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First Mid-Illinois Bancshares, Inc. Announces First Quarter 2019 Results

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MATTOON, Ill., April 24, 2019 (GLOBE NEWSWIRE) -- First Mid-Illinois Bancshares, Inc. (FMBH) (the “Company”) today announced its financial results for the quarter ended March 31, 2019.

Highlights

  • Record quarterly net income of $13.3 million, or $0.80 diluted earnings per share

  • Completed SCB Bancorp, Inc. (“Soy Capital”) Bank conversion and remain on target to achieve projected savings

  • Named top 50 highest performing community bank by S&P Global Market Intelligence based on asset size

  • Awarded Central/Southern Illinois Community Bank of the Year by U.S. Small Business Administration for 6th consecutive year

  • Finalizing our rebranding initiative by receiving shareholder approval to change the name of our charter to First Mid Bancshares, Inc.

“We kicked off 2019 with very strong earnings,” said Joe Dively, Chairman and Chief Executive Officer. “Our cross-selling efforts between our banking, insurance and wealth management groups are off to a great start with the former Soy Capital business lines. In addition, our continued emphasis on improving asset quality is driving positive momentum with minimal net charge-offs and lower provision expense. However, this initiative combined with typical first quarter seasonality contributed to a slight decline in loan balances.”

“Subsequent to quarter end, on the first weekend of April, we completed the systems integration and merger with the former Soy Capital Bank. Also, that weekend, we completed the system conversions to combine the insurance divisions of each company. The integrations went very well and I could not be more proud of the team on the efforts to ensure such successful projects. We are really excited about the future of the combined companies and are pleased to have the Soy Capital employees and customers as part of First Mid,” said Dively.

“I am also excited to announce that today our shareholders voted to approve shortening the name of our company to First Mid Bancshares, Inc. This refreshed name and logo aligns our Company with its three lines of business and completes the rebranding initiative that kicked off last year with the name change of our bank. We believe the shortened name positions us for future growth opportunities. The change will be official upon the filing of an amendment to our charter, which we anticipate will happen on April 25, 2019,” Dively concluded.

Net Interest Income

Net interest income for the first quarter of 2019 increased by $1.3 million, or 4.0% compared to the fourth quarter of 2018. The increase was primarily driven by the full quarter impact of the acquisition of Soy Capital, which closed on November 15, 2018. In addition, accretion income in the current quarter was $2.9 million compared to $2.1 million in the prior quarter.

In comparison to the first quarter of 2018, net interest income increased by $9.1 million, or 39.1%. The increase was primarily attributable to the addition of Soy Capital and the acquisition of First BancTrust Corporation (“First Bank”), which closed on May 1, 2018.

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.74% for the first quarter of 2019 compared to 3.75% in the prior quarter. The decrease was primarily driven by the inclusion of Soy Capital’s lower margin for the full period, partially offset by higher accretion income. Excluding accretion income, net interest margin declined by 9 basis points in the current quarter. In addition to the decline from the inclusion of Soy Capital, net interest margin was lower due to the impact of greater Fed Funds sold and interest-bearing deposits.

In comparison to the first quarter of 2018, net interest margin increased by 9 basis points. The year-over-year increase in the ratio was primarily due to higher yields on loans and investments, as well as the additional accretion income from the acquisitions outpacing the increase in cost of funds.

Loan Portfolio

Total loans ended the quarter at $2.60 billion, representing a decrease of $47.5 million compared to the prior quarter. The first quarter has historically been a seasonally slower growth quarter due in part to pay downs in agriculture operating loans, although the first quarter of 2018 was an anomaly. In addition, the company has been working through some acquired loans with lower asset quality measures, resulting in higher payoffs than normal. Loans increased by $619.2 million compared to the first quarter of last year through a combination of both organic and acquisition related growth.

Asset Quality

At March 31, 2019, nonperforming loans were 1.0% of total loans, allowance for loan losses was 1.03% of total loans, and the allowance for loan losses to nonperforming loans was 102.8%. Nonperforming loans declined $3.7 million to $26.0 million at quarter end. The Consolidated Financial Highlights and Ratios table at the end of the release reflects certain changes to the fourth quarter 2018 asset quality measures to properly reflect the exclusion of TDR’s from Soy Capital, which were marked to fair value at the close of the transaction. Excluding outstanding acquired loans, the allowance for loan losses to total loans was 1.42%.

