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

April, 24 2019 05:05 PM First Mid Bancshares Inc.

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 6^th 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 10^th. 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.

Company Name:	First Mid Bancshares Inc.
Stock Symbol:	FMBH
Market:	NASDAQ
Website:	firstmid.com

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