First Midwest Bancorp, Inc. Announces 2016 Second Quarter Results
/EINPresswire.com/ -- ITASCA, IL -- (Marketwired) -- 07/19/16 -- 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 second quarter of 2016. Net income for the second quarter of 2016 was $25.3 million, or $0.31 per share. This compares to $18.0 million, or $0.23 per share, for the first quarter of 2016, and $22.6 million, or $0.29 per share, for the second quarter of 2015. Performance for the second and first quarters of 2016 were impacted by acquisition and integration related pre-tax expenses of $618,000 and $5.0 million, respectively. Excluding these expenses, earnings per share was $0.32 for the second quarter of 2016 compared to $0.27 for the first quarter of 2016.
SELECT SECOND QUARTER HIGHLIGHTS
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Increased earnings per share to $0.32, up 19% from the first quarter of 2016 and 10% from second quarter of 2015, excluding acquisition and integration related expenses.
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Grew fee-based revenues to $36 million, an increase of 7% from the first quarter of 2016 and 14% from the second quarter of 2015.
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Improved efficiency ratio to 61%, compared to 65% for the first quarter of 2016 and 62% for the second quarter of 2015.
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Expanded total loans to $8.0 billion, up 8% annualized from March 31, 2016 and 17% from June 30, 2015.
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Reported non-performing assets to total loans plus OREO of 0.93%, down 17 basis points from June 30, 2015 and consistent with March 31, 2016.
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Grew average core deposits to $7.7 billion, up 9% from the first quarter of 2016 and 13% from the second quarter of 2015.
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Announced the pending acquisition of Standard Bancshares, Inc. on June 28, 2016, with $2.5 billion in assets, $2.2 billion in deposits, and $1.8 billion in loans.
"It was an active second quarter, reflecting continued, successful execution on a number of business fronts," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Core earnings per share improved by 19% to $0.32 as compared to first quarter 2016, benefiting from the full quarter impact of our acquisition of The National Bank and Trust Company of Sycamore as well as organic earning asset and revenue growth and controlled operating expenses. Our loan growth was both strong and balanced, growing by 8% annualized versus the end of last quarter and 17% as contrasted to a year ago."
Mr. Scudder continued, "Against a backdrop of market volatility and uncertainty, we remain centered on those actions which enhance the value of our franchise and inure to the long term benefit of our shareholders. Our pending acquisition of Standard Bank and Trust Company further positions us as a premier market leader in metro Chicago and reinforces our commitment to relationship based business banking. At the same time, we continue to strengthen our lines of business and work to efficiently grow and diversify our revenues. Combined with our strong capital foundation, these efforts add to our underlying business momentum and position us well for future performance and growth."
ACQUISITIONS
Pending Acquisition
Standard Bancshares, Inc.
On June 28, 2016, the Company entered into a definitive agreement to acquire Standard Bancshares, Inc. ("Standard"), the holding company for Standard Bank and Trust Company. With the acquisition, the Company would acquire 35 banking offices in the southwest Chicago suburbs and adjacent markets in northwest Indiana. Standard has total assets of approximately $2.5 billion with $2.2 billion in deposits, of which over 90% are core deposits, and $1.8 billion in loans, of which 80% are commercial-related. If the merger is completed, the merger consideration to Standard shareholders will be Company common stock, with an overall transaction value of approximately $365 million as of the date of announcement. The acquisition is expected to close in late 2016 or early 2017, subject to customary regulatory approvals and closing conditions, as well as Company and Standard shareholder approval.
Completed Acquisitions
NI Bancshares Corporation
On March 8, 2016, the Company completed its acquisition of NI Bancshares Corporation ("NI Bancshares"), the holding company for The National Bank & Trust Company of Sycamore. With the acquisition, the Company obtained ten banking offices in northern Illinois, and added approximately $400 million in loans and $600 million in deposits. In addition, the Company acquired over $700 million in trust assets under management, which increased the Company's trust assets under management by approximately 10%. The merger consideration totaled $70.1 million and consisted of $54.9 million in Company common stock and $15.2 million in cash.
Peoples Bancorp, Inc.
On December 3, 2015, the Company completed its acquisition of Peoples Bancorp, Inc. ("Peoples") and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights. With the acquisition, the Company acquired two banking offices in Arlington Heights, Illinois, and approximately $92 million in deposits and $54 million in loans. The merger consideration totaled $16.8 million and was paid in cash.
