Investor Relations

Dear Shareholder:

2017 was the tale of two different years. From January through October our company was on track for record earnings. That changed in November and December when we had an unexpected loan loss, followed by major tax reform legislation that led to year-end adjustments. While the former had a permanent impact on earnings and capital, the latter was only temporary and we are already seeing the positive impact of lower taxes in 2018.

For the year we had net earnings of $3,320,616, which was down from 2016 earnings of $3,537,102 and represents a decrease of 6.52%. Our overall return on common equity was 7.93% and we paid $1,375,064 in common and preferred dividends to our shareholders.

The bank achieved a return on average assets of 0.81%, compared to our local peer group of 0.83% and our 2016 return of 0.86%. Net interest margin, the primary revenue engine of the bank, improved to 3.52% from 3.39% and compares favorably to peer at 3.33%. While we have been making progress on credit quality, this still remains a challenge, with our non-performing loans and charge-off ratios remaining higher than our peers.

Here are some key highlights of this past year:
•An engagement with Profit Resources, Inc. (PRI) to look for improvement opportunities in all areas of the bank. This was a very intensive process that we expect to pay significant dividends beginning in 2018.

•Further expansion of our electronic banking platform, along with a new direct contract with VISA for our debit and credit cards that will enhance or revenue by $500K over the next ten years.

•Formation of a new division - Midwest Mortgage. This was done in conjunction with the implementation of a new automated mortgage platform and the introduction of new products.

•The strengthening and growth of our relationship with Monmouth College, making it our largest. The college is the most important institution in our home town and Warren County. During the year we were able to further assist them with their financial management and strategic initiatives.

In writing recent editions of this letters, I have come to realize that the message has remained the same - our continued focus on diversifying and growing our non-interest revenue. While this has been a longer-term strategy, we are beginning to reap the benefits. Once we are able to achieve our credit quality goals, the overall impact of this strategy on our earnings will become more apparent.

We expect 2018 to be a very exciting year. We recently announced our plans to open a new branch in East Peoria in March of 2019 and we hope soon to announce an expansion in the Quad City market. None of this would be possible without a lot of hard work by our management team. We truly have a great group that are very committed to the growth and success of Western Illinois Bancshares and I cannot thank them and our entire staff enough for their efforts.

I also want to thank you, our Shareholders, for your support. We greatly appreciate the trust you place in us and we look forward to continuing our mission for your benefit and that of our employees and our communities.

Cordially,

Christopher J. Gavin
President & CEO
Midwest Bank

Board of Directors for Western Illinois Bancshares, Inc.

Augustin S. Hart III, President
Raymond E. Defenbaugh, Vice President
Christopher J. Gavin, Secretary and Treasurer
C. Dean Hennenfent
Mark J. Sexton
Robert C. Fick
Robert A. Riley
Scott T. Champion