First Midwest Bancorp, Inc. Announces 2015 Third Quarter Results
/EINPresswire.com/ -- ITASCA, IL -- (Marketwired) -- 10/20/15 -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the third quarter of 2015. Net income for the third quarter of 2015 was $23.3 million, or $0.30 per share. This compares to $22.6 million, or $0.29 per share, for the second quarter of 2015, and $18.5 million, or $0.25 per share, for the third quarter of 2014.
SELECT HIGHLIGHTS
-
Increased earnings per share to $0.30, up 20% from the third quarter of 2014 and 3% from the second quarter of 2015.
-
Produced a return on average tangible common equity of 12%, up from 10% for the third quarter of 2014 and consistent with the second quarter of 2015.
-
Grew fee-based revenues to $33 million, an increase of 12% from the third quarter of 2014 and 5% from the second quarter of 2015.
-
Increased total loans, excluding covered loans, to nearly $7 billion, up 7% from September 30, 2014 and 5% annualized from June 30, 2015.
-
Decreased non-performing assets to $71 million, down 33% from September 30, 2014 and 6% from June 30, 2015.
-
Reduced net loan charge-offs to $3.1 million for the third quarter of 2015, down 81% from the third quarter of 2014 and 45% from the second quarter of 2015.
"Our performance for the quarter was once again strong, reflecting balanced execution of our business objectives," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Quarterly earnings per share improved to $0.30, an increase of 20% from a year ago and 3% compared to last quarter. Business performance was solid across our sales platforms, benefiting from targeted growth in our consumer and fee-based businesses as well as reduced credit costs."
Mr. Scudder concluded, "Our sales teams are fully engaged and our balance sheet is strong, providing ample liquidity and capital for growth. Concurrently, our recently announced pending acquisition of The Peoples' Bank of Arlington Heights is expected to add to our expanding suburban Chicago footprint and provide additional business opportunities. As we look ahead, our priorities remain balanced on building and broadening our client relationships as we navigate evolving market conditions and the accompanying competitive pressures. We remain well positioned to leverage the strength of our balance sheet and infrastructure to pursue opportunities for growth and return value to our shareholders."
ACQUISITION
On September 21, 2015, the Company entered into a definitive agreement to acquire Peoples Bancorp, Inc. and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights. As part of the acquisition, the Company will acquire two banking offices in Arlington Heights, Illinois, approximately $95 million in deposits, and $57 million in loans. The acquisition is subject to customary regulatory approvals and certain closing conditions and is expected to close before the end of 2015.
OPERATING PERFORMANCE
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
Quarters Ended
-------------------------------------------------------
September 30, 2015 June 30, 2015
--------------------------- ---------------------------
Interest Yield/ Interest Yield/
Average Earned/ Rate Average Earned/ Rate
Balance Paid (%) Balance Paid (%)
---------- -------- ------ ---------- -------- ------
Assets:
Other interest-
earning assets $ 820,318 $ 645 0.31 $ 669,556 $ 516 0.31
Securities (1) 1,194,711 9,559 3.20 1,177,516 9,792 3.33
Federal Home Loan
Bank ("FHLB") and
Federal Reserve
Bank ("FRB") stock 38,748 369 3.81 38,748 368 3.80
Loans (1)(2) 6,887,611 76,328 4.40 6,815,781 76,573 4.51
---------- -------- ------ ---------- -------- ------
Total interest-
earning assets
(1) 8,941,388 86,901 3.86 8,701,601 87,249 4.02
-------- ------ -------- ------
Cash and due from
banks 132,504 133,180
Allowance for loan
and covered loan
losses (73,928) (73,865)
Other assets 875,668 881,613
---------- ----------
Total assets $9,875,632 $9,642,529
========== ==========
Liabilities and
Stockholders'
Equity:
Interest-bearing
core deposits (3) $4,465,956 931 0.08 $4,407,168 896 0.08
Time deposits 1,173,127 1,398 0.47 1,216,371 1,506 0.50
Borrowed funds 168,807 928 2.18 140,002 118 0.34
Senior and
subordinated debt 201,083 3,133 6.18 200,999 3,134 6.25
---------- -------- ------ ---------- -------- ------
Total interest-
bearing
liabilities 6,008,973 6,390 0.42 5,964,540 5,654 0.38
-------- ------ -------- ------
Demand deposits (3) 2,601,442 2,437,742
---------- ----------
Total funding
sources 8,610,415 8,402,282
Other liabilities 130,250 116,717
Stockholders' equity
- common 1,134,967 1,123,530
---------- ----------
Total
liabilities and
stockholders'
equity $9,875,632 $9,642,529
========== ==========
Tax-equivalent net
interest
income/margin (1) 80,511 3.58 81,595 3.76
====== ======
Tax-equivalent
adjustment (2,609) (2,693)
-------- --------
Net interest
income (GAAP) $ 77,902 $ 78,902
======== ========
Quarters Ended
-----------------------------
September 30, 2014
----------------------------
Interest Yield/
Average Earned/ Rate
Balance Paid (%)
---------- -------- ------
Assets:
Other interest-
earning assets $ 476,768 $ 313 0.26
Securities (1) 1,086,105 9,689 3.57
Federal Home Loan
Bank ("FHLB") and
Federal Reserve
Bank ("FRB") stock 35,588 341 3.83
Loans (1)(2) 6,302,883 69,458 4.37
---------- -------- ------
Total interest-
earning assets
(1) 7,901,344 79,801 4.01
-------- ------
Cash and due from
banks 126,279
Allowance for loan
and covered loan
losses (77,596)
Other assets 818,066
----------
Total assets $8,768,093
==========
Liabilities and
Stockholders'
Equity:
Interest-bearing
core deposits (3) $3,906,975 865 0.09
Time deposits 1,226,025 1,941 0.63
Borrowed funds 101,674 9 0.04
Senior and
subordinated debt 191,013 3,016 6.26
---------- -------- ------
Total interest-
bearing
liabilities 5,425,687 5,831 0.43
-------- ------
Demand deposits (3) 2,208,450
----------
Total funding
sources 7,634,137
Other liabilities 83,075
Stockholders' equity
- common 1,050,881
----------
Total
liabilities and
stockholders'
equity $8,768,093
==========
Tax-equivalent net
interest
income/margin (1) 73,970 3.72
======
Tax-equivalent
adjustment (2,939)
--------
Net interest
income (GAAP) $ 71,031
========
(1) Interest income and yields on tax-exempt securities and loans are
presented on a tax-equivalent basis, assuming a federal income tax rate
of 35%. This non-GAAP financial measure assists management in comparing
revenue from both taxable and tax-exempt sources. The corresponding
income tax impact related to tax-exempt items is recorded in income tax
expense. These adjustments have no impact on net income.
(2) Includes loans acquired through Federal Deposit Insurance Corporation
("FDIC")-assisted transactions subject to loss sharing agreements
("covered loans") and a related FDIC indemnification asset.
(3) See the deposit portfolio section for further average balance detail by
category.
For the third quarter of 2015, total average interest-earning assets rose $239.8 million from the second quarter of 2015 driven by loan growth and an increase in lower yielding other interest-earning assets. Total average funding sources increased $208.1 million from the second quarter of 2015 as a result of seasonally higher levels of interest-bearing core deposits and demand deposits.
Compared to the third quarter of 2014, the $1.0 billion increase in total average interest-earning assets and the $976.3 million rise in total average funding sources reflect the impact of the acquisitions completed in the second half of 2014 and organic loan growth over the course of the year.
Tax-equivalent net interest margin for the current quarter was 3.58%, decreasing 18 basis points from the second quarter of 2015 and 14 basis points from the third quarter of 2014. Compared to the second quarter of 2015, the reduction in tax-equivalent net interest margin was due primarily to a decrease in acquired loan accretion, a seasonally higher balance of other interest-earning assets, the continued shift in the loan mix to floating rate loans, and the flattening of the yield curve. Tax-equivalent net interest margin decreased compared to the third quarter of 2014 due primarily to a rise in other interest-earning assets, lower accretion on covered loans, the continued shift in the loan mix, and the flattening of the yield curve, which were partially offset by greater accretion on acquired loans related to the 2014 acquisitions.