OPERATING PERFORMANCE Net Interest Income and Margin Analysis (Dollar amounts in thousands) Quarters Ended -------------------------------------------------------- June 30, 2016 March 31, 2016 --------------------------- --------------------------- Interest Yield/ Interest Yield/ Average Earned/ Rate Average Earned/ Rate Balance Paid (%) Balance Paid (%) ----------- -------- ------ ----------- -------- ------ Assets: Other interest- earning assets $ 300,945 $ 426 0.57 $ 241,645 $ 342 0.57 Securities (1) 1,721,781 10,636 2.47 1,495,462 9,998 2.67 Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock 42,561 200 1.88 39,773 159 1.60 Loans (1)(2) 7,883,806 87,481 4.46 7,346,035 79,356 4.34 ----------- -------- ------ ----------- -------- ------ Total interest- earning assets (1) 9,949,093 98,743 3.99 9,122,915 89,855 3.96 -------- ------ -------- ------ Cash and due from banks 154,693 133,268 Allowance for loan and covered loan losses (80,561) (75,654) Other assets 945,291 876,316 Total assets $10,968,516 $10,056,845 =========== =========== Liabilities and Stockholders' Equity: Interest-bearing core deposits (3) $ 4,941,779 991 0.08 $ 4,607,738 948 0.08 Time deposits 1,277,694 1,491 0.47 1,183,463 1,437 0.49 Borrowed funds 461,363 1,499 1.31 303,232 1,316 1.75 Senior and subordinated debt 162,836 2,588 6.39 201,253 3,133 6.26 ----------- -------- ------ ----------- -------- ------ Total interest- bearing liabilities 6,843,672 6,569 0.39 6,295,686 6,834 0.44 -------- ------ -------- ------ Demand deposits (3) 2,771,813 2,463,017 ----------- ----------- Total funding sources 9,615,485 8,758,703 Other liabilities 117,534 119,554 Stockholders' equity - common 1,235,497 1,178,588 Total liabilities and stockholders' equity $10,968,516 $10,056,845 =========== =========== Tax-equivalent net interest income/margin (1) 92,174 3.72 83,021 3.66 ====== ====== Tax-equivalent adjustment (2,193) (2,307) -------- -------- Net interest income (GAAP) $ 89,981 $ 80,714 ======== ======== Quarters Ended ------------------------------ June 30, 2015 ------------------------------ Interest Yield/ Average Earned/ Rate Balance Paid (%) ---------- --------- ------- Assets: Other interest- earning assets $ 669,556 $ 516 0.31 Securities (1) 1,177,516 9,792 3.33 Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock 38,748 368 3.80 Loans (1)(2) 6,815,781 76,573 4.51 ---------- --------- ------- Total interest- earning assets (1) 8,701,601 87,249 4.02 --------- ------- Cash and due from banks 133,180 Allowance for loan and covered loan losses (73,865) Other assets 881,613 Total assets $9,642,529 ========== Liabilities and Stockholders' Equity: Interest-bearing core deposits (3) $4,407,168 896 0.08 Time deposits 1,216,371 1,506 0.50 Borrowed funds 140,002 118 0.34 Senior and subordinated debt 200,999 3,134 6.25 ---------- --------- ------- Total interest- bearing liabilities 5,964,540 5,654 0.38 --------- ------- Demand deposits (3) 2,437,742 ---------- Total funding sources 8,402,282 Other liabilities 116,717 Stockholders' equity - common 1,123,530 Total liabilities and stockholders' equity $9,642,529 ========== Tax-equivalent net interest income/margin (1) 81,595 3.76 ======= Tax-equivalent adjustment (2,693) --------- Net interest income (GAAP) $ 78,902 ========= (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%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. See the accompanying Non-GAAP Financial Information discussion and the Non-GAAP Reconciliations for details on the calculation of tax-equivalent net interest income. (2) Includes loans acquired through Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements ("covered loans"), which totaled $27.2 million, $28.4 million, and $57.9 million at June 30, 2016, March 31, 2016, and June 30, 2015, respectively. (3) See the Deposit Composition table for further average balance detail by category.
For the second quarter of 2016, total average interest-earning assets rose $826.2 million from the first quarter of 2016 and $1.2 billion from the second quarter of 2015. The increase from both prior periods was driven primarily by $528.8 million of interest-earning assets acquired in the NI Bancshares transaction late in the first quarter of 2016, as well as leveraging growth in deposits and FHLB advances. Compared to the second quarter of 2015, the rise in average interest-earning assets was also impacted by $96.2 million of interest-earning assets acquired in the Peoples transaction late in the fourth quarter of 2015.
Average funding sources increased by $856.8 million from the first quarter of 2016 and $1.2 billion from the second quarter of 2015. Compared to both prior periods, the increase resulted primarily from deposits acquired in the NI Bancshares transaction and the full quarter impact of the addition of $262.5 million of FHLB advances during the first quarter of 2016. In addition, deposits acquired in the Peoples transaction contributed to the increase in average funding sources compared to the second quarter of 2015.
