-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MlHczFqWXXyhO+0s2tN8k97vUMT33gtX1Xp6VUjnA0RaZvxWQUWqaMboJqJtt2Db wDm61Odw6ZQ0qK6Pg18Rhg== 0000700565-95-000014.txt : 19951119 0000700565-95-000014.hdr.sgml : 19951119 ACCESSION NUMBER: 0000700565-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MID ILLINOIS BANCSHARES INC CENTRAL INDEX KEY: 0000700565 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 371103704 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13368 FILM NUMBER: 95590189 BUSINESS ADDRESS: STREET 1: 1515 CHARLESTON AVE STREET 2: PO BOX 499 CITY: MATTOON STATE: IL ZIP: 61938 BUSINESS PHONE: 2172347454 MAIL ADDRESS: STREET 1: 1515 CHARLESTON AVENUE STREET 2: PO BOX 499 CITY: MATTOON STATE: IL ZIP: 61938 10-Q 1 [PERIOD-TYPE] 9-MOS SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q SEPTEMBER 30, 1995 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from_________________to_________________ Commission file number: 0-13368 FIRST MID-ILLINOIS BANCSHARES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 37-1103704 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1515 CHARLESTON AVENUE, MATTOON, ILLINOIS 61938 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 217-234-7454 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR VALUE $4.00 PER SHARE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: 889,108 shares of Common Stock at November 10, 1995. FORM 10-Q For the Quarter Ended September 30, 1995 INDEX Beginning Page No. Part I - Financial Information Item 1. Financial Statements 3 Consolidated Balance Sheets 4 Consolidated Statements of Income 5 Consolidated Statement of Cash Flows 7 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II - Other Information Item 1. Legal Proceedings 31 Item 2. Changes in Securities 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Submission of Matters to a Vote of Security Holders 31 Item 5. Other Information 31 Item 6. Exhibits and Reports on Form 8-K 31 Signatures 32 PART I - FINANCIAL INFORMATION Item 1. Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information required by generally accepted accounting principles for complete financial statements and related footnote disclosures. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered for a fair presentation have been included. For further information, refer to the financial statements and notes included in the Registrant's 1994 Annual Report to Stockholders. FIRST MID-ILLINOIS BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands)
September 30, December 31, 1995 1994 Assets Cash and due from banks: Noninterest bearing $ 14,120 $ 17,631 Interest bearing 795 82 Excess funds sold 10,250 - Cash and cash equivalents 25,165 17,713 Investment certificates of deposits 99 99 Investment securities available-for- sale at fair value 61,831 68,973 Investment securities held-to- maturity (approximate fair value of $63,787,000 at September 30, 1995 and $59,836,000 at December 31, 1994 64,259 62,304 Loans 308,562 282,153 Less allowance for loan losses 2,788 2,608 Net loans 305,774 279,545 Premises and equipment, net 9,342 9,336 Intangible assets 6,171 6,627 Other assets 7,567 6,561 Total assets $ 480,208 $ 451,158 Liabilities and Stockholders' Equity Deposits: Noninterest bearing $ 46,789 $ 45,159 Interest bearing 352,081 344,409 Total deposits 398,870 389,568 Other liabilities 3,818 3,700 Short term borrowings 35,120 19,590 Long term debt 7,450 7,700 Total liabilities 445,258 420,558 Stockholders' equity Preferred stock no par value;issued 620 shares of Series A preferred with stated value of $5,000 per share 3,100 3,100 Common stock, $4 par value; authorized 2,000,000 shares; issued 891,108 shares in 1995 and 878,769 in 1994) 3,549 3,515 Additional paid-in-capital 3,872 3,531 Retained earnings 24,067 21,577 Net unrealized gain(loss) on available-for- sale investment securities, net of tax 386 (1,099) 34,974 30,624 Less treasury stock at cost, 2,000 shares 24 24 Total stockholders' equity 34,950 30,600 Total liabilities and stockholders' equity $ 480,208 $ 451,158 See accompanying notes to consolidated financial statements.
FIRST MID-ILLINOIS BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME Three months ended September 30, 1995 and 1994 (unaudited) (in thousands, except per share data)
1995 1994 Interest income: Interest and fees on loans $ 6,589 $ 4,941 Interest on investment securities 1,996 1,563 Interest on excess funds sold 75 44 Interest on deposits with financial institutions 11 8 Total interest income 8,671 6,556 Interest expense: Interest on deposits 3,825 2,710 Interest on short-term borrowings 439 129 Interest on long-term debt 142 98 Total interest expense 4,406 2,937 Net interest income 4,265 3,619 Provision for loan losses 48 12 Net interest income after provision for loan losses 4,217 3,607 Other income: Trust fees 237 201 Brokerage and annuity fees 42 76 Service charges 406 385 Securities losses, net - (46) Mortgage banking income 69 35 Other 225 183 Total other income 979 834 Other expense: Salaries and employee benefits 1,908 1,727 Occupancy, furniture and equipment, net 584 508 Federal deposit insurance premiums 53 192 Other 1,026 842 Total other expense 3,571 3,269 Income before income taxes 1,625 1,172 Income taxes 532 341 Net income $ 1,093 $ 831 Per common share data: Primary earnings per share $ 1.15 $ .87 Fully diluted earnings per share $ 1.08 $ .83 See accompanying notes to consolidated financial statements.
FIRST MID-ILLINOIS BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME Nine months ended September 30, 1995 and 1994 (unaudited) (in thousands, except per share data)
1995 1994 Interest income: Interest and fees on loans $ 18,593 $ 13,728 Interest on investment securities 5,902 4,792 Interest on excess funds sold 212 85 Interest on deposits with financial institutions 78 68 Total interest income 24,785 18,673 Interest expense: Interest on deposits 10,973 7,788 Interest on short-term borrowings 899 293 Interest on long-term debt 431 248 Total interest expense 12,303 8,329 Net interest income 12,482 10,344 Provision for loan losses 138 156 Net interest income after provision for loan losses 12,344 10,188 Other income: Trust fees 845 839 Brokerage and annuity fees 132 293 Service charges 1,155 1,070 Securities losses, net - (25) Mortgage banking income 167 134 Other 647 551 Total other income 2,946 2,862 Other expense: Salaries and employee benefits 5,634 5,141 Occupancy, furniture and equipment, net 1,702 1,448 Federal deposit insurance premiums 495 584 Other 3,063 2,427 Total other expense 10,894 9,600 Income before income taxes 4,396 3,450 Income taxes 1,390 995 Net income $ 3,006 $ 2,455 Per common share data: Primary earnings per share $ 3.15 $ 2.55 Fully diluted earnings per share $ 2.97 $ 2.45 See accompanying notes to consolidated financial statements.