Acquired loan accretion related to the 2014 acquisitions contributed $1.8 million and $3.6 million to net interest income for the third and second quarters of 2015, respectively. This acquired loan accretion includes accelerated accretion on purchased credit impaired ("PCI") loans of $556,000 and $1.7 million for the third and second quarters of 2015, respectively.
Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
September 30, 2015
Percent Change
Quarters Ended from
------------------------------ ------------------
September September June September
30, June 30, 30, 30, 30,
2015 2015 2014 2015 2014
---------- -------- ---------- ------- ---------
Service charges on
deposit accounts $ 10,519 $ 9,886 $ 9,902 6.4 6.2
Wealth management fees 7,222 7,433 6,721 (2.8) 7.5
Card-based fees 6,868 6,953 6,646 (1.2) 3.3
Merchant servicing fees
(1) 3,207 2,938 2,932 9.2 9.4
Mortgage banking income 1,402 1,439 1,125 (2.6) 24.6
Other service charges,
commissions, and fees 3,900 2,924 2,334 33.4 67.1
---------- -------- ---------- ------- ---------
Total fee-based
revenues 33,118 31,573 29,660 4.9 11.7
Other income 1,372 1,900 923 (27.8) 48.6
Net securities gains 524 515 2,570 1.7 (79.6)
Gains on sales of
properties -- -- 3,954 -- (100.0)
---------- -------- ---------- ------- ---------
Total noninterest
income $ 35,014 $ 33,988 $ 37,107 3.0 (5.6)
========== ======== ========== ======= =========
(1) Merchant servicing fees are substantially offset by merchant card
expense included in noninterest expense for each period presented.
Total fee-based revenues of $33.1 million grew 4.9% compared to the second quarter of 2015, primarily reflecting normal seasonality. The 11.7% increase compared to the third quarter of 2014 primarily reflects organic growth across the majority of categories. In addition, the benefit from the 2014 acquisitions contributed to the increase.
Compared to the second quarter of 2015, the increase in service charges on deposit accounts was driven by seasonally higher activity. The increase in service charges on deposit accounts compared to the third quarter of 2014 also reflects services provided to customers added in the 2014 acquisitions. Continued sales of fiduciary and investment advisory services to new and existing customers drove the rise in wealth management fees compared to the third quarter of 2014.
Mortgage banking income resulted from sales of $42.2 million of 1-4 family mortgage loans in the secondary market during the third quarter of 2015, compared to $51.9 million in the second quarter of 2015 and $31.7 million in the third quarter of 2014. Compared to both prior periods presented, gains realized on the sale of leasing equipment contracts originated by First Midwest Equipment Finance, which was formed from an acquisition in September of 2014, drove the increase in other service charges, commissions, and fees. In addition, fee income generated from sales of capital market products to commercial clients contributed to the increase compared to both prior periods presented.
Total noninterest income of $35.0 million grew 3.0% and decreased 5.6% from the second quarter of 2015 and the third quarter of 2014, respectively. Other income was elevated during the second quarter of 2015 due to greater bank-owned life insurance income. The third quarter of 2014 total noninterest income reflects the net gains from the disposition of two branch properties and net securities gains.
Noninterest Expense Analysis
(Dollar amounts in thousands)
September 30,
2015
Percent Change
Quarters Ended from
------------------------------- -----------------
September June September June September
30, 30, 30, 30, 30,
2015 2015 2014 2015 2014
---------- ------- ---------- ------ ---------
Salaries and employee
benefits:
Salaries and wages $ 33,554 $33,096 $ 28,152 1.4 19.2
Retirement and other
employee benefits 7,807 7,198 7,319 8.5 6.7
---------- ------- ---------- ------ ---------
Total salaries and
employee benefits 41,361 40,294 35,471 2.6 16.6
---------- ------- ---------- ------ ---------
Net occupancy and
equipment expense 9,406 9,622 8,639 (2.2) 8.9
Professional services 6,172 5,322 5,692 16.0 8.4
Technology and related
costs 3,673 3,527 3,253 4.1 12.9
Merchant card expense
(1) 2,722 2,472 2,396 10.1 13.6
Advertising and
promotions 1,828 2,344 1,822 (22.0) 0.3
Net other real estate
owned ("OREO") expense 1,290 1,861 1,406 (30.7) (8.3)
Cardholder expenses 1,354 1,292 1,120 4.8 20.9
Other expenses 6,559 6,717 6,766 (2.4) (3.1)
Acquisition and
integration related
expenses -- -- 3,748 -- (100.0)
---------- ------- ---------- ------ ---------
Total noninterest
expense $ 74,365 $73,451 $ 70,313 1.2 5.8
========== ======= ========== ====== =========
Efficiency ratio (2) 63% 62% 62%
(1) Merchant card expenses are substantially offset by merchant servicing
fees included in noninterest income for each period presented.
(2) The efficiency ratio expresses noninterest expense, excluding OREO
expense, as a percentage of tax-equivalent net interest income plus
total fee-based revenues, other income, and tax-equivalent adjusted
bank-owned life insurance ("BOLI") income. In addition, acquisition and
integration related expenses of $3.7 million are excluded from the
efficiency ratio for the third quarter of 2014. See the accompanying
Non-GAAP Reconciliations for details on the calculation of the
efficiency ratio.
Total noninterest expense increased 1.2% from the second quarter of 2015 and 5.8% from the third quarter of 2014. The increase from the second quarter of 2015 primarily reflects seasonal increases in benefits, as well as expenses associated with talent recruitment and organizational growth needs, including an independent cyber-risk assessment as a part of a targeted risk mitigation process.
The rise in total noninterest expense compared to the third quarter of 2014 was due primarily to operating costs of the 21 banking locations acquired during the second half of 2014, of which four have been closed. These costs primarily occurred within salaries and employee benefits, net occupancy and equipment expense, technology and related costs, and other expenses.
LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
September 30, 2015
As of Percent Change from
-------------------------------- -------------------
September September September
30, June 30, 30, June 30, 30,
2015 2015 2014 2015 (1) 2014
---------- ---------- ---------- -------- ---------
Commercial and
industrial $2,392,860 $2,366,056 $2,208,166 4.5 8.4
Agricultural 393,732 377,410 347,511 17.3 13.3
Commercial real
estate:
Office 487,629 488,863 437,222 (1.0) 11.5
Retail 432,107 432,880 454,178 (0.7) (4.9)
Industrial 494,341 510,759 531,122 (12.9) (6.9)
Multi-family 539,308 557,947 559,689 (13.4) (3.6)
Construction 192,086 190,970 193,445 2.3 (0.7)
Other commercial
real estate 869,748 871,119 871,825 (0.6) (0.2)
---------- ---------- ---------- -------- ---------
Total commercial
real estate 3,015,219 3,052,538 3,047,481 (4.9) (1.1)
---------- ---------- ---------- -------- ---------
Total corporate
loans 5,801,811 5,796,004 5,603,158 0.4 3.5
---------- ---------- ---------- -------- ---------
Home equity 647,223 599,320 517,446 32.0 25.1
1-4 family mortgages 294,261 283,562 238,172 15.1 23.5
Installment 131,185 113,382 69,428 62.8 89.0
---------- ---------- ---------- -------- ---------
Total consumer
loans 1,072,669 996,264 825,046 30.7 30.0
---------- ---------- ---------- -------- ---------
Total loans,
excluding covered
loans 6,874,480 6,792,268 6,428,204 4.8 6.9
Covered loans 51,219 57,917 90,875 (46.3) (43.6)
---------- ---------- ---------- -------- ---------
Total loans $6,925,699 $6,850,185 $6,519,079 4.4 6.2
========== ========== ========== ======== =========
(1) Ratios are presented on an annualized basis.
