SCHEDULE 14A

                                  (RULE 14-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant                     |X|

Filed by a Party other than the Registrant  |_|

Check the appropriate box:

|_|      Preliminary Proxy Statement
|_|      Confidential, for use of the Commission only (as permitted by
         Rule 14a-6(e)(2))
|X|      Definitive Proxy Statement
|_|      Definitive Additional Materials
|_|      Soliciting Material pursuant to Rule 14a-12


                       FIRST MID-ILLINOIS BANCSHARES, INC.
                (Name of Registrant as Specified in its Charter)

                       FIRST MID-ILLINOIS BANCSHARES, INC.
                   (Name of Person(s) Filing Proxy Statement)

Payment of filing fee (check the appropriate box):

|X|  No fee required.

|_|  Fee computed on table below per Exchange  Act Rules  14a-6(i)(1)  and 0-11.
     (1)  Title of each class of securities to which transaction applies:
     (2)  Aggregate number of securities to which transaction applies:
     (3)  Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (set forth the amount on which the
          filing fee is calculated and state how it was determined):
     (4)  Proposed maximum aggregate value of transaction: (5) Total fee paid:

|_| Fee paid previously with preliminary materials.

    Checkbox if any part of the fee is offset as provided by Exchange  Act Rule
    0-11(a)(2)  and identify the filing for which the  offsetting  fee was paid
    previously.  Identify the previous filing by registration statement number,
    or the form or schedule and the date of its filing.

     (1)  Amount Previously Paid:
     (2)  Form, Schedule or Registration Statement No.:
     (3)  Filing Party:
     (4)  Date Filed:







                                 April 11, 2003


Dear Fellow Stockholder:

     On behalf of the Board of Directors and  management  of First  Mid-Illinois
Bancshares,  Inc.,  I  cordially  invite  you to attend  the  Annual  Meeting of
Stockholders of First Mid-Illinois  Bancshares,  Inc. to be held at 4:00 p.m. on
May 28, 2003, in the lobby of First  Mid-Illinois  Bank & Trust, 1515 Charleston
Avenue, Mattoon, Illinois.

     The  accompanying  Notice  of  Annual  Meeting  of  Stockholders  and Proxy
Statement  discuss the business to be  conducted  at the  meeting.  We have also
enclosed a copy of the Company's 2002 Report to the Owners and its Annual Report
on Form 10-K for the recently  completed  fiscal year.  At the meeting,  we will
report on Company  operations and the outlook for the year ahead.  Directors and
officers of the Company,  as well as a representative of KPMG LLP, the Company's
independent  auditors,  will be present to respond to any appropriate  questions
stockholders may have.

     I encourage you to attend the meeting in person. Whether or not you plan to
attend the meeting,  please act promptly to vote your shares.  You may vote your
shares by  completing,  signing and dating the enclosed proxy card and returning
it in the accompanying  postage paid envelope  provided.  You also may vote your
shares by telephone or through the Internet by following  the  instructions  set
forth on the proxy card. If you attend the meeting,  you may vote your shares in
person,  even if you have previously  submitted a proxy in writing, by telephone
or through the Internet.  This will ensure that your shares are  represented  at
the meeting. If you have any questions concerning these matters,  please contact
me at (217) 258-0415 or Christie  Burich,  Manager of Shareholder  Services,  at
(217) 258-0493. We look forward with pleasure to seeing and visiting with you at
the meeting.

                                          Very truly yours,

                                          FIRST MID-ILLINOIS BANCSHARES, INC.


                                          /s/ William S. Rowland
                                          William S. Rowland
                                          Chairman And Chief Executive Officer

--------------------------------------------------------------------------------
1515 Charleston Avenue o P.O. Box 499 o Mattoon, IL 61938 o Phone:(217) 258-0493






                                    NOTICE OF
                         ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD MAY 28, 2003


                       FIRST MID-ILLINOIS BANCSHARES, INC.
                      1515 CHARLESTON AVENUE, P.O. BOX 499
                             MATTOON, ILLINOIS 61938
                                 (217) 258-0493

NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of First
Mid-Illinois Bancshares, Inc. will be held in the lobby of First Mid-Illinois
Bank & Trust, 1515 Charleston Avenue, Mattoon, Illinois, on Wednesday, May 28,
2003 at 4:00 p.m. local time.

The meeting is for the purpose of considering and acting upon:

1. The election of three directors of the Company; and
2. Such other matters as may properly come before the meeting or any
   adjournments thereof.

The Board of Directors has fixed the close of business on April 1, 2003 as the
record date for the determination of the stockholders entitled to vote at the
meeting and any adjournments thereof.

You are requested to act promptly to vote your shares by completing, signing and
returning the enclosed proxy card in the enclosed return envelope or by
telephone or through the Internet by following the instructions set forth on the
proxy card.

BY ORDER OF THE BOARD OF DIRECTORS


/s/ William S. Rowland
William S. Rowland
Chairman and Chief Executive Officer

Mattoon, Illinois
April 11, 2003






                                 PROXY STATEMENT


--------------------------------------------------------------------------------
                               GENERAL INFORMATION
--------------------------------------------------------------------------------

     This Proxy  Statement is furnished in connection  with the  solicitation of
proxies by the Board of Directors of First Mid-Illinois  Bancshares,  Inc. to be
voted at the  Annual  Meeting of  Stockholders  to be held in the lobby of First
Mid-Illinois  Bank &  Trust,  1515  Charleston  Avenue,  Mattoon,  Illinois,  on
Wednesday,  May 28, 2003 at 4:00 p.m. local time.  The Board of Directors  would
like to have all stockholders  represented at the meeting. Please complete, sign
and return  your proxy  card in the  enclosed  return  envelope,  telephone  the
toll-free  number  listed on your proxy card, or use the Internet site listed on
your proxy card.

     The  accompanying  Notice of Annual  Meeting,  this Proxy Statement and the
proxy card are first being  mailed to  stockholders  on or about April 11, 2003.
The Company's Annual Report on Form 10-K for the recently completed fiscal year,
which includes the  consolidated  financial  statements of the Company,  is also
enclosed.