FIRST MID-ILLINOIS BANCSHARES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Three months ended September 30, 1995 and 1994 (unaudited) (in thousands, except per share data)
1995 1994 Cash flows fron operating activities: Net income $ 1,093 $ 831 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 48 12 Depreciation, amortization and accretion, net 285 336 Securities losses, net - 46 Gain on sale of loans held for sale (43) (16) Origination of mortgage loans held for sale (4,305) (1,301) Proceeds from sales of mortgage loans held for sale 4,293 1,351 Net (increase) in other assets (719) (627) Net decrease in other liabilities (960) (450) Net cash provided by (used in) operating activities (308) 182 Cash flows from investing activities: Expenditures for premises and equipment (185) (79) Net (increase) in loans (12,658) (17,634) Proceeds from sales of: Investment securities - 6,451 Proceeds from maturities of: Investment securities - 2,994 Securities available-for-sale 4,922 - Securities held-to-maturity 2,749 - Purchases of: Securities available-for-sale (2,006) - Securities held-to-maturity (2,987) - Net decrease in investment certificates of deposits - 599 Net cash (used in) investment activities (10,165) (7,669) Cash flows from financing activities: Net increase in deposits 9,600 11,894 Net increase in short-term borrowings 5,640 4,390 Repayment of long-term debt (250) - Dividends paid on common stock - - Dividends paid on preferred stock - - Net cash provided by financing activities 14,990 16,284 Increase in cash and cash equivalents 4,517 8,797 Cash and cash equivalents at beginning of period 20,648 14,581 Cash and cash equivalents at end of period $ 25,165 $ 23,378 Additional disclosure of cash flow information: Interest paid during the period $ 4,417 $ 3,472 Income taxes paid during the period 500 200 Loans transferred to real estate owned 26 61 See accompanying notes to consolidated financial statements.
FIRST MID-ILLINOIS BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended September 30, 1995 and 1994 (unaudited) (in thousands, except per share data)
1995 1994 Cash flows from operating activities: Net income $ 3,006 $ 2,455 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 138 156 Depreciation, amortization and accretion, 959 1,131 Securities losses, net - 25 Gain on sale of loans held for sale (60) (63) Origination of mortgage loans held for sale (5,330) (3,496) Proceeds from sales of mortgage loans held for sale 5,689 4,251 Net (increase) in other assets (1,006) (170) Net increase (decrease) in other liabilities (359) 410 Net cash provided by operating activities 3,037 4,699 Cash flows from investing activities: Expenditures for premises and equipment (556) (246) Net (increase) in loans (26,666) (31,852) Proceeds from sales of: Investment securities - 14,986 Proceeds from maturities of: Investment securities - 24,612 Securities available-for-sale 15,124 - Securities held-to-maturity 4,036 - Purchases of: Securities available-for-sale (5,685) (11,794) Securities held-to-maturity (5,991) (12,776) Net decrease in investment certificates of deposits - 2,776 Net cash (used in) investment activities (19,738) (14,294) Cash flows from financing activities: Net increase in deposits 9,302 2,287 Net increase in short-term borrowings 15,530 10,370 Repayment of long-term debt (250) (300) Dividends paid on common stock (387) (658) Dividends paid on preferred stock (42) (143) Net cash provided by financing activities 24,153 11,556 Increase in cash and cash equivalents 7,452 1,961 Cash and cash equivalents at beginning of period 17,713 21,417 Cash and cash equivalents at end of period $ 25,165 $ 23,378 Additional disclosure of cash flow information: Interest paid during the period $ 12,700 $ 8,843 Income taxes paid during the period 1,350 1,050 Loans transferred to real estate owned 135 217 See accompanying notes to consolidated financial statements.
Notes to the Consolidated Financial Statements 1) The consolidated financial statements include the accounts of First Mid-Illinois Bancshares, Inc. (the "Registrant"), and its wholly owned subsidiaries, First Mid-Illinois Bank & Trust, N.A. (the "Bank"), Heartland Savings Bank ("Heartland") and Mid-Illinois Data Services, Inc. ("MIDS"). Intercompany amounts have been eliminated. On October 4, 1994, the Bank acquired all of the outstanding stock of Downstate Bancshares, Inc. ("DBI") which owned 100% of the stock of Downstate National Bank ("DNB"). DNB had locations in Altamont and Effingham, Illinois. Immediately following the acquisition, DBI was dissolved and DNB was merged with and into the Bank with the Bank being the surviving entity. DBI was purchased for cash of $8,570,000 with $5,570,000 of that amount being internally generated funds and $3,000,000 resulting from additional long-term borrowings of the Registrant. The acquisition of DBI by the Bank was accounted for using the purchase method of accounting whereby the assets and liabilities of DBI were recorded at their fair values as of the acquisition date and the operating results of the DBI operations have been combined with those of the Registrant since October 4, 1994. 2) The financial information reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the results of the interim periods ended September 30, 1995 and 1994, and all such adjustments are of a normal recurring nature. The results of the interim period ended September 30, 1995, are not necessarily indicative of the results expected for the year ending December 31, 1995. 3) Income for primary and fully diluted earnings per share is adjusted for dividends attributable to preferred stock. Primary earnings per share is based on the weighted average number of common shares outstanding. Fully diluted earnings per share data is computed by using the weighted average number of common shares outstanding, increased by the assumed conversion of the convertible preferred stock. The weighted average number of common equivalent shares used in calculating earnings per share for the periods ended September 30, 1995 and 1994, are as follows:
Three months ended Nine months ended September 30, September 30, 1995 1994 1995 1994 Primary 889,108 876,769 885,475 876,769 Fully Diluted 1,014,410 1,002,071 1,010,777 1,002,071