Tax-equivalent net interest margin for the current quarter was 3.72%, increasing 6 basis points from the first quarter of 2016 and decreasing 4 basis points from the second quarter of 2015. The increase in tax-equivalent net interest margin from the first quarter of 2016 was due primarily to higher accretion on acquired loans and lower funding costs resulting from the maturity of $38.5 million of subordinated notes early in the second quarter of 2016, partially offset by the addition of lower yielding securities. Compared to the second quarter of 2015, the decrease in tax-equivalent net interest margin was due primarily to the addition of FHLB advances and lower covered loan income, partially offset by the maturity of subordinated notes.
Net interest income increased by 11.5% and 14.0% from the first quarter of 2016 and second quarter of 2015, respectively, due primarily to the increase in average loans of 7.3% and 15.7% from the same periods.
Acquired loan accretion contributed $3.9 million, $1.4 million, and $3.6 million to net interest income for the second quarter of 2016, the first quarter of 2016, and the second quarter of 2015, respectively.
Fee-based Revenues and Total Noninterest Income Analysis (Dollar amounts in thousands) June 30, 2016 Quarters Ended Percent Change from ----------------------------- ------------------- June 30, March 31, June 30, March 31, June 30, 2016 2016 2015 2016 2015 --------- --------- --------- --------- -------- Service charges on deposit accounts $ 10,169 $ 9,473 $ 9,886 7.3 2.9 Wealth management fees 8,642 7,559 7,433 14.3 16.3 Card-based fees 7,592 6,718 6,953 13.0 9.2 Merchant servicing fees 3,170 3,028 2,938 4.7 7.9 Mortgage banking income 1,863 1,368 1,439 36.2 29.5 Other service charges, commissions, and fees 4,498 5,448 2,924 (17.4) 53.8 --------- --------- --------- --------- -------- Total fee-based revenues 35,934 33,594 31,573 7.0 13.8 Other income 1,865 1,445 1,900 29.1 (1.8) Net securities gains 23 887 515 (97.4) (95.5) --------- --------- --------- --------- -------- Total noninterest income $ 37,822 $ 35,926 $ 33,988 5.3 11.3 ========= ========= ========= ========= ========
Total fee-based revenues of $35.9 million grew $2.3 million, or 7.0%, compared to the first quarter of 2016, with services provided to customers acquired in the NI Bancshares transaction contributing to the majority of the increase. In addition, the increase in card-based fees from the first quarter of 2016 reflected seasonally higher transaction volumes and mortgage banking income rose as a result of $52.1 million in sales of 1-4 family mortgage loans in the secondary market during the second quarter of 2016, compared to $38.7 million in the first quarter of 2016. These increases were partially offset by lower sales of capital market products to commercial clients within other service charges, commissions, and fees.
Compared to the second quarter of 2015, total fee-based revenues grew $4.4 million, or 13.8%, with approximately half due to services provided to customers acquired in the NI Bancshares and Peoples transactions. In addition, card-based fees increased as a result of higher transaction volumes and other service charges, commissions, and fees grew due to sales of capital market products to commercial clients and gains realized on the sale of equipment financing contracts originated by First Midwest Equipment Finance.
Total noninterest income of $37.8 million grew 5.3% and 11.3% from the first quarter of 2016 and the second quarter of 2015, respectively.
Noninterest Expense Analysis (Dollar amounts in thousands) June 30, 2016 Quarters Ended Percent Change from ------------------------------- ------------------- June 30, March 31, June 30, March 31, June 30, 2016 2016 2015 2016 2015 --------- --------- --------- --------- -------- Salaries and employee benefits: Salaries and wages $ 37,916 $ 36,296 $ 33,096 4.5 14.6 Retirement and other employee benefits 8,351 8,298 7,198 0.6 16.0 --------- --------- --------- --------- -------- Total salaries and employee benefits 46,267 44,594 40,294 3.8 14.8 --------- --------- --------- --------- -------- Net occupancy and equipment expense 9,928 9,697 9,622 2.4 3.2 Professional services 5,292 5,920 5,322 (10.6) (0.6) Technology and related costs 3,669 3,701 3,527 (0.9) 4.0 Merchant card expense 2,724 2,598 2,472 4.8 10.2 Advertising and promotions 1,927 1,589 2,344 21.3 (17.8) Cardholder expenses 1,512 1,359 1,292 11.3 17.0 Net other real estate owned ("OREO") expense 1,122 664 1,861 69.0 (39.7) Other expenses 8,295 7,447 6,717 11.4 23.5 --------- --------- --------- --------- -------- Total noninterest expense excluding acquisition and integration related expenses (1) 80,736 77,569 73,451 4.1 9.9 Acquisition and integration related expenses 618 5,020 -- (87.7) N/M --------- --------- --------- --------- -------- Total noninterest expense $ 81,354 $ 82,589 $ 73,451 (1.5) 10.8 ========= ========= ========= ========= ======== Efficiency ratio (2) 61% 65% 62% N/M - Not meaningful. (1) See the Non-GAAP Financial Information discussion for detail. (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 pre-tax expenses of $618,000 and $5.0 million are excluded from the efficiency ratio for the second and first quarters of 2016, respectively. See the accompanying Non-GAAP Financial Information discussion and Non-GAAP Reconciliations for details on the calculation of the efficiency ratio.
