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):
JULY 23, 2003
FIRST MID-ILLINOIS BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-13368 37-1103704
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
1515 CHARLESTON AVENUE, MATTOON, IL 61938
(ADDRESS INCLUDING ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)
(217) 234-7454
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Item 5. Other Events
Incorporated by reference is the quarterly shareholder report issued by the
Registrant on July 23, 2003, attached as Exhibit 99, providing information
concerning the Registrant's financial statements as of June 30, 2003.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99 - Quarterly shareholder report issued July 23, 2003
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: July 23, 2003 By: /s/ William S. Rowland
William S. Rowland
President and Chief
Executive Officer
EXHIBIT INDEX
Exhibit
Number Description
99 Quarterly shareholder report issued July 23, 2003
Exhibit 99
July 23, 2003
Quarterly Report to the Owners,
First Mid-Illinois Bancshares, Inc.
First Mid-Illinois Bancshares, Inc. has done well in 2003 with diluted earnings
per share amounting to $1.40 per share for the first six months of the year.
This represents a 19% increase from $1.18 per share earned in the first six
months of 2002. As a result, the Board of Directors elected to increase the
dividend for the first half of 2003 to $.25 per share from $.23 per share paid
in the first half of 2002. Our solid financial progress resulted in the total
market capitalization (the market price per share multiplied by the number of
shares outstanding) of First Mid-Illinois Bancshares, Inc. exceeding $100
million for the first time in our long history. We achieved this milestone in
the second quarter of the year and are pleased that the market place has
recognized our solid financial performance. Our stock buy-back activities
continued during the first half of 2003, with 70,051 shares being acquired at a
total investment of $2,075,000. We continue to believe this is one of the best
ways of enhancing shareholder value, and any shareholder who wishes to utilize
this service should contact Ms. Christie Burich at (217) 258-0493.
Net income for the first half of 2003 amounted to $4,484,000, a 12% increase
from the $4,015,000 we earned in the first six months of 2002. Net interest
income was essentially flat for the first six months, amounting to $13,105,000
in 2003 as compared to $13,122,000 in 2002. Loan pricing constraints together
with an extremely low interest rate environment resulted in a decline in our net
interest margin from 4.18% in the first half of 2002 to 3.77% for the first half
of 2003. While margin compression is a concern, we have been able to offset it
by increasing our loan volumes. In addition, residential real estate activity
continues to be strong throughout our franchise area with mortgage banking
revenue increasing to $1,082,000 in 2003 from $703,000 in the first half of
2002. Most of the residential real estate loans we originate are sold into the
secondary market for interest rate risk management purposes. The fees that we
received from these loan sales have compensated for the lower net interest
margin.
Our provision for loan losses amounted to $500,000 for the first six months of
2003 as compared to $275,000 during the same period last year. This is in
response to an increase of approximately $2,500,000 in non-performing loans
during the first half of 2003. The majority of the increase is in the
agricultural sector of our lending operations. While we do not anticipate any
material losses from these credits, an increased provision was nevertheless
appropriate in these circumstances. As a result of a recovery on one commercial
loan during the first six months of 2003, year-to-date net charge-offs declined
to $101,000 as compared with $264,000 for the first half of 2002.
The Checkley Agency, Inc., which we acquired in early 2002, continues to perform
well and our two new banking centers in Champaign and Maryville are both
exceeding our growth and operational forecasts. We expect both of these branches
to add to our profitability in the second half of 2003.
Though we face many challenges, we remain optimistic about our future. You can
be assured that the Board, management, and staff will continue to work hard to
retain the confidence you have demonstrated with your investment.