4) The Registrant is required to classify its debt securities into one of three categories at the time of purchase: held-to-maturity, available- for-sale or trading. Held-to-maturity securities are those which management has the intent and ability to hold to maturity. These securities are carried at amortized historical cost. Available-for-sale securities are those securities which management may sell prior to maturity as a result of the Registrant's overall asset and liability management strategy. These securities are recorded at fair value. Trading securities are those securities bought and held principally for the purpose of selling them in the near term. Trading securities are recorded at the lower of historical cost or fair value. The Registrant currently has no securities designated as trading. 5) Heartland originates residential first mortgage loans both for its portfolio and for sale into the secondary market. Held for sale loans are carried at the lower of aggregate, amortized cost or estimated market value. Mortgage banking income consists of gains or losses on the sale of loans and servicing fee income. Origination costs for loans sold are expensed as incurred. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations-Summary For the third quarter, net income amounted to $1,093,000 ($1.08 per share on a fully diluted basis) in 1995 as compared with $831,000 ($.83 per share on a fully diluted basis) in 1994. A summary of the factors which contributed to the quarterly earnings increase follows (dollars in thousands except per share data):
Three months ended September 30, 1995 Total Percent Increase/ vs. September 30, 1994 Net Change (Decrease) Change 1995/1994 Per Share Net interest income $ 646 17.9% $ .64 Provision for loan losses 36 300.0 .04 Other income 145 17.4 .14 Other expense 302 9.2 .30 Income taxes 191 56.0 .19 Total increase in net income $ 262 31.5% $ .25
An explanation for the change in "other income" and "other expense" is shown on pages 25 through 27. Net income for the nine month period ended September 30, 1995, amounted to $3,006,000 ($2.97 per share on a fully diluted basis). This represents a $551,000 or 22.4% increase from the earnings of $2,455,000 ($2.45 per share on a fully diluted basis) earnings for the nine month period ended September 30, 1994. A summary of the factors which contributed to the earnings increase follows (dollars in thousands, except per share data):
Nine months ended September 30, 1995 Total Percent Increase/ vs. September 30, 1994 Net Change (Decrease) Change 1995/1994 Per Share Net interest income $2,138 20.7% $ 2.11 Provision for loan losses (18) (11.5) (.01) Other income 84 2.9 .08 Other expense 1,294 13.5 1.28 Income taxes 395 39.7 .40 Total increase in net income $ 551 22.4% $ .52
Net Interest Income and Interest Rate Sensitivity During the first nine months in 1995, the Registrant's net interest income increased by $2,138,000 (20.7%) as compared with the net interest income for the same period in 1994. Net interest income for the nine months ended September 30, 1995, was $12,482,000 as compared with $10,344,000 for the nine months ended September 30, 1994. The table which follows sets forth details of average balances, interest income and expense and average rates for the Registrant for 1995 and 1994. The 1995 figures have been annualized based on the actual results through September 30, 1995. The annualized amounts are not necessarily indicative of the actual amounts that are expected or that will occur for the year ended December 31, 1995. As can be seen, annualized net interest margin is 3.98% in 1995 (on a tax equivalent basis). The overall cost of interest bearing liabilities has been 79 basis points higher in 1995 than in 1994 and the yield on interest earning assets has been 76 basis points higher in 1995 than in 1994. Beginning in early 1994, economic activity and loan demand began to increase significantly in the Registrant's market area. As the largest financial institution in the area and the one with the most banking outlets, the Registrant's loan totals have increased dramatically. The loan to deposit ratio (a traditional measure of a bank's relative lending volume) of the Registrant has increased from 63.9% at December 31, 1993 to 73.2% at September 30, 1995. This rapid growth in loans has caused net interest income to increase because yields on loans are generally 200 to 300 basis points higher than are the yields on the investment products they replace and/or the incremental funding costs of the additional deposits or short term borrowings that the Registrant has acquired to fund the loan growth. As a result of an active asset/liability management effort, this loan growth has not added appreciably to the amount of interest rate or liquidity risk associated with the Registrant's operations. Distribution of Consolidated Assets, Liabilities, and Stockholder's Equity Interest Rates and Interest Differential (dollars in thousands)
Nine Month Period Ended Year Ended September 30, 1995 December 31, 1994 Avg Bal Int Avg Rate Avg Bal Int Avg Rate INTEREST EARNING ASSETS Investment certificates of deposits $ 99 $ 10 10.24% $ 1,211 $ 51 4.21% Due from banks-interest bearing 1,622 93 5.83% 924 22 2.38% Excess funds sold 4,926 283 5.73% 3,643 156 4.28% Investment securities: Taxable 117,214 7,119 6.07% 117,285 5,772 4.92% Tax-exempt 12,879 750 8.82% 14,546 851 8.86% Loans (net of unearned income) 290,723 24,791 8.53% 243,166 19,576 8.05% Total earning assets 427,463 33,046 7.82% 380,775 26,428 7.06% NONEARNING ASSETS Cash and due from banks 15,023 13,720 Premises and equipment 9,322 8,393 Other nonearning assets 12,637 9,150 Allowance for loan losses (2,690) (2,354) Total assets $461,755 $409,684 INTEREST BEARING LIABILITIES Demand deposits $106,973 $ 2,844 2.66% $110,069 $ 2,764 2.51% Savings deposits 41,929 1,140 2.72% 38,985 1,009 2.59% Time deposits 199,548 10,647 5.34% 170,252 7,298 4.29% Short-term borrowings 23,190 1,198 5.17% 13,103 471 3.59% Long-term debt 7,699 575 7.46% 5,579 376 6.74% Total interest- bearing liabilities 379,339 16,404 4.32% 337,988 11,918 3.53% NONINTEREST BEARING LIABILITIES Demand deposits 45,231 37,527 Other liabilities 4,410 3,901 Stockholders' equity 32,775 30,268 Total liabilities & equity $461,755 $409,684 Net interest earnings $16,642 $14,510 Net interest earnings as a % of interest earning assets on a full tax equivalent basis 3.98% 3.93%
(1) Full tax equivalent yields on tax exempt securities have been calculated using a 34% tax rate. (2) Nonaccrual loans have been included in the average balances. (3) Interest includes net loan fees. (4) 1995 interest income and expense amounts have been annualized based on results through September 30, 1995. The annualized amounts are not necessarily indicative of the actual amounts that are expected or that will occur for the year ending December 31, 1995. The following table describes changes in net interest income attributable to changes in the volume of earning assets compared to changes in interest rates (in thousands).