Total loans, excluding covered loans, of $6.9 billion grew 4.8% on an annualized basis from June 30, 2015 and 6.9% from September 30, 2014. The loan growth from September 30, 2014 related to loans obtained in the 2014 acquisition completed in the fourth quarter of 2014 and organic growth.
Compared to June 30, 2015, growth in corporate loans was concentrated within our commercial and industrial and agricultural loan categories. The increase in commercial and industrial loans primarily reflects the continued expansion into select sector-based lending areas such as healthcare, structured finance, and leasing. Agricultural loans grew due to seasonal draws on lines of credit and new relationships. The overall decline in commercial real estate loans resulted from the decision of certain customers to opportunistically sell their middle market businesses and investment real estate properties, which more than offset organic growth. The rise in consumer loans reflects the purchase of high quality, shorter-duration, floating rate home equity loans and the expansion of our web-based installment lending program.
Asset Quality
(Dollar amounts in thousands)
September 30, 2015
As of Percent Change from
--------------------------------- -------------------
September September September
30, June 30, 30, June 30, 30,
2015 2015 2014 2015 2014
---------- --------- ---------- -------- ---------
Asset quality,
excluding covered
loans and covered
OREO
Non-accrual loans $ 32,308 $ 45,009 $ 64,528 (28.2) (49.9)
90 days or more past
due loans 4,559 2,744 6,062 66.1 (24.8)
---------- --------- ---------- -------- ---------
Total non-
performing loans 36,867 47,753 70,590 (22.8) (47.8)
Accruing troubled
debt restructurings
("TDRs") 2,771 3,067 5,449 (9.7) (49.1)
OREO 31,129 24,471 29,165 27.2 6.7
---------- --------- ---------- -------- ---------
Total non-
performing assets $ 70,767 $ 75,291 $ 105,204 (6.0) (32.7)
========== ========= ========== ======== =========
30-89 days past due
loans $ 28,629 $ 28,625 $ 17,321
Non-accrual loans to
total loans 0.47% 0.66% 1.00%
Non-performing loans
to total loans 0.54% 0.70% 1.10%
Non-performing
assets to total
loans plus OREO 1.02% 1.10% 1.63%
Allowance for Credit
Losses
Allowance for loan
and covered loan
losses $ 72,500 $ 71,463 $ 73,106
Reserve for unfunded
commitments 1,225 1,816 1,616
---------- --------- ----------
Total allowance
for credit losses $ 73,725 $ 73,279 $ 74,722
========== ========= ==========
Allowance for credit
losses to total
loans (1) 1.06% 1.07% 1.15%
Allowance for credit
losses to non-
accrual loans,
excluding covered
loans 215.45% 152.01% 102.39%
(1) Acquired loans are recorded at fair value as of the acquisition date
with no allowance for credit losses being established. Included within
total loans are loans acquired during 2014 which totaled $545.9 million
at September 30, 2015, $587.0 million at June 30, 2015, and $533.2
million at September 30, 2014. These loans have an allowance for loan
losses of $1.2 million at September 30, 2015 and $821,000 at June 30,
2015. In addition, there was a remaining acquisition adjustment of $15.5
million at September 30, 2015, $17.5 million at June 30, 2015, and $13.6
million at September 30, 2014. This acquisition adjustment represents
the difference between the contractual loan balances and the carrying
value of these loans.
Asset quality continued to improve across all metrics. Total non-performing assets, excluding covered loans and covered OREO, decreased by $4.5 million, or 6.0%, from June 30, 2015 and $34.4 million, or 32.7%, from September 30, 2014.
Charge-Off Data
(Dollar amounts in thousands)
Quarters Ended
------------------------------------------------------
September September
30, % of June 30, % of 30, % of
2015 Total 2015 Total 2014 Total
---------- ----- --------- ----- ---------- -----
Net loan charge-offs
(1):
Commercial and
industrial $ 1,601 52.3 $ 3,273 59.2 $ 9,047 56.7
Agricultural -- -- -- -- -- --
Office, retail, and
industrial 457 14.9 1,862 33.7 2,459 15.4
Multi-family 67 2.2 466 8.4 26 0.2
Construction (114) (3.7) (188) (3.4) 157 1.0
Other commercial
real estate 92 3.0 (603) (10.9) 1,255 7.9
Consumer 959 31.3 432 7.8 2,998 18.8
Covered 1 -- 285 5.2 5 --
---------- ----- --------- ----- ---------- -----
Total net loan
charge-offs $ 3,063 100.0 $ 5,527 100.0 $ 15,947 100.0
========== ===== ========= ===== ========== =====
Net loan charge-offs
to average loans,
annualized:
Quarter-to-date 0.18% 0.33% 1.01%
Year-to-date 0.33% 0.41% 0.67%
(1) Amounts represent charge-offs, net of recoveries.
Total net loan charge-offs for the third quarter of 2015 were 18 basis points of average loans, or $3.1 million, decreasing from 33 basis points for the second quarter of 2015 and 101 basis points for the third quarter of 2014.
DEPOSIT PORTFOLIO
Deposit Composition
(Dollar amounts in thousands)
September 30, 2015
Quarters Ended (1) Percent Change from
-------------------------------- -------------------
September September September
30, June 30, 30, June 30, 30,
2015 2015 2014 2015 2014
---------- ---------- ---------- -------- ---------
Demand deposits $2,601,442 $2,437,742 $2,208,450 6.7 17.8
Savings deposits 1,471,003 1,470,441 1,231,700 -- 19.4
NOW accounts 1,405,371 1,379,508 1,261,522 1.9 11.4
Money market accounts 1,589,582 1,557,219 1,413,753 2.1 12.4
---------- ---------- ---------- -------- ---------
Core deposits 7,067,398 6,844,910 6,115,425 3.3 15.6
Time deposits and
other 1,173,127 1,216,371 1,226,025 (3.6) (4.3)
---------- ---------- ---------- -------- ---------
Total deposits $8,240,525 $8,061,281 $7,341,450 2.2 12.2
========== ========== ========== ======== =========
(1) Amounts presented are average balances.
Average core deposits of $7.1 billion for the third quarter of 2015 increased 3.3% and 15.6% compared to the second quarter of 2015 and the third quarter of 2014, respectively. The rise in average core deposits compared to the second quarter of 2015 resulted primarily from a seasonal increase in average municipal deposits of $221.9 million. Compared to the third quarter of 2014, the rise was due primarily to the full impact of deposits assumed in the acquisitions completed during the second half of 2014, which further strengthened the Company's core deposit base.
CAPITAL MANAGEMENT
Capital Ratios
(Dollar amounts in thousands)
As of
-------------------------------------
June
September 30, December September
30, 2015 2015 31, 2014 30, 2014
--------- ------- --------- ---------
Company regulatory capital ratios: (1)
Total capital to risk-weighted
assets 11.43% 11.37% 11.23% 10.94%
Tier 1 capital to risk-weighted
assets 10.55% 10.49% 10.19% 9.86%
Tier 1 common capital to risk-
weighted assets 10.00% 9.93% N/A N/A
Tier 1 leverage to average assets 9.29% 9.34% 9.03% 8.93%
Company tangible common equity ratios
(2)(3):
Tangible common equity to tangible
assets 8.50% 8.32% 8.41% 8.33%
Tangible common equity, excluding
other comprehensive loss, to
tangible assets 8.67% 8.54% 8.59% 8.54%
Tangible common equity to risk-
weighted assets 9.70% 9.55% 9.73% 9.57%
N/A - Not applicable.
(1) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk-weighted
assets. As a result, ratios subsequent to December 31, 2014 are computed
using the new rules and prior periods presented are reported using the
regulatory guidance applicable at that time.
(2) Ratio is not subject to formal Federal Reserve regulatory guidance.
