UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
SEPTEMBER 30, 2006
FIRST MID-ILLINOIS BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Other Jurisdiction of Incorporation)
0-13368 37-1103704
(Commission File Number) (IRS Employer Identification No.)
1515 CHARLESTON AVENUE
MATTOON, IL 61938
(Address of Principal Executive Offices) (Zip Code)
(217) 234-7454
(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR 240.13e-4(c))
Item 8.01. Other Events
Incorporated by reference is the quarterly shareholder report issued by the
Registrant on November 8, 2006, attached as Exhibit 99, providing information
concerning the Registrant's financial statements as of September 30, 2006.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit 99 - Quarterly shareholder report as of and for the period
ending September 30, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has dully caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST MID-ILLINOIS BANCSHARES, INC.
Dated: November 8, 2006 /s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Quarterly shareholder report issued November 8, 2006
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
The financial performance of First Mid-Illinois Bancshares, Inc. was good during
the first nine months of 2006 with diluted earnings per share increasing 4% to
$1.66 compared to $1.59 per share during the same period in 2005. Net income
increased to $7,359,000 for the first nine months of 2006 compared to $7,242,000
for the first nine months of 2005.
On May 1, 2006, we completed the acquisition of Peoples State Bank of
Mansfield. This means that the 2006 consolidated financial statements include
the results of Peoples since that date. I am pleased to report that for the
first five months of operation Peoples has provided a positive contribution
to earnings. In addition, the integration and combination of Peoples into First
Mid-Illinois Bank & Trust, N.A. was completed as scheduled during the third
quarter.
Net interest income is our largest source of revenue and increased to
$22,748,000 for the first nine months of 2006 from $21,546,000 for the same
period last year. This increase is the result of growth resulting from the
Peoples acquisition as well as organic growth. A challenging rate environment
and intense competition for loans and deposits has led to contraction of the net
interest margin. Our net interest margin for 2006 is 3.50% as compared to 3.69%
for the first nine months of 2005. Loan balances on September 30, 2006 were $727
million as compared to $638 million on December 31, 2005 with the majority of
this growth in commercial real estate loans. Additionally, $55 million in loan
balances were added with the Peoples acquisition. Deposit balances on September
30, 2006 were $791 million compared to $649 million on December 31, 2005 with
$114 million added with Peoples.
Non-interest income amounted to $9,824,000 for the first nine months of 2006
compared to $9,381,000 in 2005. Increases in long-term interest rates led to a
decline in mortgage banking revenues, but service charge income from deposit
accounts and insurance commissions increased. During the first nine months of
2005, we recognized $315,000 in gains on the sales of securities whereas we
recognized only $66,000 in gains during the first nine months of 2006 due to the
interest rate environment and investment portfolio liquidity requirements.
Non-interest expense increased to $20,947,000 compared with $19,193,000 in 2005.
This increase is primarily attributed to the Peoples acquisition. In addition,
we began expensing stock options in 2006 per new accounting regulations. This
accounting change resulted in additional compensation expense of $135,000 being
recorded in the first nine months of 2006. In previous years, this amount has
been shown only in the footnotes to the financial statements.
We continue to stress the importance of credit quality. Total non-performing
assets were $4.2 million on September 30, 2006 as compared to $3.8 million on
September 30, 2005. Our provision for loan losses amounted to $575,000 for the
first nine months of 2006 as compared to $550,000 for the first nine months of
2005. Net charge-offs were $652,000 for the first nine months of 2006 compared
to $497,000 for the same period last year.
In addition to the growth of our balance sheet and growth in the number of
banking locations, I am pleased to report that we continue to move forward with
opportunities to add to the expertise and depth of professional bankers in our
Company. With our expansion in Champaign and Piatt counties through the Peoples
acquisition, we have added Mitchel Swim to our commercial banking team. Mitch is
a Mahomet resident and brings over 16 years of lending experience. In addition,
we have added Stacy Womack as Vice President of Employee Benefits. Stacy brings
a wealth of experience in assisting customers with group health insurance and
employee benefit plans. Stacy has over 16 years of experience in this business.
We have also recently added William Drake to lead our retail lending efforts in
Madison and St. Clair Counties. Bill has 21 years of banking experience with a
large regional bank. The addition of these quality individuals demonstrates our
desire to provide the expertise needed to determine the best financial solutions
for our customers.
