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First Mid-Illinois Bancshares, Inc. Announces Second Quarter 2017 Results and Organizational Changes

MATTOON, Ill., July 27, 2017 (GLOBE NEWSWIRE) -- First Mid-Illinois Bancshares, Inc. (NASDAQ:FMBH) (the “Company”) today announced its financial results for the quarter and year-to-date period ended June 30, 2017 and organizational changes within the leadership team.

/EIN News/ -- Highlights

  • Strong Year-Over-Year Growth in Net Income and Earnings per Share
  • Book Value per Share Increased by 9.3% Compared to Second Quarter Last Year
  • Improved Asset Quality Metrics Building Upon the Company’s Strong Credit Culture
  • Awarded 2016 Central/Southern Illinois Community Bank of the Year by U.S. Small Business Administration

Second Quarter Financial Summary

  • Net income of $8.2 million, or $0.66 diluted earnings per share
  • Net interest income of $24.0 million
  • Non-interest income of $8.0 million
  • Return on average assets of 1.16%

“We delivered another strong quarter of both financial and operational results,” said Joe Dively, Chairman and Chief Executive Officer.  “We continue to execute on our strategic plan to fulfill the financial needs of our communities and customers, while driving positive shareholder value.”

“The second quarter marked the first full quarter of operations following the merger and integration of our subsidiary banks.  During the period, special focus was given to improving asset quality metrics and realizing acquisition related cost savings.  These efforts by our team led to an improved efficiency ratio and net interest margin growth, which helped drive a very strong quarter of net income.”

“Finally, I am extremely proud that First Mid was awarded the 2016 Central/Southern Illinois Community Bank of the Year Award by the U.S. Small Business Administration.  This is the fourth consecutive year we have received the award and it reflects our commitment to the small businesses in the communities we serve,” Dively concluded.

Net Interest Income

Net interest income for the second quarter of 2017 increased by $1.2 million, or 5.2% compared to the first quarter of 2017.  The increase was primarily driven by higher yields in both the loan and the investment portfolio and higher accretion income from First Clover Leaf.  The second quarter 2017 included approximately $1.2 million in accelerated accretion income, which was primarily tied to one credit.  The first quarter of 2017 included accelerated accretion income of $0.9 million.

In comparison to the second quarter of 2016, net interest income increased by $8.0 million, or 50.0%.  The increase was primarily attributable to the First Clover Leaf acquisition and associated accretion income as well as loan growth and higher yields.   

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.84% for the second quarter compared to 3.37% in the same period last year.  The ratio was higher due to growth in loans and investments, as well as the First Clover Leaf acquisition, including the associated accretion income. 

Loan Portfolio

The Company continued to maintain a well-diversified loan portfolio.  Total loans were $1.83 billion at June 30, 2017 compared to $1.80 billion at the end of the prior quarter.  The increase was mostly in the categories of commercial and industrial and commercial real estate.  Loans increased from $1.32 billion in the second quarter of 2016 driven by both organic growth and the First Clover Leaf acquisition.    

Asset Quality

At June 30, 2017, nonperforming loans were 0.94% of total loans compared to 1.54% at March 31, 2017.  The Company’s allowance for loan losses was 1.00% of total loans at the end of the second quarter compared to 0.99% at March 31, 2017.   The allowance for loan losses to non-performing loans was 106.3% at June 30, 2017 versus 64.5% at March 31, 2017.  Non-performing loans were reduced by $10.5 million primarily due to the foreclosure and sale of certain assets tied to the $9.2 million credit mentioned in last quarter’s report.  The actions taken on this credit contributed to the higher provisioning expense and charge-offs, which was offset by the accelerated accretion income.      

Net charge-offs totaled $1.5 million during the second quarter compared to $0.6 million for the first quarter 2017.  The increase in net charge-offs was primarily from two credits, including the credit mentioned above where a majority of the assets were sold.

The Company recorded a provision for loan losses of $1.8 million during the second quarter compared to $1.7 million during the first quarter of 2017 and $0.7 million in the second quarter of last year.  The increase in the year-over-year provision expense is primarily related to the acquisition of First Clover Leaf and the larger overall loan portfolio as well as a higher level of non-performing loans and net charge-offs.       

