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First Mid-Illinois Bancshares, Inc. Announces Third Quarter 2017 Results

MATTOON, Ill., Oct. 26, 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 September 30, 2017.

Highlights

  • Delivered Year-Over-Year Growth in Net Income and Earnings Per Share of 43.1% and 19.6%, respectively  
  • Total Loans increased $41.9 million, or 2.3% in the Quarter
  • Board of Directors Increases Semi-Annual Dividend by $0.02, or 6.3%

Third Quarter Financial Summary

  • Net income of $7.6 million, or $0.61 diluted earnings per share
  • Net interest income of $22.9 million
  • Non-interest income of $7.7 million
  • Return on average assets of 1.08%

“We are pleased with our third quarter results and the ongoing success of our strategic initiatives,” said Joe Dively, Chairman and Chief Executive Officer.  “Our third quarter results reflect solid growth in earnings and a strong quarter of loan growth, continuing the positive momentum we have built throughout the year and positioning us well for the future.  We continued to improve our overall capital position and the Board of Directors increased the semi-annual dividend.  The results in the quarter and our ongoing success reflect our commitment to customers, shareholders and the communities we serve.”

Net Interest Income

Net interest income for the third quarter of 2017 decreased by $1.1 million, or 4.5% compared to the second quarter of 2017.  The decrease was primarily driven by $1.2 million in accelerated accretion income recognized in the second quarter versus $0.1 million in the current quarter.  Excluding the accelerated accretion, net interest income was consistent with the prior quarter on growth in loan income offset by a decline in investment income.  The balance in the investment portfolio was lower as securities were sold to fund loan growth.

In comparison to the third quarter of 2016, net interest income increased by $5.3 million, or 29.8%.  The increase was primarily attributable to the growth in earning assets, increased interest rates and the First Clover Leaf acquisition, which closed on September 8, 2016.   

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.68% for the third quarter compared to 3.84% in the prior quarter and 3.40% in the third quarter last year.  The second quarter included $1.2 million in accelerated accretion income.  The year-over-year increase in the ratio was due to higher yields on loans and investments, which outpaced the increase in our cost of funds.  In addition, accretion income associated with the First Clover Leaf acquisition helped drive the margin higher.  On a year-to-date basis, the net interest margin was 3.68% compared to 3.38% for the same period last year.

Loan Portfolio

Total loans increased by $41.9 million in the quarter and ended at $1.87 billion compared to $1.83 billion at the end of the prior quarter.  The Company continued to maintain a well-diversified loan portfolio.  The increase was mostly in the categories of commercial and industrial and commercial real estate.  Loans increased by $60.8 million compared to the third quarter of 2016 driven by organic growth.    

Asset Quality

At September 30, 2017, nonperforming loans were 1.06% of total loans compared to 0.94% at June 30, 2017.  The Company’s allowance for loan losses was 1.00% of total loans at the end of the third quarter, which was the same as the prior quarter.   The allowance for loan losses to non-performing loans was 93.9% at September 30, 2017 versus 106.3% at June 30, 2017.  Non-performing loans were $19.8 million, which was an increase of $2.7 million versus the prior quarter.      

Net charge-offs improved to $1.1 million during the third quarter compared to $1.5 million for the second quarter 2017.  The Company recorded a provision for loan losses of $1.5 million during the third quarter compared to $1.8 million during the second quarter of 2017.  The decrease was primarily related to lower net charge-offs, partially offset by loan growth. The provision increased by $0.4 million from $1.1 million when compared to the third quarter of last year.         

Deposits

Total deposits ended the quarter at $2.22 billion, which represented a decrease of approximately $72.0 million from the prior quarter and a decrease of $47.8 million from the same quarter last year.  The decrease in the current quarter was primarily due to cash flow requirements for a few of our largest depositors.  Consistent with general trends in the industry, the Company has experienced some upward pressure on cost of deposits and has responded with targeted promotions, while maintaining a low overall cost of funds.    

Noninterest Income

Noninterest income for the third quarter of 2017 was $7.7 million compared to $8.0 million in the second quarter.  Increases in the third quarter were primarily in trust revenues and service charges, which were more than offset by seasonal declines in insurance and ATM card revenue.  In addition, the second quarter included a $0.9 million tax refund that was partially offset by a bank owned life insurance claim of $0.5 million in the third quarter.  Noninterest income increased $0.8 million when compared to the third quarter of last year.     

Noninterest Expenses    

Noninterest expense for the third quarter totaled $17.9 million, which was consistent with the prior quarter.  During the quarter, the Company recorded a write-down on other real estate owned of $0.3 million on a vacant lot that was an asset of First Clover Leaf’s prior to the acquisition.  In addition, the Company recorded a non-recurring $0.4 million loss on a negotiated settlement for a former First Clover Leaf credit.    

Noninterest expense increased by $2.6 million when compared to the third quarter of 2016 primarily due to the First Clover Leaf acquisition.  The Company’s efficiency ratio, on a tax equivalent basis, for the third quarter 2017 was 54.5% compared to 60.2% for the same period last year.