     The Company is a diversified  financial  services  company which serves the
financial needs of central Illinois. The Company directly or indirectly owns all
the  outstanding  capital  stock of First  Mid-Illinois  Bank & Trust,  N.A.,  a
national banking association (the "Bank"), with offices in Mattoon,  Charleston,
Effingham, Altamont, Neoga, Sullivan, Arcola, Taylorville,  Tuscola, Monticello,
Deland,  Urbana,  Decatur,  Highland,  Pocahontas,   Champaign,  and  Maryville,
Illinois;  Mid-Illinois  Data Services,  Inc., a data processing  company ("Data
Services"); and The Checkley Agency, Inc., an insurance agency ("Checkley").

     Only  holders  of  record  of the  Company's  Common  Stock at the close of
business  on April 1, 2003 (the  "Record  Date") will be entitled to vote at the
annual meeting or any  adjournments  or  postponements  of such meeting.  On the
Record  Date,  the  Company  had  3,162,383  shares of Common  Stock  issued and
outstanding. In the election of directors, and for any other matters to be voted
upon at the annual meeting, each issued and outstanding share of Common Stock is
entitled to one vote.

     You may  revoke  your  proxy at any time  before  it is  voted.  Unless  so
revoked,  the shares  represented  by such  proxies  will be voted at the annual
meeting  and all  adjournments  thereof.  You may revoke  your proxy at any time
before it is voted by delivering  written  notice of revocation to the Secretary
of the Company at 1515 Charleston Avenue, P.O. Box 499, Mattoon, Illinois 61938,
by executing and delivering a subsequently  dated proxy,  by voting by telephone
or through the Internet on a later date, or by attending the annual  meeting and
voting in person.  Proxies  solicited  by the Board of  Directors of the Company
will be  voted  in  accordance  with  the  directions  given  therein.  Where no
instructions  are  indicated,  proxies  will be  voted  in  accordance  with the
recommendations of the Board of Directors with respect to the proposal described
herein.


     A quorum of stockholders is necessary to take action at the annual meeting.
The presence,  in person or by proxy, of the holders of a majority of the shares
of Common Stock of the Company entitled to vote at the meeting will constitute a
quorum. Votes cast by proxy or in person at the meeting will be tabulated by the
inspector of election  appointed  for the meeting and will be counted as present
for  purposes of  determining  whether a quorum is  present.  The  inspector  of
election  will treat  broker  non-votes  as  present  and  entitled  to vote for
purposes of determining  whether a quorum is present.  "Broker non-votes" refers
to a broker or other nominee holding shares for a beneficial owner not voting on
a  particular  proposal  because  the  broker  or  other  nominee  does not have
discretionary voting power regarding that item and has not received instructions
from the beneficial owner.

     The expenses of  solicitation,  including the cost of printing and mailing,
will be paid by the Company. Proxies are being solicited principally by mail, by
telephone, and by e-mail. In addition, directors, officers and regular employees
of the  Company may  solicit  proxies  personally,  by  telephone,  by fax or by
special  letter.  The Company may also  reimburse  brokers,  nominees  and other
fiduciaries  for their  reasonable  expenses in  forwarding  proxy  materials to
beneficial owners.

--------------------------------------------------------------------------------
                 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------------

     The following  table sets forth,  as of March 1, 2003, the number of shares
of Common Stock beneficially owned by each person known by the Company to be the
beneficial  owner of more than five percent of the outstanding  shares of Common
Stock (who are not also directors),  each director nominee of the Company,  each
director,  the "named  executive  officers" (as defined  below) and all director
nominees, directors and executive officers of the Company as a group.


     Name and Address             Amount and Nature of       Percent of Common
   of Beneficial Owner           Beneficial Ownership(1)     Stock Outstanding

Principal Stockholders

Margaret Lumpkin Keon                  186,347 (2)                  5.8%
c/o Keon Enterprises
16 Miller Avenue, Suite 203
Mill Valley, California 94941


Mary Lumpkin Sparks                    220,009 (3)                   6.9%
2438 Campbell Road, N.W.
Albuquerque, New Mexico 87104

David R. Hodgman                       166,659 (4)                   5.2%
c/o Schiff Hardin & Waite
6600 Sears Tower
Chicago, Illinois 60606


Director Nominees, Directors and Named Executive
Officers:

Charles A. Adams                       239,166 (5)                   7.4%(19)

Kenneth R. Diepholz                     24,739 (6)                    * %(19)

Steven L. Grissom                      186,427 (7)                   5.8%(19)

Richard Anthony Lumpkin                323,058 (8)                  10.1%(19)

Daniel E. Marvin, Jr.                   71,739 (9)                   2.2%(19)

Gary W. Melvin                         117,547(10)                   3.7%(19)

Sara Jane Preston                        6,491(11)                    * %(19)

William S. Rowland                      39,218(12)                   1.2%(19)

Ray Anthony Sparks                     114,307(13)                   3.6%(19)

John W. Hedges                           4,912(14)                    * %(19)

Robert J. Swift, Jr.                     2,030(15)                    * %(19)

Stanley E. Gilliland                    24,420(16)                    * %(19)

Michael L. Taylor                        1,940(17)                    * %(19)

All directors and executive          1,185,446(18)                  36.1%(20)
officers as a group (15 persons)


(1)  Unless otherwise  indicated,  the nature of beneficial ownership for shares
     shown in this column is sole voting and investment  power.  The information
     contained in this column is based upon information furnished to the Company
     by the persons named above.

(2)  The above amount  includes  118,154  shares held under the Margaret L. Keon
     Trust,  established  under  Article 5 of the Mary G.  Lumpkin  Trust  dated
     January 31, 1984, of which trust Ms. Keon is trustee and  beneficiary.  The
     above amount also includes  68,193 shares held by SKL Investment  Group, of
     which Ms. Keon is a voting member.

(3)  The above amount  includes  32,937  shares held in trust for the benefit of
     Richard Anthony Lumpkin's adult son for which Mrs. Sparks serves as trustee
     and of which shares Mrs. Sparks disclaims beneficial  ownership.  The above
     amount also  includes  72,000  shares owned by Pinon Tree Holding  Company,
     LLC, of which Mrs. Sparks disclaims  beneficial ownership of 71,280 shares.
     The above amount also includes 68,193 shares held by SKL Investment  Group,
     of which Mrs. Sparks is a voting member.