Net charge-offs were $0.4 million during the first quarter compared to $0.8 million in the prior quarter. The Company recorded a provision for loan losses of $0.9 million during the first quarter compared to $3.2 million in the fourth quarter of 2018 and $1.1 million in the first quarter of last year.

Deposits

Total deposits ended the quarter at $3.05 billion, which represented an increase of $57.5 million from the prior quarter. The Company’s average rate on cost of funds was 0.70% for the quarter compared to 0.60% in the fourth quarter and 0.32% in the first quarter of 2018. With nearly 50% of deposits in noninterest bearing and interest bearing checking, and approximately 80% as core deposits, the Company continues to maintain a strong deposit base.

Noninterest Income

Noninterest income for the first quarter of 2019 was $14.6 million compared to $11.6 million in the fourth quarter and $7.5 million in the first quarter of last year. The increase was primarily driven by the insurance and wealth management (including Ag services) business lines from Soy Capital included in the results for the full period. Noninterest income is traditionally higher in the first quarter due to the timing of insurance commission revenues. Overall, noninterest income represented over 31% of total revenues in the quarter and our wealth management division increased to $4.2 billion in assets under management from $3.9 billion at the end of 2018.

Noninterest Expenses

Noninterest expense for the first quarter totaled $28.3 million compared to $26.3 million in the fourth quarter 2018. The current quarter included $0.2 million in acquisition related costs compared to $1.1 million in the prior quarter. The higher expenses are primarily tied to the additional period Soy Capital was in the results in the first quarter 2019. In addition, the increase in expenses was partially driven by the company's continued investment in technology with its recent upgrade to its commercial online banking platform. Cost savings initiatives tied to the Soy Capital acquisition are on target overall with some of the savings in the first quarter run-rate and an additional amount to be included in the second quarter tied to the completion of the bank merger and systems conversion.

Noninterest expense was $9.9 million higher than the first quarter of 2018. The increase is primarily due to the addition of both Soy Capital and First Bank in the numbers for the current quarter. The Company’s efficiency ratio, on a tax equivalent basis, for the first quarter 2019 was 56.8% compared to 57.2% for the same period last year.

Regulatory Capital Levels and Dividend

The Company’s capital levels remained comfortably above the “well capitalized” levels and ended the period as follows:

Total capital to risk-weighted assets

14.45%

Tier 1 capital to risk-weighted assets

13.55%

Common equity tier 1 capital to risk-weighted assets

12.57%

Leverage ratio

10.77%

On April 24, 2019, the Board of Directors declared the Company’s next semi-annual dividend of $0.36 for shareholders of record on June 3rd and payable on June 10th. The dividend represents an increase of 5.6% over the dividend paid in the first half of 2018.

Capital Raise

Under the previously announced ‘at-the-market’ equity offering, during the quarter ended March 31, 2019, the Company did not sell any shares.

About Us: First Mid-Illinois Bancshares, Inc. (“First Mid”) is the parent company of First Mid Bank & Trust, N.A., First Mid Insurance Group, Inc. and First Mid Wealth Management Co. 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 our customers and shareholders.

First Mid is a $3.9 billion community-focused organization that provides a full-suite of financial services including banking, wealth management, brokerage, Ag services, and insurance through a sizeable network of locations throughout Illinois and eastern Missouri and a loan production office in the greater Indianapolis area. Together, our First Mid team takes great pride in their work and their ability to serve our customers well over the last 154 years.

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”.

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.

Forward Looking Statements: This document may contain certain forward-looking statements about First Mid, such as discussions of First Mid’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. First Mid intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1955. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of First Mid, 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, among other things, changes in interest rates; general economic conditions and those in the market areas of First Mid; legislative/regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of First Mid’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition, demand for financial services in the market areas of First Mid; and accounting principles, policies and guidelines. Additional information concerning First Mid, including additional factors and risks that could materially affect First Mid’s financial results, are included in First Mid’s filings with the Securities and Exchange Commission (the “SEC”), including its Annual Reports on Form 10-K. 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 obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

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, unaudited)