The efficiency ratio improved to 61% in the second quarter of 2016 compared to 65% for the first quarter of 2016 and 62% for the second quarter of 2015. Excluding acquisition and integration related expenses, total noninterest expense increased by 4.1% from the first quarter of 2016 and 9.9% compared to the second quarter of 2015, with the operations associated with the NI Bancshares and Peoples transactions contributing to substantially all of the linked quarter increase and approximately two-thirds of the increase from second quarter of 2015. These costs primarily occurred within salaries and employee benefits expense, net occupancy and equipment expense, technology and related costs, cardholder expenses, and other expense.
The decrease in professional services from the first quarter of 2016 resulted primarily from a reduction in covered loan remediation expenses.
LOAN PORTFOLIO AND ASSET QUALITY Loan Portfolio Composition (Dollar amounts in thousands) June 30, 2016 As of Percent Change From ----------------------------------- -------------------- June 30, March 31, June 30, March 31, June 30, 2016 2016 2015 2016 2015 ----------- ----------- ----------- --------- --------- Commercial and industrial $ 2,699,742 $ 2,634,391 $ 2,366,056 2.5 14.1 Agricultural 401,858 422,231 377,410 (4.8) 6.5 Commercial real estate: Office, retail, and industrial 1,529,675 1,566,395 1,432,502 (2.3) 6.8 Multi-family 587,104 562,065 557,947 4.5 5.2 Construction 371,016 260,743 190,970 42.3 94.3 Other commercial real estate 1,000,655 1,060,302 871,119 (5.6) 14.9 ----------- ----------- ----------- --------- --------- Total commercial real estate 3,488,450 3,449,505 3,052,538 1.1 14.3 ----------- ----------- ----------- --------- --------- Total corporate loans 6,590,050 6,506,127 5,796,004 1.3 13.7 ----------- ----------- ----------- --------- --------- Home equity 722,881 683,171 599,320 5.8 20.6 1-4 family mortgages 415,581 390,887 283,562 6.3 46.6 Installment 223,845 213,979 113,382 4.6 97.4 ----------- ----------- ----------- --------- --------- Total consumer loans 1,362,307 1,288,037 996,264 5.8 36.7 Covered loans 27,180 28,391 57,917 (4.3) (53.1) ----------- ----------- ----------- --------- --------- Total loans $ 7,979,537 $ 7,822,555 $ 6,850,185 2.0 16.5 =========== =========== =========== ========= =========
Total loans grew by 8.0% on an annualized basis from March 31, 2016 and 11.2% from June 30, 2015, excluding loans acquired in the NI Bancshares transaction of $363.2 million. Compared to both prior periods presented, growth in commercial and industrial loans reflects the continued expansion into select sector-based lending areas such as structured finance, asset-based lending, and equipment financing. The rise in construction loans compared to both prior periods presented was driven mainly by select commercial projects for which permanent financing is expected upon their completion. Consumer loans grew compared to both prior periods presented due to the continued expansion of mortgage and installment loans, as well as the addition of shorter-duration, floating rate home equity loans.