Sincerely,
/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
Condensed Consolidated Balance Sheets
(In thousands, except share data) (unaudited) June 30, December 31,
2003 2002
------------------ -----------------
Assets
Cash and due from banks $ 19,746 $ 22,437
Federal funds sold and other interest-bearing deposits 7,637 47,220
Investment securities:
Available-for-sale, at fair value 173,743 166,415
Held-to-maturity, at amortized cost (estimated fair
value of $1,821 and $1,927 at June 30, 2003
Loans 523,258 499,864
Less allowance for loan losses (4,122) (3,723)
------------------ -----------------
Net loans 519,136 496,141
Premises and equipment, net 16,663 16,916
Goodwill, net 9,034 9,034
Intangible assets, net 4,378 4,743
Other assets 9,876 11,432
------------------ -----------------
Total assets $762,010 $776,240
================== =================
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $ 87,739 $ 84,025
Interest bearing 520,425 529,427
------------------ -----------------
Total deposits 608,164 613,452
Repurchase agreements with customers 38,303 44,184
Other borrowings 39,925 44,625
Other liabilities 5,625 7,172
------------------ -----------------
Total liabilities $692,017 $709,433
------------------ -----------------
Stockholders' Equity:
Common stock ($4 par value; authorized 6,000,000 shares;
Issued 3,653,857 shares in 2003 and 3,603,737 shares in 2002) $14,615 $14,415
Additional paid-in capital 15,625 14,450
Retained earnings 49,589 45,896
Deferred compensation 1,791 1,589
Accumulated other comprehensive income 2,566 2,373
Treasury stock at cost, 484,613 shares in 2003 and 414,562 shares in 2002 (14,193) (11,916)
------------------ -----------------
Total stockholders' equity 69,993 66,807
------------------ -----------------
Total liabilities and stockholders' equity $762,010 $776,240
================== =================
Condensed Consolidated Statements of Income
(In thousands) (unaudited)
For the six months ended June 30, 2003 2002
------------------ -----------------
Interest income:
Interest and fees on loans $ 16,083 $ 16,821
Interest on investment securities 3,175 3,778
Interest on federal funds sold and other 191 86
------------------ -----------------
Total interest income 19,449 20,685
Interest expense:
Interest on deposits 5,269 6,374
Interest on repurchase agreements with customers 132 172
Interest on other borrowings 943 1,017
------------------ -----------------
Total interest expense 6,344 7,563
------------------ -----------------
Net interest income 13,105 13,122
Provision for loan losses 500 275
------------------ -----------------
Net interest income after provision for loan losses 12,605 12,847
Non-interest income:
Trust revenues 945 928
Brokerage commissions 124 134
Insurance commissions 778 554
Service charges 2,138 1,517
Securities gains, net 370 116
Mortgage banking revenues 1,082 703
Other 1,108 847
------------------ -----------------
Total non-interest income 6,545 4,799
Non-interest expense:
Salaries and employee benefits 6,729 6,102
Net occupancy and equipment expense 2,123 1,980
Amortization of intangible assets 365 370
Other 3,129 3,193
------------------ -----------------
Total non-interest expense 12,346 11,645
------------------ -----------------
Income before income taxes 6,804 6,001
Income taxes 2,320 1,986
------------------ -----------------
Net income $ 4,484 $ 4,015
================== =================
Condensed Consolidated Statements of Changes in Stockholders' Equity
(in thousands) (unaudited)
For the six month period ended June 30, 2003 2002
------------------ -----------------
Balance at beginning of period $ 66,807 $ 63,925
Net income 4,484 4,015
Dividends on stock (791) (780)
Issuance of stock 1,375 1,292
Purchase of treasury stock (2,075) (614)
Change in accumulated other comprehensive income (loss) 193 1,246
------------------ -----------------
Balance at end of period $ 69,993 $ 69,084
================== =================
Per Share Information
(unaudited) June 30, June 30,
2003 2002
------------------ -----------------
Basic earnings per share $ 1.41 $ 1.19
Diluted earnings per share $ 1.40 $ 1.18
Book value per share $ 22.09 $ 20.31
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
(217) 234-7454
www.firstmid.com