Regulatory Capital Levels and Dividend

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

Total capital to risk-weighted assets   13.26%
Tier 1 capital to risk-weighted assets   12.41%
Common equity tier 1 capital to risk-weighted assets   11.31%
Leverage ratio     9.84%

On October 24, 2017, the Board of Directors declared the Company’s next semi-annual dividend of $0.34, which represents a 6.3% increase over the prior dividend.  The dividend is payable on December 8th for shareholders of record on December 1st.

Capital Raise

Under the previously announced ‘at-the-market’ equity offering, during the quarter ended September 30, 2017, the Company sold 95,310 common shares at a weighted average price of approximately $35.06, representing gross proceeds of $3.34 million and net proceeds of $3.28 million.       

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 $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.    

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


- Tables Follow -  
                 
FIRST MID-ILLINOIS BANCSHARES, INC.  
Condensed Consolidated Balance Sheets  
(In thousands)  
                 
      As of  
      September 30,   December 31,   September 30,  
        2017       2016       2016    
      (unaudited)   (audited)   (unaudited)  
                 
Assets                
Cash and cash equivalents   $   69,643     $   175,902     $   123,037    
Investment securities       692,195         708,722         684,571    
Loans (including loans held for sale)     1,867,562         1,825,992         1,806,745    
Less allowance for loan losses       (18,589 )       (16,753 )       (16,161 )  
Net loans         1,848,973         1,809,239         1,790,584    
Premises and equipment, net       38,638         40,292         40,695    
Goodwill and intangibles, net       71,331         70,623         71,209    
Bank owned life insurance       41,601         41,318         41,031    
Other assets         32,075         38,439         32,821    
  Total assets     $   2,794,456     $   2,884,535     $   2,783,948    
                 
Liabilities and Stockholders' Equity            
Deposits:                
Non-interest bearing   $   430,036     $   471,206     $   431,480    
Interest bearing         1,787,441         1,858,681         1,833,779    
Total deposits         2,217,477         2,329,887         2,265,259    
Repurchase agreement with customers     116,360         185,763         127,432    
Other borrowings       118,302         58,157         72,109    
Junior subordinated debentures       23,980         23,917         23,892    
Other liabilities         6,906         6,138         7,991    
  Total liabilities         2,483,025         2,603,862         2,496,683    
                 
  Total stockholders' equity       311,431         280,673         287,265    
Total liabilities and stockholders' equity $   2,794,456     $   2,884,535     $   2,783,948    
                 
                 


FIRST MID-ILLINOIS BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
                         
          Three Months Ended   Nine Months Ended
          September 30   September 30
              2017     2016     2017     2016
Interest income:                        
Interest and fees on loans         $   20,385   $   15,294   $   61,337   $   42,496
Interest on investment securities           4,179     3,229     12,585     9,622
Interest on federal funds sold & other deposits         50     100     320     367
  Total interest income               24,614       18,623       74,242       52,485
Interest expense:                        
Interest on deposits             1,028     623     2,840     1,777
Interest on securities sold under agreements to repurchase         51     23     137     62
Interest on other borrowings           426     192     987     510
Interest on subordinated debt           236     162     680     456
  Total interest expense               1,741       1,000       4,644       2,805
Net interest income               22,873       17,623       69,598       49,680
Provision for loan losses           1,489     1,081     5,051     1,927
Net interest income after provision for loan             21,384       16,542       64,547       47,753
Non-interest income:                        
Trust revenues             925     774     2,696     2,549
Brokerage commissions             536     526     1,550     1,440
Insurance commissions             670     738     3,148     2,806
Service charges             1,758     1,824     5,160     4,977
Securities gains, net             254     466     589     1,130
Mortgage banking revenues           347     382     875     715
ATM/debit card revenue             1,595     1,457     4,828     4,418
Other             1,576     731     4,280     1,966
Total non-interest income             7,661       6,898       23,126       20,001
Non-interest expense:                        
Salaries and employee benefits           9,648     7,844     29,685     23,293
Net occupancy and equipment expense           3,129     2,864     9,378     8,389
Net other real estate owned (income) expense         385     32     530     23
FDIC insurance             210     294     679     841
Amortization of intangible assets           545     455     1,651     1,312
Stationary and supplies             168     221     539     612
Legal and professional expense           871     713     2,596     2,414
Marketing and donations           338     285     909     1,486
Other             2,618     2,612     9,102     6,264
Total non-interest expense             17,912       15,320       55,069       44,634
Income before income taxes             11,133       8,120       32,604       23,120
Income taxes             3,538     2,812     10,545     8,077
Net income           $   7,595   $   5,308   $   22,059   $   15,043
                         
Per Share Information                        
Basic earnings per common share         $   0.61   $   0.51   $   1.76   $   1.52
Diluted earnings per common share             0.61       0.51       1.76       1.50
                         
Weighted average shares outstanding           12,528,674     10,497,072     12,498,913     9,372,547
Diluted weighted average shares outstanding         12,535,809     10,504,046     12,506,576     10,057,398
                         