Asset Quality (Dollar amounts in thousands) June 30, 2016 As of Percent Change from ------------------------------- ------------------- June 30, March 31, June 30, March 31, June 30, 2016 2016 2015 2016 2015 --------- --------- --------- --------- -------- Asset quality, excluding covered loans and covered OREO Non-accrual loans $ 36,859 $ 31,383 $ 45,009 17.4 (18.1) 90 days or more past due loans, still accruing interest 5,406 5,483 2,744 (1.4) 97.0 --------- --------- --------- --------- -------- Total non-performing loans 42,265 36,866 47,753 14.6 (11.5) Accruing troubled debt restructurings ("TDRs") 2,491 2,702 3,067 (7.8) (18.8) OREO 29,452 29,238 24,471 0.7 20.4 --------- --------- --------- --------- -------- Total non-performing assets $ 74,208 $ 68,806 $ 75,291 7.9 (1.4) ========= ========= ========= ========= ======== 30-89 days past due loans $ 22,770 $ 29,826 $ 28,625 Non-accrual loans to total loans 0.46% 0.40% 0.66% Non-performing loans to total loans 0.53% 0.47% 0.70% Non-performing assets to total loans plus OREO 0.93% 0.88% 1.10% Allowance for Credit Losses Allowance for loan losses $ 80,105 $ 77,150 $ 71,463 Reserve for unfunded commitments 1,400 1,225 1,816 --------- --------- --------- Total allowance for credit losses $ 81,505 $ 78,375 $ 73,279 ========= ========= ========= Allowance for credit losses to total loans (1) 1.02% 1.00% 1.07% Allowance for credit losses to loans, excluding acquired loans 1.11% 1.11% 1.16% Allowance for credit losses to non-accrual loans, excluding covered loans 217.34% 244.74% 152.01% (1) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses on acquired loans is established as necessary to reflect credit deterioration.
Total non-performing assets represented 0.93% of total loans and OREO at June 30, 2016, compared to 0.88% at March 31, 2016 and down from 1.10% at June 30, 2015.
Charge-Off Data (Dollar amounts in thousands) Quarters Ended ----------------------------------------------------- June 30, % of March 31, % of June 30, % of 2016 Total 2016 Total 2015 Total -------- ------ --------- ------- -------- ------ Net loan charge-offs (1): Commercial and industrial $ 1,450 28.3 $ 1,396 34.3 $ 3,273 59.2 Agricultural -- -- -- -- -- -- Office, retail, and industrial 1,633 31.8 421 10.3 1,862 33.7 Multi-family 83 1.6 179 4.4 466 8.4 Construction (12) (0.2) 111 2.7 (188) (3.4) Other commercial real estate 810 15.8 1,294 31.8 (603) (10.9) Consumer 1,164 22.7 672 16.5 432 7.8 Covered 2 -- -- -- 285 5.2 -------- ------ --------- ------- -------- ------ Total net loan charge-offs $ 5,130 100.0 $ 4,073 100.0 $ 5,527 100.0 ======== ====== ========= ======= ======== ====== Net loan charge-offs to average loans, annualized: Quarter-to-date 0.26% 0.22% 0.33% Year-to-date 0.24% 0.22% 0.41% (1) Amounts represent charge-offs, net of recoveries. DEPOSIT PORTFOLIO Deposit Composition (Dollar amounts in thousands) June 30, 2016 Percent Change Average for Quarters Ended from ----------------------------------- ------------------ June 30, March 31, June 30, March 31, June 30, 2016 2016 2015 2016 2015 ----------- ----------- ----------- --------- -------- Demand deposits $ 2,771,813 $ 2,463,017 $ 2,437,742 12.5 13.7 Savings deposits 1,655,566 1,575,174 1,470,441 5.1 12.6 NOW accounts 1,615,677 1,448,666 1,379,508 11.5 17.1 Money market accounts 1,670,536 1,583,898 1,557,219 5.5 7.3 ----------- ----------- ----------- --------- -------- Core deposits 7,713,592 7,070,755 6,844,910 9.1 12.7 Time deposits and other 1,277,694 1,183,463 1,216,371 8.0 5.0 ----------- ----------- ----------- --------- -------- Total deposits $ 8,991,286 $ 8,254,218 $ 8,061,281 8.9 11.5 =========== =========== =========== ========= ========
Average core deposits of $7.7 billion for the second quarter of 2016 increased by 9.1% and 12.7% compared to the first quarter of 2016 and the second quarter of 2015, respectively. The rise in average core deposits compared to both prior periods reflects the full quarter impact of the $443.1 million in core deposits assumed in the NI Bancshares transaction, which was completed late in the first quarter of 2016, and organic growth. Additionally, the rise in average core deposits from the first quarter of 2016 was impacted by the seasonal increase in average municipal deposits of nearly $180.0 million.