(4)  The above  amount  includes  83,329.5  shares held by the  Richard  Anthony
     Lumpkin  1990  Personal  Income  Trust for the benefit of Benjamin  Iverson
     Lumpkin  dated  April 20,  1990,  and  83,329.5  shares held by the Richard
     Anthony  Lumpkin  1990  Personal  Income Trust for the benefit of Elizabeth
     Arabella  Lumpkin  dated  April  20,  1990.  Mr.  Hodgman,  who  serves  as
     co-trustee of the aforementioned trusts,  disclaims beneficial ownership of
     the foregoing 166,659 shares held by these trusts.

(5)  The  above  amount  includes  164,080  shares  of  Common  Stock  held by a
     corporation  which Mr.  Adams is deemed to control.  The above  amount also
     includes  3,367  shares held by Mr.  Adams'  spouse,  over which shares Mr.
     Adams has no voting and  investment  power,  and options to purchase  1,000
     shares of Common Stock. The above amount does not include 2,648 shares held
     by adult children of Mr. Adams.


(6)  The above amount reflects the disposition by Mr. Diepholz to the Company of
     27,452  shares on March 6, 2003 in a privately  negotiated  transaction  in
     accordance with the Company's share  repurchase  program.  The above amount
     also includes options to purchase 5,750 shares of Common Stock.

(7)  The above amount  includes  17,018  shares held by Mr.  Grissom.  The above
     amount also includes  83,329.5  shares held by the Richard  Anthony Lumpkin
     1990  Personal  Income  Trust for the benefit of Benjamin  Iverson  Lumpkin
     dated April 20,  1990,  and  83,329.5  shares  held by the Richard  Anthony
     Lumpkin 1990  Personal  Income Trust for the benefit of Elizabeth  Arabella
     Lumpkin dated April 20, 1990. Mr. Grissom,  who serves as co-trustee of the
     aforementioned  trusts,  disclaims  beneficial  ownership of the  foregoing
     166,659 shares held by these trusts. The above amount also includes options
     to purchase 2,750 shares of Common Stock.

(8)  The  above  amount  includes  62,685  shares  held  by The  Lumpkin  Family
     Foundation,  of which Mr. Lumpkin serves as a director, and of which shares
     beneficial  ownership is disclaimed.  The above amount also includes 68,193
     shares  held by SKL  Investment  Group,  of which Mr.  Lumpkin  is a voting
     member.  The above amount also includes options to purchase 5,750 shares of
     Common Stock.

(9)  The above amount  includes 6,490 shares held by Mr. Marvin's  spouse,  over
     which shares Mr. Marvin has no voting or investment  power and of which Mr.
     Marvin  disclaims  beneficial  ownership,  and  1,402  shares  held  by Mr.
     Marvin's  grandchildren,  over  which Mr.  Marvin  has  shared  voting  and
     investment power. The above amount also includes options to purchase 22,250
     shares of Common Stock.

(10) The above amount includes options to purchase 5,750 shares of Common Stock.

(11) The above amount includes options to purchase 2,750 shares of Common Stock.

(12) The above  amount  includes  options to  purchase  22,315  shares of Common
     Stock.

(13) The above amount  includes 35,857 shares held by Sparks  Investment  Group,
     LP, over which Mr.  Sparks shares voting and  investment  power.  The above
     amount also includes  3,731 shares held by Mr. Sparks'  spouse,  over which
     shares Mr.  Sparks  has no voting  and  investment  power,  and  options to
     purchase 1,000 shares of Common Stock.

(14) The above amount includes options to purchase 3,937 shares of Common Stock.

(15) The above amount includes options to purchase 1,125 shares of Common Stock.

(16) The above amount includes options to purchase 8,812 shares of Common Stock.

(17) The above amount includes options to purchase 1,687 shares of Common Stock.

(18) Includes an  aggregate  of 86,377  shares  obtainable  upon the exercise of
     options.

(19) Percentage is calculated on a partially  diluted  basis,  assuming only the
     exercise of stock options by such individual  which are exercisable  within
     60 days.

(20) Percentage is calculated on a fully diluted basis, assuming the exercise of
     all stock  options  which  are  exercisable  within 60 days by  individuals
     included in the above table.

*    Less than 1%.

     As of March 1, 2003, the Bank acted as sole or co-fiduciary with respect to
trusts and other fiduciary accounts which own or hold 119,535 shares or 3.74% of
the outstanding Common Stock of the Company, over which the Bank has sole voting
and investment  power with respect to 104,450 shares or 3.27% of the outstanding
Common  Stock and shared  voting  and  investment  power with  respect to 15,085
shares or .47% of the outstanding Common Stock.


--------------------------------------------------------------------------------
                       PROPOSAL I - ELECTION OF DIRECTORS
--------------------------------------------------------------------------------

     The  directors  of the  Company  are  divided  into  three  classes  having
staggered terms of three years. At the annual meeting,  the stockholders will be
entitled to elect  three Class II  directors  for a term  expiring in 2006.  The
number of  directors is nine,  comprised of three  directors in each of Class I,
Class II, and Class III.

     For this year's  annual  stockholders  meeting,  the Board of Directors has
nominated for election as Class II directors Richard Anthony Lumpkin,  Sara Jane
Preston,  and William S.  Rowland.  Messrs.  Lumpkin and Rowland  have served as
directors  of the Company  since 1982 and 1991,  respectively.  Ms.  Preston has
served as director of the Company since 2000.  The three  individuals  receiving
the highest number of votes cast will be elected as directors of the Company and
will serve as Class II directors for three year terms  expiring in 2006.  Broker
non-votes,  because they are not considered  votes cast,  will not be counted in
the vote  totals.  The Company has no knowledge  that any of the  nominees  will
refuse or be unable to serve, but if any of the nominees becomes unavailable for
election,  the holders of the proxies  reserve the right to  substitute  another
person of their choice as a nominee when voting at the meeting.

     The following  table sets forth as to each nominee and director  continuing
in office,  his or her name,  age,  principal  occupation and the year he or she
first  became  a  director  of the  Company.  Unless  otherwise  indicated,  the
principal occupation listed for each person below has been his or her occupation
for the past five years.



