UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
JUNE 30, 2006
FIRST MID-ILLINOIS BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of Other Jurisdiction of Incorporation)
0-13368 37-1103704
(Commission File Number) (IRS Employer Identification No.)
1515 CHARLESTON AVENUE
MATTOON, IL 61938
(Address of Principal Executive Offices) (Zip Code)
(217) 234-7454
(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR 240.13e-4(c))
Item 8.01. Other Events
Incorporated by reference is the quarterly shareholder report issued by the
Registrant on August 8, 2006, attached as Exhibit 99, providing information
concerning the Registrant's financial statements as of June 30, 2006.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit 99 - Quarterly shareholder report as of and for the period
ending June 30, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has dully caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST MID-ILLINOIS BANCSHARES, INC.
Dated: August 8, 2006 /s/ William S. Rowland
William S. Rowland
President and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Quarterly shareholder report issued August 8, 2006
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
The financial performance of First Mid-Illinois Bancshares, Inc. was good during
the first six months of 2006 with diluted earnings per share increasing 5% to
$1.11 compared to $1.06 per share during the same period in 2005. Net income
increased to $4,926,000 for the first half of 2006 compared to $4,797,000 for
the first half of 2005. As a result of this performance, the Board of Directors
elected to increase the dividend to $.26 per share for the first half of 2006
from $.24 per share for the first half of 2005. The dividend was paid on June 15
to shareholders of record as of June 1.
On May 1, 2006, we completed the acquisition of Peoples State Bank of Mansfield.
This means that the 2006 consolidated financial statements include the results
of Peoples since that date. I am pleased to report that for the first two months
of operation Peoples has provided a positive contribution to earnings and the
integration is on schedule for a third quarter combination of Peoples with First
Mid-Illinois Bank & Trust, N.A.
Net interest income is our largest source of revenue and increased to
$14,905,000 for the first six months of 2006 from $14,297,000 for the same
period last year. This increase is the result of growth resulting from the
Peoples acquisition as well as organic growth. A challenging rate environment
and intense competition for loans and deposits has led to further contraction of
the net interest margin. Our net interest margin for 2006 is 3.58% and compared
to 3.73% for the first six months of 2005. Loan balances on June 30, 2006 were
$718 million as compared to $638 million on December 31, 2005 with the majority
of this growth in commercial real estate loans. Additionally, $55 million in
loan balances were added with the Peoples acquisition. Deposit balances on June
30, 2006 were $780 million compared to $649 million on December 31, 2005 with
$114 million added with Peoples.
Non-interest income amounted to $6,548,000 for the first six months of 2006
compared to $6,244,000 in 2005. Increases in long-term interest rates led to a
decline in mortgage banking revenues, but service charge income from deposit
accounts and insurance commissions increased. During the first six months of
2005, we recognized $254,000 of securities gains whereas no security gains were
recognized in the first six months of 2006.
Non-interest expense increased to $13,666,000 compared with $12,800,000 in 2005.
This increase is attributed to the Peoples acquisition, the opening of a branch
in Highland, Illinois in March 2005, and the new location for The Checkley
Agency, Inc. which opened in June 2005. In addition, we began expensing stock
options in 2006 per the new accounting regulations. This accounting change
resulted in additional compensation expense of $92,000 being recorded in the
first six months of 2006. In previous years, this amount has been shown only in
the footnotes to the financial statements.
We continue to stress the importance of credit quality. Total non-performing
assets were $4.2 million on June 30, 2006 as compared to $4.1 million on June
30, 2005 and remain below peer bank averages. Our provision for loan losses
amounted to $404,000 for the first six months of 2006 as compared to $337,000
for the first six months of 2005. Net charge-offs were $234,000 for the first
six months of 2006 compared to $271,000 for the same period last year.
As mentioned, we have completed the acquisition of Peoples and begun to expand
services in its markets. In June, we completed the installation of an ATM in
Mahomet. Also, any Peoples customer can now use the First Mid network of over 30
ATMs. We continue to work diligently to combine the operations of Peoples and
First Mid-Illinois Bank & Trust, N.A. and anticipate this to be completed during
the third quarter, 2006. At that time, services such as electronic banking and
remote deposit will be available for all of our customers.
