location. We have also reduced building maintenance costs.
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 were higher at March 31, 2015 compared to December 31, 2014 and March 31, 2014. This increase was primarily due to additional net income. Tangible book value per share also increased to $16.56 at March 31, 2015 compared to $15.63 at year-end and $12.58 last March.
In conclusion, I am pleased to start the year with strong financial results and am excited about the opportunity to expand our company in 2015. In April, 2015, First Mid-Illinois Bank and Trust, N.A. celebrates its 150 year anniversary from the date that the bank was first chartered in April, 1865. The longevity and success of the bank over such a long period of time is a testimony to the directors, employees, customers, and shareholders that have built this outstanding organization. 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
April 29, 2015
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| | | | | | | | | | | |
| First Quarter 2015 Financial Results | | | |
| FIRST MID-ILLINOIS BANCSHARES, INC. | | | | | |
| CONDENSED CONSOLIDATED BALANCE SHEETS | | | | |
| (In thousands) | (unaudited) |
| |
|
| | (unaudited) |
|
| | March 31, |
| | December 31, |
| | March 31, |
|
| | 2015 |
| | 2014 | | 2014 |
| Assets | | | | | |
| Cash and cash equivalents | $ | 55,967 |
| | $ | 51,730 |
| | $ | 72,588 |
|
| Investment securities | 454,322 |
| | 431,506 |
| | 447,851 |
|
| Loans (including loans held for sale) | 1,054,156 |
| | 1,062,406 |
| | 991,731 |
|
| Less allowance for loan losses | (14,106 | ) | | (13,682 | ) | | (13,603 | ) |
| Net loans | 1,040,050 |
| | 1,048,724 |
| | 978,128 |
|
| Premises and equipment, net | 27,093 |
| | 27,352 |
| | 28,062 |
|
| Goodwill and intangibles, net | 27,442 |
| | 27,597 |
| | 28,078 |
|
| Other assets | 18,776 |
| | 20,194 |
| | 28,365 |
|
| Total assets | $ | 1,623,650 |
| | $ | 1,607,103 |
| | $ | 1,583,072 |
|
| | | | | | |
| Liabilities and Stockholders’ Equity | | | | | |
| Deposits: | | | | | |
| Non-interest bearing | $ | 231,443 |
| | $ | 222,116 |
| | $ | 226,079 |
|
| Interest bearing | 1,047,660 |
| | 1,049,961 |
| | 1,079,746 |
|
| Total deposits | 1,279,103 |
| | 1,272,077 |
| | 1,305,825 |
|
| Repurchase agreements with customers | 116,596 |
| | 121,869 |
| | 81,277 |
|
| Other borrowings | 27,000 |
| | 20,000 |
| | 11,000 |
|
| Junior subordinated debentures | 20,620 |
| | 20,620 |
| | 20,620 |
|
| Other liabilities | 9,532 |
| | 7,621 |
| | 10,473 |
|
Total liabilities | 1,452,851 |
| | 1,442,187 |
| | 1,429,195 |
|
| Total stockholders’ equity | 170,799 |
| | 164,916 |
| | 153,877 |
|
| Total liabilities and stockholders’ equity | $ | 1,623,650 |
| | $ | 1,607,103 |
| | $ | 1,583,072 |
|
|
| | | | | | | |
| CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY |
| (in thousands)(unaudited) | | | |
| | Three months ended |
| | March 31, |
| | 2015 | | 2014 |
| Balance at beginning of period | $ | 164,916 |
| | $ | 149,381 |
|
| Net income | 4,039 |
| | 3,607 |
|
| Dividends on preferred stock and common stock | (550 | ) | | (1,102 | ) |
| Issuance of preferred and common stock | 254 |
| | 496 |
|
| Purchase of treasury stock | (836 | ) | | (902 | ) |
| Deferred compensation and other adjustments | 99 |
| | (35 | ) |
| Changes in accumulated other comprehensive income | 2,877 |
| | 2,432 |
|
| Balance at end of period | $ | 170,799 |
| | $ | 153,877 |
|
|
| | | | | | | | |
| First Quarter 2015 Financial Results | | | |
| FIRST MID-ILLINOIS BANCSHARES, INC. | | | |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | | | |
| (In thousands, except per share data)(unaudited) | | | | |
| | | Three months ended |
| | | March 31, |
| | | 2015 | | 2014 |
| Interest income: | | | | |
| Interest and fees on loans | | $ | 11,052 |
| | $ | 10,812 |
|
| Interest on investment securities | | 2,361 |
| | 2,523 |
|
| Interest on federal funds sold & other deposits | | 26 |
| | 27 |
|
| Total interest income | | 13,439 |
| | 13,362 |
|
| Interest expense: | |
| | |
| Interest on deposits | | 532 |
| | 609 |
|
| Interest on repurchase agreements with customers | | 14 |