I would like to also thank Bob Swift for his years of service with First Mid.
Bob recently announced that he will be resigning from First Mid in December to
take a position with a bank in Colorado. We wish him well in his new position.
Susan Young, one of our Senior Vice-Presidents, will assume the leadership
responsibilities for the trust and wealth management division. Susan has managed
operations for the area for the past several years and provides a wealth of
experience in investment, tax, and estate planning.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
Sincerely,
/s/ William S. Rowland
Chairman and Chief Executive Officer
November 8, 2006
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (unaudited) Sep 30, Dec 31,
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2006 2005
Assets
Cash and due from banks $17,688 $19,131
Federal funds sold and other interest-bearing deposits 476 426
Investment securities:
Available-for-sale, at fair value 197,815 155,841
Held-to-maturity, at amortized cost (estimated fair
value of $1,365 and $1,442 at September 30, 2006
and December 31, 2005, respectively) 1,343 1,412
Loans 726,954 638,133
Less allowance for loan losses (5,976) (4,648)
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Net loans 720,978 633,485
Premises and equipment, net 16,536 15,168
Goodwill, net 17,363 9,034
Intangible assets, net 5,364 2,778
Other assets 15,923 13,298
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Total assets $993,486 $850,573
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Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $111,750 $95,305
Interest bearing 679,004 553,764
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Total deposits 790,754 649,069
Repurchase agreements with customers 55,031 67,380
Other borrowings 44,200 44,500
Junior subordinated debentures 20,620 10,310
Other liabilities 7,151 6,988
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Total liabilities 917,756 778,247
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Stockholders' Equity:
Common stock ($4 par value; authorized
18,000,000 shares; issued 5,688,404 shares
in 2006 and 5,633,621 shares in 2005) 22,753 22,534
Additional paid-in capital 21,109 19,439
Retained earnings 67,098 60,867
Deferred compensation 2,610 2,440
Accumulated other comprehensive income (152) (739)
Treasury stock at cost, 1,369,808 shares in
2006 and 1,241,359 shares in 2005 (37,688) (32,215)
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Total stockholders' equity 75,730 72,326
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Total liabilities and stockholders' equity $993,486 $850,573
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands) (unaudited)
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For the nine months ended September 30, 2006 2005
Interest income:
Interest and fees on loans $34,169 $27,894
Interest on investment securities 5,937 4,618
Interest on federal funds sold and other 208 218
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Total interest income 40,314 32,730
Interest expense:
Interest on deposits 13,091 8,318
Interest on repurchase agreements with customers 1,665 997
Interest on subordinated debt 1,890 1,408
Interest on other borrowings 920 461
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Total interest expense 17,566 11,184
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Net interest income 22,748 21,546
Provision for loan losses 575 550
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Net interest income after provision for loan losses 22,173 20,996
Non-interest income:
Trust revenues 1,801 1,756
Brokerage commissions 418 284
Insurance commissions 1,343 1,264
Service charges 3,897 3,420
Securities gains, net 66 315
Mortgage banking revenues 288 605
Other 2,011 1,737
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Total non-interest income 9,824 9,381
Non-interest expense:
Salaries and employee benefits 11,391 10,223
Net occupancy and equipment expense 3,570 3,199
Amortization of intangible assets 545 430
Other 5,441 5,341
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Total non-interest expense 20,947 19,193
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Income before income taxes 11,050 11,184
Income taxes 3,691 3,942
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Net income $7,359 $7,242
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Per Share Information
(unaudited)
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For the nine months ended September 30, 2006 2005
Basic earnings per share $1.69 $1.63
Diluted earnings per share $1.66 $1.59
Book value per share at September 30 $17.54 $16.35
Market price of stock at September 30 $41.50 $41.00
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands) (unaudited)
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For the nine months ended September 30, 2006 2005
Balance at beginning of period $72,326 $69,154
Net income 7,359 7,242
Dividends on stock (1,128) (1,056)
Issuance of stock 1,481 1,544
Purchase of treasury stock (5,303) (4,304)
Deferred compensation adjustment 408 140
Changes in accumulated other comprehensive
income (loss) 587 (745)
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Balance at end of period $75,730 $71,975
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