Attached files
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| 8-K - 2010 4TH QUARTER EARNINGS RELEASE - FIRST MID BANCSHARES, INC. | form8k_012811.htm |
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
2010 was a good year for First Mid-Illinois Bancshares, Inc. In September, we acquired 10 Central Illinois branches from First Bank, adding performing loans, liquid investments, and core deposits as we expanded into new markets. Our 2010 results as described in this letter include the results of our 10 new branches since their September acquisition. We also added several quality managers, maintained our dividend and share repurchase program, increased our reserves, reduced the level of our problem loans, responded to a more robust regulatory environment, and announced plans to increase capital to better position ourselves for the future. We also managed to increase our profitability in an extremely difficult economic environment. All-in-all, 2010 was a year in which we can all take a good deal of pride.
Net income for 2010 increased by 7% and was $8.8 million as compared to $8.2 million for 2009. This included the legal, professional, and integration costs to complete the acquisition of our new branches. Diluted earnings per share also increased to $1.07 in 2010 as compared with $1.04 per share in 2009.
Net interest income for 2010 amounted to $40.1 million as compared to $35.6 million in 2009. This was due to growth in the balance sheet with more loans, investments, and deposits and from obtaining a higher interest rate spread. The net interest margin was 3.57% for 2010 as compared to 3.46% for 2009 as funding costs declined. We ended 2010 with a higher level of liquidity with federal funds sold and interest-bearing deposits of $210 million.
Total non-interest income of $13.8 million for 2010 was higher than the $13.5 million recognized during the same period last year. Revenues from our trust, brokerage, and mortgage banking areas all increased during the year. Also, fees received on debit and ATM transactions increased as our customers continue to have more electronic transactions. We did incur $1.4 million in impairment charges on trust preferred securities we own. This was down from last year but remain elevated as other banks continue to experience credit stress. During 2009, we recognized a one-time gain of $1 million on the sale of our merchant card portfolio which affects the annual comparison.
2010 operating expenses were $36.9 million as compared to $33.2 million in 2009. This includes costs of $1.2 million related to the acquisition of our 10 new branches and the ongoing costs of operating these new facilities.
We have made progress in reducing our non-performing loan balances from $12.7 million on December 31, 2009 to $10.4 million at December 31, 2010. We have charged-down the balance of these loans, when appropriate, resulting in net charge-offs of $2.8 million in 2010 as compared to $1.7 million in 2009, and a loan loss provision of $3.7 in 2010 as compared to $3.6 million in 2009. We ended the year with a coverage ratio, or total loan loss reserve to non-accrual loans, of 111% as compared with 74% at December 31, 2009. We have also taken possession of a few properties and seen the balance of other real estate owned increase to $6.1 million from $2.9 million at December 31, 2009. We will continue to monitor these assets closely.
In December, we announced a private placement of up to $27.5 million of non-cumulative perpetual convertible preferred stock. Our goal is to complete the private placement by mid-February 2011. The purpose of this offering is to provide Tier 1 Capital for regulatory purposes, improve our already strong capital position, and put First Mid in a position to respond to opportunities that may lie ahead. The preferred stock offered in the proposed private placement will not be registered under the Securities Act of 1933, as amended, or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and applicable state securities laws.
Our operating environment in 2011 will likely remain difficult. Economic activity in the United States is anticipated to remain weak and the unemployment rate is expected to remain high. Later in 2011, we anticipate more clarity from the government with respect to the Dodd-Frank legislation of 2010 and we know this legislation will add to our already high regulatory compliance costs. Moreover, in early 2011, the State of Illinois increased income taxes for both individuals and businesses. Clearly, an environment such as this presents many challenges. That said, it is also likely to produce many opportunities for banks with strong balance sheets, a solid infrastructure and good management. That is why I remain optimistic about the future.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
Very Truly Yours,
/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
January 28, 2011
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited)
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(in thousands, except share data)
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Dec 31
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Dec 31
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2010
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2009
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Assets
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Cash and due from banks
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$ | 21,008 | $ | 20,243 | ||||
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Federal funds sold and other interest-bearing deposits
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210,485 | 70,168 | ||||||
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Certificates of deposit investments
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10,000 | 9,344 | ||||||
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Investment securities:
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Available-for-sale, at fair value
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342,816 | 238,697 | ||||||
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Held-to-maturity, at amortized cost (estimated fair value of $53 and
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$469 at December 31, 2010 and 2009, respectively)
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50 | 459 | ||||||
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Loans
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804,581 | 700,750 | ||||||
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Less allowance for loan losses
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(10,393 | ) | (9,462 | ) | ||||
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Net loans
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794,188 | 691,288 | ||||||
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Premises and equipment, net
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28,544 | 15,487 | ||||||
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Goodwill, net
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25,753 | 17,363 | ||||||
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Intangible assets, net
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5,068 | 2,832 | ||||||
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Other assets
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30,333 | 29,274 | ||||||
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Total assets
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$ | 1,468,245 | $ | 1,095,155 | ||||
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Liabilities and Stockholders’ Equity
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Deposits:
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Non-interest bearing
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$ | 183,932 | $ | 128,726 | ||||
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Interest bearing
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1,028,778 | 711,684 | ||||||
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Total deposits
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1,212,710 | 840,410 | ||||||
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Repurchase agreements with customers
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94,057 | 80,386 | ||||||
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Other borrowings
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22,750 | 32,750 | ||||||
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Junior subordinated debentures
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20,620 | 20,620 | ||||||
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Other liabilities
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5,843 | 9,768 | ||||||
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Total liabilities
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1,355,980 | 983,934 | ||||||
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Stockholders’ Equity:
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Preferred stock (no par value, authorized 1,000,000 shares; issued
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4,927 shares in 2010 and 2009)
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24,635 | 24,635 | ||||||
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Common stock ($4 par value; authorized 18,000,000 shares; issued
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7,477,132 shares in 2010 and 7,364,959 shares in 2009)
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29,909 | 29,460 | ||||||
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Additional paid-in capital
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28,223 | 26,811 | ||||||
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Retained earnings
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66,356 | 62,144 | ||||||
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Deferred compensation
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2,929 | 2,894 | ||||||
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Accumulated other comprehensive income (loss)
