UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2004
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
(Full Title of Plan)
FIRST MID-ILLINOIS BANCSHARES, INC.
1515 Charleston Avenue
P.O. Box 499
Mattoon, Illinois 61938
(Name of Issuer of the Securities Held Pursuant to the Plan
and the Address of the Principal Executive Office)
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Financial Statements and Supplemental Schedule
December 31, 2004 and 2003
(With Report of Independent Registered Public Accounting Firm Thereon)
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Table of Contents
Page
Report of Independent Registered Public Accounting Firm 1
Statements of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 9
Report of Independent Registered Public Accounting Firm
The Participants and Plan Administrator of the
First Mid-Illinois Bancshares, Inc.
401(k) Profit Sharing Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the First Mid Illinois Bancshares, Inc. 401(k) Profit Sharing Plan
as of December 31, 2004 and 2003, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2004. These
financial statements are the responsibility of the Plan Administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the plan administrator, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the First
Mid-Illinois Bancshares, Inc. 401(k) Profit Sharing Plan as of December 31, 2004
and 2003, and the changes in net assets available for plan benefits for the year
ended December 31, 2004 in conformity with U.S. generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules & Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan Administrator. The
supplemental schedule has been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ KPMG LLP
Chicago, Illinois
June 24, 2005
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2004 and 2003
2004 2003
---------------- ----------------
Assets:
Investments, at fair value:
Mutual funds $ 11,540,838 $ 9,585,032
Money market funds 205,631 257,025
Certificates of deposit 1,457,730 1,378,437
Employer common stock 9,192,884 7,215,610
Participant loans 482,914 319,348
---------------- ----------------
22,879,997 18,755,452
Receivables:
Interest and dividends 63,921 82,147
Employer contributions 1,761 --
---------------- ----------------
Total assets 22,945,679 18,837,599
Liabilities:
Refunds due to excess contributions 4,629 --
---------------- ----------------
Net assets available for plan benefits $ 22,941,060 $ 18,837,599
================ ================
See accompanying notes to financial statements.
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2004
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 498,841
Net appreciation in fair value of investments 2,571,172
--------------
Total investment income 3,070,013
--------------
Contributions:
Employer 613,843
Participants 719,296
Rollovers 142,044
--------------
Total contributions 1,475,183
--------------
Total additions 4,545,196
Deductions from net assets attributed to:
Benefit payments 441,745
--------------
Net increase in net assets available for plan benefits 4,103,451
Net assets available for plan benefits:
Beginning of year 18,837,599
--------------
End of year $ 22,941,050
==============
See accompanying notes to financial statements.
(1) Description of Plan
The following description of the First Mid-Illinois Bancshares, Inc. 401(k)
Profit Sharing Plan (the Plan) provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan established on January 1,
1985, covering all eligible employees of First Mid-Illinois
Bancshares, Inc. (the Company) and any of its subsidiary corporations.
All employees who have completed one-half year of service are eligible
to participate in the Plan. Under the provisions of the Plan, each
participant may direct their contributions into any of eleven
investment options available under the Plan. The Plan currently offers
eight mutual funds, a money market fund, certificates of deposit, and
the Company's common stock as investment options for participants.
Participants are also allowed to transfer all or part of their actual
balances between these funds. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions
Under the provisions of the Plan, all employees who have entered into
a compensation reduction agreement with the Company may elect to
reduce their eligible compensation by up to any percentage, subject to
the dollar limitations of Section 402(g) of the Internal Revenue Code
(Code), ($13,000 for the 2004 Plan year), and to have the Company
contribute this amount to the Plan as a before-tax contribution of the
participant. The Company also makes a matching contribution calculated
as a percentage of the before tax contribution made on behalf of each
contributing participant. The Company determines this percentage each
year. Matching contributions, however, will not exceed 2% of the
eligible compensation of each participant in any year and cannot
exceed 50% of the employee's elected deferral. Matching contributions
are invested according to the participant's investment elections. For
the year ended December 31, 2004, the matching contribution percentage
was 2% for a total of $187,502.
The Company may also, at its sole discretion, contribute to the Plan
an amount to be determined from year to year as a profit sharing
contribution. For the year ended December 31, 2004, the profit sharing
contribution was 4% of eligible compensation for a total of $426,341.