                          Age at                                                  Year First     Year
                           April                                                    Became       Term
Name                      1, 2003   Principal Occupation                           Director    Expires
----                      -------   --------------------                           --------    -------

DIRECTOR NOMINEES
                                                                                     

Richard Anthony Lumpkin     68      Director of the Bank (since 1966) and of         1982        2003
                                    the Company; Chairman of the Board of
                                    Consolidated Communications, Inc. (since
                                    2003); Director of Ameren Corporation
                                    (since 1995); Vice Chairman, McLeod USA
                                    Inc. (until 2002); Chairman, President, and
                                    CEO, Illinois Consolidated Telephone
                                    Company (until 2002); in 1997, Illinois
                                    Consolidated Telephone Company merged with
                                    McLeod USA; in January 2002, McLeod USA
                                    filed a prenegotiated plan of
                                    reorganization through a Chapter 11
                                    petition filed in the U.S. Bankruptcy Court
                                    for the District of Delaware  in order to
                                    complete a recapitalization; in April 2002,
                                    this plan of reorganization became
                                    effective and McLeod USA emerged from
                                    Chapter 11 protection; in December 2002, a
                                    corporation led by Mr. Lumpkin
                                    (Consolidated Communications, Inc.)
                                    completed its acquisition of Illinois
                                    Consolidated Telephone Company and other
                                    operating entities from McLeod USA in
                                    connection with the recapitalization and
                                    then changed its name to Consolidated
                                    Communications, Inc.; Director of Illuminet
                                    Holdings, Inc. (until 2001).

Sara Jane Preston           62      Director of the Bank (since 1999) and of         2000        2003
                                    the Company (since 2000); Director of
                                    Checkley (since 2002); retired President
                                    and CEO of Charleston National Bank and the
                                    southern Illinois lending operations of its
                                    successor organizations (Boatmen's National
                                    Bank, NationsBank and BankAmerica).


William S. Rowland          56      Chairman, President, Chief Executive             1991        2003
                                    Officer and Director of the Company;
                                    Executive Vice President (1997-1999),
                                    Treasurer and Chief Financial Officer
                                    (1989-1999) of the Company; Director of
                                    Data Services (since 1989); Director (since
                                    1999), Chairman (since 1999), and Executive
                                    Vice President (1989-1999) of the Bank;
                                    Director of Checkley (since 2002).

DIRECTORS CONTINUING IN OFFICE

Charles A. Adams            61      Director of the Bank (since 1989) and of         1984        2004
                                    the Company; Director of Data Services
                                    (since 1987); Director of Checkley (since
                                    2002); President, Howell Paving, Inc.

Daniel E. Marvin, Jr.       64      President Emeritus, Eastern Illinois             1982        2004
                                    University (since 2002); Chairman,
                                    President, Chief Executive Officer
                                    (1983-1999) and Director of the Company;
                                    Director (since 1980), Chairman
                                    (1983-1999), and President and Chief
                                    Executive Officer (1983-1997) of the Bank;
                                    Director of Data Services (1987-1992).

Ray Anthony Sparks          46      Director of the Bank (since 1997) and of         1994        2004
                                    the Company; Director of Data Services
                                    (since 1996); Director of Checkley (since
                                    2002); former President of Elasco Agency
                                    Sales, Inc. and Electrical Laboratories and
                                    Sales Corporation; private investor, Sparks
                                    Investment Group, LP.

Kenneth R. Diepholz         64      Director of the Bank (since 1984) and of         1990        2005
                                    the Company; President, Ken Diepholz
                                    Chevrolet, Inc. (until 2000) and Vice
                                    President, Ken Diepholz Chevrolet, Inc.
                                    (since 2000); President, D-Co Coin Laundry;
                                    President, Augusta Lakes; Owner, Diepholz
                                    Rentals.

Steven L. Grissom           50      Director of the Bank and the Company (since      2000        2005
                                    2000); Treasurer and Secretary of
                                    Consolidated Communications, Inc. (since
                                    2003); Assistant Secretary of  Illinois
                                    Consolidated Telephone Company (since
                                    2003); Administrative Officer of SKL
                                    Investment Group, LLC (since 1997);
                                    Treasurer of Illinois Consolidated
                                    Telephone Company (until 2002).

Gary W. Melvin              54      Director of the Bank (since 1984) and of         1990        2005
                                    the Company; Director of Data Services
                                    (since 1987); President and Co-Owner, Rural
                                    King Stores.



    The Board of Directors recommends a vote "FOR" the election of Directors
            Lumpkin, Preston and Rowland for a term of three years.




                                    Age at
                                   April 1,
Name                                2003       Principal Occupation

NAMED EXECUTIVE OFFICERS

                                         
John W. Hedges                        55       President of the Bank (since 1999) and Executive
                                               Vice President of the Company (since 1999); former
                                               Senior Vice President, National City Bank (until
                                               1999).

Robert J. Swift, Jr.                  51       Executive Vice President of the Bank (since 2000)
                                               and Vice President of the Company (since 2000);
                                               former Senior Vice President, Central Trust Bank
                                               (until 2000).

Stanley E. Gilliland                  58       Executive Vice President-Loans of the Bank (since
                                               1994) and Vice President of the Company (since 1984).

Michael L. Taylor                     34       Executive Vice President and Chief Financial Officer
                                               of the Bank (since 2000) and Vice President and
                                               Chief Financial Officer of the Company (since 2000);
                                               Vice President of AMCORE Bank (until 2000).


--------------------------------------------------------------------------------
                MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------

     The Board of Directors of the Company has  established  an audit  committee
and a compensation committee.  These committees are composed entirely of outside
directors.  The Board has also created other company-wide committees composed of
officers of the Company and its subsidiaries.  The Company does not maintain any
standing  nominating  committee.  The full Board acts on all matters relating to
the nomination of individuals for election as directors.

     Members  of the audit  committee  are  Messrs.  Adams,  Diepholz,  Grissom,
Marvin,  Melvin, and Sparks, and Ms. Preston. The audit committee reports to the
Board of  Directors  and has the  responsibility  for  reviewing  and  approving
internal control procedures,  accounting  practices and reporting  activities of
the  Company's  subsidiaries.  The  committee  also has the  responsibility  for
establishing   and  maintaining   communications   between  the  Board  and  the
independent auditors and regulatory  agencies.  The audit committee reviews with
the  independent  auditors  the  scope of their  examinations,  with  particular
emphasis  on the areas to which  either  the  audit  committee  or the  auditors
believe special  attention  should be directed.  It also reviews the examination
reports of regulatory  agencies and reports to the full Board regarding  matters
discussed  therein.  Finally,  it oversees the  establishment and maintenance of
effective controls over the business  operations of the Company's  subsidiaries.
The audit committee met five times in 2002.

