Attached files
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| 8-K - RESULTS OF OPERATIONS AND FINANCIAL CONDITION - FIRST MID BANCSHARES, INC. | form8k_042711a.htm |
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
We have started the year well with growth in earnings, growth in the balance sheet, and a stronger capital position. Net income for the first quarter of 2011 was $2,845,000 as compared to $2,548,000 for the first quarter of 2010, an increase of 12%. Diluted earnings per share also increased to $.35 for the first quarter of 2011 as compared to $.32 per share for the same period last year.
Net interest income for the first quarter of 2011 amounted to $11.7 million as compared to $9.4 million last year. This was due to growth in the balance sheet with more loans, investments, and deposits than a year ago, reflecting the acquisition of bank branches completed in September 2010. The initial results from the new locations in Peoria, Bloomington, Galesburg, and Quincy have been positive with increases in commercial operating loans and checking account balances in those communities. Our commercial cash management products have been well received in these communities. The balance sheet shows a decline in total loan balances since year-end as the growth in commercial loans has been offset by seasonal paydowns in agricultural operating loans. Our net interest income has also increased as we continue to systematically invest some of the liquidity resulting from the acquisition. At March 31, 2011, we had federal funds sold and interest bearing deposits of $192 million.
With the higher level of liquidity, our net interest margin is lower than last year. The net interest margin was 3.48% for the first quarter of 2011 as compared with 3.76% for the first quarter of 2010. We have a good opportunity to improve the margin by continuing to move some of the liquidity into higher-yielding loans and investments.
Total non-interest income of $4 million for the first quarter of 2011 was higher than the $3.1 million recognized during the same period last year. Revenues from our trust, brokerage, and mortgage banking areas all increased. Also, fees received on debit and ATM transactions increased as we added customers from the new locations. Impairment charges on trust preferred securities we own were lower than last year as the level of community bank defaults slowed slightly.
Operating expenses for the first quarter of 2011 were $10.3 million as compared to $7.8 million for the same period last year. The higher expenses reflect the personnel and operating costs for the 10 new branch locations. The Company’s effective tax rate is also higher with the increase in State of Illinois taxes this year. This tax increase amounted to approximately $100,000 in additional expense for the first quarter.
Economic conditions appear to have improved slightly for some borrowers but a widespread recovery has been constrained by higher fuel prices and operating costs. Our total non-performing assets(non-performing loans and other real estate owned) have improved from a year ago($17.6 million at March 31, 2011 as compared to $18.9 million on March 31, 2010) but were higher than at December 31, 2010. Provision expense for the quarter was $940,000 as compared with $760,000 for the first quarter of last year. Our net charge-offs for the first quarter were essentially the same as last year at $682,000 as compared with $693,000 for the first quarter of 2010. Our coverage ratio, or total loan loss reserve to non-accrual loans, of 94% remains strong when compared to our peer banks. We will continue to monitor these assets closely.
In February, we strengthened our capital position with our planned convertible preferred stock issuance. Thus far, we have issued $13.8 million of preferred stock with $13.7 million more expected to be issued following regulatory approval. At March 31, 2011, our Tier 1 Capital ratio was 13.54% which is well in excess of the regulatory minimums to be considered well-capitalized. The offering not only improves our already strong capital position but puts First Mid in a position to respond to opportunities that may lie ahead.
I mentioned in the last communication that our operating environment in 2011 will likely remain difficult. High levels of unemployment continue to hurt the economic recovery and increased regulation from Dodd-Frank is adding to bank’s operating costs. An environment such as this presents many challenges. That said, I remain convinced that it is also likely to produce many opportunities for banks with strong balance sheets, a solid infrastructure and good management. That is why I remain optimistic about the future.
Thank you for your continued support of First Mid-Illinois Bancshares, Inc.
