SCHEDULE 14A

                                 (RULE 14a-101)

                            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:

|X| Preliminary Proxy Statement
|_| Confidential, for use of the Commission only
        (as permitted by Rule 14a-6(e)(2))
|_| 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.

     Check box 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 19, 2004


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 26, 2004, 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 2003 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  Wright,  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.



                                 William S. Rowland
                                 Chairman and Chief Executive Officer

--------------------------------------------------------------------------------

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





                                    NOTICE OF
                         ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD MAY 26, 2004


                       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 26,
2004 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;
2.   The amendment of the Company's Certificate of Incorporation to increase the
     number of authorized shares of Common Stock; and
3.   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, 2004 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



William S. Rowland
Chairman and Chief Executive Officer

Mattoon, Illinois
April 19, 2004








                                 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 26, 2004 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 19, 2004.
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  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, 2004 (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  3,000,073  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, 2004, 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

David R. Hodgman
c/o Schiff Hardin LLP
6600 Sears Tower
Chicago, Illinois 60606                  169,532(2)                    5.7%



Director Nominees, Directors and Named Executive
Officers:

Charles A. Adams                        245,509 (3)                    8.2% (17)

Kenneth R. Diepholz                      26,239 (4)                      *% (17)

Steven L. Grissom                       191,093 (5)                    6.4% (17)

Richard Anthony Lumpkin                 276,011 (6)                    9.2% (17)

Daniel E. Marvin, Jr.                    67,950 (7)                    2.3% (17)

Gary W. Melvin                          123,706 (8)                    4.1% (17)

Sara Jane Preston                         8,434 (9)                      *% (17)

William S. Rowland                       47,062 (10)                   1.6% (17)

Ray Anthony Sparks                      122,321 (11)                   4.1% (17)

John W. Hedges                            8,577 (12)                     *% (17)

Robert J. Swift, Jr.                      1,378 (13)                     *% (17)

Stanley E. Gilliland                     27,018 (14)                     *% (17)

Michael L. Taylor                         3,674 (15)                     *% (17)

All directors and executive
Officers as a group (16 persons)      1,156,611 (16)                   7.3% (18)



(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 84,766 shares held by the Richard Anthony Lumpkin
     1990  Personal  Income  Trust for the benefit of Benjamin  Iverson  Lumpkin
     dated April 20, 1990, and 84,766 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
     169,532 shares held by these trusts.


(3)  The above amount includes 55,330 shares held by Mr. Adams individually. The
     above  amount  also  includes  166,908  shares  of Common  Stock  held by a
     corporation which Mr. Adams is deemed to control;  3,425 shares held by Mr.
     Adams'  spouse,  over which shares Mr.  Adams has no voting and  investment
     power;  18,346 shares held for the account of Mr. Adams under the Company's
     Deferred  Compensation Plan; and options to purchase 1,500 shares of Common
     Stock.

(4)  The above amount includes 8,837 shares held by Mr.  Diepholz  individually.
     The above amount also  includes  10,152  shares held for the account of Mr.
     Diepholz under an Individual  Retirement  Account;  and options to purchase
     7,250 shares of Common Stock.

(5)  The above amount  includes  17,311  shares held by Mr.  Grissom.  The above
     amount also includes 84,766 shares held by the Richard Anthony Lumpkin 1990
     Personal  Income Trust for the benefit of Benjamin  Iverson  Lumpkin  dated
     April 20, 1990, and 84,766 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 169,532 shares held
     by these trusts.  The above amount also includes  options to purchase 4,250
     shares of Common Stock.

(6)  The above amount includes 119,592 shares held by Mr. Lumpkin  individually.
     The above amount also  includes  59,155  shares held by The Lumpkin  Family
     Foundation,  of which Mr. Lumpkin serves as a director, and of which shares
     beneficial  ownership is  disclaimed;  44,368 shares held by SKL Investment
     Group,  of which Mr. Lumpkin is a voting member;  25,000 shares held by the
     Richard  Adamson  Lumpkin  Trust dated  February 6, 1970 for the benefit of
     Richard  Anthony  Lumpkin,  under  which Mr.  Lumpkin  has sole  voting and
     investment  power;  20,646 shares held for the account of Mr. Lumpkin under
     the Company's  Deferred  Compensation  Plan;  and options to purchase 7,250
     shares of Common Stock.

(7)  The above amount  includes  13,088 shares held by Mr. Marvin  individually.
     The above amount also includes 14,609 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;  1,321  shares  held  by Mr.
     Marvin's  grandchildren,  over  which Mr.  Marvin  has  shared  voting  and
     investment power; 15,891 shares held for the account of Mr. Marvin under an
     Individual  Retirement  Account;  4,541  shares held for the account of Mr.
     Marvin  under the  Company's  Deferred  Compensation  Plan;  and options to
     purchase 18,500 shares of Common Stock.

(8)  The above amount  includes  101,127  shares held by Mr.  Melvin.  The above
     amount also includes 15,329 shares held for the account of Mr. Melvin under
     the Company's Deferred  Compensation Plan; options to purchase 7,250 shares
     of Common Stock.

(9)  The above amount  includes 2,950 shares held by Ms.  Preston  individually.
     The above  amount also  includes  1,234  shares held for the account of Ms.
     Preston  under the Company's  Deferred  Compensation  Plan;  and options to
     purchase 4,250 shares of Common Stock.