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(2,066 | ) | 464 | |||||
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Treasury stock at cost, 1,418,456 shares in 2010
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and 1,282,076 in 2009
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(37,721 | ) | (35,187 | ) | ||||
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Total stockholders’ equity
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112,265 | 111,221 | ||||||
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Total liabilities and stockholders’ equity
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$ | 1,468,245 | $ | 1,095,155 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(In thousands) (unaudited)
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For the period ended December 31,
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2010
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2009
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Interest income:
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Interest and fees on loans
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$ | 41,803 | $ | 42,146 | ||||
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Interest on investment securities
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8,699 | 9,036 | ||||||
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Interest on certificates of deposit
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110 | 55 | ||||||
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Interest on federal funds sold & other deposits
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271 | 172 | ||||||
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Total interest income
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50,883 | 51,409 | ||||||
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Interest expense:
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Interest on deposits
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8,471 | 12,970 | ||||||
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Interest on repurchase agreements with customers
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133 | 129 | ||||||
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Interest on other borrowings
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1,099 | 1,634 | ||||||
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Interest on subordinated debt
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1,053 | 1,104 | ||||||
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Total interest expense
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10,756 | 15,837 | ||||||
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Net interest income
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40,127 | 35,572 | ||||||
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Provision for loan losses
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3,737 | 3,594 | ||||||
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Net interest income after provision for loan losses
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36,390 | 31,978 | ||||||
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Non-interest income:
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Trust revenues
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2,601 | 2,229 | ||||||
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Brokerage commissions
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536 | 424 | ||||||
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Insurance commissions
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1,779 | 1,912 | ||||||
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Services charges
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4,662 | 4,952 | ||||||
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Securities gains (losses), net
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543 | 637 | ||||||
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Impairment losses on securities
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(1,418 | ) | (1,812 | ) | ||||
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Mortgage banking revenues
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776 | 664 | ||||||
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ATM / debit card revenue
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2,869 | 2,333 | ||||||
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Other
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1,472 | 2,116 | ||||||
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Total non-interest income
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13,820 | 13,455 | ||||||
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Non-interest expense:
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Salaries and employee benefits
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18,649 | 16,830 | ||||||
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Net occupancy and equipment expense
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5,851 | 4,989 | ||||||
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FDIC insurance
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1,508 | 1,943 | ||||||
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Amortization of intangible assets
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814 | 730 | ||||||
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Legal and professional expense
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2,361 | 2,021 | ||||||
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Other
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7,744 | 6,699 | ||||||
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Total non-interest expense
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36,927 | 33,212 | ||||||
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Income before income taxes
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13,283 | 12,221 | ||||||
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Income taxes
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4,522 | 4,007 | ||||||
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Net income
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$ | 8,761 | $ | 8,214 | ||||
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Per Share Information (unaudited)
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For the period ended December 31,
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2010 | 2009 | ||||||
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Basic earnings per common share
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$ | 1.07 | $ | 1.04 | ||||
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Diluted earnings per common share
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$ | 1.07 | $ | 1.04 | ||||
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Book value per share at Dec 31
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$ | 14.46 | $ | 14.23 | ||||
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Market price of stock at Dec 31
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$ | 17.25 | $ | 17.50 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
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(In thousands) (unaudited)
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For the period ended December 31,
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2010
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2009
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Balance at beginning of period
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$ | 111,221 | $ | 82,778 | ||||
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Net income
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8,761 | 8,214 | ||||||
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Dividends on preferred stock and common stock
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(4,549 | ) | (4,129 | ) | ||||
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Issuance of preferred and common stock
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1,651 | 26,382 | ||||||
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Purchase of treasury stock
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(2,499 | ) | (3,122 | ) | ||||
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Deferred compensation and other adjustments
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210 | 218 | ||||||
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Changes in accumulated other comprehensive income (loss)
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(2,530 | ) | 880 | |||||
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Balance at end of period
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$ | 112,265 | $ | 111,221 | ||||
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CONSOLIDATED CAPITAL RATIOS
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Threshold
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As of
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for “Well-
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First Mid-Illinois Bancshares, Inc.
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Dec 31,
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Capitalized”
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Primary Capital Measurements (unaudited):
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2010
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Designation
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Leverage ratio
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7.42 | % | 5 | % | ||||
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Tier 1 capital to risk-weighted assets
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11.71 | % | 6 | % | ||||
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Total capital to risk-weighted assets
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12.84 | % | 10 | % | ||||