1995 Compared to 1994 Increase - (Decrease) Total Rate/ Change Volume Rate Volume INTEREST INCOME: Investment certificates of deposit $ (41) $ (47) $ 73 $ (67) Due from banks-interest bearing 71 16 31 24 Excess funds sold 127 55 53 19 Investment securities: Taxable 1,347 (3) 1,351 (1) Tax-exempt (101) (98) (3) - Loans 5,215 3,829 1,159 227 Total interest income 6,618 3,752 2,664 202 INTEREST EXPENSE: Demand deposits 80 (78) 163 (5) Savings deposits 131 76 51 4 Time deposits 3,349 1,256 1,786 307 Short-term borrowings 727 363 205 159 Long-term debt 199 143 41 15 Total interest expense 4,486 1,760 2,246 480 NET INTEREST EARNINGS $ 2,132 $ 1,992 $ 418 $ (278)
(1) Nonaccrual loans are not material and have been included in the average loan balances for purposes of this computation. No out-of-period adjustments have been included in the preceding analysis. (2) Changes in rates and volume are computed on a consistent basis using the absolute values of changes in volume compared to the absolute values of the changes in rates. Loan fees included in interest income are not material. Interest on nontaxable securities is shown on a tax-equivalent basis using a 34% tax rate. (3) There were no foreign activities by the Registrant during the nine month periods ending September 30, 1995 and September 30, 1994. (4) 1995 interest income and expense amounts have been annualized based on results through September 30, 1995. The annualized amounts are not necessarily indicative of the actual amounts that are expected or that will occur for the year ending December 31, 1995. The following table is the Registrant's "static gap" schedule as of September 30, 1995. This is just one of several tools used by management to monitor the interest rate sensitivity position of the Registrant. The following table presents earning assets and interest bearing liabilities within selected time intervals based on their repricing and maturing characteristics. Interest rate sensitivity is measured by "gaps", (the difference between interest earning assets and interest bearing liabilities within a particular time interval). A positive GAP indicates more assets than liabilities could reprice in that time period and a negative GAP indicates more liabilities could reprice.
(dollars in thousands) Number of Months Until Next Repricing Opportunity 0-1 1-3 3-6 6-12 12+ INTEREST EARNING ASSETS: Investment certificates of deposits $ - $ - $ - $ - $ 99 Due from banks- interest bearing 795 - - - - Excess funds sold 10,250 - - - - Investment securities: Taxable 48,047 16,871 14,274 4,391 29,911 Tax-exempt - 373 192 196 11,835 Loans 36,547 21,395 32,832 29,969 187,819 Total $ 95,639 $ 38,639 $ 47,298 $ 34,556 $229,664 INTEREST BEARING LIABILITIES: Savings and NOW accts $102,008 $ - $ - $ - $ - Money market accounts 36,117 - - - - Other time deposits 30,900 35,100 40,578 56,805 50,573 Short-term borrowings 7,000 16,620 4,500 500 6,500 Long-term debt 7,450 - - - - Total $183,475 $ 51,720 $ 45,078 $ 57,305 $ 57,073 Periodic GAP $(87,836) $ (13,081) $ 2,220 $ (22,749) $172,591 Cumulative GAP $(87,836) $(100,917) $(98,697) $(121,446) $ 51,145 Gaps as a percent of interest earning assets: Periodic (19.7%) (2.9%) 0.5% (5.1%) 38.7% Cumulative (19.7%) (22.6%) (22.1%) (27.2%) 11.5%
The preceding tabulation classifies savings and NOW accounts as immediately repriceable because if rates paid on these accounts were to change, the rates would, most likely, change on all such accounts at the same time. As a practical matter, management is able to exercise a significant amount of control over these rates and they have shown to be very resistant to rate changes. Management of the Registrant continually monitors its interest rate sensitivity position. While the preceding table is an indication of interest rate risk, overall interest rate sensitivity is influenced by other factors such as the competitive environment, the timing and amount of rate changes, loan prepayments and the inherent stability of certain deposits. A number of different factors, including those objectively determined and measurable, as well as those subjectively ascertained, are considered by management in its evaluation of interest rate risk. As a result of this analysis, management believes that the overall level of interest rate risk is manageable and does not believe that changing rates will have a material negative effect on the Registrant's net interest margin. Investment Portfolio and Investment Transactions The Registrant adopted Statement of Financial Accounting Standards No. 115 (FAS 115), "Accounting for Certain Investments in Debt and Equity Securities" effective December 31, 1993. Investment securities that the Registrant has the positive intent and ability to hold to maturity are classified as "held- to-maturity" and reported at amortized cost. All other investment securities are classified as "available-for-sale" and have been reported at their estimated fair value at September 30, 1995, and December 31, 1994. In accordance with FAS 115, the unrealized gains, net of related taxes, in the amount of $386,000 have been included in stockholders' equity at September 30, 1995. Total investment securities designated as available-for-sale represented 49% of the portfolio and held-to-maturity represented 51%. During the three months ended September 30, 1995, neither available-for-sale nor held-to- maturity investment securities were sold. During the three months ended September 30, 1995, $3,000,000 held-to-maturity investment securities and $2,050,000 available-for-sale investment securities were purchased. The following table provides detailed information for investment securities at September 30, 1995, (in thousands):
Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value AVAILABLE-FOR-SALE: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 27,619 $ 242 $ 146 $ 27,715 Obligations of state and political subdivisions 8,653 450 9 9,094 Mortgage backed securities 22,869 176 128 22,917 Other securities 2,105 - - 2,105 Total available-for-sale $ 61,246 $ 868 $ 283 $ 61,831 HELD-TO-MATURITY: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 45,812 $ 188 $ 664 $ 45,336 Obligations of state and political subdivisions 3,984 81 13 4,052 Mortgage backed securities 14,463 62 126 14,399 Other securities - - - - Total held-to-maturity $ 64,259 $ 331 $ 803 $ 63,787 Total $125,505 $ 1,199 $ 1,086 $125,618
Information related to investment securities at December 31, 1994 follows (in thousands):