(3) Tangible common equity ("TCE") represents common stockholders' equity
less goodwill and identifiable intangible assets. In management's view,
Tier 1 common capital and TCE measures are meaningful to the Company, as
well as analysts and investors, in assessing the Company's use of equity
and in facilitating comparisons with competitors. See the accompanying
Non-GAAP Reconciliations for details of the calculation of these ratios.
The Company's capital ratios increased from June 30, 2015 and September 30, 2014 driven primarily by growth in retained earnings partially offset by an increase in assets.
The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the third quarter of 2015, which is consistent with the second quarter of 2015 and follows a dividend increase from $0.08 to $0.09 per common share during the first quarter of 2015.
Conference Call
A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 21, 2015 at 10:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10073929 beginning one hour after completion of the live call until 9:00 A.M. (ET) on October 29, 2015. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.
Press Release and Additional Information Available on Website
This press release and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.
Forward-Looking Statements
This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "probable," "potential," "possible," "target," or "continue" and words of similar import. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and we undertake no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.
Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, including First Midwest's proposed acquisition of The Peoples' Bank of Arlington Heights, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as our subsequent filings made with the Securities and Exchange Commission. However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.
Non-GAAP Financial Information
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practice within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. See the following reconciliations for details on the calculation of these measures to the extent presented herein.
About the Company
First Midwest is a relationship-focused financial institution and one of Illinois' largest independent publicly-traded bank holding companies. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of business, middle market and retail banking as well as wealth management and private banking services through over 100 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized as having the "Highest Customer Satisfaction with Retail Banking in the Midwest, Two Years in a Row"* according to the J.D. Power 2014 and 2015 Retail Banking Satisfaction Studies(SM). First Midwest's website is www.firstmidwest.com.
* First Midwest Bank received the highest numerical score among retail banks in the Midwest region in the proprietary J.D. Power 2014 and 2015 Retail Banking Satisfaction Studies(SM). The 2015 study is based on 82,030 total responses measuring 20 providers in the Midwest region (IA, IL, KS, MO, WI) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed April 2014 - February 2015. Your experiences may vary. Visit jdpower.com.
Accompanying Unaudited Selected Financial Information
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
As of
----------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
---------- ---------- ---------- ---------- ----------
Period-End
Balance Sheet
Assets
Cash and due
from banks $ 125,279 $ 135,546 $ 126,450 $ 117,315 $ 125,977
Interest-bearing
deposits in
other banks 822,264 811,287 492,607 488,947 550,606
Trading
securities, at
fair value 17,038 18,172 18,374 17,460 17,928
Securities
available-for-
sale, at fair
value 1,151,418 1,142,407 1,151,603 1,187,009 997,420
Securities held-
to-maturity, at
amortized cost 23,723 24,292 25,861 26,555 26,776
FHLB and FRB
stock 38,748 38,748 38,748 37,558 35,588
Loans, excluding
covered loans:
Commercial and
industrial 2,392,860 2,366,056 2,318,058 2,253,556 2,208,166
Agricultural 393,732 377,410 368,836 358,249 347,511
Commercial
real estate:
Office,
retail, and
industrial 1,414,077 1,432,502 1,443,562 1,478,379 1,422,522
Multi-family 539,308 557,947 560,800 564,421 559,689
Construction 192,086 190,970 191,104 204,236 193,445
Other
commercial
real estate 869,748 871,119 881,026 887,897 871,825
Home equity 647,223 599,320 599,543 543,185 517,446
1-4 family
mortgages 294,261 283,562 285,758 291,463 238,172
Installment 131,185 113,382 92,834 76,032 69,428
---------- ---------- ---------- ---------- ----------
Total loans,
excluding
covered
loans 6,874,480 6,792,268 6,741,521 6,657,418 6,428,204
Covered loans 51,219 57,917 62,830 79,435 90,875
Allowance for
loan and
covered loan
losses (72,500) (71,463) (70,990) (72,694) (73,106)
---------- ---------- ---------- ---------- ----------
Net loans 6,853,199 6,778,722 6,733,361 6,664,159 6,445,973
OREO, excluding
covered OREO 31,129 24,471 26,042 26,898 29,165
Covered OREO 906 3,759 7,309 8,068 9,277
FDIC
indemnification
asset 6,106 7,335 8,540 8,452 8,699
Premises,
furniture, and
equipment, net 127,443 128,621 128,698 131,109 123,473
Investment in
BOLI 208,666 207,814 207,190 206,498 195,270
Goodwill and
other
intangible
assets 331,250 332,223 333,202 334,199 318,511
Accrued interest
receivable and
other assets 197,877 209,630 200,611 190,912 211,688
---------- ---------- ---------- ---------- ----------
Total assets $9,935,046 $9,863,027 $9,498,596 $9,445,139 $9,096,351
========== ========== ========== ========== ==========
Liabilities and
Stockholders'
Equity
Noninterest-
bearing
deposits $2,671,793 $2,508,316 $2,339,492 $2,301,757 $2,295,679
Interest-bearing
deposits 5,624,657 5,704,355 5,575,187 5,586,001 5,320,454
---------- ---------- ---------- ---------- ----------
Total deposits 8,296,450 8,212,671 7,914,679 7,887,758 7,616,133
Borrowed funds 169,943 189,036 131,200 137,994 132,877
Senior and
subordinated
debt 201,123 201,039 200,954 200,869 191,028
Accrued interest
payable and
other
liabilities 119,861 135,324 135,813 117,743 106,637
Stockholders'
equity 1,147,669 1,124,957 1,115,950 1,100,775 1,049,676
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
stockholders'
equity $9,935,046 $9,863,027 $9,498,596 $9,445,139 $9,096,351
========== ========== ========== ========== ==========
Stockholders'
equity,
excluding
accumulated
other
comprehensive
income ("AOCI") $1,163,487 $1,146,189 $1,128,755 $1,116,630 $1,068,528
Stockholders'
equity, common 1,147,669 1,124,957 1,115,950 1,100,775 1,049,676
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
Quarters Ended
------------------------------------------------
September June March December September
30, 30, 31, 31, 30,
2015 2015 2015 2014 2014
---------- ------- ------- --------- ----------
Income Statement
Interest income $ 84,292 $84,556 $82,469 $ 81,309 $ 76,862
Interest expense 6,390 5,654 5,687 5,490 5,831
---------- ------- ------- --------- ----------
Net interest income 77,902 78,902 76,782 75,819 71,031
Provision for loan and
covered loan losses 4,100 6,000 6,552 1,659 10,727
---------- ------- ------- --------- ----------
Net interest income
after provision for
loan and covered
loan losses 73,802 72,902 70,230 74,160 60,304
---------- ------- ------- --------- ----------
Noninterest Income
Service charges on