(10) The above amount includes 418 shares held by Mr. Rowland individually.  The
     above amount also  includes  10,989  shares for the account of Mr.  Rowland
     under an Individual  Retirement Account;  3,595 shares held for the account
     of Mr. Rowland under the Company's  401(k) Plan;  2,498 shares held for the
     account of Mr. Rowland under the Company's Deferred  Compensation Plan; and
     options to purchase 29,562 shares of Common Stock.

(11) The above amount includes 71,777 held by Mr. Sparks.  The above amount also
     includes 38,204 shares held by Sparks  Investment Group, LP, over which Mr.
     Sparks shares voting and investment power; 3,795 shares held by Mr. Sparks'
     spouse,  over which shares Mr. Sparks has no voting and  investment  power;
     7,045  shares  held for the  account  of Mr.  Sparks  under  the  Company's
     Deferred  Compensation Plan; and options to purchase 1,500 shares of Common
     Stock.

(12) The above amount includes 250 shares held by Mr. Hedges  individually.  The
     above amount also  includes  579 shares held for the account of Mr.  Hedges
     under the Company's  401(k) Plan;  1,123 shares held for the account of Mr.
     Hedges  under the  Company's  Deferred  Compensation  Plan;  and options to
     purchase 6,625 shares of Common Stock.

(13) The above  amount  includes  647 shares held for the  account of Mr.  Swift
     under the Company's 401(k) Plan; and 731 shares held for the account of Mr.
     Swift under the Company's Deferred Compensation Plan.

(14) The above amount  includes  5,099 shares held by Mr.  Gilliland.  The above
     amount also  includes  2,246  shares held for the account of Mr.  Gilliland
     under an Individual  Retirement Account;  7,338 shares held for the account
     of Mr. Gilliland under the Company's 401(k) Plan; 1,460 shares held for the
     account of Mr. Gilliland under the Company's  Deferred  Compensation  Plan;
     and options to purchase 10,875 shares of Common Stock.

(15) The above amount includes 160 shares held by Mr. Taylor  individually.  The
     above amount also  includes  139 shares held for the account of Mr.  Taylor
     under the Company's  401(k) Plan;  and options to purchase  3,375 shares of
     Common Stock.

(16) Includes an aggregate  of 105,437  shares  obtainable  upon the exercise of
     options.

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

(18) 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, 2004, the Bank acted as sole or co-fiduciary with respect to
trusts and other fiduciary  accounts which own or hold 126,560 shares or 4.2% of
the outstanding Common Stock of the Company, over which the Bank has sole voting
and investment  power with respect to 110,917 shares or 3.7% of the  outstanding
Common  Stock and shared  voting  and  investment  power with  respect to 15,643
shares or .5% 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 III  directors  for a term  expiring in 2007.  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 III  directors  Charles A.  Adams,  Daniel E.
Marvin,  Jr.,  and Ray Anthony  Sparks.  Messrs.  Marvin,  Adams and Sparks have
served as directors of the Company since 1982, 1984 and 1994, respectively.  The
three individuals  receiving the highest number of votes cast will be elected as
directors  of the Company and will serve as Class III  directors  for three year
terms expiring in 2007. 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, 2004   Principal Occupation                           Director    Expires
----                  -------   --------------------                           --------    -------

                                                                                 
DIRECTOR NOMINEES

Charles A. Adams        62      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.   65      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      47      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.



DIRECTORS CONTINUING IN OFFICE

Kenneth R. Diepholz     65      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); Vice President, Diepholz Auto
                                Group (since 2003); President, D-Co Coin
                                Laundry; President, Augusta Lakes; Owner,
                                Diepholz Rentals.

Steven L. Grissom       51      Director of the Bank and the Company (since      2000        2005
                                2000); Treasurer and Secretary of
                                Consolidated Communications, Inc. (since
                                2003); Administrative Officer of SKL
                                Investment Group, LLC (since 1997);
                                Treasurer of Illinois Consolidated
                                Telephone Company (until 2002).

Gary W. Melvin          55      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.


Richard Anthony Lumpkin 69      Director of the Bank (since 1966) and of         1982        2006
                                the Company; Chairman of the Board of
                                Homebase Acquisition, LLC (since 2003);
                                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 (Homebase
                                Acquisition, LLC) completed its acquisition
                                of Illinois Consolidated Telephone Company
                                and other operating entities from McLeod
                                USA in connection with the
                                recapitalization; Director of Illuminet
                                Holdings, Inc. (until 2001).

Sara Jane Preston       63      Director of the Bank (since 1999) and of         2000        2006
                                the Company; 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      57      Chairman, President, Chief Executive             1991        2006
                                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).


 The Board of Directors recommends a vote "FOR" the election of Directors Adams,
                  Marvin and Sparks for a term of three years.

                           Age at
                          April 1,
Name                        2004     Principal Occupation
----                      -------    --------------------

NAMED EXECUTIVE OFFICERS

John W. Hedges               56      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.         52      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         59      Executive Vice President of the Bank (since
                                     1994) and Vice President of the Company
                                     (since 1984).

Michael L. Taylor            35      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).


--------------------------------------------------------------------------------
           PROPOSAL II - AMENDMENT TO THE CERTIFICATE OF INCORPORATION
--------------------------------------------------------------------------------

     The  Board  of  Directors   recommended   an  amendment  to  the  Company's
Certificate  of  Incorporation  to increase the number of  authorized  shares of
Common Stock from  6,000,000 to 18,000,000  (the  "Amendment")  and has directed
that the  Amendment be  submitted  for  approval to  stockholders  at the annual
meeting.