The profit sharing contribution is maintained in a nonparticipant
directed investment until this contribution is allocated by the Plan
to the participant accounts. Participants who work at least 1,000
hours of service during the plan year are entitled to this
contribution regardless of whether they elect to make a before-tax
contribution.
Participant Accounts
Separate participant accounts are maintained for the purpose of
distributing the Plan's earnings or losses, forfeitures, voluntary
employee contributions, and employer contributions. Allocations of the
Plan's earnings or losses, forfeitures, and employer contributions to
the participant accounts are based on participant earnings or account
balances, as defined in the Plan. Forfeited nonvested accounts are
allocated to participant accounts annually. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to the lesser of $50,000 or 40% of their vested
account balance. Loan transactions are treated as a transfer between
the various investment funds and participant loans. Maturity dates
range from October 2005 through October 2018. The loans are secured by
the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the plan
administrator. Interest rates on loans outstanding at December 31,
2004 ranged from 4.00% to 8.50%. Principal and interest is paid
ratably through periodic payroll deductions.
Vesting
Participants are immediately vested in their voluntary contribution
and the Company's matching contribution, and any earnings thereon. The
Company's profit sharing contribution, and any earnings thereon, vest
according to the following schedule:
Years Vested
of service Percentage
---------------- --------------
1 0%
2 20
3 40
4 60
5 80
6 100
On termination of service, a participant's vested account balance will
be paid in the form of a lump sum distribution or installment
payments.
Administrative Expenses
Administrative expenses of the Plan are paid by the Company.
Forfeited Accounts
Forfeitures of terminated nonvested account balances allocated to
remaining participants at December 31, 2004 and 2003 totaled $14,644
and $24,208, respectively. Forfeitures are allocated to participant
accounts on a prorata share based on compensation.
Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions
of ERISA. In the event the Plan is terminated, participants will
become fully vested in their accounts.
Transfers to the Plan
Effective November 18, 2003, the Company merged the Checkley Agency,
Inc. 401(k) Plan, with assets of $607,580, into the Plan.
(2) Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual
method of accounting in accordance with accounting principles
generally accepted in the United States of America.
Investment Valuation and Income Recognition
Quoted market prices are used to value the mutual funds and common
stock. Money market funds and certificates of deposit are valued at
cost, which approximates fair value. Participant loans are recorded at
the unpaid principal balance of the loans which approximates fair
value. The Plan's investments are held in a trust account (the Trust)
administered by First Mid-Illinois Bank & Trust (the Bank), a wholly
owned subsidiary of the Company.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
Use of Estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
the plan administrator to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Payment of Benefits
Benefits are recorded when paid.
(3) Investments
The following table presents the fair value of individual investments which
represent 5% or more of the Plan's net assets available for plan benefits
at December 31:
Investment Description 2004 2003
------------------------------------------- --------------- ------------ ------------
First Mid-Illinois Band & Trust Certificate of
Certificate of Deposit deposit $ * $ 967,541
Federated Max Capital Fund Mutual fund 2,228,390 2,111,881
Janus Adviser Balance Fund Mutual fund -- 1,226,625
Janus Adviser Worldwide Fund Mutual fund -- 1,201,757
Vanguard Growth Index Fund Mutual fund 2,419,618 2,295,459
Dodge & Cox Balanced Fund Mutual fund 1,630,340 --
Oakmark Global I Fund Mutual fund 1,615,027 --
T. Rowe Price Mid-Cap Value Fund Mutual fund 1,161,257 *
First Mid-Illinois Bancshares, Inc. stock Common stock $9,192,884 $7,215,610
* - Less than 5% at December 31
During 2004, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value as follows:
Mutual funds $ 879,328
Common stock 1,691,844
---------------
Net appreciation in fair value
of investments $ 2,571,172
===============
(4) Nonparticipant-Directed Investments
Information about the net assets relating to the nonparticipant-directed
investments as of December 31, 2004 and 2003, and the components of the