deposit accounts 10,519 9,886 9,271 10,015 9,902
Wealth management fees 7,222 7,433 7,014 6,744 6,721
Card-based fees 6,868 6,953 6,402 6,390 6,646
Merchant servicing
fees 3,207 2,938 2,665 2,703 2,932
Mortgage banking
income 1,402 1,439 1,123 812 1,125
Other service charges,
commissions, and fees 3,900 2,924 2,166 2,700 2,334
---------- ------- ------- --------- ----------
Total fee-based
revenues 33,118 31,573 28,641 29,364 29,660
Other income 1,372 1,900 1,948 1,767 923
Net securities gains
(losses) 524 515 512 (63) 2,570
Gains on sales of
properties -- -- -- -- 3,954
Loss on early
extinguishment of
debt -- -- -- -- --
---------- ------- ------- --------- ----------
Total noninterest
income 35,014 33,988 31,101 31,068 37,107
Noninterest Expense
Salaries and employee
benefits:
Salaries and wages 33,554 33,096 32,794 32,640 28,152
Retirement and other
employee benefits 7,807 7,198 7,922 7,660 7,319
---------- ------- ------- --------- ----------
Total salaries and
employee benefits 41,361 40,294 40,716 40,300 35,471
---------- ------- ------- --------- ----------
Net occupancy and
equipment expense 9,406 9,622 10,436 9,479 8,639
Professional services 6,172 5,322 5,109 6,664 5,692
Technology and related
costs 3,673 3,527 3,687 3,444 3,253
Merchant card expense 2,722 2,472 2,197 2,203 2,396
Advertising and
promotions 1,828 2,344 1,223 2,418 1,822
Net OREO expense 1,290 1,861 1,204 2,544 1,406
Cardholder expenses 1,354 1,292 1,268 1,036 1,120
Other expenses 6,559 6,717 6,817 7,446 6,766
Acquisition and
integration related
expense -- -- -- 9,294 3,748
---------- ------- ------- --------- ----------
Total noninterest
expense 74,365 73,451 72,657 84,828 70,313
---------- ------- ------- --------- ----------
Income before income
tax expense 34,451 33,439 28,674 20,400 27,098
Income tax expense 11,167 10,865 8,792 5,807 8,549
---------- ------- ------- --------- ----------
Net income $ 23,284 $22,574 $19,882 $ 14,593 $ 18,549
========== ======= ======= ========= ==========
Net income applicable to
common shares $ 23,058 $22,325 $19,654 $ 14,454 $ 18,307
Net income applicable to
common shares,
excluding acquisition
and integration related
expenses $ 23,058 $22,325 $19,654 $ 20,030 $ 20,556
Nine Months Ended
---------------------
September September
30, 30,
2015 2014
---------- ----------
Income Statement
Interest income $ 251,317 $ 218,555
Interest expense 17,731 17,522
---------- ----------
Net interest income 233,586 201,033
Provision for loan and
covered loan losses 16,652 17,509
---------- ----------
Net interest income
after provision for
loan and covered
loan losses 216,934 183,524
---------- ----------
Noninterest Income
Service charges on
deposit accounts 29,676 26,895
Wealth management fees 21,669 19,730
Card-based fees 20,223 17,950
Merchant servicing
fees 8,810 8,557
Mortgage banking
income 3,964 3,199
Other service charges,
commissions, and fees 8,990 5,386
---------- ----------
Total fee-based
revenues 93,332 81,717
Other income 5,220 3,778
Net securities gains
(losses) 1,551 8,160
Gains on sales of
properties -- 3,954
Loss on early
extinguishment of
debt -- (2,059)
---------- ----------
Total noninterest
income 100,103 95,550
Noninterest Expense
Salaries and employee
benefits:
Salaries and wages 99,444 83,938
Retirement and other
employee benefits 22,927 19,585
---------- ----------
Total salaries and
employee benefits 122,371 103,523
---------- ----------
Net occupancy and
equipment expense 29,464 25,702
Professional services 16,603 16,772
Technology and related
costs 10,887 9,431
Merchant card expense 7,391 6,992
Advertising and
promotions 5,395 5,741
Net OREO expense 4,355 4,531
Cardholder expenses 3,914 3,215
Other expenses 20,093 18,513
Acquisition and
integration related
expense -- 4,578
---------- ----------
Total noninterest
expense 220,473 198,998
---------- ----------
Income before income
tax expense 96,564 80,076
Income tax expense 30,824 25,363
---------- ----------
Net income $ 65,740 $ 54,713
========== ==========
Net income applicable to
common shares $ 65,037 $ 54,016
Net income applicable to
common shares,
excluding acquisition
and integration related
expenses $ 65,037 $ 49,438
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
-------------------------------------------------------
Quarters Ended
-----------------------------------------------------
September March December September
30, June 30, 31, 31, 30,
2015 2015 2015 2014 2014
---------- -------- -------- --------- ----------
Earnings Per Share
Basic earnings per
common share
("EPS") $ 0.30 $ 0.29 $ 0.26 $ 0.19 $ 0.25
Diluted EPS $ 0.30 $ 0.29 $ 0.26 $ 0.19 $ 0.25
Diluted EPS,
excluding
acquisition and
integration related
expenses $ 0.30 $ 0.29 $ 0.26 $ 0.27 $ 0.28
Common Stock and
Related Per Common
Share Data
Book value $ 14.72 $ 14.43 $ 14.31 $ 14.17 $ 13.94
Tangible book value 10.47 10.17 10.04 9.87 9.71
Dividends declared
per share 0.09 0.09 0.09 0.08 0.08
Closing price at
period end 17.54 18.97 17.37 17.11 16.09
Closing price to
book value 1.2 1.3 1.2 1.2 1.2
Period end shares
outstanding 77,942 77,961 77,957 77,695 75,295
Period end treasury
shares 10,286 10,267 10,271 10,533 10,492
Common dividends $ 7,014 $ 7,022 $ 7,011 $ 6,206 $ 6,027
Key Ratios/Data
Return on average
common equity (1) 8.06% 7.97% 7.15% 5.35% 6.91%
Return on average
tangible common
equity (1) 11.68% 11.62% 10.52% 7.89% 9.73%
Return on average
tangible common
equity, excluding
acquisition and
integration related
expenses (1) 11.68% 11.62% 10.52% 10.83% 10.90%
Return on average
assets (1) 0.94% 0.94% 0.85% 0.63% 0.84%
Efficiency ratio 63.20% 61.70% 64.46% 66.09% 62.02%
Net interest margin
(2) 3.58% 3.76% 3.79% 3.76% 3.72%
Loans-to-deposits 83.48% 83.41% 85.97% 85.41% 85.60%
Yield on average
interest-earning
assets (2) 3.86% 4.02% 4.06% 4.02% 4.01%
Cost of funds 0.42% 0.38% 0.39% 0.38% 0.43%
Net noninterest
expense to average
assets 1.60% 1.66% 1.80% 2.31% 1.80%
Effective income tax
rate 32.41% 32.50% 30.66% 28.47% 31.55%
Capital Ratios
Total capital to
risk-weighted
assets 11.43% 11.37% 11.23% 11.23% 10.94%
Tier 1 capital to
risk-weighted
assets 10.55% 10.49% 10.35% 10.19% 9.86%
Tier 1 common
capital to risk-
weighted assets
(CET1) (3) 10.00% 9.93% 9.79% N/A N/A
Tier 1 leverage to
average assets 9.29% 9.34% 9.32% 9.03% 8.93%
Tangible common
equity to tangible
assets 8.50% 8.32% 8.54% 8.41% 8.33%
Tangible common
equity, excluding
AOCI, to tangible
assets 8.67% 8.54% 8.68% 8.59% 8.54%
Tangible common
equity to risk-
weighted assets 9.70% 9.55% 9.51% 9.73% 9.57%
As of or for the
----------------------
Nine Months Ended
----------------------
September September
30, 30,
2015 2014
---------- ----------
Earnings Per Share
Basic earnings per
common share
("EPS") $ 0.84 $ 0.73
Diluted EPS $ 0.84 $ 0.73
Diluted EPS,
excluding
acquisition and
integration related
expenses $ 0.84 $ 0.76
Common Stock and
Related Per Common
Share Data
Book value $ 14.72 $ 13.94
Tangible book value 10.47 9.71
Dividends declared
per share 0.27 0.23
Closing price at
period end 17.54 16.09
Closing price to
book value 1.2 1.2
Period end shares
outstanding 77,942 75,295
Period end treasury
shares 10,286 10,492
Common dividends $ 21,047 $ 17,324
Key Ratios/Data
Return on average
common equity (1) 7.73% 6.99%
Return on average
tangible common
equity (1) 11.28% 9.80%
Return on average
tangible common
equity, excluding
acquisition and
integration related
