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First Mid-Illinois Bancshares, Inc. Announces Third Quarter 2017 Results

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.



Source:First Mid-Illinois Bancshares, Inc.