Gross Gross Approximate Amortized Unrealized Unrealized Fair Cost Gains Losses Value AVAILABLE-FOR-SALE: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 34,358 $ - $ 970 $ 33,388 Obligations of state and political subdivisions 9,641 240 160 9,721 Mortgage backed securities 24,751 29 804 23,976 Other securities 1,888 - - 1,888 Total available-for-sale $ 70,638 $ 269 $ 1,934 $ 68,973 HELD-TO-MATURITY: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 42,312 $ 6 $ 1,760 $ 40,558 Obligations of state and political subdivisions 4,023 5 101 3,927 Mortgage backed securities 15,969 1 619 15,351 Other securities - - - - Total held-to-maturity $ 62,304 $ 12 $ 2,480 $ 59,836 Total $132,942 $ 281 $ 4,414 $128,809
The following table indicates the expected maturities of investment securities classified as available-for-sale and held-to-maturity at September 30, 1995, (dollars in thousands) and their weighted average yields:
Available-for-Sale Investment Securities - Approximate Fair Value Maturing One After 1 After 5 After year through through ten or less 5 years 10 years years Total U.S. Treasury securities and obligations of U.S. government corporations and agencies $11,526 $13,674 $ 2,515 $ - $27,715 Mortgage-backed securities 906 14,542 4,111 3,358 22,917 Obligations of state and political subdivisions 194 6,844 2,056 - 9,094 Other securities - - - 2,105 2,105 Total available-for-sale securities $12,626 $35,060 $ 8,682 $ 5,463 $61,831 Weighted average yield 5.31% 6.06% 7.16% 8.67% Full tax equivalent yield 5.35% 6.61% 7.96% 8.67%
Held-to-Maturity Investment Securities - Book Value Maturing One After 1 After 5 After year through through ten or less 5 years 10 years years Total U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 4,800 $34,030 $ 6,982 $ - $45,812 Mortgage-backed securities 1,052 11,870 572 969 14,463 Obligations of state and political subdivisions 356 2,325 1,303 - 3,984 Total held-to-maturity securities $ 6,208 $48,225 $ 8,857 $ 969 $64,259 Weighted average yield 5.35% 5.02% 5.19% 6.46% Full tax equivalent yield 5.51% 5.14% 5.58% 6.46%
The weighted average yields are calculated on the basis of the cost and effective yields weighted for the scheduled maturity of each security. Full tax equivalent yields have been calculated using a 34% tax rate. The maturities of, and yields on, mortgage backed securities have been calculated using actual quarterly repayment history. However, where securities have call features and market values greater than par, the call date has been used to determine the expected maturity. Except for U.S. Treasury securities and obligations of U.S. Government corporations and agencies, no investment in a single issuer exceeds 10% of stockholders' equity at September 30, 1995. Other securities includes stock in the Federal Home Loan Bank of Chicago totaling $1,699,000 in 1995 and $507,000 in 1994. Loan Quality and Allowance for Loan Losses The following tables provide information relating to the Registrant's loan portfolio, risk elements within the portfolio and historical loan loss experience. The Registrant adopted Statement of Financial Accounting Standards No. 114 "Accounting by Creditors for Impairment of a Loan" ("FAS 114") and Statement of Financial Accounting Standards No. 118 "Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure" ("FAS 118") effective January 1, 1995. FAS 114 applies to all creditors and to all loans that are accounted for at fair value or at the lower of cost or fair value. It requires that impaired loans be measured at the present values of expected future cash flows by discounting those cash flows at the loan's effective interest rate. FAS 118 amends FAS 114 to allow a creditor to use existing methods for recognizing interest income on an impaired loan. FAS 118 also amends the disclosure requirements of FAS 114 to require information about the recorded investment in certain impaired loans and about how a creditor recognizes interest income related to those impaired loans. The Registrant had no impaired loans as of September 30, 1995. Loan Portfolio The composition of the Registrant's loan portfolio as of September 30, 1995, December 31, 1994 and 1993 is as follows (in thousands):
1995 1994 1993 Commercial, financial and agricultural $ 66,887 $ 61,520 $ 50,353 Real estate - mortgage 211,658 195,524 151,916 Installment loans to individuals 27,930 22,294 16,360 Other 2,087 2,815 4,590 Total loans $308,562 $282,153 $223,219
The following table presents the aggregate balances of loans outstanding as of September 30, 1995, by maturities, based on remaining scheduled, contractual repayments of principal (in thousands):
Over 1 One year through Over or less 5 years 5 years Total Commercial, financial and agricultural $ 48,922 $ 15,495 $ 2,470 $ 66,887 Real estate - mortgage 41,854 108,187 61,617 211,658 Installment loans to individuals 6,297 20,655 978 27,930 Other 467 1,021 599 2,087 Total loans $ 97,540 $145,358 $ 65,664 $308,562
As of September 30, 1995, loans with maturities over one year were comprised of $164,275,000 in fixed rate loans and $46,747,000 in variable rate loans. The loan maturities noted previously are based on the contractual provisions of the individual loans. The Registrant has no general policy regarding rollovers and borrower requests for such are handled on a case by case basis. As of September 30, 1995, the Registrant had loan concentrations in agricultural industries of 12.8% of outstanding loans. The Registrant had no other industry loan concentrations in excess of 10% of outstanding loans. There was no foreign activity required to be disclosed for the reporting period ended September 30, 1995. Non-Performing Loans It is the Registrant's policy to discontinue the accrual of interest income on any loan when, in the opinion of management, there is reasonable doubt as to the timely collectibility of interest or principal. Nonaccrual loans are returned to accrual status when, in the opinion of management, the financial position of the borrower indicates there is no longer any reasonable doubt as to the timely collectibility of interest or principal. The following table presents information concerning the aggregate amount of nonperforming loans at the dates indicated. Nonperforming loans include: (a) loans accounted for on a nonaccrual basis; (b) accruing loans contractually past due 90 days or more as to interest or principal payments; and (c) loans not included in (a) or (b) previously, which are "restructured loans" as defined in Statement of Financial Accounting Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings."
