EX-99 2 ex99_072607.htm EXHIBIT 99_072707 Exhibit 99_072707

Exhibit 99
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The financial performance of First Mid-Illinois Bancshares, Inc. was good during the first six months of 2007 with diluted earnings per share increasing 4% to $.77 per share compared to $.74 per share during the same period in 2006. Net income increased to $5,001,000 for the first half of 2007 compared to $4,926,000 for the first half of 2006. As a result of this performance, the Board of Directors elected to increase the dividend to $.19 per share for the first half of 2007 from $.17 per share for the first half of 2006. The dividend was paid on June 15, 2007 to shareholders of record as of June 1, 2007. The Board also declared a three-for-two stock split in the form of a 50 percent stock dividend. This stock dividend was declared on May 23, 2007 and paid on June 29, 2007 to shareholders of record as of June 18, 2007. As a result of this stock dividend, all share and per share information for current and prior periods presented in this report have been adjusted to reflect the stock split. This is our fourth stock split since 1997 and is reflective of our long-term commitment to shareholder value.

Growth in both non-interest income and net interest income were the primary contributors to the increase in earnings. It is important to note for year-to-year comparisons that the consolidated financial statements include the results of Peoples State Bank of Mansfield since acquisition date of May 1, 2006. Non-interest income increased to $7,378,000 for the first half of 2007 as compared to $6,548,000 for the same period in 2006. Growth in deposit account balances led to an increase in service charge income. In addition, trust revenues increased as a result of growth in agency and employee benefit accounts and mortgage banking revenues increased by $93,000. We added experienced loan personnel in Maryville and Champaign in the past few years and we are pleased with the increased activity in these markets. Also, we sold securities that resulted in a gain of $156,000 during the first half of 2007 as market opportunities and investment portfolio liquidity factored in the decision to sell.

Net interest income increased to $15,337,000 as compared to $14,905,000 for the first half of 2006. This was the result of growth in loans. Loan balances on June 30, 2007 were $732 million as compared to $718 million on June 30, 2006 with the majority of the growth in commercial real estate loans. Deposit balances actually decreased to $766 million from $780 million last June. However, $42 million in brokered deposits were allowed to mature during that time and were the reason for the decrease. These brokered deposits were allowed to mature in light of the deposits acquired in the Peoples acquisition and growth in customer deposits from the remainder of our markets. The growth in loans has offset a decline in the Company’s net interest margin. The Company’s year-to-date net interest margin was 3.46% on a tax-equivalent basis as compared to 3.62% for the first half of last year as short-term interest rates remain higher than longer-term rates and intense competition for loans and deposits has led to reduced margins.

Non-interest expense increased to $14,885,000 compared with $13,666,000 for the first half of 2007. This increase is primarily attributed to costs associated with the three locations in Mansfield, Mahomet, and Weldon acquired in the Peoples acquisition.
Credit quality remains an area of importance to us and one to which we devote significant resources. Our net charge-offs for the first half of 2007 were low at only $113,000, but we have seen an increase in the level of non-performing loans. Non-performing loans were $7.6 million on June 30, 2007 as compared to $3.6 million on June 30, 2006. This increase was primarily due to insufficient cash flow on four commercial real estate loans to one borrower which totaled $3.9 million. We believe we are adequately collateralized on these credits and are actively working with the borrower on repayment plans.

In 1998, First Mid adopted an ongoing share repurchase program to ensure that shareholders have adequate investment liquidity. This program has been successful in enhancing shareholder value. In February 2007, the Board of Directors approved the repurchase of $5 million of additional shares of the Company’s common stock in open market and privately-negotiated transactions. Any shareholder who would like to sell their stock should contact LeeAnn Perry, Manager of Shareholder Services at (217) 258-0493.

I would also like to extend a sincere thank you to Christie Wright for her years of dedicated service to First Mid. Christie has announced that she will be retiring at the end of this month to spend more time with family and friends. She has been with our organization for twenty-two years, has led our shareholder services activities for the past twelve years, and has always displayed a high degree of professionalism. We wish her well.

