UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 29, 2003 FIRST MID-ILLINOIS BANCSHARES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE (STATE OR OTHER JURISDICTION OF INCORPORATION) 0-13368 37-1103704 (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.) 1515 CHARLESTON AVENUE, MATTOON, IL 61938 (ADDRESS INCLUDING ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES) (217) 234-7454 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Item 5. Other Events Incorporated by reference is the quarterly shareholder report issued by the Registrant on October 29, 2003, attached as Exhibit 99, providing information concerning the Registrant's financial statements as of September 30, 2003. Item 7. Financial Statements and Exhibits (c) Exhibits Exhibit 99 - Quarterly shareholder report issued October 29, 2003 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has dully caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. FIRST MID-ILLINOIS BANCSHARES, INC. Dated: October 29, 2003 By: /s/ William S. Rowland William S. Rowland President and Chief Executive Officer EXHIBIT INDEX Exhibit Number Description 99 Quarterly shareholder report issued October 29, 2003 Exhibit 99 October 29, 2003 Quarterly Report to the Owners, First Mid-Illinois Bancshares, Inc. Our financial results for the first nine months of 2003 were good, with diluted earnings per share amounting to $2.14 per share. This amount represents a 21% increase from the $1.77 per share we earned during the same period in 2002. Total net income during the first nine months of 2003 was $6,877,000, representing a 14% increase from the $6,046,000 we earned during the same period in 2002. Earnings per share increased faster than net income because of our share buy-back program. Year-to-date in 2003, we have acquired 103,419 shares at a total investment of $3,466,000. This program has proven to be an effective way of increasing value for shareholders. Any shareholder who wishes to use this service should contact Mrs. Christie Wright at (217) 258-0493. Higher non-interest income was the primary factor in the earnings growth. Non-interest income increased to $9,913,000 for the first nine months of 2003 as compared to $7,727,000 for the same period in 2002. Residential real estate activity has continued to be strong throughout our franchise area, with mortgage banking revenue increasing to $1,755,000 for the first nine months of 2003 from $1,054,000 for the same period in 2002. Most of the residential real estate loans we originate are sold into the secondary market for interest rate risk management purposes. In addition, growth in deposit service charges due to increases in deposit balances and overdraft fees, and increased insurance commissions also contributed to the non-interest income increase. Net interest income declined slightly for the first nine months, amounting to $19,965,000 in 2003 as compared to $20,001,000 in 2002. Loan pricing constraints together with an extremely low interest rate environment resulted in a decline in our net interest margin from 4.18% in the first nine months of 2002 to 3.81% for the first nine months of 2003. We have been able to offset the margin compression by increasing our loan volumes. Loan balances have increased by $40 million since December 31, 2002, with the growth primarily in commercial real estate loans. Our provision for loan losses amounted to $750,000 for the first nine months of 2003 as compared to $775,000 during the same period last year, with net charge-offs declining to $205,000 for the first nine months of 2003 as compared with $578,000 for the same period in 2002. Non-performing loans on September 30, 2003 were $4,766,000 as compared with $3,149,000 on December 31, 2002. Non-interest expenses of $18,674,000 increased by $769,000 for the first nine months of 2003 when compared to the same period in 2002 primarily as a result of the increased costs associated with the locations in Champaign and Maryville that were opened in November, 2002. Both branches have had solid loan and deposit growth and are now adding to our profitability. Thank you for your support and for your confidence in First Mid-Illinois Bancshares, Inc. Sincerely, /s/ William S. Rowland William S. Rowland Chairman and Chief Executive Officer