8-K 1 form8k_080806.txt 2006 2ND 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): JUNE 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 August 8, 2006, attached as Exhibit 99, providing information concerning the Registrant's financial statements as of June 30, 2006. Item 9.01. Financial Statements and Exhibits (d) Exhibits Exhibit 99 - Quarterly shareholder report as of and for the period ending June 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: August 8, 2006 /s/ William S. Rowland William S. Rowland President and Chief Executive Officer INDEX TO EXHIBITS Exhibit Number Description -------------------------------------------------------------------------------- 99 Quarterly shareholder report issued August 8, 2006 Exhibit 99 [GRAPHIC OMITTED][GRAPHIC OMITTED] The financial performance of First Mid-Illinois Bancshares, Inc. was good during the first six months of 2006 with diluted earnings per share increasing 5% to $1.11 compared to $1.06 per share during the same period in 2005. Net income increased to $4,926,000 for the first half of 2006 compared to $4,797,000 for the first half of 2005. As a result of this performance, the Board of Directors elected to increase the dividend to $.26 per share for the first half of 2006 from $.24 per share for the first half of 2005. The dividend was paid on June 15 to shareholders of record as of June 1. 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 two months of operation Peoples has provided a positive contribution to earnings and the integration is on schedule for a third quarter combination of Peoples with First Mid-Illinois Bank & Trust, N.A. Net interest income is our largest source of revenue and increased to $14,905,000 for the first six months of 2006 from $14,297,000 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 further contraction of the net interest margin. Our net interest margin for 2006 is 3.58% and compared to 3.73% for the first six months of 2005. Loan balances on June 30, 2006 were $718 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 June 30, 2006 were $780 million compared to $649 million on December 31, 2005 with $114 million added with Peoples. Non-interest income amounted to $6,548,000 for the first six months of 2006 compared to $6,244,000 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 six months of 2005, we recognized $254,000 of securities gains whereas no security gains were recognized in the first six months of 2006. Non-interest expense increased to $13,666,000 compared with $12,800,000 in 2005. This increase is attributed to the Peoples acquisition, the opening of a branch in Highland, Illinois in March 2005, and the new location for The Checkley Agency, Inc. which opened in June 2005. In addition, we began expensing stock options in 2006 per the new accounting regulations. This accounting change resulted in additional compensation expense of $92,000 being recorded in the first six 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 June 30, 2006 as compared to $4.1 million on June 30, 2005 and remain below peer bank averages. Our provision for loan losses amounted to $404,000 for the first six months of 2006 as compared to $337,000 for the first six months of 2005. Net charge-offs were $234,000 for the first six months of 2006 compared to $271,000 for the same period last year. As mentioned, we have completed the acquisition of Peoples and begun to expand services in its markets. In June, we completed the installation of an ATM in Mahomet. Also, any Peoples customer can now use the First Mid network of over 30 ATMs. 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 during the third quarter, 2006. At that time, services such as electronic banking and remote deposit will be available for all of our customers. While we are cognizant of the many challenges facing our industry, we are excited about the opportunities that lie ahead and confident of the future. Thank you for your continued support of First Mid-Illinois Bancshares, Inc. Sincerely, /s/ William S. Rowland Chairman and Chief Executive Officer August 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) Jun 30, Dec 31, -------------------------------------------------------------------------------- 2006 2005 Assets Cash and due from banks $21,502 $19,131 Federal funds sold and other interest-bearing deposits 2,408 426 Investment securities: Available-for-sale, at fair value 191,874 155,841 Held-to-maturity, at amortized cost (estimated fair value of $1,364 and $1,442 at June 30, 2006 and December 31, 2005, respectively) 1,343 1,412 Loans 718,186 638,133 Less allowance for loan losses (6,223) (4,648) -------------------------------------------------------------------------------- Net loans 711,963 633,485 Premises and equipment, net 16,607 15,168 Goodwill, net 17,366 9,034 Intangible assets, net 5,581 2,778 Other assets 13,869 13,298 -------------------------------------------------------------------------------- Total assets $982,513 $850,573 ================================================================================ Liabilities and Stockholders' Equity Deposits: Non-interest bearing $113,106 $95,305 Interest bearing 667,279 553,764 -------------------------------------------------------------------------------- Total deposits 780,385 649,069 Repurchase agreements with customers 52,578 67,380 Other borrowings 50,000 44,500 Junior subordinated debentures 20,620 10,310 Other liabilities 6,438 6,988 -------------------------------------------------------------------------------- Total liabilities 910,021 778,247 -------------------------------------------------------------------------------- Stockholders' Equity: Common stock ($4 par value; authorized 18,000,000 shares; issued 5,674,703 shares in 2006 and 5,633,621 shares in 2005) 22,699 22,534 Additional paid-in capital 20,745 19,439 Retained earnings 64,665 60,867 Deferred compensation 2,584 2,440 Accumulated other comprehensive income (1,603) (739) Treasury stock at cost, 1,344,378 shares in 2006 and 1,241,359 shares in 2005 (36,598) (32,215) -------------------------------------------------------------------------------- Total stockholders' equity 72,492 72,326 -------------------------------------------------------------------------------- Total liabilities and stockholders' equity $982,513 $850,573 ================================================================================ CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands) (unaudited) -------------------------------------------------------------------------------- For the six months ended June 30, 2006 2005 Interest income: Interest and fees on loans $21,800 $ 18,072 Interest on investment securities 3,584 3,123 Interest on federal funds sold and other 126 102 -------------------------------------------------------------------------------- Total interest income 25,510 21,297 Interest expense: Interest on deposits 7,830 5,151 Interest on repurchase agreements with customers 1,011 619 Interest on subordinated debt 1,270 937 Interest on other borrowings 494 293 -------------------------------------------------------------------------------- Total interest expense 10,605 7,000 -------------------------------------------------------------------------------- Net interest income 14,905 14,297 Provision for loan losses 404 337 -------------------------------------------------------------------------------- Net interest income after provision for loan losses 14,501 13,960 Non-interest income: Trust revenues 1,209 1,208 Brokerage commissions 296 212 Insurance commissions 1,076 912 Service charges 2,484 2,187 Securities gains, net (1) 254 Mortgage banking revenues 161 321 Other 1,325 1,150 -------------------------------------------------------------------------------- Total non-interest income 6,548 6,244 Non-interest expense: Salaries and employee benefits 7,447 6,880 Net occupancy and equipment expense 2,334 2,080 Amortization of intangible assets 329 287 Other 3,556 3,553 -------------------------------------------------------------------------------- Total non-interest expense 13,666 12,800 -------------------------------------------------------------------------------- Income before income taxes 7,383 7,404 Income taxes 2,457 2,607 -------------------------------------------------------------------------------- Net income $4,926 $4,797 ================================================================================ Per Share Information (unaudited) -------------------------------------------------------------------------------- For the six months ended June 30, 2006 2005 Basic earnings per share $1.13 $1.08 Diluted earnings per share $1.11 $1.06 Book value per share at June 30 $16.74 $15.96 Market price of stock at June 30 $41.25 $40.50 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (In thousands) (unaudited) -------------------------------------------------------------------------------- For the six months ended June 30, 2006 2005 Balance at beginning of period $72,326 $69,154 Net income 4,926 4,797 Dividends on stock (1,128) (1,056) Issuance of stock 1,232 1,352 Purchase of treasury stock (4,239) (3,303) Deferred compensation adjustment 239 118 Changes in accumulated other comprehensive income (loss) (864) (543) -------------------------------------------------------------------------------- Balance at end of period $72,492 $70,519 ================================================================================