Nonperforming Loans (in thousands) September 30, December 31, 1995 1994 1993 1992 1991 Nonaccrual loans $ 380 $ 393 $ 497 $ 685 $ 348 Loans past due ninety days or more and still accruing 232 509 248 585 418 Restructured loans which are performing in accordance with revised terms 634 772 307 383 678
Interest income that would have been reported in 1995 if nonaccrual and restructured loans had been performing totaled $111,500 for the nine month period ended September 30, 1995. Interest income relating to these non- performing loans that was included in income totaled $16,500 for the same period. Allowance for Loan Losses The provision for loan losses charged to expense was $138,000 for the nine months ended September 30, 1995, as compared to $156,000 for the nine months ended September 30, 1994, an $18,000 (11.5%) decrease. This decrease was due to reduced loan charge offs, a lower level of problem loans and more favorable economic conditions which allowed the Registrant to reduce the provision and at the same time improve reserve coverage. Management establishes an allowance for loan losses which reduces the total loans outstanding by an estimate of uncollectible loans. Loans deemed to be uncollectible are charged against and reduce the allowance. The provision for loan losses and recoveries are credited to and increase the allowance. The allowance for loan losses totaled $2,788,000 (.90% of total loans) at September 30, 1995, and $2,608,000 (.93% of total loans) at December 31, 1994. The allowance for loan losses equaled 223.8% and 155.8% of total non- performing loans at September 30, 1995 and December 31, 1994, respectively. A summary of loan loss experience for the periods indicated is as follows (dollars in thousands):
Nine months ended September 30, Year ended December 31, 1995 1994 1993 1992 1991 Average loans Outstanding, net of unearned income $290,723 $243,166 $214,408 $178,919 $127,918 Allowance- beginning of year 2,608 2,110 1,906 1,566 1,505 Balance of acquired subsidiary - 343 - 350 - Charge-offs: Commercial, financial and agricultural 17 29 140 298 273 Real estate-mortgage 9 28 241 350 11 Installment 30 120 86 139 132 Total charge-offs 56 177 467 787 416 Recoveries: Commercial, financial and agricultural 69 98 150 167 57 Real estate-mortgage - 21 3 18 - Installment 29 45 26 49 33 Total recoveries 98 164 179 234 90 Net charge-offs (recoveries) (42) 13 288 553 326 Provision for loan losses 138 168 492 543 387 Allowance-end of period $ 2,788 $2,608 $ 2,110 $ 1,906 $ 1,566 Ratio of net charge-offs (recoveries) to average loans (.01%) .01% .13% .31% .25% Ratio of allowance for loan losses to loans outstanding (less unearned interest) at end of period .90% .93% .95% .89% 1.17%
The allowance for loan losses represents management's best estimate of the reserve necessary to adequately cover losses that could ultimately be realized from current loan exposures. In determining the adequacy of the allowance for loan losses, management relies predominantly on a disciplined credit review and approval process which extends to the full range of the Registrant's credit exposure. The review process is directed by overall lending policy and is intended to identify, at the earliest possible stage, borrowers who might be facing financial difficulty. Once identified, the magnitude of the exposure to individual borrowers is quantified in the form of specific allocation of the allowance for loan losses. Collateral values are considered by management in the determination of such specific allocations. Additional factors considered by management in evaluating the overall adequacy of the allowance include historical net loan losses, the level and composition of nonaccrual, past due and restructured loans and the current and anticipated economic conditions in the region where the Registrant operates. In addition to the aforementioned considerations, management also considers the experience of certain other similarly situated banks, thrifts and bank holding companies. The allowance for loan losses, in management's judgment, would be allocated as follows to cover potential loan losses (in thousands):
September 30, 1995 December 31, 1994 Allowance % of Allowance % of for loans for loans loan to total loan to total losses loans losses loans Commercial, financial and agricultural $ 1,536 21.7% $ 1,481 21.8% Real estate-mortgage 311 68.6% 427 69.3% Installment 131 9.1% 100 7.9% Other - .6% - 1.0% Total allocated 1,978 2,008 Unallocated 810 N/A 600 N/A Allowance at end of reported period $ 2,788 100.0% $ 2,608 100.0%
The allowance is allocated to the individual loan categories by a specific reserve for all classified loans plus a percentage of loans not classified based on historical losses. There were no other interest-bearing assets which would be required to be disclosed as having "risk elements" if such other assets were loans. Deposit Base The following table details the year-to-date average deposits for the indicated periods and weighted average rates at September 30, 1995, December 31, 1994 and 1993 (in thousands):
September 30, December 31, December 31, 1995 1994 1993 Weighted Weighted Weighted Average Average Average Amount Rate Amount Rate Amount Rate Demand deposits: Non-interest bearing $ 45,231 - $ 37,527 - $ 31,746 - Interest bearing 106,973 2.66% 110,069 2.51% 107,896 2.68% Savings 41,929 2.72% 38,985 2.59% 35,860 2.88% Time deposits 199,548 5.34% 170,252 4.29% 168,724 4.39% Total average deposits $393,681 3.72% $356,833 3.10% $344,226 3.29%
The following table sets forth the maturity of time certificates of deposit of $100,000 or more at September 30, 1995 (in thousands):
Balance 3 months or less $ 25,929 Over 3 through 6 months 6,965 Over 6 through 12 months 6,579 Over 12 months 5,454 Total $ 44,927
There were no time deposits of $100,000 or more that were issued by foreign offices at September 30, 1995. Short-term Borrowings Short-term borrowings at September 30, 1995, December 31, 1994 and December 31, 1993 are shown (in thousands) in the following table:
1995 1994 1993 Securities sold under agreement to repurchase $18,620 $15,590 $ 9,630 Federal Home Loan Bank advances 16,500 3,500 - Federal funds purchased - 500 - Total short-term borrowing $35,120 $19,590 $ 9,630
Federal Home Loan Bank advances are secured by stock of the Federal Home Loan Bank of Chicago and by residential mortgage loans. Information concerning such borrowings for the periods ended September 30, 1995, December 31, 1994 and December 31, 1993 is as follows (in thousands):
1995 1994 1993 Maximum amount of borrowings outstanding at any month end $36,770 $23,460 $11,390 Average amount outstanding 23,190 13,103 8,843 Weighted average interest rate-end of period 5.22% 3.55% 2.91% Weighted average interest rate during the year 5.17% 3.59% 2.96%
Other Income Other income increased $84,000 or 2.9% to $2,946,000 in the first nine months of 1995 as compared with $2,862,000 in the same period of 1994. The following table sets forth information regarding the major components of and changes in other income (dollars in thousands).
