8-K 1 form8k_050506.txt 2006 1ST QTR EARNINGS 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): MARCH 31, 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 Including Zip Code of Principal Executive Offices) (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 May 5, 2006, attached as Exhibit 99, providing information concerning the Registrant's financial statements as of March 31, 2006. Item 9.01. Financial Statements and Exhibits (d) Exhibits Exhibit 99 - Quarterly shareholder report as of and for the period ending March 31, 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: May 5, 2006 /s/ Michael L. Taylor Michael L. Taylor Chief Financial Officer INDEX TO EXHIBITS Exhibit Number Description -------------------------------------------------------------------------------- 99 Quarterly shareholder report issued May 5, 2006 Exhibit 99 [GRAPHIC OMITTED][GRAPHIC OMITTED] First Mid-Illinois Bancshares, Inc. has started 2006 well with diluted earnings per share of $.54 and net income of $2,404,000 - results that are comparable to last year's first quarter results of $.54 per share and net income of $2,435,000. Loan and deposit balances increased during the first quarter of 2006, non-performing assets declined to $3.3 million from $4.3 million a year ago and our previously announced acquisition of Mansfield Bancorp, Inc. has closed as scheduled during the second quarter. In previous reports, I have communicated with you about the challenging interest rate environment which banks are experiencing. This rate environment has continued in 2006, resulting in a decline in our net interest margin to 3.66% at March 31, 2006 from 3.71% at March 31, 2005. However, growth in loans and deposits has more than compensated for the decline in margin. Loan balances on March 31, 2006 were $642 million as compared to $638 million on December 31, 2005 with the majority of the growth in commercial real estate loans. Deposit balances on March 31, 2006 were $654 million compared to $649 million on December 31, 2005 with growth in money market account balances. As a result, net interest income increased by $65,000 to $7,140,000 compared to $7,075,000 for the first quarter of 2005. Non-interest income amounted to $3,133,000 for the first quarter of 2006 as compared with $3,176,000 for the first quarter of 2005. Increases in long-term interest rates led to a decline in mortgage banking revenues, while service charge income from deposit accounts and insurance commissions increased. During the first quarter of 2005, we recognized $173,000 of securities gains. We recognized no security gains in the first quarter of 2006. Non-interest expense increased slightly in 2006 to $6,529,000 compared to $6,306,000 in 2005. This increase is attributed to the opening of our newest branch in Highland, Illinois which opened in March 2005, the new location for The Checkley Agency, Inc. which opened in June 2005 and an accounting change associated with stock options. Beginning in 2006, businesses that have outstanding stock options are required to make an estimate of compensation expense associated with these options and record that amount as a charge to earnings. This accounting change resulted in additional compensation expense of $49,000 being recorded in the first quarter 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 have declined from $4.3 million on March 31, 2005 to $3.3 million on March 31, 2006 and remain below peer bank averages. Our provision for loan losses amounted to $193,000 for the first quarter of 2006 as compared with $187,000 for the first quarter of 2005. Net charge-offs were $112,000 for the first quarter of 2006 as compared to $71,000 last year. We also continue to provide our shareholders with liquidity for their First Mid investments through our ongoing share repurchase program. During the first quarter of 2006, we repurchased approximately 80,000 shares at a total cost of $3.3 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 wishes to utilize this service should contact Ms. Christie Wright at (217) 258-0493. As mentioned earlier, I am pleased to report that we have recently completed the acquisition of Mansfield, Bancorp, Inc., the parent company for Peoples State Bank of Mansfield. From a strategic standpoint, the acquisition expands our ability to deliver banking, trust, and insurance solutions to clients in Champaign, Piatt and Dewitt Counties. Our existing branch network compliments these locations nicely, and we will now have 28 banking locations in 20 communities across central Illinois. We look forward to carrying on the tradition of quality customer service that Peoples State Bank of Mansfield has displayed since 1910. We have recently begun preparations for installation of an ATM at the Mahomet facility to enhance convenience for customers. In addition, we continue to work diligently to combine the operations of Peoples and First Mid-Illinois Bank & Trust, N.A. and anticipate this to be completed by the end of the third quarter, 2006. At that time, services such as electronic banking and remote deposit will be available for customers. We look forward to the opportunities that lie ahead. Our 2006 annual meeting of stockholders will be held at 4:00 p.m. on May 24, 2006 in the 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 