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

Sincerely,

/s/ William S. Rowland
 
William S. Rowland
Chairman and Chief Executive Officer

July 26, 2007


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)
    
Jun 30
    
Dec 31
  
     
2007
    
2006
  
               
Assets
              
Cash and due from banks
  
$
18,964
  
$
20,266
  
Federal funds sold and other interest-bearing deposits
    
370
    
1,570
  
Investment securities:
              
Available-for-sale, at fair value
    
185,366
    
184,266
  
Held-to-maturity, at amortized cost (estimated fair value of $1,212 and
              
$1,346 at June 30, 2007 and December 31, 2006, respectively
    
1,198
    
1,323
  
Loans
    
731,803
    
723,568
  
Less allowance for loan losses
    
(6,158
)
  
(5,876
)
Net loans
    
725,645
    
717,692
  
Premises and equipment, net
    
15,904
    
16,293
  
Goodwill, net
    
17,363
    
17,363
  
Intangible assets, net
    
4,715
    
5,148
  
Other assets
    
15,971
    
16,638
  
Total assets
  
$
985,496
  
$
980,559
  
               
Liabilities and Stockholders’ Equity
              
Deposits:
              
Non-interest bearing
  
$
110,415
  
$
121,405
  
Interest bearing
    
655,759
    
649,190
  
Total deposits
    
766,174
    
770,595
  
Repurchase agreements with customers
    
45,520
    
66,693
  
Other borrowings
    
68,000
    
37,800
  
Junior subordinated debentures
    
20,620
    
20,620
  
Other liabilities
    
8,015
    
9,065
  
  Total liabilities
    
908,329
    
904,773
  
Stockholders’ Equity:
      
Common stock ($4 par value; authorized18,000,000 shares; issued
              
7,120,368 shares in 2007 and 8,552,886 shares in 2006)
    
28,481
    
22,808
  
Additional paid-in capital
    
23,045
    
21,261
  
Retained earnings
    
51,282
    
68,625
  
Deferred compensation
    
2,496
    
2,629
  
Accumulated other comprehensive income (loss)
    
(900
)
  
19
  
Treasury stock at cost, 746,874 shares in 2007 and 2,121,269
             
in 2006
    
(27,237
)
  
(39,556
)
Total stockholders’ equity
    
77,167
    
75,786
  
Total liabilities and stockholders’ equity
  
$
985,496
  
$
980,559
  





 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands) (unaudited)
              
For the six months ended June 30,
   
2007
    
2006
  
               
Interest income:
              
Interest and fees on loans
  
$
24,594
  
$
21,800
  
Interest on investment securities
    
4,481
    
3,584
  
Interest on federal funds sold & other deposits
    
151
    
126
  
Total interest income
    
29,226
    
25,510
  
Interest expense:
              
Interest on deposits
    
10,692
    
7,830
  
Interest on repurchase agreements with customers
    
1,169
    
1,011
  
Interest on other borrowings
    
1,245
    
494
  
Interest on subordinated debt
    
783
    
1,270
  
Total interest expense
    
13,889
    
10,605
  
Net interest income
    
15,337
    
14,905
  
Provision for loan losses
    
395
    
404
  
Net interest income after provision for loan losses
    
14,942
    
14,501
  
Non-interest income:
              
Trust revenues
    
1,335
    
1,209
  
Brokerage commissions
    
252
    
296
  
Insurance commissions
    
1,126
    
1,074
  
Services charges
    
2,714
    
2,484
  
Securities gains (losses), net
    
156
    
(1
)
Mortgage banking revenues
    
254
    
161
  
Other
    
1,541
    
1,325
  
Total non-interest income
    
7,378
    
6,548
  
Non-interest expense:
              
Salaries and employee benefits
    
8,084
    
7,447
  
Net occupancy and equipment expense
    
2,414
    
2,334
  
Amortization of intangible assets
    
433
    
329
  
Other
    
3,954
    
3,556
  
Total non-interest expense
    
14,885
    
13,666
  
Income before income taxes
    
7,435
    
7,383
  
Income taxes
    
2,434
    
2,457
  
Net income
  
$
5,001
  
$
4,926
  
               
Per Share Information (unaudited)
              
For the six months ended June 30,
    
2007
    
2006
  
Basic earnings per share
  
$
0.78
  
$
0.75
  
Diluted earnings per share
  
 
0.77
  
 
0.74
  
Book value per share at June 30
  
 
12.11
  
 
11.16
  
Market price of stock at June 30
  
 
26.33
  
 
27.50
  
               




CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
  
(In thousands) (unaudited)
              
For the six months ended June 30,
    
2007
    
2006
  
               
Balance at beginning of period
  
$
75,786
  
$
72,326
  
Net income
    
5,001
    
4,926
  
Dividends on stock
    
(1,182
)
  
(1,128
)
Issuance of stock
    
1,383
    
1,232
  
Purchase of treasury stock
    
(3,484
)
  
(4,239
)
Deferred compensation and other adjustments
    
582
    
239
  
Changes in accumulated other comprehensive income (loss)
    
(919
)
  
(864
)
Balance at end of period
  
$
77,167
  
$
72,492