Nine months ended Change September 30, 1995/1995 1995 1994 Amount Percent Trust fees $ 845 $ 839 $ 6 .7% Brokerage and annuity fees 132 293 (161) (54.9) Service charges 1,155 1,070 85 7.9 Securities gains, net - (25) 25 100.0 Mortgage banking income 167 134 33 24.6 Other 647 551 96 17.4 Total other income $2,946 $2,862 $ 84 2.9%
Revenues from brokerage and annuity fees have declined significantly in 1995 as compared to 1994. During 1994, yields on annuity products were higher, sometimes by as much as 200 basis points, than rates offered on traditional certificates of deposits. During late 1994 and throughout 1995 however, this rate disparity has disappeared as CD yields have increased and annuity yields have decreased. Accordingly, consumer preference has shifted away from the annuity product. Management does not anticipate that annuity sales will increase significantly from their 1995 levels until such time as these products again attain a rate advantage over certificates of deposits. Service charges on deposits consists of fees on both interest bearing and non-interest bearing accounts and charges for other items, including insufficient funds, overdrafts and stop payment requests. Service charges on deposits increased $85,000 or 7.9% for the nine month period ended September 30, 1995 as compared with the same period in 1994. During mid-1994, the Registrant adopted a revised schedule for such fees which has resulted in most of the increase. Other income for the third quarter of 1995 increased $145,000 (17.4%) to $979,000 from $834,000 in the third quarter of 1994. This increase consisted primarily of service charges ($21,000), mortgage banking income ($34,000), a reduction of security losses ($46,000) and other income ($44,000). Other Expense Other expense increased $1,294,000 or 13.5% to $10,894,000 in the first nine months of 1995 as compared with $9,600,000 in the first nine months of 1994. Most of this increase was attributable to the acquisition of Downstate Bancshares, Inc. that occurred early in the fourth quarter of 1994. Other expense as a percentage of average assets remained stable at 2.6% during the first nine months of 1995 and 1994. The following table sets forth information regarding the major components of and changes in other expense (dollars in thousands).
Nine months ended Change September 30, 1995/1994 1995 1994 Amount Percent Salaries and employee benefits $5,634 $5,141 $ 493 9.6% Occupancy, furniture and equipment, net 1,702 1,448 254 17.5 Federal deposit insurance premiums 495 584 (89) (15.2) Other 3,063 2,427 636 26.2 Total other expense $10,894 $9,600 $ 1,294 13.5%
Salaries and employee benefits, the largest component of other expense, increased $493,000 or 9.6% during the first nine months of 1995 as compared with the same period in 1994. The increase was due to a rise in the number of employees on staff (as a result of the aforementioned acquisition) during the comparable periods and regular merit increases which affected payroll beginning January 1, 1995. Net occupancy, furniture and equipment expenses increased $254,000 or 17.5% during the first nine months of 1995 compared with the same period in 1994. This increase was attributable in part to the additional buildings and fixed assets acquired as a result of the acquisition in the fourth quarter of 1994 and in part to the remodeling of the Mattoon and Charleston banking facilities. The opening of the Arcola Branch in early September, 1995, contributed slightly to this overall increase. FDIC insurance premiums decreased $89,000 or (15.2%) in the nine months of 1995 compared with 1994. The FDIC amended its regulations to change the range of deposit insurance assessments to members of the Bank Insurance Fund. This change in assessment rates was applied retroactively to June 1, 1995 and the Bank received a refund of $170,000 in the third quarter. Effective June 1, 1995, the Bank has an assessment rate of $.04 per $100 of deposits. Members of the Savings Association Insurance Fund, such as Heartland, will continue to pay assessments rates of $.23 per $100 of deposits. Refer to the "Recent Regulatory Developments" on page 29 for more information. Other expense increased $636,000 or 26.2% for the first nine months of 1995 as compared with the same period of 1994. This increase was attributable to a $95,000 or 14.9% increase in advertising, donations and public relations expense and an increase in office supplies expense of $118,000 or 18.6%. Amortization expense increased $241,000 or 37.9% due to the additional goodwill from the Downstate acquisition. Other expense for the third quarter of 1995 totaled $3,571,000 as compared to $3,269,000 during the third quarter of 1994. This increase of $302,000 or 9.2% consisted of higher levels in salaries and benefits of $181,000, occupancy expense of $76,000 and other of $184,000. Offsetting this increase was a decrease in the FDIC premiums of $139,000 attributable to the reduction of the premium rate. Income Taxes The Registrant recorded income tax expense of $1,390,000 for the nine months ended September 30, 1995, as compared to $995,000 for the same period in 1994. The effective income tax rate was 31.6% for the nine months ended September 30, 1995, as compared with 28.8% in the same period in 1994. Tax exempt interest as a percentage of total interest income declined in 1995, which contributed to the slightly higher tax rates. Income tax expense for the third quarter of 1995 amounted to $532,000 as compared to $341,000 in the third quarter of 1994. The effective tax rate for the third quarter of 1995 was 32.7% as compared to 29.1 for the same period in 1994. Liquidity Liquidity represents the ability of the Registrant and its subsidiaries to meet the present and future requirements of customers for new loans and deposit withdrawals. Liquidity management focuses on the ability to obtain funds economically and to maintain assets which may be converted into cash at minimal costs. The Registrant has provided for its liquidity needs through growth in core deposits, maturing loans and investment securities, and by maintaining adequate balances in other short-term investments. Management continually and carefully monitors its expected liquidity requirements, focusing primarily on cash flows from operating, investing and financing activities. A summary of the Registrant's cash flows from these sources during the three and nine month periods ended September 30, 1995 and 1994 follows (in thousands):
Three months ended Nine months ended September 30, September 30, 1995 1994 1995 1994 Cash flow provided by (used in): Operating activities $ (308) $ 182 $ 3,037 $ 4,699 Investing activities (10,165) (7,669) (19,738) (14,294) Financing activities 14,990 16,284 24,153 11,556 Total $ 4,517 $ 8,797 $ 7,452 $ 1,961