expenses (1) 11.28% 10.29%
Return on average
assets (1) 0.91% 0.86%
Efficiency ratio 63.10% 64.00%
Net interest margin
(2) 3.70% 3.66%
Loans-to-deposits 83.48% 85.60%
Yield on average
interest-earning
assets (2) 3.98% 3.97%
Cost of funds 0.40% 0.44%
Net noninterest
expense to average
assets 1.69% 1.79%
Effective income tax
rate 31.92% 31.67%
Capital Ratios
Total capital to
risk-weighted
assets 11.43% 10.94%
Tier 1 capital to
risk-weighted
assets 10.55% 9.86%
Tier 1 common
capital to risk-
weighted assets
(CET1) (3) 10.00% N/A
Tier 1 leverage to
average assets 9.29% 8.93%
Tangible common
equity to tangible
assets 8.50% 8.33%
Tangible common
equity, excluding
AOCI, to tangible
assets 8.67% 8.54%
Tangible common
equity to risk-
weighted assets 9.70% 9.57%
--------------------------------------------------------------------------------------
Note: Selected Financial Information footnotes are located at the end of this section.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
------------------------------------------------------
Quarters Ended
------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
---------- -------- --------- --------- ----------
Asset Quality
Performance Data
Non-performing
assets(4)
Commercial and
industrial $ 6,438 $ 11,100 $ 12,913 $ 22,693 $ 19,696
Agricultural 112 317 358 360 361
Commercial real
estate:
Office, retail, and
industrial 6,961 12,599 11,363 12,939 16,963
Multi-family 1,046 1,287 700 754 1,536
Construction 3,332 4,940 7,488 6,981 7,082
Other commercial
real estate 5,898 5,513 5,915 6,970 7,912
Consumer 8,521 9,253 9,340 9,274 10,978
---------- -------- --------- --------- ----------
Total non-accrual
loans 32,308 45,009 48,077 59,971 64,528
90 days or more past
due loans 4,559 2,744 3,564 1,173 6,062
---------- -------- --------- --------- ----------
Total non-
performing loans 36,867 47,753 51,641 61,144 70,590
Accruing troubled
debt restructurings 2,771 3,067 3,581 3,704 5,449
Other real estate
owned 31,129 24,471 26,042 26,898 29,165
---------- -------- --------- --------- ----------
Total non-
performing assets $ 70,767 $ 75,291 $ 81,264 $ 91,746 $ 105,204
========== ======== ========= ========= ==========
30-89 days past due
loans (4) $ 28,629 $ 28,625 $ 18,631 $ 20,073 $ 17,321
Allowance for credit
losses
Allowance for loan
losses $ 68,384 $ 66,602 $ 65,311 $ 65,468 $ 64,457
Allowance for covered
loan losses 4,116 4,861 5,679 7,226 8,649
Reserve for unfunded
commitments 1,225 1,816 1,816 1,816 1,616
---------- -------- --------- --------- ----------
Total allowance for
credit losses $ 73,725 $ 73,279 $ 72,806 $ 74,510 $ 74,722
========== ======== ========= ========= ==========
Provision for loan
and covered loan
losses $ 4,100 $ 6,000 $ 6,552 $ 1,659 $ 10,727
Net charge-offs by
category
Commercial and
industrial $ 1,601 $ 3,273 $ 6,657 $ 1,217 $ 9,047
Agricultural -- -- -- -- --
Commercial real
estate:
Office, retail, and
industrial 457 1,862 (166) 143 2,459
Multi-family 67 466 24 476 26
Construction (114) (188) (17) (6) 157
Other commercial
real estate 92 (603) 1,051 (247) 1,255
Consumer 959 432 479 342 2,998
---------- -------- --------- --------- ----------
Net charge-offs,
excluding covered
loans 3,062 5,242 8,028 1,925 15,942
Charge-offs on
covered loans 1 285 228 146 5
---------- -------- --------- --------- ----------
Total net charge-
offs $ 3,063 $ 5,527 $ 8,256 $ 2,071 $ 15,947
========== ======== ========= ========= ==========
Total recoveries
included above $ 1,294 $ 2,579 $ 1,797 $ 2,669 $ 1,159
As of or for the
-----------------------
Nine Months Ended
----------------------
September September
30, 30,
2015 2014
---------- ----------
Asset Quality
Performance Data
Non-performing
assets(4)
Commercial and
industrial $ 6,438 $ 19,696
Agricultural 112 361
Commercial real
estate:
Office, retail, and
industrial 6,961 16,963
Multi-family 1,046 1,536
Construction 3,332 7,082
Other commercial
real estate 5,898 7,912
Consumer 8,521 10,978
---------- ----------
Total non-accrual
loans 32,308 64,528
90 days or more past
due loans 4,559 6,062
---------- ----------
Total non-
performing loans 36,867 70,590
Accruing troubled
debt restructurings 2,771 5,449
Other real estate
owned 31,129 29,165
---------- ----------
Total non-
performing assets $ 70,767 $ 105,204
========== ==========
30-89 days past due
loans (4) $ 28,629 $ 17,321
Allowance for credit
losses
Allowance for loan
losses $ 68,384 $ 64,457
Allowance for covered
loan losses 4,116 8,649
Reserve for unfunded
commitments 1,225 1,616
---------- ----------
Total allowance for
credit losses $ 73,725 $ 74,722
========== ==========
Provision for loan
and covered loan
losses $ 16,652 $ 17,509
Net charge-offs by
category
Commercial and
industrial $ 11,531 $ 12,254
Agricultural -- 153
Commercial real
estate:
Office, retail, and
industrial 2,153 6,705
Multi-family 557 380
Construction (319) 892
Other commercial
real estate 540 3,354
Consumer 1,870 6,503
---------- ----------
Net charge-offs,
excluding covered
loans 16,332 30,241
Charge-offs on
covered loans 514 (333)
---------- ----------
Total net charge-
offs $ 16,846 $ 29,908
========== ==========
Total recoveries
included above $ 5,670 $ 5,536
--------------------------------------------------------------------------------------
Note: Selected Financial Information footnotes are located at the end of this section.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
-----------------------------------------------------
Quarters Ended
---------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
--------- -------- --------- -------- ---------
Asset Quality
ratios(4)
Non-accrual loans to
total loans 0.47% 0.66% 0.71% 0.90% 1.00%
Non-performing loans
to total loans 0.54% 0.70% 0.77% 0.92% 1.10%
Non-performing assets
to total loans plus
OREO 1.02% 1.10% 1.20% 1.37% 1.63%
Non-performing assets
to tangible common
equity plus allowance
for credit losses 7.99% 8.74% 9.56% 11.00% 13.20%
Non-accrual loans to
total assets 0.33% 0.46% 0.51% 0.64% 0.72%
Allowance for credit
losses and net
charge-off ratios
Allowance for credit
losses to total loans
(5) 1.06% 1.07% 1.07% 1.11% 1.15%
Allowance for credit
losses to non-accrual
loans (4) 215.45% 152.01% 139.62% 112.19% 102.39%
Allowance for credit
losses to non-
performing loans (4) 188.81% 143.27% 129.99% 110.04% 93.60%
Net charge-offs to
average loans (1) 0.18% 0.33% 0.50% 0.13% 1.01%
----------------------------------------------------------------------------
As of or for the
--------------------
Nine Months Ended
--------------------
September September
30, 30,
2015 2014
--------- ---------
Asset Quality
ratios(4)
Non-accrual loans to
total loans 0.47% 1.00%
Non-performing loans
to total loans 0.54% 1.10%
Non-performing assets
to total loans plus
OREO 1.02% 1.63%
Non-performing assets
to tangible common
equity plus allowance
for credit losses 7.99% 13.20%
Non-accrual loans to
total assets 0.33% 0.72%
Allowance for credit
losses and net
charge-off ratios
Allowance for credit
losses to total loans
(5) 1.06% 1.15%
Allowance for credit
losses to non-accrual
loans (4) 215.45% 102.39%
Allowance for credit
losses to non-
performing loans (4) 188.81% 93.60%
Net charge-offs to
average loans (1) 0.33% 0.67%
-------------------------------------------
Footnotes to Selected Financial Information
(1) Annualized based on the actual number of days for each period presented.