Chairman and Chief Executive Officer May 5, 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) Mar 31, Dec 31, -------------------------------------------------------------------------------- 2006 2005 Assets Cash and due from banks $14,945 $19,131 Federal funds sold and other interest-bearing deposits 2,345 426 Investment securities: Available-for-sale, at fair value 147,000 155,841 Held-to-maturity, at amortized cost (estimated fair value of $1,316 and $1,442 at March 31, 2006 and December 31, 2005, respectively) 1,292 1,412 Loans 641,861 638,133 Less allowance for loan losses (4,729) (4,648) -------------------------------------------------------------------------------- Net loans 637,132 633,485 Premises and equipment, net 15,325 15,168 Goodwill, net 9,034 9,034 Intangible assets, net 2,640 2,778 Other assets 12,303 13,298 -------------------------------------------------------------------------------- Total assets $842,016 $850,573 ================================================================================ Liabilities and Stockholders' Equity Deposits: Non-interest bearing $96,827 $95,305 Interest bearing 556,919 553,764 -------------------------------------------------------------------------------- Total deposits 653,746 649,069 Repurchase agreements with customers 46,606 67,380 Other borrowings 53,000 44,500 Junior subordinated debentures 10,310 10,310 Other liabilities 6,101 6,988 -------------------------------------------------------------------------------- Total liabilities 769,763 778,247 -------------------------------------------------------------------------------- Stockholders' Equity: Common stock ($4 par value; authorized 18,000,000 shares; issued 5,662,115 shares in 2006 and 5,633,621 shares in 2005) 22,648 22,534 Additional paid-in capital 20,302 19,439 Retained earnings 63,272 60,867 Deferred compensation 2,514 2,440 Accumulated other comprehensive income (887) (739) Treasury stock at cost, 1,321,390 shares in 2006 and 1,241,359 shares in 2005 (35,596) (32,215) -------------------------------------------------------------------------------- Total stockholders' equity 72,253 72,326 -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $842,016 $850,573 ================================================================================ CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands) (unaudited) -------------------------------------------------------------------------------- For the three months ended March 31, 2006 2005 Interest income: Interest and fees on loans $10,286 $ 8,782 Interest on investment securities 1,553 1,563 Interest on federal funds sold and other 20 79 -------------------------------------------------------------------------------- Total interest income 11,859 10,424 Interest expense: Interest on deposits 3,449 2,515 Interest on repurchase agreements with customers 481 283 Interest on subordinated debt 599 411 Interest on other borrowings 190 140 -------------------------------------------------------------------------------- Total interest expense 4,719 3,349 -------------------------------------------------------------------------------- Net interest income 7,140 7,075 Provision for loan losses 193 187 -------------------------------------------------------------------------------- Net interest income after provision for loan losses 6,947 6,888 Non-interest income: Trust revenues 609 636 Brokerage commissions 92 97 Insurance commissions 576 511 Service charges 1,150 1,034 Securities gains, net (1) 173 Mortgage banking revenues 67 153 Other 640 572 -------------------------------------------------------------------------------- Total non-interest income 3,133 3,176 Non-interest expense: Salaries and employee benefits 3,563 3,474 Net occupancy and equipment expense 1,136 1,036 Amortization of intangible assets 138 142 Other 1,692 1,654 -------------------------------------------------------------------------------- Total non-interest expense 6,529 6,306 -------------------------------------------------------------------------------- Income before income taxes 3,551 3 758 Income taxes 1,147 1,323 -------------------------------------------------------------------------------- Net income $2,404 $2,435 ================================================================================ Per Share Information (unaudited) -------------------------------------------------------------------------------- For the three months ended March 31, 2005 2004 Basic earnings per share $0.55 $0.55 Diluted earnings per share $0.54 $0.54 Book value per share at March 31 $16.65 $15.72 Market price of stock at March 31 $40.00 $40.15 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands) (unaudited) -------------------------------------------------------------------------------- For the three months ended March 31, 2005 2004 Balance at beginning of period $72,326 $69,154 Net income 2,404 2,435 Issuance of stock 783 711 Purchase of treasury stock (3,307) (1,566) Deferred compensation adjustment 195 87 Changes in accumulated other comprehensive income (loss) (148) (985) -------------------------------------------------------------------------------- Balance at end of period $74,259 $71,841 ================================================================================