Deposits

Total deposits ended the quarter at $2.29 billion, which represented a decrease of approximately $40.1 million from the prior quarter and an increase of $585.2 million from the same quarter last year.  The decrease in the current quarter was primarily seasonal and across multiple customers.  The increase from the prior year was mostly attributable to the acquisition of First Clover Leaf and the benefit of the larger combined organization where certain customers had previously maintained deposits at other financial institutions for concentration risk mitigation.  

Noninterest Income

Noninterest income for the second quarter of 2017 was $8.0 million compared to $7.5 million in the first quarter.  Increases in the second quarter were primarily in electronic banking, securities gains and a $0.9 million tax refund in other income.  As expected, insurance commissions were lower compared to the prior quarter due to the nature and seasonality of some of the business lines.  Compared to the second quarter of 2016, noninterest income increased by $1.5 million.  The year-over-year increase was primarily driven by the First Clover Leaf acquisition, the tax refund and growth in both wealth management and insurance.    

Noninterest Expenses    

Noninterest expense for the second quarter totaled $18.0 million, which was a decrease of $1.2 million versus the first quarter.  The decrease was primarily attributable to cost savings achieved from the bank merger and system integration in March and the higher acquisition related costs that were recognized in the first quarter.  The second quarter included $0.2 million in acquisition related costs. 

Noninterest expense increased by $3.8 million when compared to the second quarter of 2016 primarily due to the First Clover Leaf acquisition and related costs.  The Company’s efficiency ratio, on a tax equivalent basis, for the second quarter 2017 was 53.2% compared to 60.9% for the same period last year.

 Regulatory Capital Levels and Dividend

The Company’s capital levels remained strong at “well capitalized” levels and ended the period as follows: 

Total capital to risk-weighted assets   12.81 %
Tier 1 capital to risk-weighted assets   11.98 %
Common equity tier 1 capital to risk-weighted assets   10.88 %
Leverage ratio   9.44 %

During the second quarter, the Company paid its semi-annual dividend of $0.32, which represented a 6.7% increase over its dividend in the second quarter of last year.

Organizational Changes

First Mid announced today that Michael L. Taylor has been named Chief Operating Officer.  Mr. Taylor joined the Company in 2000 and had been serving as the Chief Financial Officer since that time.  Taylor’s expertise in the financial, operational, risk management, and regulatory compliance of the Company have been and will continue to be critical to the organization’s success.  Taylor received his Bachelor’s Degree in Finance from the University of Illinois.  He also graduated from the Graduate School of Banking in Wisconsin.  He served two terms on the Accounting Board of the American Bankers Association in Washington D.C. and also served on the Eastern Illinois University Accounting Advisory Board.  Taylor has volunteered and been involved in a number of local community events and organizations and currently serves on the Coles Together Board and First Baptist Church Diaconate.

First Mid also announced today that Matthew K. Smith has been named Chief Financial Officer.  Mr. Smith joined the Company in 2016 and has been serving as Executive Vice President, Director of Finance where he has played a role in expanding First Mid’s participation and activity in the capital markets and providing strategic guidance within the organization.  Before joining First Mid, he was the Corporate Treasurer and Vice President of Finance and Investor Relations for Consolidated Communications Holdings, Inc., a publicly traded company on NASDAQ.  Smith earned his Bachelor’s Degree in Finance and an MBA from Eastern Illinois University.  Smith also received a Master’s Degree in Accounting and Financial Management from DeVry University and is a Certified Public Accountant.  Along with volunteering in youth sports and Special Olympics, he has been involved in a number of local community boards and currently serves on the Eastern Illinois University School of Business Advisory Board.       

“Over the last couple of years the Company has grown its asset size by over 70% and significantly increased its activity and relevance in the public capital markets.  This, along with our strategic growth initiatives, is a key driver behind these organizational changes.  I am excited about the well-deserved promotions and expanded roles for Mike and Matt.  They position us well for both merger and acquisition activity and operational execution,” said Dively.