(2) Tax equivalent basis reflects federal and state tax benefits.
(3) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk weighted
assets. As a result, ratios subsequent to December 31, 2014 are computed
using the new rules and prior periods presented are reported using the
regulatory guidance applicable at that time.
(4) Excludes covered loans and covered OREO.
(5) Acquired loans are recorded at fair value as of the acquisition date
with no allowance for credit losses being established. Included within
total loans are loans acquired during 2014 which totaled $545.9 million
at September 30, 2015, $587.0 million at June 30, 2015, $660.9 million
at March 31, 2015, $718.3 million at December 31, 2014, and $533.2
million at September 30, 2014. These loans have an allowance for loan
losses of $1.2 million at September 30, 2015 and $821,000 at June 30,
2015. In addition, there was a remaining acquisition adjustment of $15.5
million at September 30, 2015, $17.5 million at June 30, 2015, $22.4
million at March 31, 2015, $24.7 million at December 31, 2014, and $13.6
million at September 30, 2014. This acquisition adjustment represents
the difference between the contractual loan balances and the carrying
value of these loans.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
Quarters Ended
-----------------------------------------------------
September March December September
30, June 30, 31, 31, 30,
2015 2015 2015 2014 2014
---------- -------- -------- --------- ----------
Earnings Per Share
Net income $ 23,284 $ 22,574 $ 19,882 $ 14,593 $ 18,549
Net income applicable
to non- vested
restricted shares (226) (249) (228) (139) (242)
---------- -------- -------- --------- ----------
Net income
applicable to
common shares 23,058 22,325 19,654 14,454 18,307
Tax-equivalent
acquisition and
integration related
expenses -- -- -- 5,576 2,249
---------- -------- -------- --------- ----------
Net income
applicable to
common shares,
excluding
acquisition and
integration
related expenses $ 23,058 $ 22,325 $ 19,654 $ 20,030 $ 20,556
========== ======== ======== ========= ==========
Weighted-average
common shares
outstanding:
Weighted-average
common shares
outstanding
(basic) 77,106 77,089 76,918 75,119 74,341
Dilutive effect of
common stock
equivalents 13 12 12 12 11
---------- -------- -------- --------- ----------
Weighted-average
diluted common
shares
outstanding 77,119 77,101 76,930 75,131 74,352
========== ======== ======== ========= ==========
Basic EPS $ 0.30 $ 0.29 $ 0.26 $ 0.19 $ 0.25
Diluted EPS $ 0.30 $ 0.29 $ 0.26 $ 0.19 $ 0.25
Diluted EPS,
excluding
acquisition and
integration related
expenses $ 0.30 $ 0.29 $ 0.26 $ 0.27 $ 0.28
Anti-dilutive shares
not included in the
computation of
diluted EPS 751 768 948 1,146 1,155
Efficiency Ratio
Calculation
Noninterest expense $ 74,365 $ 73,451 $ 72,657 $ 84,828 $ 70,313
Less:
Net OREO expense (1,290) (1,861) (1,204) (2,544) (1,406)
Acquisition and
integration
related expenses -- -- -- (9,294) (3,748)
---------- -------- -------- --------- ----------
Total $ 73,075 $ 71,590 $ 71,453 $ 72,990 $ 65,159
========== ======== ======== ========= ==========
Tax-equivalent net
interest income (1) $ 80,511 $ 81,595 $ 79,665 $ 78,742 $ 73,970
Fee-based revenues 33,118 31,573 28,641 29,364 29,660
Add:
Other income,
excluding BOLI
income 446 446 1,065 924 156
Tax-adjusted BOLI
(BOLI/.6) 1,543 2,423 1,472 1,405 1,278
---------- -------- -------- --------- ----------
Total $ 115,618 $116,037 $110,843 $ 110,435 $ 105,064
========== ======== ======== ========= ==========
Efficiency ratio 63.20% 61.70% 64.46% 66.09% 62.02%
Tax Equivalent Net
Interest Income
Net interest income $ 77,902 $ 78,902 $ 76,782 $ 75,819 $ 71,031
Tax-equivalent
adjustment 2,609 2,693 2,883 2,923 2,939
---------- -------- -------- --------- ----------
Tax-equivalent net
interest income
(1) $ 80,511 $ 81,595 $ 79,665 $ 78,742 $ 73,970
========== ======== ======== ========= ==========
Nine Months Ended
----------------------
September September
30, 30,
2015 2014
---------- ----------
Earnings Per Share
Net income $ 65,740 $ 54,713
Net income applicable
to non- vested
restricted shares (703) (697)
---------- ----------
Net income
applicable to
common shares 65,037 54,016
Tax-equivalent
acquisition and
integration related
expenses -- 2,747
---------- ----------
Net income
applicable to
common shares,
excluding
acquisition and
integration
related expenses $ 65,037 $ 56,763
========== ==========
Weighted-average
common shares
outstanding:
Weighted-average
common shares
outstanding
(basic) 77,038 74,270
Dilutive effect of
common stock
equivalents 13 12
---------- ----------
Weighted-average
diluted common
shares
outstanding 77,051 74,282
========== ==========
Basic EPS $ 0.84 $ 0.73
Diluted EPS $ 0.84 $ 0.73
Diluted EPS,
excluding
acquisition and
integration related
expenses $ 0.84 $ 0.76
Anti-dilutive shares
not included in the
computation of
diluted EPS 822 1,215
Efficiency Ratio
Calculation
Noninterest expense $ 220,473 $ 198,998
Less:
Net OREO expense (4,355) (4,531)
Acquisition and
integration
related expenses -- (4,578)
---------- ----------
Total $ 216,118 $ 189,889
========== ==========
Tax-equivalent net
interest income (1) $ 241,771 $ 209,847
Fee-based revenues 93,332 81,717
Add:
Other income,
excluding BOLI
income 1,957 1,748
Tax-adjusted BOLI
(BOLI/.6) 5,438 3,383
---------- ----------
Total $ 342,498 $ 296,695
========== ==========
Efficiency ratio 63.10% 64.00%
Tax Equivalent Net
Interest Income
Net interest income $ 233,586 $ 201,033
Tax-equivalent
adjustment 8,185 8,814
---------- ----------
Tax-equivalent net
interest income
(1) $ 241,771 $ 209,847
========== ==========
----------------------------------------------------------------------------
Note: Non-GAAP Reconciliations footnotes are located at the end of this
section.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
-----------------------------------------------------------
Quarters Ended
----------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
---------- ---------- ---------- ---------- ----------
Risk-Based
Capital Data
Common stock $ 882 $ 882 $ 882 $ 882 $ 858
Additional paid-
in capital 445,037 443,558 441,689 449,798 408,789
Retained
earnings 944,209 927,939 912,387 899,516 891,129
Treasury stock,
at cost (226,641) (226,190) (226,203) (233,566) (232,248)
Goodwill and
other
intangible
assets (318,854) (319,243) (319,635) (334,199) (318,511)
Disallowed
deferred tax
assets (CET1)
(2) (2,889) (3,046) (3,354) (30,638) (33,473)
---------- ---------- ---------- ---------- ----------
Common equity
Tier 1
capital 841,744 823,900 805,766 751,793 716,544
Trust preferred
securities 50,690 50,690 50,690 50,690 36,690
Disallowed
deferred tax
assets (other)
(2) (4,334) (4,568) (5,030) N/A N/A
---------- ---------- ---------- ---------- ----------
Tier 1 capital 888,100 870,022 851,426 802,483 753,234
Tier 2 capital 73,725 73,279 72,806 82,209 82,421
---------- ---------- ---------- ---------- ----------
Total capital $ 961,825 $ 943,301 $ 924,232 $ 884,692 $ 835,655
========== ========== ========== ========== ==========
Risk-weighted
assets $8,414,729 $8,296,679 $8,229,627 $7,876,754 $7,640,487
