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):
DECEMBER 31, 2005
FIRST MID-ILLINOIS BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State of 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)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17CFR 240.13e-4(c))
Item 8.01. Other Events
Incorporated by reference is the quarterly shareholder report issued by the
Registrant on February 14, 2006, attached as Exhibit 99, providing information
concerning the Registrant's financial statements as of December 31, 2005.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit 99 - Quarterly shareholder report as of and for the period
ending December 31, 2005
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: February 14, 2006 /s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Quarterly shareholder report issued February 14, 2006
Exhibit 99
[GRAPHIC OMITTED][GRAPHIC OMITTED]
First Mid-Illinois Bancshares, Inc. had a successful 2005, with diluted earnings
per share increasing to $2.16 compared to $2.13 per share in 2004. Net income
increased to $9,807,000 in 2005 compared to $9,751,000 in 2004. As a result, the
Company increased its annual dividend to $.50 per share in 2005 from $.45 per
share in 2004.
We are also pleased to report that we have reached an agreement to acquire
Mansfield Bancorp, Inc., the parent company for Peoples State Bank of Mansfield.
Peoples is a profitable community bank with approximately $127 million in
assets, loans outstanding of $60 million, deposits of $111 million, and equity
of $15 million as of December 31, 2005. Peoples has locations in Mansfield,
Mahomet and Weldon, Illinois-communities that are contiguous to our existing
branch footprint. Peoples was first chartered in 1910 and shares our commitment
to customer service and community banking. The cost of the acquisition is
expected to be approximately $24 million in cash. No First Mid stock will be
issued in this acquisition. The agreement is subject to approval by Mansfield's
shareholders as well as by banking regulators. We believe this is an excellent
opportunity for First Mid to grow and to add to shareholder value. We expect the
transaction to close during the second quarter of 2006.
With respect to our 2005 results, net interest income, mortgage banking
revenues, trust revenues, and insurance commissions all had meaningful increases
during the year overcoming the challenging interest rate environment of 2005.
Short-term interest rates continued to increase during the year leading to
greater funding costs for many financial institutions. The ability to grow our
community banking line and increased business from the trust and insurance lines
were important to our performance in 2005.
Net interest income increased by $513,000 to $28,893,000 in 2005 as a result of
growth in loan balances. Loan balances increased to $638 million at year end as
compared to $598 million on December 31, 2004 with the majority of the growth in
commercial real estate loans. Deposit balances at year-end were essentially the
same as a year ago as competition for deposits has remained intense throughout
our market area. However, repurchase agreement balances of commercial customers
increased by $7.5 million from December 31, 2004. The balance sheet growth more
than compensated for the decline in margin. The Company's net interest margin
for 2005 was 3.66% as compared to 3.75% for 2004.
Increased residential mortgage originations and greater refinance activity led
to mortgage banking revenues increasing by $220,000 in 2005. Also, as a result
of new business underwritten, insurance commissions were $120,000 greater in
2005 than in 2004. Trust revenues also increased by $102,000 during the year
with growth in trust assets due to market value increases and from new
customers. During the fourth quarter of 2005, the market value of trust assets
increased to over $400 million for the first time in our history.
In addition, one other factor in the increase in non-interest income was the
sale of securities that resulted in gains of $281,000 greater than last year. We
review the balance sheet for liquidity and yield on a regular basis and make
decisions to sell when the market opportunities warrant.
We continue to manage our costs as operating expenses increased by less than 1%
from $25.1 million in 2004 to $25.4 million in 2005 despite incurring costs of
opening a new facility in Highland and a new office location for The Checkley
Agency, Inc.
Credit quality remains of high importance to banks and is an area where we
invest significant energies. Our 2005 provision for loan losses amounted to
$1,091,000 as compared with $588,000 for 2004. While we would, of course, prefer
to have no losses, our net charge-offs continue to be below peer banks and are
reasonable given the size of our portfolio. Total non-performing assets were
$3.9 million on December 31, 2005 as compared to $4.0 million on December 31,
2004.