Condensed Consolidated Balance Sheets (In thousands, except share data) (unaudited) September 30, December 31, 2003 2002 ------------------ ----------------- Assets Cash and due from banks $ 23,887 $ 22,437 Federal funds sold and other interest-bearing deposits 15,750 47,220 Investment securities: Available-for-sale, at fair value 167,055 166,415 Held-to-maturity, at amortized cost (estimated fair value of $1,714 and $1,927 at September 30, 2003 and December 31, 2002, respectively) 1,692 1,902 Loans 539,743 499,864 Less allowance for loan losses (4,269) (3,723) Net loans 535,474 496,141 remises and equipment, net 16,307 16,916 Goodwill, net 9,034 9,034 Intangible assets, net 4,166 4,743 Other assets 10,493 11,432 ------------------ ----------------- Total assets $783,858 $776,240 ================== ================= Liabilities and Stockholders' Equity Deposits: Non-interest bearing $ 90,545 $ 84,025 Interest bearing 524,234 529,427 ------------------ ----------------- Total deposits 614,779 613,452 Repurchase agreements with customers 53,333 44,184 Other borrowings 39,925 44,625 Other liabilities 5,520 7,172 ------------------ ----------------- Total liabilities $713,557 $709,433 ------------------ ----------------- Stockholders' Equity: Common stock ($4 par value; authorized 6,000,000 shares; Issued 3,663,610 shares in 2003 and 3,603,737 shares in 2002) $14,655 $14,415 Additional paid-in capital 15,790 14,450 Retained earnings 51,982 45,896 Deferred compensation 1,833 1,589 Accumulated other comprehensive income 1,667 2,373 Treasury stock at cost, 517,981 shares in 2003 and 414,562 shares in 2002 (15,626) (11,916) ------------------ ----------------- Total stockholders' equity 70,301 66,807 ------------------ ----------------- Total liabilities and stockholders' equity $783,858 $776,240 ================== ================= Condensed Consolidated Statements of Income (In thousands) (unaudited) For the nine months ended September 30, 2003 2002 ------------------ ----------------- Interest income: Interest and fees on loans $ 24,245 $ 25,317 Interest on investment securities 4,649 5,578 Interest on federal funds sold and other 222 174 ------------------ ----------------- Total interest income 29,116 31,069 Interest expense: nterest on deposits 7,549 9,255 Interest on repurchase agreements with customers 193 257 Interest on other borrowings 1,409 1,556 ------------------ ----------------- Total interest expense 9,151 11,068 ------------------ ----------------- Net interest income 19,965 20,001 Provision for loan losses 750 775 ------------------ ----------------- Net interest income after provision for loan losses 19,215 19,226 Non-interest income: Trust revenues 1,444 1,398 Brokerage commissions 209 195 Insurance commissions 1,141 901 Service charges 3,303 2,609 Securities gains, net 370 223 Mortgage banking revenues 1,755 1,054 Other 1,691 1,347 ------------------ ----------------- Total non-interest income 9,913 7,727 Non-interest expense: Salaries and employee benefits 10,197 9,344 Net occupancy and equipment expense 3,202 3,023 Amortization of intangible assets 577 557 Other 4,698 4,981 ------------------ ----------------- Total non-interest expense 18,674 17,905 ------------------ ----------------- Income before income taxes 10,454 9,048 Income taxes 3,577 3,002 ------------------ ----------------- Net income $ 6,877 $ 6,046 ================== ================= Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands) (unaudited) For the nine month period ended September 30, 2003 2002 ------------------ ----------------- Balance at beginning of period $ 66,807 $ 63,925 Net income 6,877 6,046 Dividends on stock (791) (780) Issuance of stock 1,580 1,346 Purchase of treasury stock (3,466) (859) Change in accumulated other comprehensive income (loss) (706) 1,896 ------------------ ----------------- Balance at end of period $ 70,301 $ 71,574 ================== ================= Per Share Information (unaudited) For the nine months ended September 30, 2003 2002 ------------------ ----------------- Basic earnings per share $ 2.17 $ 1.78 Diluted earnings per share $ 2.14 $ 1.77 Book value per share $22.35 $21.09 First Mid-Illinois Bancshares, Inc. 1515 Charleston Avenue Mattoon, Illinois 61938 (217) 234-7454 www.firstmid.com