| | 12 |
|
| Interest on other borrowings | | 153 |
| | 68 |
|
| Interest on subordinated debt | | 128 |
| | 126 |
|
| Total interest expense | | 827 |
| | 815 |
|
| Net interest income | | 12,612 |
| | 12,547 |
|
| Provision for loan losses | | 265 |
| | 323 |
|
| Net interest income after provision for loan losses | | 12,347 |
| | 12,224 |
|
| Non-interest income: | | | | |
| Trust revenues | | 920 |
| | 933 |
|
| Brokerage commissions | | 278 |
| | 250 |
|
| Insurance commissions | | 635 |
| | 558 |
|
| Service charges | | 1,189 |
| | 1,144 |
|
| Securities gains, net | | 229 |
| | 191 |
|
| Mortgage banking revenues | | 167 |
| | 98 |
|
| ATM / debit card revenue | | 1,006 |
| | 973 |
|
| Other | | 375 |
| | 334 |
|
| Total non-interest income | | 4,799 |
| | 4,481 |
|
| Non-interest expense: | | | | |
| Salaries and employee benefits | | 6,056 |
| | 6,053 |
|
| Net occupancy and equipment expense | | 1,979 |
| | 2,149 |
|
| Amortization of intangible assets | | 155 |
| | 162 |
|
| Legal and professional expense | | 582 |
| | 562 |
|
| Other | | 2,032 |
| | 2,034 |
|
| Total non-interest expense | | 10,804 |
| | 10,960 |
|
| Income before income taxes | | 6,342 |
| | 5,745 |
|
| Income taxes | | 2,303 |
| | 2,138 |
|
| Net income | | $ | 4,039 |
| | $ | 3,607 |
|
| | | | | |
| Per Share Information | | | | |
| Basic earnings per common share | | $ | 0.50 |
| | $ | 0.43 |
|
| Diluted earnings per common share | | $ | 0.48 |
| | $ | 0.43 |
|
|
| | | | | | | | |
| First Quarter 2015 Financial Results | | | |
| FIRST MID-ILLINOIS BANCSHARES, INC. | | | | | |
| SELECTED FINANCIAL HIGHLIGHTS | As of |
| | (Unaudited) |
| |
|
| | (Unaudited) |
|
| | March 31, |
| | December 31, |
| | March 31, |
|
| | 2015 |
| | 2014 | | 2014 |
| SHARE AND PER COMMON SHARE DATA | | | | | |
| Book value per common share | $20.48 | | $19.55 | | $17.36 |
| Tangible book value per common share | $16.56 | | $15.63 | | $12.58 |
| Common shares outstanding | 7,003,685 |
| | 7,033,318 |
| | 5,865,438 |
|
| Market price of stock | $20.00 | | $18.55 | | $21.05 |
| | | | | | |
| REGULATORY CAPITAL RATIOS | | | | | |
| Leverage ratio | 10.68 | % | | 10.52 | % | | 10.17 | % |
| Total capital to risk-weighted assets | 15.69 | % | | 15.60 | % | | 15.46 | % |
| Tier 1 capital to risk-weighted assets | 14.50 | % | | 14.42 | % | | 14.24 | % |
| Common equity tier 1 capital to risk weighted assets | 10.49 | % | | 10.32 | % | | 7.83 | % |
| Preferred stockholders' equity | $27,400,000 | | $27,400,000 | | $52,030,000 |
| Common stockholders' equity | $143,399,000 | | $137,516,000 | | $101,847,000 |
| | | | | | |
| ASSET QUALITY | | | | | |
| Allowance for loan losses to non-performing loans | 303 | % | | 301 | % | | 248 | % |
| Allowance for loan losses to total loans outstanding | 1.34 | % | | 1.29 | % | | 1.37 | % |
| Total YTD net charge-offs (recoveries) (1) | $(159,000) | | $196,000 | | $(31,000) |
| Total non-performing loans and other real estate owned | $4,899,000 | | $4,803,000 | | $6,067,000 |
| | | | | | |
|
| | | | | | | | | |
| | Three months ended | |
| | (unaudited) |
| | | | (unaudited) |
| |
| | March 31, |
| | December 31, |
| | March 31, |
| |
| | 2015 |
| | 2014 | | 2014 |
| |
PERFORMANCE RATIOS (1) | | | | | | |
| Return on average assets (2) | 1.00 | % | | 0.97 | % | | 0.91 | % | |
| Return on average common equity (2) | 9.99 | % | | 9.32 | % | | 9.96 | % | |
| Net interest margin (3) | 3.44 | % | | 3.53 | % | | 3.50 | % | |
| | | | | | | |
(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 o fulfill the financial needs of our communities with exceptional personal service, professionalism and integrity, and deliver meaningful value and results for customers and shareholders.
First Mid Bank was first chartered in 1865 and has since grown into a more than $1.6 billion community-focused organization that provides financial services through a network of 35 banking centers in 23 communities. Our talented team is comprised of over 400 men and women who take great pride in First Mid Bank and the Company, their work and their ability to serve our customers.
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