CAPITAL MANAGEMENT Capital Ratios As of --------------------------------------------- June 30, March 31, December 31, June 30, 2016 2016 2015 2015 --------- --------- ------------ --------- Company regulatory capital ratios: Total capital to risk- weighted assets 10.68% 10.64% 11.15% 11.37% Tier 1 capital to risk- weighted assets 9.83% 9.81% 10.28% 10.49% Common equity Tier 1 ("CET1") to risk-weighted assets 9.32% 9.30% 9.73% 9.93% Tier 1 capital to average assets 8.94% 9.56% 9.40% 9.34% Company tangible common equity ratios (1)(2): Tangible common equity to tangible assets 8.29% 8.25% 8.59% 8.32% Tangible common equity, excluding other comprehensive loss, to tangible assets 8.37% 8.39% 8.89% 8.54% Tangible common equity to risk-weighted assets 9.14% 9.04% 9.29% 9.55% (1) These ratios are not subject to formal Federal Reserve regulatory guidance. (2) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. See the accompanying Non-GAAP Reconciliations for details of the calculation of these ratios.
Overall, the Company's regulatory capital ratios were consistent compared to March 31, 2016 as a result of an increase in retained earnings, offset by the impact of loan growth on risk-weighted assets. The reduction in Tier 1 capital to average assets from March 31, 2016 resulted from the full quarter impact of assets acquired in the NI Bancshares transaction.
The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the second quarter of 2016, which is consistent with the quarterly dividend paid to shareholders in the first quarter of 2016 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, July 20, 2016 at 11:00 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 ID 10088402 beginning one hour after completion of the live call until 9:00 A.M. (ET) on July 28, 2016. 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," "continue," "look forward," or "assume" 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 Standard, 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, 2015, 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 practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which management believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include earnings per share and total non-interest expense, excluding certain significant transactions, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, the efficiency ratio, tangible common equity to tangible assets, tangible common equity, excluding accumulated other comprehensive loss, to tangible assets, tangible common equity to risk-weighted assets, return on average tangible common equity, and return on average tangible common equity, excluding certain significant transactions.
Earnings per share, excluding certain significant transactions, and the efficiency ratio exclude acquisition and integration related expenses and property valuation adjustments. Management believes excluding these transactions from earnings per share and the efficiency ratio are useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion facilitates better comparability between periods.
The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it enhances comparability for peer comparison purposes.
In management's view, tangible common equity 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 peers.
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.
Additional Information for Stockholders
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and Standard, First Midwest will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of First Midwest and Standard, which also will constitute a prospectus of First Midwest, that First Midwest and Standard will send to their respective shareholders. Investors and shareholders are advised to read the joint proxy statement/prospectus when it becomes available because it will contain important information about First Midwest, Standard and the proposed transaction. When filed, this document and other documents relating to the merger filed by First Midwest can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest's website at www.firstmidwest.com under the tab "Investor Relations" and then under "SEC Filings." Alternatively, these documents, when available, can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 or by calling (630) 875-7463, or from Standard upon written request to Standard Bancshares, Inc., Attn: Lawrence P. Kelley, President and Chief Executive Officer, 7800 West 95th Street, Hickory Hills, Illinois 60457 or by calling (708) 499-2000.
Participants in the Proposed Standard Transaction
First Midwest, Standard and certain of their respective directors and executive officers may be deemed under the rules of the SEC to be participants in the solicitation of proxies from the respective shareholders of First Midwest and Standard in connection with the proposed Standard transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the joint proxy statement/prospectus regarding the proposed Standard transaction when it becomes available. Additional information about First Midwest and its directors and officers may be found in the definitive proxy statement of First Midwest relating to its 2016 Annual Meeting of Stockholders filed with the SEC on April 14, 2016 and First Midwest's annual report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 23, 2016. The definitive proxy statement and annual report can be obtained free of charge from the SEC's website at www.sec.gov.
About the Company
First Midwest is a relationship-based financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, retail, wealth management, trust, and private banking products and services through over 110 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's website is www.firstmidwest.com.