     The  Company's  Certificate  of  Incorporation   presently  authorizes  the
issuance of 6,000,000  shares of Common Stock and 1,000,000  shares of Preferred
Stock.  The Amendment  would increase the authorized  number of shares of Common
Stock to 18,000,000. No change is proposed in the number of authorized shares of
Preferred Stock.

     If the Amendment is approved, the text of the first paragraph of Article IV
of the Certificate of Incorporation would read in its entirety as follows:

         A. The total number of shares of all classes of stock which the
         Corporation shall have the authority to issue is 18,000,000 shares of
         Common Stock, par value $4.00 per share, and 1,000,000 shares of
         Preferred Stock, no par value per share.

     Of the Company's  6,000,000  authorized  shares of Common Stock,  3,000,073
were issued and outstanding as of April 1, 2004. At April 1, 2004,  after taking
into account shares underlying  outstanding stock options and the reservation of
shares for issuance  under the  Company's  equity-based  compensation  plans and
dividend  reinvestment  plan,  approximately  1,680,000 of the 6,000,000  shares
authorized in the Certificate of Incorporation remain available for issuance.

     The Board of Directors believes the Amendment is advisable in order
to maintain the Company's financing and capital-raising flexibility, to
facilitate future stock splits, to have sufficient shares available for
acquisitions, employee benefit plans and other corporate purposes, and to
generally maintain the Company's flexibility in today's competitive,
fast-changing environment. There are no present agreements, understandings or
plans to issue any of the additional shares that would be authorized by the
Amendment.

     Adoption of the Amendment would enable the Board from time to time to issue
additional  shares of Common Stock for such purposes and such  consideration  as
the Board may approve  without further  approval of the Company's  stockholders,
except as may be required by law.  As is true for shares  presently  authorized,
issuance of Common Stock  authorized by the Amendment  may,  among other things,
have a dilutive  effect on earnings per share and on the equity and voting power
of existing holders of Common Stock.

     There are no preemptive  rights with respect to shares of Common Stock. The
additional  authorized  shares of Common Stock would have the identical  powers,
preferences and rights as the shares now authorized, including the right to cast
one vote per share and to receive  dividends.  Under Delaware law,  stockholders
will not  have any  dissenters'  or  appraisal  rights  in  connection  with the
Amendment.  If the  Amendment  is  approved  by  stockholders,  it  will  become
effective upon  executing,  acknowledging  and filing a Certificate of Amendment
required by the Delaware General Corporation Law.


     While the  issuance of shares in certain  instances  may have the effect of
forestalling a hostile takeover,  the Board does not intend or view the increase
in authorized Common Stock as an anti-takeover measure, nor is the Company aware
of any proposed or contemplated transaction of this type.

     The  affirmative  vote of the holders of a majority of the shares of Common
Stock present in person or by proxy at the annual meeting is required to approve
the Amendment.  The Board of Directors  recommends that you vote your shares FOR
the Amendment.

--------------------------------------------------------------------------------
                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 entire
Board performs the functions of a nominating  committee,  and considers and acts
on all  matters  relating  to the  nomination  of  individuals  for  election as
directors.  The Board does not believe it needs a separate nominating  committee
because  the  Board  has the time and  resources  to  perform  the  function  of
selecting director nominees. Also, more than two-thirds of the directors satisfy
the  independence  requirements of the New York Stock  Exchange.  When the Board
performs  its  nominating  function,  the  Board  acts in  accordance  with  the
Company's Certificate of Incorporation.

     Stockholders  entitled  to vote for the  election of  directors  may submit
candidates  for  consideration  by the  Company if the Company  receives  timely
written notice, in proper form, for each such director nominee. If the notice is
not  timely  and in proper  form,  the  nominee  will not be  considered  by the
Company.  To be timely for the annual  meeting,  the  notice  generally  must be
received  within the time frame set forth in "Notice  Provisions For Stockholder
Nominations of Directors"  below. To be in proper form, each written  nomination
must set forth: (1) the name, age, business address and, if known, the residence
address of the  nominee,  (2) the  principal  occupation  or  employment  of the
nominee  for the past five  years,  and (3) the number of shares of stock of the
Company beneficially owned by the nominee and by the nominating stockholder.

     In the  consideration  of director  nominees,  including any nominee that a
stockholder  may submit,  the Board of Directors  considers,  at a minimum,  the
following  factors  for new  directors,  or the  continued  service of  existing
directors: (a) the ability of the prospective nominee to represent the interests
of the stockholders of the Company;  (b) the prospective  nominee's standards of
integrity,  commitment  and  independence  of  thought  and  judgment;  (c)  the
prospective  nominee's ability to dedicate sufficient time, energy and attention
to the diligent  performance  of his or her duties;  and (d) the extent to which
the prospective nominee contributes to the range of talent,  skill and expertise
appropriate for the Board.


     Members  of the audit  committee  are  Messrs.  Adams,  Diepholz,  Grissom,
Marvin,  Melvin,  and Sparks,  and Ms. Preston.  The audit committee assists the
Board of Directors in overseeing the corporate  financial  reporting process and
the  internal  and the  independent  outside  audits of the  Company.  The audit
committee met six times in 2003.

     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 2003.

     A total of 14 regularly  scheduled  and special  meetings  were held by the
Board of  Directors  of the Company  during 2003.  During  2003,  all  directors
attended at least 75 percent of the meetings of the Board and the  committees on
which they served.