We have demonstrated a track record of good performance and are excited about
the future. Thank you for your continued support of First Mid-Illinois
Bancshares, Inc.
Sincerely,
/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer
February 14, 2006
First Mid-Illinois Bancshares, Inc.
1515 Charleston Avenue
Mattoon, Illinois 61938
217-234-7454
www.firstmid.com
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (unaudited) Dec 31, Dec 31,
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2005 2004
Assets
Cash and due from banks $19,131 $19,119
Federal funds sold and other interest-bearing deposits 426 4,435
Investment securities:
Available-for-sale, at fair value 155,841 168,821
Held-to-maturity, at amortized cost (estimated fair
value of $1,442 and $1,598 at December 31, 2005
and December 31, 2004, respectively) 1,412 1,552
Loans 638,133 597,849
Less allowance for loan losses (4,648) (4,621)
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Net loans 633,485 593,228
Premises and equipment, net 15,168 15,227
Goodwill, net 9,034 9,034
Intangible assets, net 2,778 3,346
Other assets 13,298 11,966
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Total assets $850,573 $826,728
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Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing $95,305 $85,524
Interest bearing 553,764 564,716
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Total deposits 649,069 650,240
Repurchase agreements with customers 67,380 59,835
Junior subordinated debentures 10,310 10,310
Other borrowings 44,500 29,900
Other liabilities 6,988 7,289
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Total liabilities 778,247 757,574
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Stockholders' Equity:
Common stock ($4 par value; authorized
18,000,000 shares; issued 5,633,621 shares
in 2005 and 5,578,897 shares in 2004) 22,534 22,316
Additional paid-in capital 19,439 17,845
Retained earnings 60,867 53,259
Deferred compensation 2,440 2,204
Accumulated other comprehensive income (739) 623
Treasury stock at cost, 1,241,359 shares in
2005 and 1,121,546 shares in 2004 (32,215) (27,093)
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Total stockholders' equity 72,326 69,154
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Total liabilities and stockholders' equity $850,573 $826,728
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands) (unaudited)
--------------------------------------------------------------------------------
For the twelve months ended December 31, 2005 2004
Interest income:
Interest and fees on loans $38,071 $33,793
Interest on investment securities 6,184 6,053
Interest on federal funds sold and other 325 178
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Total interest income 44,580 40,024
Interest expense:
Interest on deposits 11,719 9,122
Interest on repurchase agreements with customers 1,496 455
Interest on subordinated debt 643 382
Interest on other borrowings 1,829 1,685
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Total interest expense 15,687 11,644
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Net interest income 28,893 28,380
Provision for loan losses 1,091 588
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Net interest income after provision for loan losses 27,802 27,792
Non-interest income:
Trust revenues 2,356 2,254
Brokerage commissions 383 428
Insurance commissions 1,567 1,447
Service charges 4,719 4,746
Securities gains, net 373 92
Mortgage banking revenues 742 522
Other 2,378 2,150
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Total non-interest income 12,518 11,639
Non-interest expense:
Salaries and employee benefits 13,310 13,626
Net occupancy and equipment expense 4,401 4,259
Amortization of intangible assets 568 623
Other 7,106 6,631
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Total non-interest expense 25,385 25,139
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Income before income taxes 14,935 14,292
Income taxes 5,128 4,541
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Net income $9,807 $9,751
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Per Share Information
(unaudited)
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For the twelve months ended December 31, 2005 2004
Basic earnings per share $2.22 $2.17
Diluted earnings per share $2.16 $2.13
Book value per share at December 31 $16.47 $15.53
Market price of stock at December 31 $40.55 $38.00
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands) (unaudited)
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For the twelve months ended December 31, 2005 2004
Balance at beginning of period $69,154 $70,595
Net income 9,807 9,751
Dividends on stock (2,199) (2,023)
Issuance of stock 1,637 2,050
Purchase of treasury stock (4,851) (10,365)
Deferred compensation adjustment 140 104
Changes in accumulated other comprehensive
income (loss) (1,362) (958)
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Balance at end of period $72,326 $69,154
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