Accompanying Unaudited Selected Financial Information
First Midwest Bancorp, Inc. Consolidated Statements of Financial Condition (Unaudited) (Dollar amounts in thousands) As of -------------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 ----------- ----------- ---------- ---------- ---------- Period-End Balance Sheet Assets Cash and due from banks $ 149,957 $ 135,049 $ 114,587 $ 125,279 $ 135,546 Interest-bearing deposits in other banks 105,432 171,312 266,615 822,264 811,287 Trading securities, at fair value 17,693 17,408 16,894 17,038 18,172 Securities available-for- sale, at fair value 1,773,759 1,625,579 1,306,636 1,151,418 1,142,407 Securities held- to-maturity, at amortized cost 20,672 21,051 23,152 23,723 24,292 FHLB and FRB stock 44,506 40,916 39,306 38,748 38,748 Loans: Commercial and industrial 2,699,742 2,634,391 2,524,726 2,392,860 2,366,056 Agricultural 401,858 422,231 387,440 393,732 377,410 Commercial real estate: Office, retail, and industrial 1,529,675 1,566,395 1,395,454 1,414,077 1,432,502 Multi-family 587,104 562,065 528,324 539,308 557,947 Construction 371,016 260,743 216,882 192,086 190,970 Other commercial real estate 1,000,655 1,060,302 931,190 869,748 871,119 Home equity 722,881 683,171 653,468 647,223 599,320 1-4 family mortgages 415,581 390,887 355,854 294,261 283,562 Installment 223,845 213,979 137,602 131,185 113,382 Covered loans 27,180 28,391 30,775 51,219 57,917 ----------- ----------- ---------- ---------- ---------- Total loans 7,979,537 7,822,555 7,161,715 6,925,699 6,850,185 Allowance for loan losses (80,105) (77,150) (73,630) (72,500) (71,463) ----------- ----------- ---------- ---------- ---------- Net loans 7,899,432 7,745,405 7,088,085 6,853,199 6,778,722 OREO 29,990 29,649 27,782 32,035 28,230 Premises, furniture, and equipment, net 140,554 141,323 122,278 127,443 128,621 Investment in BOLI 218,133 218,873 209,601 208,666 207,814 Goodwill and other intangible assets 369,962 369,979 339,277 331,250 332,223 Accrued interest receivable and other assets 225,720 212,378 178,463 203,983 216,965 ----------- ----------- ---------- ---------- ---------- Total assets $10,995,810 $10,728,922 $9,732,676 $9,935,046 $9,863,027 =========== =========== ========== ========== ========== Liabilities and Stockholders' Equity Noninterest- bearing deposits $ 2,683,495 $ 2,627,530 $2,414,454 $2,671,793 $2,508,316 Interest-bearing deposits 6,287,821 6,153,288 5,683,284 5,624,657 5,704,355 ----------- ----------- ---------- ---------- ---------- Total deposits 8,971,316 8,780,818 8,097,738 8,296,450 8,212,671 Borrowed funds 449,744 387,411 165,096 169,943 189,036 Senior and subordinated debt 162,876 201,293 201,208 201,123 201,039 Accrued interest payable and other liabilities 160,985 134,835 122,366 119,861 135,324 Stockholders' equity 1,250,889 1,224,565 1,146,268 1,147,669 1,124,957 ----------- ----------- ---------- ---------- ---------- Total liabilities and stockholders' equity $10,995,810 $10,728,922 $9,732,676 $9,935,046 $9,863,027 =========== =========== ========== ========== ========== Stockholders' equity, excluding accumulated other comprehensive income ("AOCI") $ 1,259,692 $ 1,239,606 $1,174,657 $1,163,487 $1,146,189 Stockholders' equity, common 1,250,889 1,224,565 1,146,268 1,147,669 1,124,957 First Midwest Bancorp, Inc. Condensed Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands) Quarters Ended ----------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 -------- --------- --------- --------- -------- Income Statement Interest income $ 96,550 $ 87,548 $ 84,667 $ 84,292 $ 84,556 Interest expense 6,569 6,834 6,655 6,390 5,654 -------- --------- --------- --------- -------- Net interest income 89,981 80,714 78,012 77,902 78,902 Provision for loan losses 8,085 7,593 4,500 4,100 6,000 -------- --------- --------- --------- -------- Net interest income after provision for loan losses 81,896 73,121 73,512 73,802 72,902 -------- --------- --------- --------- -------- Noninterest Income Service charges on deposit accounts 10,169 9,473 10,303 10,519 9,886 Wealth management fees 8,642 7,559 7,493 7,222 7,433 Card-based fees 7,592 6,718 6,761 6,868 6,953 Merchant servicing fees 3,170 3,028 2,929 3,207 2,938 Mortgage banking income 1,863 1,368 1,777 1,402 1,439 Other service charges, commissions, and fees 4,498 5,448 4,664 3,900 2,924 -------- --------- --------- --------- -------- Total fee-based revenues 35,934 33,594 33,927 33,118 31,573 Other income 1,865 1,445 1,729 1,372 1,900 Net securities gains 23 887 822 524 515 -------- --------- --------- --------- -------- Total noninterest income 37,822 35,926 36,478 