--------------------------------------------------------------------------------
             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,  2003 were  Messrs.  Sparks  (Chairman),  Adams,  Diepholz,
Grissom,  Marvin, and Melvin, and Ms. Preston. The Board of Directors determined
that each member of the audit committee satisfies the independence  requirements
of the New York Stock Exchange.

     The  Securities and Exchange  Commission  requires that boards of directors
determine  whether any audit committee  member  qualifies as an "audit committee
financial  expert." The Board of Directors  determined that Steven L. Grissom is
an audit committee financial expert.

     The audit committee acts pursuant to a written charter that was revised and
adopted by the Board of Directors on January 27, 2004.  The charter was reviewed
and reassessed for adequacy and adopted with changes to the original language by
the audit committee on January 27, 2004. A copy of this Audit Committee  Charter
is attached  as Appendix A to this Proxy  Statement.  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, 2003.

     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, 2003.

     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, 2003, June
30,  2003,  and  September  30,  2003  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 years ended  December  31, 2003 and 2002 and the review of the  financial
statements  included in the  Company's  Quarterly  Reports on Form 10-Q for said
fiscal years were $103,100 and $102,650, respectively.

     Audit-Related  Fees.  The aggregate fees billed for  professional  services
rendered  by KPMG LLP for  audit-related  services  for the fiscal  years  ended
December 31, 2003 and 2002 (namely,  employee benefit plan audit, and statements
and consent issuances) were $9,600 and $10,750, respectively.

     Tax Fees. The aggregate fees billed for professional  services  rendered by
KPMG LLP for the fiscal years ended  December 31, 2003 and 2002 were $19,948 and
$4,350 for  amended  tax  returns  and  compliance  and  $4,000 for  compliance,
respectively.

     All Other  Fees.  The  aggregate  fees  billed  for  professional  services
rendered by KPMG LLP for all products and services  other than the foregoing for
the  fiscal  years  ended  December  31,  2003 and  2002  were  zero  and  zero,
respectively.

     The  audit  committee  preapproves  all  auditing  services  and  permitted
non-audit  services  provided by the  independent  auditors.  These services may
include audit services, audit-related services, tax services and other services.
The audit  committee  preapproved  all  services  performed  by the  independent
auditors in 2003.


--------------------------------------------------------------------------------
                             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,  2003,  2002 and 2001 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,  who are sometimes herein
referred to as the "named executive officers."





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

                                                                                     
William S. Rowland, Chairman,                2003       $ 200,000   $ 87,000         8,000          $17,898(3)
President and Chief Executive Officer        2002       $ 187,000   $ 74,800         8,000          $17,898(3)
of the Company                               2001       $ 170,000   $ 48,136         9,000          $18,878(3)

John W. Hedges, Executive Vice               2003       $ 140,000   $ 40,915         3,250          $10,855(4)
President of the Company                     2002       $ 130,000   $ 40,950         3,250          $10,257(4)
                                             2001       $ 122,000   $ 29,573         2,250          $ 9,101(4)

Robert J. Swift, Jr., Vice President         2003       $ 126,500   $ 27,198         2,250          $ 9,222(4)
of the Company                               2002       $ 126,500   $ 23,719         2,250          $ 9,013(4)
                                             2001       $ 122,100   $ 23,866         2,250          $ 8,087(4)

Stanley E. Gilliland,                        2003       $ 116,000   $ 22,838         2,250          $ 8,330(4)
Vice President of the Company                2002       $ 113,500   $ 23,409         2,250          $ 8,215(4)
                                             2001       $ 109,000   $ 22,277         2,250          $ 7,877(4)

Michael L. Taylor, Vice President and        2003       $ 100,000   $ 22,063         2,250          $ 7,324(4)
Chief Financial Officer of the Company       2002       $  94,000   $ 22,443         2,250          $ 6,987(4)
                                             2001       $  89,000   $ 21,634         2,250          $ 6,638(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 2003, 2002, and 2001.

(2)  Includes deferred amounts.

(3)  Represents the Company's  contributions  to its  retirement  plan for 2003,
     2002, and 2001 of $12,000, $12,000 and $12,980, 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 2003 to the named executive officers.





                              Number of          Percent of                                  Potential Realizable
                              Securities        Total Options     Exercise                     Value at Assumed
                              Underlying         Granted to        Price     Expir-          Annual Rates of Stock
                               Options          Employees in        Per      ation           Price Appreciation for
Name                         Granted (#)(1)      Fiscal Year       Share      Date                Options Term
----                        -----------          -----------       -----      ----           --------------------
                                                                                               5%            10%
                                                                                               --            ---

                                                                                     
William S. Rowland              8,000               22%             $ 46.50   12/16/13     $ 233,920      $ 592,880

John W. Hedges                  3,250                9%             $ 46.50   12/16/13     $  95,030      $ 240,857

Robert J. Swift, Jr.            2,250                6%             $ 46.50   12/16/13     $  65,790      $ 166,747

Stanley E. Gilliland            2,250                6%             $ 46.50   12/16/13     $  65,790      $ 166,747

Michael L. Taylor               2,250                6%             $ 46.50   12/16/13     $  65,790      $ 166,747




(1)  The options  become  exercisable  with respect to 25% of the shares covered
     thereby  beginning  on January 1, 2005 and on each of the  following  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
                                                                       Underlying Unexercised         In-the-Money
                                          Shares                         Options at Fiscal             Options at
                                        Acquired on        Value           Year-End (#)            Fiscal Year-End(1)
Name                                    Exercise (#)       Realized     -------------------       --------------------
----                                    -----------        --------     Exer-       Unexer-       Exer-       Unexer-
                                                                        cisable     cisable       cisable     cisable
                                                                        -------     -------       -------     -------

