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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. (NASDAQ: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.
                   


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