Very Truly Yours,
/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
April 27, 2011
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(unaudited)
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(in thousands, except share data)
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Mar
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Dec 31
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2011
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2010
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Assets
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Cash and due from banks
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$ | 25,537 | $ | 21,008 | ||||
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Federal funds sold and other interest-bearing deposits
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192,275 | 210,485 | ||||||
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Certificates of deposit investments
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10,000 | 10,000 | ||||||
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Investment securities:
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Available-for-sale, at fair value
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387,196 | 342,816 | ||||||
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Held-to-maturity, at amortized cost (estimated fair value of $53
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at March 31, 2011 and December 31, 2010, respectively)
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50 | 50 | ||||||
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Loans
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795,097 | 804,581 | ||||||
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Less allowance for loan losses
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(10,651 | ) | (10,393 | ) | ||||
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Net loans
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784,446 | 794,188 | ||||||
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Premises and equipment, net
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28,331 | 28,544 | ||||||
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Goodwill, net
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25,753 | 25,753 | ||||||
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Intangible assets, net
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4,782 | 5,068 | ||||||
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Other assets
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29,473 | 30,333 | ||||||
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Total assets
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$ | 1,487,843 | $ | 1,468,245 | ||||
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Liabilities and Stockholders’ Equity
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Deposits:
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Non-interest bearing
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$ | 198,745 | $ | 183,932 | ||||
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Interest bearing
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1,017,620 | 1,028,778 | ||||||
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Total deposits
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1,216,365 | 1,212,710 | ||||||
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Repurchase agreements with customers
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94,670 | 94,057 | ||||||
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Other borrowings
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19,750 | 22,750 | ||||||
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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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7,529 | 5,843 | ||||||
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Total liabilities
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1,358,934 | 1,355,980 | ||||||
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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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7,679 shares in 2011 and 4,927 shares in 2010)
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38,395 | 24,635 | ||||||
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Common stock ($4 par value; authorized 18,000,000 shares; issued
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7,496,801 shares in 2011 and 7,477,132 shares in 2010)
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29,987 | 29,909 | ||||||
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Additional paid-in capital
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28,528 | 28,223 | ||||||
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Retained earnings
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68,494 | 66,356 | ||||||
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Deferred compensation
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2,885 | 2,929 | ||||||
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Accumulated other comprehensive loss
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(1,321 | ) | (2,066 | ) | ||||
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Treasury stock at cost, 1,439,143 shares in 2011
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and 1,418,456 in 2010
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(38,059 | ) | (37,721 | ) | ||||
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Total stockholders’ equity
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128,909 | 112,265 | ||||||
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Total liabilities and stockholders’ equity
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$ | 1,487,843 | $ | 1,468,245 | ||||
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(In thousands) (unaudited)
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For the period ended March 31,
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2011
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2010
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Interest income:
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Interest and fees on loans
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$ | 11,463 | $ | 9,914 | ||||
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Interest on investment securities
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2,444 | 2,235 | ||||||
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Interest on certificates of deposit
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21 | 30 | ||||||
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Interest on federal funds sold & other deposits
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101 | 31 | ||||||
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Total interest income
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14,029 | 12,210 | ||||||
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Interest expense:
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Interest on deposits
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1,819 | 2,186 | ||||||
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Interest on repurchase agreements with customers
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33 | 30 | ||||||
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Interest on other borrowings
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211 | 343 | ||||||
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Interest on subordinated debt
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261 | 260 | ||||||
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Total interest expense
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2,324 | 2,819 | ||||||
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Net interest income
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11,705 | 9,391 | ||||||
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Provision for loan losses
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940 | 760 | ||||||
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Net interest income after provision for loan losses
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10,765 | 8,631 | ||||||
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Non-interest income:
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Trust revenues
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781 | 624 | ||||||
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Brokerage commissions
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155 | 129 | ||||||
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Insurance commissions
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608 | 644 | ||||||
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Services charges
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1,096 | 1,076 | ||||||
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Securities gains (losses), net
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181 | 241 | ||||||
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Impairment losses on securities
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(185 | ) | (623 | ) | ||||
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Mortgage banking revenues
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116 | 96 | ||||||
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ATM / debit card revenue
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832 | 624 | ||||||
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Other
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421 | 257 | ||||||
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Total non-interest income
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4,005 | 3,068 | ||||||
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Non-interest expense:
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Salaries and employee benefits
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5,434 | 4,368 | ||||||
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Net occupancy and equipment expense
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1,967 | 1,278 | ||||||
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FDIC insurance
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434 | 318 | ||||||
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Amortization of intangible assets
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286 | 176 | ||||||
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Legal and professional expense
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567 | 429 | ||||||
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Other
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1,604 | 1,221 | ||||||
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Total non-interest expense
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10,292 | 7,790 | ||||||
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Income before income taxes
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4,478 | 3,909 | ||||||
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Income taxes
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1,633 | 1,361 | ||||||
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Net income
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$ | 2,845 | $ | 2,548 | ||||
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Per Share Information (unaudited)
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For the period ended March 31,
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2011 | 2010 | ||||||
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Basic earnings per common share
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$ | 0.35 | $ | 0.32 | ||||
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Diluted earnings per common share
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$ | 0.35 | $ | 0.32 | ||||
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Book value per share at Mar 31
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$ | 14.94 | $ | 14.66 | ||||
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Market price of stock at Mar 31
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$ | 18.65 | $ | 16.50 | ||||
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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 March 31,
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2011
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2010
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Balance at beginning of period
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$ | 112,265 | $ | 111,221 | ||||
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Net income
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2,845 | 2,548 | ||||||
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Dividends on preferred stock and common stock
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(707 | ) | (577 | ) | ||||
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Issuance of preferred and common stock
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14,111 | 4221 | ||||||
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Purchase of treasury stock
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(382 | ) | (102 | ) | ||||
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Deferred compensation and other adjustments
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32 | 45 | ||||||
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Changes in accumulated other comprehensive income
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745 | 504 | ||||||
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Balance at end of period
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$ | 128,909 | $ | 114,081 | ||||
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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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Mar 31
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Capitalized”
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Primary Capital Measurements (unaudited):
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2011
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Designation
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Leverage ratio
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8.56 | % | 5 | % | ||||
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Tier 1 capital to risk-weighted assets
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13.54 | % | 6 | % | ||||
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Total capital to risk-weighted assets
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14.70 | % | 10 | % | ||||