While we are cognizant of the many challenges facing our industry, we are
excited about the opportunities that lie ahead and confident of the future.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
Sincerely,
/s/ William S. Rowland
Chairman and Chief Executive Officer
August 8, 2006
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (unaudited) Jun 30, Dec 31,
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2006 2005
Assets
Cash and due from banks $21,502 $19,131
Federal funds sold and other interest-bearing deposits 2,408 426
Investment securities:
Available-for-sale, at fair value 191,874 155,841
Held-to-maturity, at amortized cost (estimated fair
value of $1,364 and $1,442 at June 30, 2006
and December 31, 2005, respectively) 1,343 1,412
Loans 718,186 638,133
Less allowance for loan losses (6,223) (4,648)
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Net loans 711,963 633,485
Premises and equipment, net 16,607 15,168
Goodwill, net 17,366 9,034
Intangible assets, net 5,581 2,778
Other assets 13,869 13,298
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Total assets $982,513 $850,573
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Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $113,106 $95,305
Interest bearing 667,279 553,764
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Total deposits 780,385 649,069
Repurchase agreements with customers 52,578 67,380
Other borrowings 50,000 44,500
Junior subordinated debentures 20,620 10,310
Other liabilities 6,438 6,988
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Total liabilities 910,021 778,247
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Stockholders' Equity:
Common stock ($4 par value; authorized
18,000,000 shares; issued 5,674,703 shares
in 2006 and 5,633,621 shares in 2005) 22,699 22,534
Additional paid-in capital 20,745 19,439
Retained earnings 64,665 60,867
Deferred compensation 2,584 2,440
Accumulated other comprehensive income (1,603) (739)
Treasury stock at cost, 1,344,378 shares in
2006 and 1,241,359 shares in 2005 (36,598) (32,215)
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Total stockholders' equity 72,492 72,326
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Total liabilities and stockholders' equity $982,513 $850,573
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands) (unaudited)
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For the six months ended June 30, 2006 2005
Interest income:
Interest and fees on loans $21,800 $ 18,072
Interest on investment securities 3,584 3,123
Interest on federal funds sold and other 126 102
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Total interest income 25,510 21,297
Interest expense:
Interest on deposits 7,830 5,151
Interest on repurchase agreements with customers 1,011 619
Interest on subordinated debt 1,270 937
Interest on other borrowings 494 293
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Total interest expense 10,605 7,000
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Net interest income 14,905 14,297
Provision for loan losses 404 337
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Net interest income after provision for loan losses 14,501 13,960
Non-interest income:
Trust revenues 1,209 1,208
Brokerage commissions 296 212
Insurance commissions 1,076 912
Service charges 2,484 2,187
Securities gains, net (1) 254
Mortgage banking revenues 161 321
Other 1,325 1,150
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Total non-interest income 6,548 6,244
Non-interest expense:
Salaries and employee benefits 7,447 6,880
Net occupancy and equipment expense 2,334 2,080
Amortization of intangible assets 329 287
Other 3,556 3,553
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Total non-interest expense 13,666 12,800
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Income before income taxes 7,383 7,404
Income taxes 2,457 2,607
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Net income $4,926 $4,797
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Per Share Information
(unaudited)
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For the six months ended June 30, 2006 2005
Basic earnings per share $1.13 $1.08
Diluted earnings per share $1.11 $1.06
Book value per share at June 30 $16.74 $15.96
Market price of stock at June 30 $41.25 $40.50
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands) (unaudited)
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For the six months ended June 30, 2006 2005
Balance at beginning of period $72,326 $69,154
Net income 4,926 4,797
Dividends on stock (1,128) (1,056)
Issuance of stock 1,232 1,352
Purchase of treasury stock (4,239) (3,303)
Deferred compensation adjustment 239 118
Changes in accumulated other comprehensive
income (loss) (864) (543)
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Balance at end of period $72,492 $70,519
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