About First Mid-Illinois Bancshares, Inc.: First Mid-Illinois Bancshares, Inc. is the parent company of First Mid-Illinois Bank & Trust, N.A. (“First Mid Bank”), Mid-Illinois Data Services, Inc., and First Mid Insurance Group.  Our mission is to fulfill the financial needs of our communities with exceptional personal service, professionalism and integrity, and deliver meaningful value and results for customers and shareholders. 

First Mid Bank was first chartered in 1865 and has since grown into a more than $2.8 billion community-focused organization that provides financial services through a network of 52 banking centers in 37 Illinois and Missouri communities.  More information about the Company is available on our website at www.firstmid.com.  Our stock is traded in The NASDAQ Stock Market LLC under the ticker symbol “FMBH”.

Forward Looking Statements: This news release contains forward-looking statements about First Mid-Illinois Bancshares, Inc. for which the Company claims protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions.  Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including those described in Item 1A – “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K and the Company’s other filings with the SEC.  Furthermore, forward-looking statements speak only as of the date they are made.  Except as required under the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligations to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Non-GAAP Measures:  In addition to reports presented in accordance with generally accepted accounting principles (“GAAP”), this release contains certain non-GAAP financial measures.  The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance.  Readers of this release, however, are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported.  These non-GAAP financial measures are detailed as supplemental tables and include “Net Interest Margin, tax equivalent,” Tangible Book Value per Common Share,” and “Common Equity Tier 1 Capital to Risk Weighted Assets”.  While the Company believes these non-GAAP financial measures provide investors with a broader understanding of the capital adequacy, funding profile and financial trends of the Company, this information should be considered as supplemental in nature and not as a substitute to the related financial information prepared in accordance with GAAP.  These non-GAAP financial measures may also differ from the similar measures presented by other companies.

– Tables Follow –

               
FIRST MID-ILLINOIS BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
               
      As of
      June 30,   December 31,   June 30,
        2017       2016       2016  
      (unaudited)   (audited)   (unaudited)
               
Assets              
Cash and cash equivalents   $ 73,889     $ 175,902     $ 53,072  
Investment securities     758,106       708,722       643,045  
Loans (including loans held for sale)   1,825,634       1,825,992       1,315,187  
Less allowance for loan losses     (18,209 )     (16,753 )     (15,164 )
Net loans       1,807,425       1,809,239       1,300,023  
Premises and equipment, net     39,076       40,292       29,569  
Goodwill and intangibles, net     69,517       70,623       49,147  
Bank owned life insurance     41,881       41,318       25,183  
Other assets       35,410       38,439       19,744  
Total assets     $ 2,825,304     $ 2,884,535     $ 2,119,783  
               
Liabilities and Stockholders' Equity          
Deposits:              
Non-interest bearing   $ 425,344     $ 471,206     $ 340,576  
Interest bearing       1,864,062       1,858,681       1,363,623  
Total deposits       2,289,406       2,329,887       1,704,199  
Repurchase agreement with customers   142,411       185,763       131,099  
Other borrowings     57,254       58,157       40,000  
Junior subordinated debentures     23,959       23,917       20,620  
Other liabilities       11,383       6,138       7,245  
Total liabilities       2,524,413       2,603,862       1,903,163  
               
Total stockholders' equity     300,891       280,673       216,620  
Total liabilities and stockholders' equity $ 2,825,304     $ 2,884,535     $ 2,119,783  
               