changes for the years ended December 31, 2004 and 2003, are as follows:
2004 2003
----------- -----------
Net assets:
Certificate of deposit $ 430,988 $ 410,896
Money market fund -- 14,494
Interest receivable 788 1,085
Employer contribution receivable 587 --
----------- -----------
Net assets $ 432,363 $ 426,475
=========== ===========
Changes in net assets:
Contributions $ 426,341 $ 418,471
Interest income 6,022 8,004
Transfers to participant-directed investments (426,475) (382,317)
----------- -----------
$ 5,888 $ 44,158
=========== ===========
(5) Tax Status of the Plan
The Company adopted a Prototype Non-Standardized Profit Sharing Plan with a
cash or deferral arrangement which received a favorable opinion letter from
the Internal Revenue Service on August 7, 2001 stating that the Plan and
related Trust are designed in accordance with applicable sections of the
Internal Revenue Code, and the Trust is, therefore, exempt from Federal
income tax under provisions of Section 501(a). The Plan has been amended
since receiving the opinion letter. However, the plan administrator and the
Plan's legal counsel believe that the Plan is designed and currently being
operated in compliance with the applicable requirements of the Internal
Revenue Code. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
(6) Transactions with Related Parties
The Plan holds certificates of deposit with First Mid-Illinois Bank &
Trust, a related party. The certificates of deposit totaled $1,457,730 and
$1,378,437 at December 31, 2004 and 2003 and interest income of $30,881 was
recorded during 2004. The Plan also had an investment in 241,918 and
155,008 shares of the Company's common stock at December 31, 2004 and 2003,
respectively. The common stock had a cost and fair value of $3,361,032 and
$9,192,884, respectively, at December 31, 2004 and $3,191,793 and
$7,215,610, respectively, at December 31, 2003. Dividends received on the
Company's common stock for 2004 were $112,854.
Schedule
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
Number of
shares or Current
Identity of issuer and description of investment units value
----------------------------------------------------------------------------- ----------- ------------
Money market funds:
Federated Prime Obligation Funds #10 36,670 $ 36,670
Federated Prime Obligation Fund #396 168,253 168,253
NTHN Institutional Funds Government Select 708 708
------------
205,631
Certificates of deposit:
First Mid-Illinois Bank & Trust CD; 2.25%, maturing
January 3, 2005 (nonparticipant-directed, cost of $430,988)* -- 430,988
First Mid-Illinois Bank & Trust CD; 2.25%, maturing
January 3, 2005 (participant-directed)* -- 1,026,742
------------
1,457,730
Mutual funds:
Federated Mid Capital Index Fund 43,834 922,263
Federated Max Capital Fund 91,141 2,228,390
Federated Total Return Bond Fund 69,539 753,804
Fidelity Low Priced Stock Fund 18,127 729,594
Dodge & Cox Balanced Fund 20,546 1,630,340
Oakmark Global I Fund 74,050 1,615,027
Royce Low-Priced Stock Fund 5,254 80,545
T. Rowe Price Mid-Cap Value Fund 50,511 1,161,257
Vanguard Growth Index Fund 91,618 2,419,618
------------
11,540,838
Common stock:
First Mid-Illinois Bancshares, Inc.* 241,918 9,192,884
Participant loans (49 loans at interest rates ranging from 4.00% to 8.50%
with maturity dates ranging from October 2005 to October 2018 482,914 482,914
------------
Total investments $22,879,997
============
* Party-in-interest
See accompanying report of independent registered public accounting firm.
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
First Mid-Illinois Bancshares, Inc.
401(k) Profit Sharing Plan
Date: June 24, 2005
/s/ William S. Rowland
William S. Rowland
President and Chief Executive Officer
Exhibit Index to Annual Report on Form 11-K
Exhibit
Number Description and Filing or Incorporation Reference
--------------- -----------------------------------------------------------
23.1 Consent of KPMG LLP
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
First Mid-Illinois Bancshares, Inc.:
We consent to incorporation by reference in the registration statement (No.
33-64139) on Form S-8 of First Mid-Illinois Bancshares, Inc. of our report dated
June 24, 2005, relating to the statements of net assets available for plan
benefits of the First Mid-Illinois Bancshares, Inc. 401(k) Profit Sharing Plan
as of December 31, 2004 and 2003, the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2004, and the
supplemental schedule of assets (held at end of year) as of December 31, 2004,
which report appears in the December 31, 2004 annual report on Form 11-K of the
First Mid-Illinois Banchshares, Inc. 401(k) Profit Sharing Plan.
/s/ KPMG LLP
Chicago, Illinois
June 24, 2005