The Registrant's need for liquidity is influenced by several factors. The increased loan demand brought on by the economic expansion in the Registrant's market area and management's strategic objective of originating and retaining loans in Heartland's portfolio. Also affecting the Registrant's cash flow is its relationship with seasonal customers such as public entities, highway contractors and those associated with the agricultural industry. Capital Resources The Registrant and its subsidiaries have capital ratios which are higher than the fully-phased in regulatory capital requirements. The requirements call for a minimum total risk-based capital ratio of 8% and a minimum leverage ratio of 3% for the most highly rated banks that do not expect significant growth. All other institutions are required to maintain a ratio of Tier 1 capital to total assets of 4% to 5% depending on their particular circumstances and risk profiles. At September 30, 1995, the Registrant's leverage ratio was 6.00%. A tabulation of the Registrant's and its subsidiaries' risk-based capital ratios as of September 30, 1995, follows:
Tier one Total risk-based risk-based capital ratio capital ratio First Mid-Illinois Bancshares, Inc. 10.08% 11.07% First Mid-Illinois Bank & Trust, N.A. 11.87% 12.93% Heartland Savings Bank 15.62% 16.27%
Banks and bank holding companies are generally expected to operate at or above the minimum capital requirements. These ratios are well in excess of regulatory minimums and will allow the Registrant to operate without capital adequacy concerns. Operating Ratios The following table presents selected financial ratios for the nine months ended September 30, 1995 (annualized) and the years ended December 31, 1994 and 1993:
1995 1994 1993 Return on average total assets .87% .83% .85% Return on average total stockholders' equity 12.23% 11.35% 11.80% Dividend payout ratio 17.86% 20.89% 21.40% Average total equity to average assets ratio 7.10% 7.38% 7.17%
Recent Regulatory Developments On August 8, 1995, the FDIC amended its regulations to change the range of deposit insurance assessments charged to members of the Bank Insurance Fund (the "BIF"), such as the Bank, from the then-prevailing range of .23% to .31% of deposits, to a range of .04% to .31% of deposits. The change in FDIC assessments has significantly decreased the amount of deposit insurance assessments that well-capitalized and well-managed BIF insured institutions, such as the Bank, pay to the FDIC. Additionally, because the change in BIF assessments was applied retroactively to June 1, 1995, BIF-member institutions, including the Bank, became entitled to a refund of the difference between the amount of assessments previously paid at the higher assessment rates for the period from June 30, 1995 through September 30, 1995, and the amount that would have been paid for that period at the new rates. During the third quarter of 1995, the Bank received a refund of $170,000 on account of such assessment overpayments. The FDIC did not, however, change the assessment rates charged to members of the Savings Association Insurance Fund (the "SAIF"), such as Heartland, and SAIF insured institutions continue to pay assessments ranging from .23% to .31% of deposits. As a result of the change in the assessment rates charged to BIF-member institutions, well- capitalized and well-managed SAIF members, such as Heartland, pay significantly higher deposit insurance assessments than well- capitalized and well-managed BIF members, such as the Bank. The FDIC was able to change the range for BIF-member deposit insurance assessments to their current levels because the ratio of the insurance reserves of the BIF to total BIF insured deposits equals or exceeds the statutorily designated reserve ratio of 1.25%. Because the SAIF does not meet this designated reserve ratio, the FDIC is prohibited by federal law from reducing the deposit insurance assessments charged to SAIF-member institutions to the same levels currently charged BIF-member institutions. Legislative proposals pending before the Congress would recapitalize the SAIF to the designated reserve ratio by imposing a special assessment against SAIF insured institutions, payable January 1, 1996, sufficient in the aggregate to increase the ratio of the insurance reserves of the SAIF to total SAIF insured deposits to 1.25%. It is anticipated that this special assessment, if enacted as proposed, would equal approximately .85% of the deposits of each SAIF insured institution. At such time as the SAIF meets the designated reserve ration of 1.25%, the assessment rates charged SAIF-member institutions can be reduced to levels consistent with those charged to BIF-member institutions. Legislation has also been introduced in the Congress that would, among other things, require federal thrift institutions to convert to state or national banks and merge the BIF and the SAIF into a single deposit insurance fund administered by the FDIC. At this time, it is not possible to predict whether, or in what form, any such legislation will be adopted or the impact such legislation would have on the Company or its subsidiaries. PART II - OTHER INFORMATION Item 1. Legal Proceedings. There are no material pending legal proceedings to which the Registrant or any of its subsidiaries is a party other than ordinary routine litigation incidental to their respective businesses. Item 2. Changes in Securities. Not applicable. Item 3. Defaults upon Senior Securities. Not applicable. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. Not applicable. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 27. Financial Data Schedule (b) Form 8-K None filed during the three month period ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST MID-ILLINOIS BANCSHARES, INC. (Registrant) Date: November 10, 1995 /s/ Daniel E. Marvin, Jr. ____________________ _____________________________________ Daniel E. Marvin, Jr. President and Chief Executive Officer Date: November 10, 1995 /s/ William S. Rowland ____________________ ____________________________________ William S. Rowland Chief Financial Officer EX-27 2 EXHIBIT 27
9 9-MOS
DEC-31-1995 SEP-30-1995 14,120,000 795,000 10,250,000 0 64,259,000 61,246,000 61,831,000 308,562,000 2,788,000 480,208,000 398,870,000 35,120,000 3,818,000 7,450,000 3,549,000 0 3,100,000 28,325,000 480,208,000 18,593,000 5,902,000 290,000 24,785,000 10,973,000 12,303,000 12,482,000 138,000 0 10,894,000 4,396,000 4,396,000 0 0 3,006,000 3.15 2.97 3.98 380,000 232,000 634,000 0 2,608,000 56,000 98,000 2,788,000 2,788,000 0 810,000
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