FIRST MID-ILLINOIS BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
                         
          Three Months Ended   Six Months Ended
          June 30   June 30
              2017     2016     2017     2016  
Interest income:                        
Interest and fees on loans         $ 21,025   $ 13,610   $ 40,952   $ 27,202  
Interest on investment securities           4,366     3,172     8,406     6,393  
Interest on federal funds sold & other deposits         55     101     270     267  
Total interest income             25,446     16,883     49,628     33,862  
Interest expense:                        
Interest on deposits             933     575     1,812     1,154  
Interest on securities sold under agreements to repurchase         46     21     86     39  
Interest on other borrowings           287     168     561     318  
Interest on subordinated debt           227     149     444     294  
Total interest expense             1,493     913     2,903     1,805  
Net interest income             23,953     15,970     46,725     32,057  
Provision for loan losses           1,840     733     3,562     846  
Net interest income after provision for loan           22,113     15,237     43,163     31,211  
Non-interest income:                        
Trust revenues             841     794     1,771     1,775  
Brokerage commissions             509     466     1,014     914  
Insurance commissions             853     735     2,478     2,068  
Service charges             1,690     1,644     3,402     3,153  
Securities gains, net             335     404     335     664  
Mortgage banking revenues           335     238     528     333  
ATM/debit card revenue             1,665     1,472     3,233     2,961  
Other             1,741     706     2,704     1,235  
Total non-interest income           7,969     6,459     15,465     13,103  
Non-interest expense:                        
Salaries and employee benefits           10,102     7,602     20,037     15,449  
Net occupancy and equipment expense           3,116     2,646     6,249     5,525  
Net other real estate owned (income) expense         127     10     145     (9 )
FDIC insurance             290     281     469     547  
Amortization of intangible assets           559     402     1,106     857  
Stationary and supplies             186     190     371     391  
Legal and professional expense           894     917     1,725     1,701  
Marketing and donations           277     239     571     1,201  
Other             2,404     1,856     6,484     3,652  
Total non-interest expense           17,955     14,143     37,157     29,314  
Income before income taxes           12,127     7,553     21,471     15,000  
Income taxes             3,927     2,624     7,007     5,265  
Net income           $ 8,200   $ 4,929   $ 14,464   $ 9,735  
                         
Per Share Information                        
Basic earnings per common share         $ 0.66   $ 0.51   $ 1.16   $ 1.01  
Diluted earnings per common share           0.66     0.50     1.16     0.99  
                         
Weighted average shares outstanding           12,491,757     9,152,709     12,483,788     8,804,107  
Diluted weighted average shares outstanding         12,499,931     9,844,982     12,491,962     9,831,591  
                         


FIRST MID-ILLINOIS BANCSHARES, INC. 
Consolidated Financial Highlights and Ratios
(Dollars in thousands, except per share data)
(Unaudited)
 
      As of and for the Quarter Ended
      June 30   March 31   December 31,   September 30,   June 30,
        2017       2017       2016       2016       2016  
                       
Loan Portfolio                      
Construction and land development   $ 68,681     $ 58,304     $ 49,104     $ 49,019     $ 33,812  
Farm loans       123,420       123,061       126,108       128,829       122,311  
1-4 Family residential properties     310,522       319,713       326,415       341,900       220,487  
Multifamily residential properties     72,492       74,714       83,200       83,697       47,215  
Commercial real estate     632,492       624,372       630,135       636,686       445,832  
Loans secured by real estate     1,207,607       1,200,164       1,214,962       1,240,131       869,657  
Agricultural loans     79,759       76,757       86,685       81,414       72,776  
Commercial and industrial loans     421,280       400,810       409,033       371,800       301,087  
Consumer loans       32,814       34,962       38,028       40,881       38,049  
All other loans       84,174       82,969       77,284       72,519       33,618  
Total loans       1,825,634       1,795,662       1,825,992       1,806,745       1,315,187  
                       
Deposit Portfolio                    
Non-interest bearing demand deposits   $ 425,344     $ 456,037     $ 471,206     $ 431,480     $ 340,576  
Interest bearing demand deposits     714,918       718,699       716,204       641,327       464,732  
Savings deposits       368,220       372,815       356,740       352,489       335,230  
Money Market       450,685       440,551       432,656       458,019       313,854  
Time deposits       330,239       341,427       353,081       381,944       249,807  
Total deposits       2,289,406       2,329,529       2,329,887       2,265,259       1,704,199  
                       
