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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