Adjusted average
assets $9,559,796 $9,318,347 $9,134,320 $8,884,045 $8,433,363
Total capital to
risk-weighted
assets 11.43% 11.37% 11.23% 11.23% 10.94%
Tier 1 capital
to risk-
weighted assets 10.55% 10.49% 10.35% 10.19% 9.86%
Tier 1 common
capital to
risk- weighted
assets (CET1) 10.00% 9.93% 9.79% N/A N/A
Tier 1 leverage
to average
assets 9.29% 9.34% 9.32% 9.03% 8.93%
Tangible Common
Equity
Stockholders'
equity $1,147,669 $1,124,957 $1,115,950 $1,100,775 $1,049,676
Less: goodwill
and other
intangible
assets (331,250) (332,223) (333,202) (334,199) (318,511)
---------- ---------- ---------- ---------- ----------
Tangible
common equity 816,419 792,734 782,748 766,576 731,165
Less: AOCI 15,818 21,232 12,805 15,855 18,852
---------- ---------- ---------- ---------- ----------
Tangible
common
equity,
excluding
AOCI $ 832,237 $ 813,966 $ 795,553 $ 782,431 $ 750,017
========== ========== ========== ========== ==========
Total assets $9,935,046 $9,863,027 $9,498,596 $9,445,139 $9,096,351
Less: goodwill
and other
intangible
assets (331,250) (332,223) (333,202) (334,199) (318,511)
---------- ---------- ---------- ---------- ----------
Tangible
assets $9,603,796 $9,530,804 $9,165,394 $9,110,940 $8,777,840
========== ========== ========== ========== ==========
Tangible common
equity to
tangible assets 8.50% 8.32% 8.54% 8.41% 8.33%
Tangible common
equity,
excluding AOCI,
to tangible
assets 8.67% 8.54% 8.68% 8.59% 8.54%
Tangible common
equity to risk-
weighted assets 9.70% 9.55% 9.51% 9.73% 9.57%
As of or for the
-----------------------
Nine Months Ended
----------------------
September September
30, 30,
2015 2014
---------- ----------
Risk-Based
Capital Data
Common stock $ 882 $ 858
Additional paid-
in capital 445,037 408,789
Retained
earnings 944,209 891,129
Treasury stock,
at cost (226,641) (232,248)
Goodwill and
other
intangible
assets (318,854) (318,511)
Disallowed
deferred tax
assets (CET1)
(2) (2,889) (33,473)
---------- ----------
Common equity
Tier 1
capital 841,744 716,544
Trust preferred
securities 50,690 36,690
Disallowed
deferred tax
assets (other)
(2) (4,334) N/A
---------- ----------
Tier 1 capital 888,100 753,234
Tier 2 capital 73,725 82,421
---------- ----------
Total capital $ 961,825 $ 835,655
========== ==========
Risk-weighted
assets $8,414,729 $7,640,487
Adjusted average
assets $9,559,796 $8,433,363
Total capital to
risk-weighted
assets 11.43% 10.94%
Tier 1 capital
to risk-
weighted assets 10.55% 9.86%
Tier 1 common
capital to
risk- weighted
assets (CET1) 10.00% N/A
Tier 1 leverage
to average
assets 9.29% 8.93%
Tangible Common
Equity
Stockholders'
equity $1,147,669 $1,049,676
Less: goodwill
and other
intangible
assets (331,250) (318,511)
---------- ----------
Tangible
common equity 816,419 731,165
Less: AOCI 15,818 18,852
---------- ----------
Tangible
common
equity,
excluding
AOCI $ 832,237 $ 750,017
========== ==========
Total assets $9,935,046 $9,096,351
Less: goodwill
and other
intangible
assets (331,250) (318,511)
---------- ----------
Tangible
assets $9,603,796 $8,777,840
========== ==========
Tangible common
equity to
tangible assets 8.50% 8.33%
Tangible common
equity,
excluding AOCI,
to tangible
assets 8.67% 8.54%
Tangible common
equity to risk-
weighted assets 9.70% 9.57%
----------------------------------------------------------------------------
Note: Non-GAAP Reconciliations footnotes are located at the end of this
section.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
------------------------------------------------------------
Quarters Ended
----------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
---------- ---------- ---------- ---------- ----------
Return on
Average Common
and Tangible
Common Equity
Net income
applicable to
common shares $ 23,058 $ 22,325 $ 19,654 $ 14,454 $ 18,307
Intangibles
amortization 973 978 998 842 643
Tax-equivalent
adjustment of
intangibles
amortization (389) (391) (399) (337) (257)
---------- ---------- ---------- ---------- ----------
Net income
applicable
to common
shares,
excluding
intangibles
amortization 23,642 22,912 20,253 14,959 18,693
Acquisition and
integration
related
expenses -- -- -- 9,294 3,748
Tax-equivalent
adjustment of
acquisition
and
integration
related
expenses -- -- -- (3,718) (1,499)
---------- ---------- ---------- ---------- ----------
Net income
applicable
to common
shares,
excluding
intangibles
amortization
and
acquisition
and
integration
related
expenses $ 23,642 $ 22,912 $ 20,253 $ 20,535 $ 20,942
========== ========== ========== ========== ==========
Average
stockholders'
equity $1,134,967 $1,123,530 $1,114,762 $1,072,682 $1,050,881
Less: average
intangible
assets (331,720) (332,694) (333,684) (320,533) (288,975)
---------- ---------- ---------- ---------- ----------
Average
tangible
common
equity $ 803,247 $ 790,836 $ 781,078 $ 752,149 $ 761,906
========== ========== ========== ========== ==========
Return on
average common
equity (3) 8.06% 7.97% 7.15% 5.35% 6.91%
Return on
average
tangible
common equity
(3) 11.68% 11.62% 10.52% 7.89% 9.73%
Return on
average
tangible
common equity,
excluding
acquisition
and
integration
related
expenses (3) 11.68% 11.62% 10.52% 10.83% 10.90%
----------------------------------------------------------------------------
As of or for the
----------------------
Nine Months Ended
----------------------
September September
30, 30,
2015 2014
---------- ----------
Return on
Average Common
and Tangible
Common Equity
Net income
applicable to
common shares $ 65,037 $ 54,016
Intangibles
amortization 2,949 2,047
Tax-equivalent
adjustment of
intangibles
amortization (1,180) (819)
---------- ----------
Net income
applicable
to common
shares,
excluding
intangibles
amortization 66,806 55,244
Acquisition and
integration
related
expenses -- 4,578
Tax-equivalent
adjustment of
acquisition
and
integration
related
expenses -- (1,831)
---------- ----------
Net income
applicable
to common
shares,
excluding
intangibles
amortization
and
acquisition
and
integration
related
expenses $ 66,806 $ 57,991
========== ==========
Average
stockholders'
equity $1,124,493 $1,033,754
Less: average
intangible
assets (332,692) (280,115)
---------- ----------
Average
tangible
common
equity $ 791,801 $ 753,639
========== ==========
Return on
average common
equity (3) 7.73% 6.99%
Return on
average
tangible
common equity
(3) 11.28% 9.80%
Return on
average
tangible
common equity,
excluding
acquisition
and
integration
related
expenses (3) 11.28% 10.29%
--------------------------------------
Footnotes to Non-GAAP Reconciliations
(1) Tax equivalent basis reflects federal and state tax benefits.
(2) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk-weighted
assets. As a result, ratios subsequent to December 31, 2014 are computed
using the new rules and prior periods presented are reported using the
regulatory guidance applicable at that time.
(3) Annualized based on the actual number of days for each period presented.
Contact Information
Investors:
Paul F. Clemens
EVP and Chief Financial Officer
(630) 875-7347
paul.clemens@firstmidwest.com
Media:
James M. Roolf
SVP and Corporate Relations Officer
(630) 875-7533
jim.roolf@firstmidwest.com
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