Asset Quality                      
Non-performing loans   $ 17,125     $ 27,652     $ 18,241     $ 15,787     $ 4,630  
Non-performing assets     21,558       30,085       20,226       17,888       5,112  
Net charge-offs       1,477       629       307       85       306  
Allowance for loan losses to non-performing loans   106.33%       64.54%       91.84%       102.37%       327.52%  
Allowance for loan losses to total loans outstanding   1.00%       0.99%       0.92%       0.89%       1.15%  
Nonperforming loans to total loans     0.94%       1.54%       1.00%       0.87%       0.35%  
Nonperforming assets to total assets     0.76%       1.06%       0.70%       0.64%       0.24%  
                       
Common Share Data                    
Common shares outstanding     12,505,873       12,483,787       12,470,999       12,457,462       9,843,652  
Book value per common share   $ 24.06     $ 23.29     $ 22.51     $ 23.06     $ 22.01  
Tangible book value per common share   $ 18.50     $ 17.68     $ 16.84     $ 17.34     $ 17.01  
Market price of stock   $ 34.10     $ 33.84     $ 34.00     $ 27.26     $ 25.00  
                       
Key Performance Ratios and Metrics                    
End of period earning assets   $ 2,604,505     $ 2,624,399     $ 2,652,628     $ 2,557,109     $ 1,964,167  
Average earning assets     2,615,792       2,633,227       2,590,488       2,134,471       1,967,281  
Average rate on average earning assets (tax equivalent)   4.08%       3.85%       3.66%       3.58%       3.56%  
Average rate on cost of funds     0.24%       0.22%       0.23%       0.18%       0.19%  
Net interest margin (tax equivalent)     3.84%       3.63%       3.43%       3.40%       3.37%  
Return on average assets     1.16%       0.88%       0.97%       0.92%       0.93%  
Return on average common equity     11.11%       8.77%       9.22%       9.02%       9.44%  
Efficiency ratio (tax equivalent) 1     53.17%       59.90%       55.67%       60.17%       60.90%  
Full-time equivalent employees     590       590       598       596       520  
                       
1 Represents non-interest expense divided by the sum of fully tax equivalent net interest income and non-interest income.  Non-interest expense adjustments exclude foreclosed property expense
and amortization of intangibles.  Non-interest income includes tax equivalent adjustments and non-interest income excludes gains and losses on the sale of investment securities.


FIRST MID-ILLINOIS BANCSHARES, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, unaudited)
                           
          As of and for the Quarter Ended
          June 30   March 31   December 31,   September 30,   June 30,
            2017       2017       2016       2016       2016  
                           
Net interest income as reported     $ 23,953     $ 22,772     $ 21,524     $ 17,623     $ 15,970  
Net interest income, (tax equivalent)     24,844       23,620       22,324       18,221       16,493  
Average earning assets       2,615,792       2,633,227       2,590,488       2,134,471       1,967,281  
Net interest margin (tax equivalent) 1     3.84%       3.63%       3.43%       3.40%       3.37%  
                           
                           
Common stockholder's equity     $ 300,891     $ 290,738     $ 280,673     $ 287,265     $ 216,620  
Goodwill and intangibles, net       69,517       70,076       70,623       71,209       49,147  
Common shares outstanding       12,506       12,484       12,471       12,457       9,844  
Tangible Book Value per common share   $ 18.50     $ 17.68     $ 16.84     $ 17.34     $ 17.01  
                           
                           
Common equity tier 1 capital     $ 237,764     $ 238,102     $ 229,341     $ 222,884     $ 176,377  
Risk weighted assets         2,185,041       2,171,056       2,111,787       2,053,118       1,499,731  
Common equity tier 1 capital to risk weighted assets  2   10.88%       10.97%       10.86%       10.86%       11.76%  
                           
1 Annualized and calculated on a tax equivalent basis where interest earned on tax-exempt securities and loans is adjusted to an amount comparable to interest subject
to normal income taxes assuming a federal tax rate of 35% and includes the impact of non-interest bearing funds. 
                           
2 Defined as total common equity adjusted for gains/(losses) less goodwill and intangibles divided by risk weighted assets as of period end. 

 

 

Investor Contact:  Aaron Holt
                    VP, Shareholder Relations
                    217-258-0463 
                    aholt@firstmid.com

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