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
      September 30,   June 30   March 31   December 31,   September 30,
        2017       2017       2017       2016       2016  
                       
Loan Portfolio                      
Construction and land development   $   77,179     $   68,681     $   58,304     $   49,104     $   49,019  
Farm loans         126,096         123,420         123,061         126,108         128,829  
1-4 Family residential properties       301,897         310,522         319,713         326,415         341,900  
Multifamily residential properties       72,323         72,492         74,714         83,200         83,697  
Commercial real estate       647,184         632,492         624,372         630,135         636,686  
  Loans secured by real estate       1,224,679         1,207,607         1,200,164         1,214,962         1,240,131  
Agricultural loans       81,383         79,759         76,757         86,685         81,414  
Commercial and industrial loans       443,473         421,280         400,810         409,033         371,800  
Consumer loans         30,074         32,814         34,962         38,028         40,881  
All other loans         87,953         84,174         82,969         77,284         72,519  
Total loans         1,867,562         1,825,634         1,795,662         1,825,992         1,806,745  
                       
Deposit Portfolio                    
Non-interest bearing demand deposits   $   430,036     $   425,344     $   456,037     $   471,206     $   431,480  
Interest bearing demand deposits       678,302         714,918         718,699         716,204         641,327  
Savings deposits         364,277         368,220         372,815         356,740         352,489  
Money Market         423,486         450,685         440,551         432,656         458,019  
Time deposits         321,376         330,239         341,427         353,081         381,944  
Total deposits         2,217,477         2,289,406         2,329,529         2,329,887         2,265,259  
                       
Asset Quality                      
Non-performing loans   $   19,788     $   17,125     $   27,652     $   18,241     $   15,787  
Non-performing assets       22,051         21,559         30,085         20,226         17,888  
Net charge-offs         1,109         1,477         629         307         85  
Allowance for loan losses to non-performing loans   93.94 %     106.33 %     64.54 %     91.84 %     102.37 %
Allowance for loan losses to total loans outstanding   1.00 %     1.00 %     0.99 %     0.92 %     0.89 %
Nonperforming loans to total loans     1.06 %     0.94 %     1.54 %     1.00 %     0.87 %
Nonperforming assets to total assets     0.79 %     0.76 %     1.06 %     0.70 %     0.64 %
                       
Common Share Data                    
Common shares outstanding       12,618,026         12,505,873         12,483,787         12,470,999         12,457,462  
Book value per common share   $   24.68     $   24.06     $   23.29     $   22.51     $   23.06  
Tangible book value per common share   $   19.03     $   18.50     $   17.68     $   16.84     $   17.34  
Market price of stock   $   38.40     $   34.10     $   33.84     $   34.00     $   27.26  
                       
Key Performance Ratios and Metrics                    
End of period earning assets   $   2,566,809     $   2,604,505     $   2,624,399     $   2,652,628     $   2,557,109  
Average earning assets       2,605,652         2,615,792         2,633,227         2,590,488         2,134,471  
Average rate on average earning assets (tax equivalent)   3.96 %     4.08 %     3.85 %     3.66 %     3.58 %
Average rate on cost of funds     0.28 %     0.24 %     0.22 %     0.23 %     0.18 %
Net interest margin (tax equivalent)     3.68 %     3.84 %     3.63 %     3.43 %     3.40 %
Return on average assets     1.08 %     1.16 %     0.88 %     0.97 %     0.92 %
Return on average common equity     9.95 %     11.11 %     8.77 %     9.22 %     9.02 %
Efficiency ratio (tax equivalent) 1     54.54 %     53.17 %     59.90 %     55.67 %     60.17 %
Full-time equivalent employees       584         590         590         598         596  
                       
                       
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
          September 30,   June 30   March 31   December 31,   September 30,
            2017       2017       2017       2016       2016  
                           
Net interest income as reported     $   22,873     $   23,953     $   22,772     $   21,524     $   17,623  
Net interest income, (tax equivalent)       23,729         24,844         23,620         22,324         18,221  
Average earning assets         2,605,652         2,615,792         2,633,227         2,590,488         2,134,471  
Net interest margin (tax equivalent) 1     3.68 %     3.84 %     3.63 %     3.43 %     3.40 %
                           
                           
Common stockholder's equity     $   311,431     $   300,891     $   290,738     $   280,673     $   287,265  
Goodwill and intangibles, net         71,331         69,517         70,076         70,623         71,209  
Common shares outstanding         12,618         12,506         12,484         12,471         12,457  
Tangible Book Value per common share   $   19.03     $   18.50     $   17.68     $   16.84     $   17.34  
                           
                           
Common equity tier 1 capital     $   247,104     $   237,764     $   238,102     $   229,341     $   222,884  
Risk weighted assets           2,184,812         2,185,041         2,171,056         2,111,787         2,053,118  
Common equity tier 1 capital to risk weighted assets  2   11.31 %     10.88 %     10.97 %     10.86 %     10.86 %
                           
                           
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.        


 

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