As of

March 31,

December 31,

March 31,

2019

2018

2018

Assets

Cash and cash equivalents

$

232,548

$

141,400

$

54,835

Investment securities

772,400

769,279

640,905

Loans (including loans held for sale)

2,596,994

2,644,519

1,977,697

Less allowance for loan losses

(26,704

)

(26,189

)

(20,771

)

Net loans

2,570,290

2,618,330

1,956,926

Premises and equipment, net

59,237

59,117

37,833

Goodwill and intangibles, net

137,461

139,097

70,324

Bank owned life insurance

65,914

65,484

42,159

Other assets

57,769

47,027

34,364

Total assets

$

3,895,619

$

3,839,734

$

2,837,346

Liabilities and Stockholders' Equity

Deposits:

Noninterest bearing

$

628,944

$

575,784

$

478,303

Interest bearing

2,417,269

2,412,902

1,813,588

Total deposits

3,046,213

2,988,686

2,291,891

Repurchase agreement with customers

157,760

192,330

132,435

Other borrowings

126,048

127,469

69,399

Junior subordinated debentures

29,042

29,000

24,021

Other liabilities

39,404

26,385

9,013

Total liabilities

3,398,467

3,363,870

2,526,759

Total stockholders' equity

497,152

475,864

310,587

Total liabilities and stockholders' equity

$

3,895,619

$

3,839,734

$

2,837,346

FIRST MID-ILLINOIS BANCSHARES, INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data, unaudited)

Three Months Ended

March 31,

2019

2018

Interest income:

Interest and fees on loans

$

32,104

$

21,007

Interest on investment securities

5,209

4,081

Interest on federal funds sold & other deposits

738

70

Total interest income

38,051

25,158

Interest expense:

Interest on deposits

4,378

1,262

Interest on securities sold under agreements to repurchase

260

59

Interest on other borrowings

723

383

Interest on subordinated debt

438

259

Total interest expense

5,799

1,963

Net interest income

32,252

23,195

Provision for loan losses

947

1,055

Net interest income after provision for loan

31,305

22,140

Noninterest income:

Wealth management revenues

3,645

1,742

Insurance commissions

5,555

1,487

Service charges

1,802

1,635

Securities gains, net

54

20

Mortgage banking revenues

239

161

ATM/debit card revenue

2,016

1,604

Other

1,328

838

Total noninterest income

14,639

7,487

Noninterest expense:

Salaries and employee benefits

16,574

10,194

Net occupancy and equipment expense

4,455

3,273

Net other real estate owned (income) expense

53

76

FDIC insurance

279

281

Amortization of intangible assets

1,356

505

Stationary and supplies

287

211

Legal and professional expense

1,194

1,137

Marketing and donations

454

354

Other

3,658

2,343

Total noninterest expense

28,310

18,374

Income before income taxes

17,634

11,253

Income taxes

4,318

2,863

Net income

$

13,316

$

8,390

Per Share Information

Basic earnings per common share

$

0.80

$

0.66

Diluted earnings per common share

0.80

0.66

Weighted average shares outstanding

16,665,999

12,671,017

Diluted weighted average shares outstanding

16,704,779

12,688,247

FIRST MID-ILLINOIS BANCSHARES, INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data, unaudited)

For the Quarter Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Interest income:

Interest and fees on loans

$

32,104

$

30,553

$

28,850

$

25,362

$

21,007

Interest on investment securities

5,209

4,966

4,511

4,679

4,081

Interest on federal funds sold & other deposits

738

269

127

90

70

Total interest income

38,051

35,788

33,488

30,131

25,158

Interest expense:

Interest on deposits

4,378

3,422

2,217

1,670

1,262

Interest on securities sold under agreements to repurchase

260

134

72

65

59

Interest on other borrowings

723

834

707

593

383

Interest on subordinated debt

438

396

405

349

259

Total interest expense

5,799

4,786

3,401

2,677

1,963

Net interest income

32,252

31,002

30,087

27,454

23,195

Provision for loan losses

947

3,184

2,551

1,877

1,055

Net interest income after provision for loan

31,305

27,818

27,536

25,577

22,140

Noninterest income:

Wealth management revenues

3,645

3,540

1,579

1,599

1,742

Insurance commissions

5,555

2,390

877

838

1,487

Service charges

1,802

1,988

2,009

1,803

1,635

Securities gains, net

54

0

0

881

20

Mortgage banking revenues

239

266

368

410

161

ATM/debit card revenue

2,016

2,044

1,979

1,860

1,604

Other

1,328

1,419

1,107

970

838

Total noninterest income

14,639

11,647

7,919

8,361

7,487

Noninterest expense:

Salaries and employee benefits

16,574

13,952

11,600

11,057

10,194

Net occupancy and equipment expense

4,455

4,225

3,530

3,505

3,273

Net other real estate owned (income) expense

53

260

(61

)

7

76

FDIC insurance

279

319

174

285

281

Amortization of intangible assets

1,356

1,156

838

716

505

Stationary and supplies

287

238

328

186

211

Legal and professional expense

1,194

1,318

1,071

1,717

1,137

Marketing and donations

454

541

468

431

354

Other

3,658

4,311

6,542

2,892

2,343

Total noninterest expense

28,310

26,320

24,490

20,796

18,374

Income before income taxes

17,634

13,145

10,965

13,142

11,253

Income taxes

4,318

3,206

2,731

3,105

2,863

Net income

$

13,316

$

9,939

$

8,234

$

10,037

$

8,390

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

March 31,

December 31,

September 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Loan Portfolio

Construction and land development

$

49,179

$

50,618

$

91,355

$

88,481

$

109,076

Farm loans

236,864

231,700

191,724

184,887

122,564

1-4 Family residential properties

362,617

373,518

367,343

378,573

289,899

Multifamily residential properties

175,903

184,051

100,368

105,948

60,881

Commercial real estate

905,679

906,850

814,574

803,362

699,142

Loans secured by real estate

1,730,242

1,746,737

1,565,364

1,561,251

1,281,562

Agricultural loans

118,026

135,877

120,770

113,533

74,336

Commercial and industrial loans

550,853

557,011

540,387

502,211

458,697

Consumer loans

86,540

91,517

57,248

59,090

28,784

All other loans

111,333

113,377

116,391

140,598

134,318

Total loans

2,596,994

2,644,519

2,400,160

2,376,683

1,977,697

Deposit Portfolio

Noninterest bearing demand deposits

$

628,944

$

575,784

$

493,935

$

526,117

$

478,303

Interest bearing demand deposits

828,144

903,426

749,396

781,360

707,759

Savings deposits

444,619

432,319

397,910

405,287

374,594

Money Market

483,867

485,388

481,799

434,559

389,020

Time deposits

660,639

591,769

528,357

523,541

342,215

Total deposits

3,046,213

2,988,686

2,651,397

2,670,864

2,291,891

Asset Quality

Nonperforming loans

$

25,988

$

29,749

$

27,924

$

24,729

$

17,869

Nonperforming assets

29,857

32,344

30,065

27,237

19,849

Net charge-offs

432

834

757

603

261

Allowance for loan losses to nonperforming loans

102.76

%

88.03

%

85.37

%

89.15

%

116.24

%

Allowance for loan losses to total loans outstanding

1.03

%

0.99

%

0.99

%

0.93

%

1.05

%

Nonperforming loans to total loans

1.00

%

1.13

%

1.16

%

1.04

%

0.90

%

Nonperforming assets to total assets

0.77

%

0.84

%

0.90

%

0.81

%

0.70

%

Common Share Data

Common shares outstanding

16,677,128

16,644,635

15,294,925

15,285,146

12,677,846

Book value per common share

$

29.81

$

28.57

$

27.25

$

26.91

$

24.50

Tangible book value per common share

$

21.57

$

20.22

$

20.58

$

20.20

$

18.95

Market price of stock

$

33.32

$

31.92

$

40.33

$

39.30

$

36.45

Key Performance Ratios and Metrics

End of period earning assets

$

3,539,175

$

3,491,606

$

3,081,929

$

3,103,956

$

2,634,223

Average earning assets

3,516,032

3,307,437

3,090,835

2,949,144

2,625,684

Average rate on average earning assets (tax equivalent)

4.44

%

4.35

%

4.35

%

4.16

%

3.95

%

Average rate on cost of funds

0.70

%

0.60

%

0.46

%

0.38

%

0.32

%

Net interest margin (tax equivalent)