                                                                                           
William S. Rowland                          --               --         22,312       26,688      $575,522    $407,533

John W. Hedges                              --               --          3,937       10,063      $ 96,853    $149,784

Robert J. Swift, Jr.                       1,125          $9,601(2)       --          7,313         --       $112,772

Stanley E. Gilliland                        --               --          8,812        7,688      $233,909    $121,603

Michael L. Taylor                           --               --          1,687        7,313      $ 43,866    $112,772



(1)  This amount represents the difference between the market value of one share
     of the Company's  Common Stock on December 31, 2003 ($46.55) 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 May 1,  2003  ($30.00)  and the  option
     exercise  price  ($18.83) times the number of shares subject to the options
     (562.5); and the market value of one share of the Company's Common Stock on
     May 2, 2003  ($29.90)  and the option  exercise  price  ($24.00)  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 and 2004,  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  two  year's  base  salary  if  employment
discontinues following a change in control of the Company.

     In August 2003, 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, 2003 were Messrs.  Diepholz  (Chairman),  Adams,
Grissom, Lumpkin, Marvin, Melvin, and Sparks, and Ms. Preston. During the fiscal
year ended  December 31, 2003,  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, 2003,
Mr. Rowland served as a member of the compensation  committee and as director of
Coles Together,  a not-for-profit  economic  development  organization,  and Mr.
Grissom served as Treasurer of Coles Together;  Messrs. Hedges and Sparks served
as directors,  and Mr. Grissom served as President,  of Mattoon Area  Industrial
Development  Corporation,  a not-for-profit  industrial development corporation;
Ms. Preston and Mr. Hedges served as members of the  compensation  committee and
as directors of Sarah Bush Lincoln  Health  Systems,  a  not-for-profit  medical
facility;  and Ms.  Preston  served as director of Eastern  Illinois  University
Foundation, a not-for-profit  organization.  See also "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 2002, 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  2003 base salary from $187,000 in 2002 to
$200,000 for 2003. Mr.  Rowland's 2003 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 2003 earnings per share goal  established by the  compensation  committee in
December  2002. The  compensation  committee  established  $2.86 as the superior
level of  earnings  per share in 2003  necessary  for Mr.  Rowland  to receive a
payout of 100% of his annual incentive compensation. Since earnings per share in
2003 were $2.82, Mr. Rowland  received an 87% payout,  amounting to 43.5% of his
base salary. Finally, in 2003, Mr. Rowland was awarded 8,000 stock options under
the Plan.

     The  2003  earnings  per  share  of  $2.82  represented  a  $.44  or  18.5%
improvement  from 2002'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  $87,000,  $40,915,
$27,198, $22,838, and $22,063, respectively.


     The relationships  between the base salaries and incentive  compensation of
Messrs. Rowland,  Hedges, Swift, Gilliland,  and Taylor for 2003, 2002, and 2001
were as follows:

                         Incentive Compensation as a Percentage of Base Salary

                               2003             2002              2001
                               ----             ----              ----

William S. Rowland             44%              40%               28%
John W. Hedges                 29%              32%               24%
Robert J. Swift, Jr.           22%              19%               20%
Stanley E. Gilliland           20%              21%               20%
Michael L. Taylor              22%              24%               24%




     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, 1998 through December 31, 2003. The
amounts shown assume the reinvestment of dividends.




                                                                       Cumulative Total Return
                                 ---------------------------------------------------------------------------------------
                                            12/98        12/99          12/00        12/01         12/02          12/03

                                                                                               
First Mid-Illinois
Bancshares, Inc.                           100.00       102.65          86.49       108.58        128.50         217.20
S & P 500                                  100.00       121.04         110.02        96.95         75.52          97.18
Nasdaq Bank                                100.00       216.79         113.10        88.84         61.04          80.89




[GRAPHIC OMITTED]









--------------------------------------------------------------------------------
                          COMMUNICATIONS WITH DIRECTORS
--------------------------------------------------------------------------------

     Any  stockholder  may  communicate  with any  director  by sending  written
correspondence  addressed  to such  director  in care  of the  Secretary  of the
Company at First Mid-Illinois Bancshares, Inc., 1515 Charleston Avenue, Mattoon,
Illinois  61938.  The  Secretary  or the  designee  thereof  will  forward  such
correspondence to the relevant director.

     The  Company  expects  directors  to  attend  the  annual  meeting,  absent
scheduling or other similar conflicts.  All of the directors attended the annual
meeting in 2003.


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

     Directors of the Company received a $3,000  quarterly  retainer for serving
on the  Board of  Directors  in 2003.  Directors  who are not  employees  of the
Company  also were  granted in 2003  options  to  purchase  1,500  shares of the
Company's  Common Stock at an exercise  price of $46.50 per share.  Such options
have terms of ten years and became exercisable on their date of grant. Directors
who are not employees of the Company also receive health insurance.

     Audit  committee  members  received $500 for each audit  committee  meeting
attended in 2003 and the audit committee  chairman also received a $2,000 annual
retainer.

     Compensation   committee   members  received  $250  for  each  compensation
committee meeting attended in 2003.

--------------------------------------------------------------------------------
                 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 2003. 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 2003 transactions are described below.