     The members of the  compensation  committee  are Messrs.  Adams,  Diepholz,
Grissom,  Lumpkin, Marvin, Melvin, and Sparks, and Ms. Preston. The compensation
committee  reports  to the Board of  Directors  and has  responsibility  for all
matters related to compensation of executive officers of the Company,  including
review  and  approval  of base  salaries,  conducting  a review of  salaries  of
executive officers compared to other financial services companies in the region,
fringe  benefits,  including  modification of the retirement plan, and incentive
compensation. The compensation committee met two times in 2002.

     A total of 14 regularly  scheduled  and special  meetings  were held by the
Board of  Directors  of the Company  during 2002.  During  2002,  all  directors
attended at least 75 percent of the meetings of the Board and the  committees on
which they served, except for Mr. Lumpkin with respect to meetings of the Board.


--------------------------------------------------------------------------------
             REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------

     The members of the audit  committee  of the Company  during the fiscal year
ended  December  31,  2002 were  Messrs.  Sparks  (Chairman),  Adams,  Diepholz,
Grissom,  Marvin, and Melvin,  and Ms. Preston.  Mr. Marvin was appointed to the
audit committee on July 1, 2002.

     The audit  committee acts pursuant to a written charter that was adopted by
the Board of  Directors  on January  23,  2001.  The charter  was  reviewed  and
reassessed for adequacy and adopted with no changes to the original  language by
the Audit  Committee on each of January 22, 2002 and January 28, 2003. The audit
committee will continue to review and reassess the charter from time to time but
not less than annually.

     The audit  committee  reviewed and discussed with  management the Company's
audited financial statements as of and for fiscal year ended December 31, 2002.

     The audit committee also discussed with the independent auditors, KPMG LLP,
the matters required to be discussed by Statement on Auditing  Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.

     The audit  committee  received the written  disclosures and the letter from
KPMG LLP required by Independence  Standards Board Standard No. 1,  Independence
Discussions with Audit Committees,  as amended,  and discussed with KPMG LLP the
independence of that firm.

     Based on the review and discussion  referred to above,  the audit committee
recommended to the Board of Directors that the financial  statements referred to
above be included  in the  Company's  Annual  Report on Form 10-K for the fiscal
year ended December 31, 2002.

     In  addition,  the audit  committee  considered  whether the  provision  of
services  by KPMG  LLP not  related  to the  audit of the  financial  statements
referred  to  above  and to the  reviews  of the  interim  financial  statements
included in the Company's Forms 10-Q for the quarters ended March 31, 2002, June
30,  2002,  and  September  30,  2002  were  compatible  with   maintaining  the
independence of KPMG LLP.

     This audit  committee  report is  submitted  by the audit  committee of the
Board of Directors:

                                                Ray Anthony Sparks, Chairman
                                                Charles A. Adams
                                                Kenneth R. Diepholz
                                                Steven L. Grissom
                                                Daniel E. Marvin, Jr.
                                                Gary W. Melvin
                                                Sara Jane Preston

--------------------------------------------------------------------------------
                          FEES OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------

     Audit Fees. The aggregate fees billed for professional services rendered by
KPMG LLP for the audit of the  Company's  annual  financial  statements  for the
fiscal year ended  December 31, 2002 and the review of the financial  statements
included in the  Company's  Quarterly  Reports on Form 10-Q for said fiscal year
were $99,050.

     Financial   Information   Systems  Design  and   Implementation   Fees.  No
professional  services  were  rendered or fees billed by KPMG LLP for  financial
information systems design and implementation for the fiscal year ended December
31, 2002.

     All Other  Fees.  The  aggregate  fees  billed  for  professional  services
rendered  by KPMG LLP other than audit fees and  financial  information  systems
design and implementation  fees for the fiscal year ended December 31, 2002 were
$18,350,  consisting of $14,350 for  audit-related  services  (namely,  employee
benefit plan audit,  registration  statement review,  and statements and consent
issuances), and $4,000 for tax compliance services.


--------------------------------------------------------------------------------
                             EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

     Summary   Compensation   Information.   The  following   table   summarizes
compensation for services to the Company and the Company's  subsidiaries for the
years ended  December  31,  2002,  2001 and 2000 paid to or earned by any person
serving as the Chief Executive  Officer of the Company,  and the four other most
highly  compensated  executive  officers of the Company  whose  salary and bonus
exceeded  $100,000,  for the year ended December 31, 2002. These individuals are
sometimes herein referred to as the "named executive officers."



                                                                                      Securities
Name and                                                         Annual               Underlying        All Other
Principal Position                           Year            Compensation(1)          Options(#)       Compensation
                                                          Salary(2)      Bonus

                                                                                          
William S. Rowland, Chairman,                2002       $ 187,000       $ 74,800         8,000           $21,606(3)
President and Chief Executive Officer        2001       $ 170,000       $ 48,136         9,000           $18,878(3)
of the Company                               2000       $ 155,000       $ 46,330         3,750           $15,552(3)

John W. Hedges, Executive Vice               2002       $ 130,000       $ 40,950         3,250           $10,257(4)
President of the Company                     2001       $ 122,000       $ 29,573         2,250           $ 9,101(4)
                                             2000       $ 116,200       $ 29,686         2,250           $ 7,279(4)

Robert J. Swift, Jr., Vice President         2002       $ 126,500       $ 23,719         2,250           $ 9,013(4)
of the Company                               2001       $ 122,100       $ 23,866         2,250           $ 8,087(4)
                                             2000       $  40,235       $ 12,675             0           $   N/A


Stanley E. Gilliland,                        2002       $ 113,500       $ 23,409         2,250           $ 8,215(4)
Vice President of the Company                2001       $ 109,000       $ 22,277         2,250           $ 7,877(4)
                                             2000       $ 106,000       $ 22,724         2,250           $ 7,723(4)

Michael L. Taylor, Vice President and        2002       $  94,000       $ 22,443         2,250           $ 6,987(4)
Chief Financial Officer of the Company       2001       $  89,000       $ 21,634         2,250           $ 6,638(4)
                                             2000       $  85,000       $ 17,638         2,250           $ 6,158(4)




(1)  None of the named  executive  officers  received any  perquisites  or other
     personal  benefits,  securities,  or property in an amount exceeding 10% of
     his salary and bonus during 2002, 2001, and 2000.

(2)  Includes deferred amounts.