3.74

%

3.75

%

3.89

%

3.79

%

3.65

%

Return on average assets

1.38

%

1.10

%

0.98

%

1.27

%

1.18

%

Return on average common equity

11.02

%

8.99

%

7.92

%

11.23

%

10.86

%

Efficiency ratio (tax equivalent) 1

56.77

%

57.66

%

61.56

%

56.65

%

57.16

%

Full-time equivalent employees

832

818

686

711

591

1 Represents noninterest expense divided by the sum of fully tax equivalent net interest income and noninterest income. Noninterest expense adjustments exclude foreclosed property expense and amortization of intangibles. Noninterest income includes tax equivalent adjustments and noninterest income excludes gains and losses on the sale of investment securities.

Note: Asset Quality metrics as of December 31, 2018 were adjusted to match the disclosures in the 10K, which exclude TDR's from the Soy Capital acquisition.

FIRST MID-ILLINOIS BANCSHARES, INC.

Net Interest Margin

For the Quarter Ended March 2019

QTD Average

Average

Balance

Interest

Rate

INTEREST EARNING ASSETS

Interest bearing deposits

112,220

697

2.52

%

Federal funds sold

663

3

1.84

%

Certificates of deposits investments

7,348

38

2.10

%

Investment Securities:

Taxable (total less municipals)

582,290

3,811

2.62

%

Tax-exempt (Municipals)

190,695

1,770

3.71

%

Loans (net of unearned income)

2,622,816

32,280

4.99

%

Total interest earning assets

3,516,032

38,599

4.44

%

NONEARNING ASSETS

Cash and due from banks

64,329

Premises and equipment

59,192

Other nonearning assets

250,265

Allowance for loan losses

(26,815

)

Total assets

$

3,863,003

INTEREST BEARING LIABILITIES

Demand deposits

1,335,626

1,622

0.49

%

Savings deposits

436,581

152

0.14

%

Time deposits

620,377

2,604

1.70

%

Total interest bearing deposits

2,392,584

4,378

0.74

%

Repurchase agreements

182,466

260

0.58

%

FHLB advances

119,760

723

2.45

%

Federal funds purchased

0

0

0.00

%

Subordinated debt

29,014

438

6.12

%

Other borrowings

6,845

0

0.00

%

Total borrowings

338,085

1,421

1.70

%

Total interest bearing liabilities

2,730,669

5,799

0.86

%

NONINTEREST BEARING LIABILITIES

Demand deposits

605,296

Average cost of funds

0.70

%

Other liabilities

43,723

Stockholders' equity

483,315

Total liabilities & stockholders' equity

$

3,863,003

Net Interest Earnings / Spread

$

32,800

3.58

%

Impact of NonInterest Bearing Funds

0.16

%

Tax effected yield on interest earning assets

3.74

%

FIRST MID-ILLINOIS BANCSHARES, INC.

Reconciliation of Non-GAAP Financial Measures

(In thousands, unaudited)

As of and for the Quarter Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2019

2018

2018

2018

2018

Net interest income as reported

$

32,252

$

31,002

$

30,087

$

27,454

$

23,195

Net interest income, (tax equivalent)

32,800

31,546

30,604

27,951

23,660

Average earning assets

3,516,032

3,307,437

3,090,835

2,949,144

2,625,685

Net interest margin (tax equivalent) 1

3.74

%

3.75

%

3.89

%

3.79

%

3.65

%

Common stockholders' equity

$

497,152

$

475,864

$

416,833

$

411,326

$

310,587

Goodwill and intangibles, net

137,461

139,097

102,014

102,618

70,324

Common shares outstanding

16,677

16,645

15,295

15,285

12,678

Tangible Book Value per common share

$

21.57

$

20.22

$

20.58

$

20.20

$

18.95

Common equity tier 1 capital

$

372,731

$

357,690

$

335,552

$

325,572

$

254,487

Risk weighted assets

2,964,638

3,030,259

2,662,706

2,678,691

2,289,235

Common equity tier 1 capital to risk weighted assets 2

12.57

%

11.80

%

12.60

%

12.15

%

11.12

%

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 21% during 2018 and 35% during 2017 and includes the impact of noninterest 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.