     Messrs. Lumpkin and Grissom served as directors of the Company and were the
beneficial  owners of more than five percent of the Company's  Common Stock.  In
addition,  Messrs.  Lumpkin and Grissom have beneficial  ownership in the equity
holders of MACC,  LLC and  Effingham  Hi-Tech  Partners and the capital stock of
Agracel,  Inc. MACC,  Effingham High-Tech and Agracel had outstanding loans with
the  Bank.  The  highest  outstanding  aggregate  balances  during  2003 and the
December 31, 2003 aggregate balances and interest rates of this indebtedness for
MACC was  $1,016,862 and $931,834 at 5.00 percent;  for Effingham  High-Tech was
$3,283,224 and  $2,916,775 at 5.375 percent;  and for Agracel was $4,332,306 and
$3,676,835 at interest rates ranging between 4.00 and 5.75 percent.


     Mr.  Grissom also had an  outstanding  home equity loan with the Bank.  The
highest  outstanding  balance  of this loan  during  2003 was  $121,036  and the
December 31, 2003 balance was $121,036 at an interest rate of 3.25 percent.

     Consolidated  Communications,  Inc., of which Mr. Lumpkin is Chairman and a
beneficial  owner,  and of which Mr.  Grissom is Treasurer  and  Secretary and a
beneficial  owner,  and its affiliates  provided paging,  long  distance/800 and
private line services, voice mail and customer premise equipment services to the
Company in the amount of $436,653.

     The Company purchased for $280,000 an office building, adjacent to property
owned by the Company in Mattoon,  Illinois,  from BAL Estate Company. BAL Estate
Company is a real  estate  investment  company  owned by members of the  Lumpkin
Family. Mr. Lumpkin is a director of BAL Estate Company.

     On February 9, 2004,  the Company  acquired  25,000  shares of Common Stock
from Mr.  Lumpkin  for  $1,187,500  and 25,000  shares of Common  Stock from SKL
Investment Group, LLC, of which Mr. Lumpkin is a voting member, for $1,187,500.

     Messrs. Diepholz, Melvin, Sparks, and Adams, who each served as director of
the Company, had outstanding loans with the Bank. In addition, Mr. Adams was the
beneficial owner of more than five percent of the Company's Common Stock. 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 during 2003 and the December 31, 2003 aggregate
balances and interest rates of this  indebtedness was $11,391,331 and $6,967,009
at interest  rates  ranging  between  4.00 and 9.50  percent  for Mr.  Diepholz;
$1,860,291  and  $1,736,755 at an interest rate of 4.00 percent for Mr.  Melvin;
$2,915,356  and  $1,717,686 at an interest rate of 4.00 percent for Mr.  Sparks;
and $2,559,890 and $1,093,009 at an interest rate of 4.00 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 or more than 60
days before a 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
--------------------------------------------------------------------------------

     KPMG LLP acted as independent  certified public  accountants 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.  The Company has not yet appointed its  independent  auditors for the
fiscal year ending December 31, 2004 and expects to make that appointment  later
in the year.

--------------------------------------------------------------------------------
              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
21, 2004.  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,  2003,  except that Ms.  Wright  filed one late Form 4
relating to shares of Common Stock held by her spouse.



                                   Appendix A
                       FIRST MID-ILLINOIS BANCSHARES, INC.
                                 (the "Company")
            Charter of the Audit Committee of the Board of Directors
                           As adopted January 27, 2004

Purpose

The Audit  Committee  is appointed by the Board of Directors to assist the Board
in monitoring:  (1) the integrity of the Company's financial statements, (2) the
Company's compliance with legal and regulatory requirements, (3) the independent
auditor's  qualifications  and  independence,  and  (4) the  performance  of the
Company's internal audit function and independent auditor.

The Audit  Committee  shall prepare the report  required by the  Securities  and
Exchange  Commission  (the "SEC") to be included in the  Company's  annual proxy
statement.

Membership

The Audit Committee shall consist of no fewer than three members. Each member of
the Audit Committee shall meet the independence  and experience  requirements of
the  Federal  Deposit  Insurance  Corporation  Act of 1991  and the  regulations
relating  thereto and the Securities  Exchange Act of 1934 (the "Exchange  Act")
and the applicable rules and regulations of the SEC, as well as the independence
requirements of the New York Stock Exchange.

Each member of the Audit Committee  shall, in the judgment of the Board,  have a
basic understanding of finance and accounting and be able to read and understand
fundamental  financial  statements.  At least one member of the Audit  Committee
shall be an "audit  committee  financial  expert" as  defined by the SEC.  Audit
Committee members shall be appointed by the Board of Directors.  Audit Committee
members may be replaced by the Board.

Meetings

The  Audit  Committee  shall  meet as  often  as it  determines,  but  not  less
frequently than quarterly.  The Audit Committee shall meet with management,  the
head of the internal audit department,  and the independent  auditor in separate
executive  sessions  periodically,  but not less  frequently  than annually,  to
discuss  anything  the  Audit  Committee  or  these  groups  believe  should  be
discussed.  The Audit  Committee  may  request  any  officer or  employee of the
Company or the  Company's  outside  counsel or  independent  auditor to attend a
meeting of the Audit  Committee  or to meet with any members of, or  consultants
to, the Audit Committee,  and to provide pertinent information as necessary.  If
the Chair of the Audit Committee is not present at a given meeting,  the members
of the Audit  Committee  present at such meeting may  designate a Chair for that
meeting by unanimous vote.