(3)  Represents the Company's  contributions  to its  retirement  plan for 2002,
     2001, and 2000 of $15,708, $12,980 and $9,654, respectively,  and an annual
     premium  payment for an insurance  policy  purchased to fund a supplemental
     retirement  and death  benefit for Mr.  Rowland in the amount of $5,898 for
     each year.

(4)  Represents  the Company's  contributions  to its  retirement  plan for each
     given year.


     The following table sets forth information  regarding  individual grants of
stock options made in 2002 to the named executive officers.


                        Number of       Percent of                         Potential Realizable Value
                        Securities     Total Options   Exercise                     at Assumed
                        Underlying      Granted to      Price     Expir-   Annual Rates of Stock Price
                         Options       Employees in      Per      ation        Appreciation for
Name                  Granted (#)(1)    Fiscal Year     Share     Date            Option Term
----                  -----------       -----------     -----     ----     ---------------------------
                                                                               5%            10%
                                                                               --            ---
                                                                         
William S. Rowland        8,000            23%         $ 27.25   12/16/12   $137,120       $347,440

John W. Hedges            3,250             9%         $ 27.25   12/16/12   $ 55,705       $141,148

Robert J. Swift, Jr.      2,250             6%         $ 27.25   12/16/12   $ 38,565       $ 97,718

Stanley E. Gilliland      2,250             6%         $ 27.25   12/16/12   $ 38,565       $ 97,718

Michael L. Taylor         2,250             6%         $ 27.25   12/16/12   $ 38,565       $ 97,718


(1)  The options  become  exercisable  with respect to 25% of the shares covered
     thereby beginning on January 1, 2004 and on each of the three anniversaries
     of this date.

     The following table sets forth information regarding the year-end values of
unexercised stock options held by the named executive officers.



                                                              Number of Securities        Value of Unexercised
                               Shares                        Underlying Unexercised           In-the-Money
                             Acquired on        Value         Options at Fiscal               Options at
               Name          Exercise (#)     Realized           Year-End                (#)Fiscal Year-End(1)
                                                          Exercisable  Unexercisable  Exercisable  Unexercisable

                                                                                   
William S. Rowland               --               --         16,312       24,688       $113,906      $ 69,219

John W. Hedges                   --               --          2,062        8,688       $ 10,594      $ 26,531

Robert J. Swift, Jr.            562.5         $3,274(2)        --          6,187       $     --      $ 20,531

Stanley E. Gilliland             --               --          6,937        7,313       $  2,469      $ 24,906

Michael L. Taylor                --               --            563        6,187       $  4,594      $ 20,531


(1)  This amount represents the difference between the market value of one share
     of the Company's Common Stock on December 31, 2002 ($27.00) and the option
     exercise  price times the total number of shares  subject to exercisable or
     unexercisable options.

(2)  This amount represents the difference between the market value of one share
     of the Company's  Common Stock on January 3, 2002 ($24.65),  and the option
     exercise  price  ($18.83) times the number of shares subject to the options
     (562.5).

     Employment  Agreements.  In January  2002,  the Company  entered into a new
employment agreement with William S. Rowland. The employment agreement generally
provides for an initial base salary,  which may be increased but not  decreased,
and a bonus of up to 40% of base  salary  for 2002 and 50% for 2003,  as well as
other benefits  under the agreement.  The agreement has an initial term of three
years, which may be extended upon mutual agreement.  In the event of termination
of Mr.  Rowland's  employment by the Company without cause,  the Company will be
obligated  to  pay  an  amount  equal  to  one  year's  salary.   Under  certain
circumstances,  if Mr. Rowland's employment  discontinues  following a change in
control of the Company,  the successor to the Company is obligated,  among other
things,  to pay an  amount  equal to two  years'  base  salary.  The  employment
agreement includes a covenant which limits the ability of Mr. Rowland to compete
with the Bank  for a  period  of two  years  following  the  termination  of his
employment.  In October 2002, the Company entered into a similar  agreement with
John W. Hedges,  which  provides for a bonus of up to 35% of base salary,  and a
payment in an amount equal to one year's base salary if employment  discontinues
following a change in control of the Company.


     In August 2000, the Company entered into a similar agreement with Robert J.
Swift, Jr., which provides for a bonus of up to 25% of base salary and a payment
in an  amount  equal  to one  year's  base  salary  if  employment  discontinues
following a change in control of the Company.  In May 2001, the Company  entered
into a similar  agreement with Stanley E. Gilliland,  which provides for a bonus
of up to 25% of base salary and a payment in an amount  equal to one year's base
salary if employment  discontinues following a change in control of the Company.
In May 2001,  the  Company  entered  into a similar  agreement  with  Michael L.
Taylor,  which provides for a bonus of up to 25% of base salary and a payment in
an amount equal to one year's base salary if employment discontinues following a
change in control of the Company.

     Compensation Committee Interlocks and Insider Participation. The members of
the  compensation  committee  of the Board of  Directors  of the Company for the
fiscal year ended  December 31, 2002 were Messrs.  Diepholz  (Chairman),  Adams,
Grissom, Lumpkin, Marvin, Melvin, and Sparks, and Ms. Preston. During the fiscal
year ended  December 31, 2002,  no member of the  compensation  committee was an
officer or  employee  or a former  officer of the  Company or its  subsidiaries,
other  than Mr.  Marvin,  the former  Chairman,  President  and Chief  Executive
Officer of the Company.  Also,  during the fiscal year ended  December 31, 2002,
Mr.  Rowland served as a member of the  compensation  committee and as director,
and Mr.  Grissom  served  as  Treasurer,  of Coles  Together,  a  not-for-profit
economic  development  organization,  and Mr.  Hedges  served as a member of the
compensation committee and as director, and Mr. Grissom served as President,  of
Mattoon Area Industrial  Development  Corporation,  a not-for-profit  industrial
development corporation. See "Certain Relationships and Related Transactions."

     Compensation   Committee  Report.   It  is  the  compensation   committee's
responsibility   to  evaluate  the  performance  of  management,   review  total
management  compensation  levels and consider  management  succession  and other
related  matters.  The  committee  reviews and approves in detail all aspects of
compensation for the senior management of the Company.

     Compensation for senior management  generally includes base salary,  annual
performance-based  incentives and long-term stock incentives. The Committee uses
a "peer group" of  financial  institutions,  including  Illinois  banks,  public
banking companies in the general area and commercial banks in the Midwest region
in assessing competitive compensation trends and pay levels.

     Base Salaries.  Base salaries for executive  officers are reviewed annually
and may be adjusted, when appropriate, to reflect competitive practices, changes
in roles and responsibilities, and individual performance.

     Annual  Incentive  Compensation.   Annual  incentive  amounts  are  payable
contingent  upon  the  performance  of the  Company,  as well as the  individual
contribution of each officer. As a result, a portion of each executive officer's
annual compensation is based upon the officer's performance,  the performance of
the  operating  unit for which the officer has primary  responsibility,  and the
performance  of the Company as a whole.  The formulas for measuring  performance
and awarding bonuses objectively link financial and individual  performance with
bonus amounts.

     Long Term Stock Incentive  Compensation.  Stock  incentive  awards are made
under the stockholder-approved  First Mid-Illinois  Bancshares,  Inc. 1997 Stock
Incentive  Plan (the  "Plan").  The Plan is intended to provide a means  whereby
executive   officers  may  sustain  a  sense  of  proprietorship   and  personal
involvement  in the continued  success of the Company,  and to encourage them to
remain  with and devote  their  best  efforts to the  business  of the  Company,
thereby advancing the interest of the Company and its stockholders.

     Chief Executive  Officer  Compensation.  The  compensation  package for Mr.
Rowland was determined in the same manner as for all other  executive  officers,
except for Mr. Rowland's  annual  incentive  compensation as described below. In
December 2001, the compensation  committee reviewed Mr. Rowland's base salary by
evaluating  the   responsibilities  of  his  position  and  his  experience  and
performance.  In addition, the compensation committee reviewed the comparison to
base  salaries  for  chief  executive  officers  at peer  group  companies,  and
determined to increase Mr.  Rowland's  2002 base salary from $170,000 in 2001 to
$187,000 for 2002. Mr.  Rowland's 2002 annual  incentive  compensation was based
100% on the Company's  total  performance  without  reference to any  particular
operating  unit of the  Company or  personal  objectives.  The  Company's  total
performance  was measured by comparing the  financial  results of the Company to
the 2002 net income goal established by the  compensation  committee in December
2001. The compensation committee established $7,800,000 as the superior level of
net income in 2002  necessary for Mr. Rowland to receive a payout of 100% of his
annual  incentive  compensation.  Since net income in 2002 was  $8,034,000,  Mr.
Rowland received this 100% payout, amounting to 40% of his base salary. Finally,
in 2002, Mr. Rowland was awarded 8,000 stock options under the Plan.


     The 2002  net  income  of  $8,034,000  represented  a  $1,518,000  or 23.3%
improvement  from 2001's level.  Also, the Company's  market share increased and
various  other   improvements   were  made  in  the   Company's   operating  and
administrative   functions.   Accordingly,   Messrs.  Rowland,   Hedges,  Swift,
Gilliland,  and Taylor  were  awarded  incentive  bonuses of  $74,800,  $40,950,
$23,719, $23,409, and $22,443, respectively.

     The relationships  between the base salaries and incentive  compensation of
Messrs. Rowland,  Hedges, Swift, Gilliland,  and Taylor for 2002, 2001, and 2000
were as follows:

     Incentive Compensation as a Percentage of Base Salary

                         2002          2001          2000
                         ----          ----          ----

William S. Rowland        40%           28%           30%
John W. Hedges            32%           24%           26%
Robert J. Swift, Jr.      19%           20%           --
Stanley E. Gilliland      21%           20%           21%
Michael L. Taylor         24%           24%           21%

     This  compensation  committee  report  is  submitted  by  the  compensation
committee of the Board of Directors:

                                               Kenneth R. Diepholz, Chairman
                                               Charles A. Adams
                                               Steven L. Grissom
                                               Richard Anthony Lumpkin
                                               Daniel E. Marvin, Jr.
                                               Gary W. Melvin
                                               Sara Jane Preston
                                               Ray Anthony Sparks




--------------------------------------------------------------------------------
                         COMMON STOCK PERFORMANCE GRAPH
--------------------------------------------------------------------------------

     The following Common Stock price  performance graph compares the cumulative
total  stockholder  return on a $100 investment in the Company's Common Stock to
the cumulative total return of the S&P 500 Index and the Nasdaq Bank Stock Index
for the period from  December  31, 1997 through  December 31, 2002.  The amounts
shown assume the reinvestment of dividends.


                                       Cumulative Total Return
                     ---------------------------------------------------------
                       12/97     12/98     12/99     12/00     12/01     12/02

First Mid-Illinois
Bancshares, Inc.      100.00    111.91    114.87     96.78    121.51    143.65
S & P 500             100.00    128.58    155.64    141.46    124.65     97.10
NASDAQ Bank           100.00     99.36     95.51    108.95    117.97    120.61

[OBJECT OMITTED]

--------------------------------------------------------------------------------
                             DIRECTORS' COMPENSATION
--------------------------------------------------------------------------------

     Directors of the Company received a $2,500  quarterly  retainer for serving
on the  Board of  Directors  in 2002.  Directors  who are not  employees  of the
Company  also were  granted in 2002  options  to  purchase  1,000  shares of the
Company's  Common Stock at an exercise  price of $27.25 per share.  Such options
have  terms  of ten  years  and  became  exercisable  on  their  date of  grant.
Additionally,  the Company provides  retirement pension benefits to non-employee
directors  who have attained the age of 70 and who have served as a director for
a minimum  of ten years  upon  retirement.  The  pension  is equal to 75% of the
compensation  received  by the  director  from the  Company  in the year  before
retirement.  Directors who are not employees of the Company also receive  health
insurance.

--------------------------------------------------------------------------------
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------------------------------

     Directors  and  officers  of the  Company  and its  subsidiaries  and their
associates  were  customers  of and had  transactions  with the  Company and its
subsidiaries during 2002. Additional  transactions may be expected to take place
in the future.  All  outstanding  loans,  commitments to loan,  transactions  in
repurchase agreements and certificates of deposit and depository  relationships,
in the opinion of management,  were made in the ordinary course of business,  on
substantially the same terms, including interest rates and collateral,  as those
prevailing at the time or comparable transactions with other persons and did not
involve more than the normal risk of collectibility or present other unfavorable
features. Specific 2002 transactions are described below.