Authority and Responsibilities

The Audit  Committee  shall have the sole  authority  to appoint or replace  the
independent auditor (subject, if applicable, to shareholder  ratification).  The
Audit Committee shall be directly responsible for the compensation and oversight
of the work of the independent  auditor  (including  resolution of disagreements
between management and the independent  auditor regarding  financial  reporting)
for the purpose of  preparing or issuing an audit  report or related  work.  The
independent auditor shall report directly to the Audit Committee.

The Audit  Committee  shall  preapprove  all  auditing  services  and  permitted
non-audit  services  (including  the fees and terms thereof) to be performed for
the Company by its independent auditor, subject to the de minimis exceptions for
non-audit services  described in Section  10A(i)(1)(B) of the Exchange Act which
are approved by the Audit Committee prior to the completion of the audit.

The Audit Committee  shall have the authority,  to the extent it deems necessary
or appropriate,  to retain independent legal, accounting, or other advisors. The
Company  shall  provide for  appropriate  funding,  as  determined  by the Audit
Committee,  for  payment of  compensation  to the  independent  auditor  for the
purpose of rendering or issuing an audit report and to any advisors  employed by
the Audit Committee.

The Audit Committee  shall make regular  reports to the Board of Directors.  The
Audit Committee shall review and reassess the adequacy of this Charter  annually
and  recommend any proposed  changes to the full Board for  approval.  The Audit
Committee shall review the Audit Committee's own performance annually.

The Audit Committee shall:

Financial Statement and Disclosure Matters

*    Review and discuss with management and the  independent  auditor the annual
     audited financial  statements,  including  disclosures made in management's
     discussion  and  analysis,  and  recommend to the Board whether the audited
     financial statements should be included in the Company's Form 10-K.

*    Establish a Disclosure Committee whose membership shall include, but not be
     limited to, the Audit Committee Chair, an audit committee financial expert,
     the Chief  Executive  Officer,  and the  Chief  Financial  Officer  for the
     purpose of reviewing and discussing  with  management  and the  independent
     auditor the Company's quarterly financial statements prior to the filing of
     the Company's Form 10-Q, including the results of the independent auditor's
     procedures with respect to the quarterly financial statements.

*    Review and discuss reports from the independent auditor on:

     *    All critical accounting policies and practices to be used.

     *    All alternative  treatments of financial  information within generally
          accepted accounting  principles ("GAAP") that have been discussed with
          management,  ramifications of the use of such alternative  disclosures
          and  treatments,  and  the  treatment  preferred  by  the  independent
          auditor.

     *    Other material written  communications between the independent auditor
          and management such as any management letter or schedule of unadjusted
          differences.


*    Discuss with management and the independent auditor  significant  financial
     reporting  issues and judgments made in connection  with the preparation of
     the Company's  financial  statements,  including any significant changes in
     the Company's selection or application of accounting principles,  any major
     issues as to the  adequacy  of the  Company's  internal  controls,  and any
     special steps adopted in light of material control deficiencies.

*    Discuss with management the Company's  earnings press  releases,  including
     the use of "pro  forma"  or  "adjusted"  non-GAAP  information,  as well as
     financial information and earnings guidance provided to analysts and rating
     agencies.  Such discussion may be done generally  (consisting of discussing
     the types of information to be disclosed and the types of  presentations to
     be made).

*    Discuss  with  management  and  the  independent   auditor  the  effect  of
     regulatory  and  accounting   initiatives  as  well  as  off-balance  sheet
     structures on the Company's financial statements.

*    Discuss with the independent  auditor the matters  required to be discussed
     by  Statement  on  Auditing  Standards  No.  61,  Communication  with Audit
     Committees, relating to the conduct of the audit.

*    Review  the  disclosures  and  certification  made by the  Company's  Chief
     Executive Officer and Chief Financial Officer under Sections 302 and 906 of
     the Sarbanes-Oxley Act of 2002.

Oversight of the Company's Relationship with the Independent Auditor

*    Obtain and review a report  from the  independent  auditor  regarding,  and
     discuss with the independent auditor, at least annually,  all relationships
     between the independent  auditor and the Company (including the matters set
     forth  in  Independence   Standards  Board  Standard  No.  1,  Independence
     Discussions with Audit  Committees).  Review and evaluate at least annually
     the  qualifications,   performance  and  independence  of  the  independent
     auditor, including considering whether the provision of permitted non-audit
     services is compatible with maintaining the auditor's independence.

*    Ensure the rotation of audit  partners as required by Section 10A(j) of the
     Exchange Act.

*    Recommend to the Board of Directors  policies for the  Company's  hiring of
     employees or former employees of the independent auditor.

*    Review with the independent  auditor any audit problems or difficulties and
     management's response.

*    Discuss with management and the independent auditor the scope of the annual
     audit,  significant  accounting policies,  and audit conclusions  regarding
     significant accounting estimates.


Oversight of the Company's Internal Audit Function

*    Review the  appointment,  performance,  and  replacement of the head of the
     internal audit department.

*    Review the significant reports to management prepared by the internal audit
     department and management's responses and follow-ups to these reports.

*    Discuss with the  independent  auditor and  management  the internal  audit
     department  responsibilities,  budget  and  staffing,  and any  recommended
     changes in the planned scope of the internal audit.

Compliance Oversight Responsibilities

*    Obtain from the  independent  auditor  assurance that Section 10A(b) of the
     Exchange  Act  regarding  the  detection  of illegal  activity has not been
     implicated.

*    Obtain reports from management,  the head of the internal audit department,
     and  the  independent   auditor  that  the  Company  and  its  wholly-owned
     subsidiaries are in conformity with applicable  legal  requirements and the
     Company's  Codes of Ethics.  Advise the Board with respect to the Company's
     policies and  procedures  regarding  compliance  with  applicable  laws and
     regulations and with the Company's Codes of Ethics.