     Mr. Grissom served as director of the Company and was the beneficial  owner
of more than five  percent of the  Company's  Common  Stock.  In  addition,  Mr.
Grissom, through his beneficial ownership in the equity holders of MACC, LLC and
Effingham Hi-Tech Partners, was the beneficial owner of more than ten percent of
the equity of each of these entities.  Mr. Grissom also was the beneficial owner
of more than ten percent of the  capital  stock of Agracel,  Inc.  Ms.  Margaret
Lumpkin  Keon,  a beneficial  owner of more than five  percent of the  Company's
Common  Stock  and the  sister  of  director  Lumpkin,  through  her  beneficial
ownership in an equity holder of MACC and Effingham Hi-Tech,  was the beneficial
owner of more than ten  percent  of the equity of each of these  entities.  Mrs.
Mary L. Sparks,  a beneficial  owner of more than five percent of the  Company's
Common  Stock  and the  sister  of  director  Lumpkin,  through  her  beneficial
ownership  in the  equity  holders  of  MACC  and  Effingham  Hi-Tech,  was  the
beneficial  owner  of more  than  ten  percent  of the  equity  of each of these
entities.  Mrs. Sparks also was the beneficial owner of more than ten percent of
the  capital  stock of  Agracel.  MACC,  Effingham  High-Tech  and  Agracel  had
outstanding loans with the Bank. The highest outstanding  aggregate balances and
the December 31, 2002 aggregate balances and interest rates of this indebtedness
for MACC was $1,083,940 and $1,016,862 at 7.49 percent;  for Effingham High-Tech
was $3,499,352  and $3,283,224 at 5.375 percent;  and for Agracel was $4,815,969
and $4,332,306 at interest rates ranging between 4.25 and 5.75 percent.


     Each of Ms. Keon and Mrs. Sparks sold 100,000 shares of their Common Stock
to the Company for $2,750,000.

     Mr. Lumpkin, who served as a director of the Company and was the beneficial
owner  of  more  than  five  percent  of  the  Company's  Common  Stock,  had an
outstanding home mortgage loan with the Bank. The highest outstanding balance of
this loan was  $76,901  and the  December  31,  2002  balance  was $72,322 at an
interest rate of 7 percent.

     Messrs. Diepholz, Melvin, Sparks, and Adams, who each served as director of
the Company,  had outstanding  loans with the Bank. In the case of Mr. Diepholz,
these loans included loans to Mr. Diepholz's sons,  Robert D. Diepholz,  Kenneth
R.  Diepholz,  Jr.,  and Ronald  Diepholz.  The  highest  outstanding  aggregate
balances and the December 31, 2002 aggregate balances and interest rates of this
indebtedness  was  $13,418,511 and $11,391,331 at interest rates ranging between
4.25 and 9.50 percent for Mr. Diepholz; $1,978,813 and $1,760,291 at an interest
rate of 4.25 percent for Mr.  Melvin;  $2,480,171  and $2,480,171 at an interest
rate of 4.25  percent  for Mr.  Sparks;  and  $2,700,000  and  $2,559,980  at an
interest rate of 4.25 percent for Mr. Adams.

--------------------------------------------------------------------------------
           NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
--------------------------------------------------------------------------------

     Any  stockholder  wishing to  nominate  an  individual  for  election  as a
director must comply with certain  provisions in the  Company's  Certificate  of
Incorporation. The Company's Certificate of Incorporation establishes an advance
notice  procedure  with  regard  to  the  nomination,  other  than  by or at the
direction of the Board of Directors of the Company,  of candidates  for election
as  directors.  Generally,  such  notice must be  delivered  to or mailed to and
received by the Secretary of the Company not fewer than 14 days nor more than 60
days before any meeting at which  directors are to be elected.  The  stockholder
must also  comply  with  certain  other  provisions  set forth in the  Company's
Certificate  of  Incorporation  relating to the  nomination of an individual for
election  as  a  director.   For  a  copy  of  the  Company's   Certificate   of
Incorporation,  which includes the  provisions  relating to the nomination of an
individual for election as a director, an interested  stockholder should contact
the Secretary of the Company at 1515 Charleston  Avenue,  P.O. Box 499, Mattoon,
Illinois 61938.

--------------------------------------------------------------------------------
                         INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------

     The Board of Directors has selected KPMG LLP, independent  certified public
accountants,  to  serve  as the  independent  auditors  of the  Company  and its
subsidiaries  for the fiscal year ending  December 31, 2003. KPMG LLP has served
as the Company's independent auditors since 1992. A representative from KPMG LLP
is expected to be present at the annual  meeting,  will have the  opportunity to
make a statement and will be available to respond to appropriate questions.

--------------------------------------------------------------------------------
              INCLUSION OF STOCKHOLDER PROPOSALS IN PROXY MATERIALS
--------------------------------------------------------------------------------

     In order to be eligible for inclusion in the Company's  proxy materials for
next year's Annual Meeting of  Stockholders,  any  stockholder  proposal to take
action at such  meeting  must be received at the  Company's  main office at 1515
Charleston Avenue, P.O. Box 499, Mattoon, Illinois 61938, no later than December
12, 2003.  Any such proposal shall be subject to the  requirements  of the proxy
rules adopted under the Securities Exchange Act of 1934.

--------------------------------------------------------------------------------
                                  OTHER MATTERS
--------------------------------------------------------------------------------

     The Board of  Directors of the Company does not intend to present any other
matters for action at the annual  meeting,  and the Board has not been  informed
that other persons  intend to present any other matters for action at the annual
meeting.  However,  if any other matters should  properly come before the annual
meeting,  the persons  named in the  accompanying  proxy intend to vote thereon,
pursuant to the proxy,  in accordance  with the  recommendation  of the Board of
Directors of the Company.


--------------------------------------------------------------------------------
             SECTION 16 - BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------

     Based  solely  upon  its  review  of  reports  on  Forms  3, 4 or 5 and any
amendments  furnished to the Company under Section 16 of the Securities Exchange
Act of 1934,  and  written  representations  from  the  executive  officers  and
directors that no other reports were required,  the Company believes that all of
these Forms were filed on a timely basis by reporting  persons during the fiscal
year ended  December 31,  2002,  except that Mr.  Lumpkin  filed one late Form 4
relating to shares of Common  Stock that were  distributed  to his sister,  Mrs.
Sparks,  from a trust that was  terminated and under which trust Mr. Lumpkin had
served as trustee.