*    Establish  procedures  for  the  receipt,   retention,   and  treatment  of
     complaints   received  by  the  Company  regarding   accounting,   internal
     accounting controls,  or auditing matters, and the confidential,  anonymous
     submission by employees of concerns  regarding  questionable  accounting or
     auditing matters.

*    Discuss with management and the independent auditor any correspondence with
     regulators or governmental  agencies and any published  reports which raise
     material issues regarding the Company's financial  statements or accounting
     policies.

Limitation of Audit Committee's Role

     While the Audit Committee has the  responsibilities and powers set forth in
this  Charter,  it is not the duty of the  Audit  Committee  to plan or  conduct
audits or to determine that the Company's  financial  statements and disclosures
are complete and accurate and are in accordance  with GAAP and applicable  rules
and  regulations.   These  are  the   responsibilities  of  management  and  the
independent auditor.


Proxy                      FIRST MID-ILLINOIS BANCSHARES, INC.         Proxy

                  PROXY is Solicited By the Board of Directors
             For the Annual Meeting of Stockholders -- May 26, 2004

The undersigned hereby appoints Stanley E. Gilliland,  John W. Hedges and Robert
J. Swift,  Jr.,  or any of them  acting in the absence of the others,  with full
power of substitution,  as attorneys and proxies,  for and in the name and place
of the  undersigned,  to vote the  number of shares  of  Common  Stock  that the
undersigned  would be entitled to vote if then personally  present and voting at
the Annual Meeting of Stockholders of First Mid-Illinois Bancshares, Inc., to be
held in the  lobby  of the  First  Mid-Illinois  Bank & Trust,  1515  Charleston
Avenue,  Mattoon,  Illinois,  on May 26, 2004, at 4:00 p.m.,  local time, or any
adjournments or postponements  thereof, upon the matters set forth in the Notice
of Annual Meeting and Proxy Statement (receipt of which is hereby  acknowledged)
as designated on the reverse and, in their discretion,  upon such other business
as may come before the meeting.

THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICE IS
INDICATED,  THIS PROXY WILL BE VOTED FOR THE  ELECTION  OF ALL  NOMINEES  LISTED
HEREON  AND  FOR  THE  APPROVAL  OF  THE   AMENDMENT  TO  THE   CERTIFICATE   OF
INCORPORATION.

                             YOUR VOTE IS IMPORTANT!

           PLEASE VOTE YOUR SHARES BY TELEPHONE, THROUGH THE INTERNET,
         OR BY COMPLETING, SIGNING, DATING AND RETURNING THIS PROXY CARD
                      PROMPTLY USING THE ENCLOSED ENVELOPE.

           (Continued and to be signed and dated on the reverse side.)





Use a black pen. Print in CAPITAL letters inside the grey areas as shown in this
example.

Election of Directors

1.   The Board of Directors recommends a vote FOR the listed nominees.

                                                     FOR            WITHHOLD
      01   Charles A. Adams                          |_|              |_|
      02   Daniel E. Marvin, Jr.                     |_|              |_|
      03   Ray Anthony Sparks                        |_|              |_|

Approval of Amendment

2.   The Board of Directors  recommends a vote FOR the approval of the amendment
     to the  Certificate of  Incorporation  to increase the number of authorized
     shares of Common Stock.

                                       FOR            AGAINST          ABSTAIN
                                         |_|            |_|              |_|

Issues

3.    In their discretion, on such              Check here if you plan to attend
      other matters that may properly                 the meeting.    |_|
      come before the meeting and any
      adjournments thereof.


Authorized  Signatures  -- Sign Here -- This section must be completed  for your
instructions to be executed.

Note: Please date and sign exactly as your name(s) appears.  For joint accounts,
each owner should  sign.  When  signing as  executor,  administrator,  attorney,
trustee or guardian, etc., please give your full title.


----------------------------------------
Signature 1


----------------------------------------
Signature 2


Date (dd/mm/yyyy)


-- --/-- --/-- -- -- --



INTERNET AND TELEPHONE VOTING INSTRUCTIONS

You can vote by telephone  OR Internet!  Available 24 Hours a day 7 days a week!
Instead  of mailing  your  proxy,  you may choose one of the two voting  methods
outlined below to vote your proxy.



                  To vote using the Telephone
                   (within U.S. and Canada)

*    Call toll free  1-877-233-3044 in the United States or Canada any time on a
     touch tone telephone. There is NO CHARGE to you for the call.

*    Enter the Holder Account Number (excluding the letter "C") and Proxy Access
     Number located below.

*    Follow the simple recorded instructions.

Option 1:   To vote as the Board of Directors recommends on
            ALL proposals:  Press 1.

            When asked, please confirm your vote by pressing 1.

Option 2:   If you choose to vote on EACH proposal separately, press 0 and
            follow the simple recorded instructions.




                  To vote using the Internet

*    Go to the following website: WWW.COMPUTERSHARE.COM/US/PROXY

*    Enter the  information  requested  on your  computer  screen and follow the
     simple instructions.




HOLDER ACCOUNT NUMBER    ______________     PROXY ACCESS NUMBER   _____

If you vote by  telephone  or the  Internet,  please DO NOT mail back this proxy
card.  Proxies  submitted by telephone or the Internet must be received by 12:00
midnight, Central Time, on May 25, 2004.
THANK YOU FOR VOTING