35,014 33,988 -------- --------- --------- --------- -------- Noninterest Expense Salaries and employee benefits: Salaries and wages 37,916 36,296 34,295 33,554 33,096 Retirement and other employee benefits 8,351 8,298 8,925 7,807 7,198 -------- --------- --------- --------- -------- Total salaries and employee benefits 46,267 44,594 43,220 41,361 40,294 -------- --------- --------- --------- -------- Net occupancy and equipment expense 9,928 9,697 9,256 9,406 9,622 Professional services 5,292 5,920 6,117 6,172 5,322 Technology and related costs 3,669 3,701 3,694 3,673 3,527 Merchant card expense 2,724 2,598 2,495 2,722 2,472 Advertising and promotions 1,927 1,589 2,211 1,828 2,344 Cardholder expenses 1,512 1,359 1,329 1,354 1,292 Net OREO expense 1,122 664 926 1,290 1,861 Other expenses 8,295 7,447 7,525 6,559 6,717 Acquisition and integration related expenses 618 5,020 1,389 -- -- Property valuation adjustments -- -- 8,581 -- -- -------- --------- --------- --------- -------- Total noninterest expense 81,354 82,589 86,743 74,365 73,451 -------- --------- --------- --------- -------- Income before income tax expense 38,364 26,458 23,247 34,451 33,439 Income tax expense 13,097 8,496 6,923 11,167 10,865 -------- --------- --------- --------- -------- Net income $ 25,267 $ 17,962 $ 16,324 $ 23,284 $ 22,574 ======== ========= ========= ========= ======== Net income applicable to common shares $ 24,977 $ 17,750 $ 16,145 $ 23,058 $ 22,325 Net income applicable to common shares, excluding certain significant transactions (1) $ 25,348 $ 20,762 $ 22,127 $ 23,058 $ 22,325 Six Months Ended --------------------- June 30, June 30, 2016 2015 ---------- ---------- Income Statement Interest income $ 184,098 $ 167,025 Interest expense 13,403 11,341 ---------- ---------- Net interest income 170,695 155,684 Provision for loan losses 15,678 12,552 ---------- ---------- Net interest income after provision for loan losses 155,017 143,132 ---------- ---------- Noninterest Income Service charges on deposit accounts 19,642 19,157 Wealth management fees 16,201 14,447 Card-based fees 14,310 13,355 Merchant servicing fees 6,198 5,603 Mortgage banking income 3,231 2,562 Other service charges, commissions, and fees 9,946 5,090 ---------- ---------- Total fee-based revenues 69,528 60,214 Other income 3,310 3,848 Net securities gains 910 1,027 ---------- ---------- Total noninterest income 73,748 65,089 ---------- ---------- Noninterest Expense Salaries and employee benefits: Salaries and wages 74,212 65,890 Retirement and other employee benefits 16,649 15,120 ---------- ---------- Total salaries and employee benefits 90,861 81,010 ---------- ---------- Net occupancy and equipment expense 19,625 20,058 Professional services 11,212 10,431 Technology and related costs 7,370 7,214 Merchant card expense 5,322 4,669 Advertising and promotions 3,516 3,567 Cardholder expenses 2,871 2,560 Net OREO expense 1,786 3,065 Other expenses 15,742 13,534 Acquisition and integration related expenses 5,638 -- Property valuation adjustments -- -- ---------- ---------- Total noninterest expense 163,943 146,108 ---------- ---------- Income before income tax expense 64,822 62,113 Income tax expense 21,593 19,657 ---------- ---------- Net income $ 43,229 $ 42,456 ========== ========== Net income applicable to common shares $ 42,727 $ 41,979 Net income applicable to common shares, excluding certain significant transactions (1) $ 46,110 $ 41,979 Footnotes to Condensed Consolidated Statements of Income (1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives. First Midwest Bancorp, Inc. Selected Financial Information (Unaudited) (Amounts in thousands, except per share data) As of or for the ----------------------------------------------------- Quarters Ended --------------------------------------------------- March December September June 30, 31, 31, 30, June 30, 2016 2016 2015 2015 2015 -------- -------- --------- ---------- -------- Earnings Per Share Basic earnings per common share ("EPS") (1) $ 0.31 $ 0.23 $ 0.21 $ 0.30 $ 0.29 Diluted EPS (1) $ 0.31 $ 0.23 $ 0.21 $ 0.30 $ 0.29 Diluted EPS, excluding certain significant transactions (1) (6) $ 0.32 $ 0.27 $ 0.29 $ 0.30 $ 0.29 Common Stock and Related Per Common Share Data Book value $ 15.38 $ 15.06 $ 14.70 $ 14.72 $ 14.43 Tangible book value $ 10.83 $ 10.51 $ 10.35 $ 10.47 $ 10.17 Dividends declared per share $ 0.09 $ 0.09 $ 0.09 $ 0.09 $ 0.09 Closing price at period end $ 17.56 $ 18.02 $ 18.43 $ 17.54 $ 18.97 Closing price to book value 1.1 1.2 1.3 1.2 1.3 Period end shares outstanding 81,312 81,298 77,952 77,942 77,961 Period end treasury shares 9,965 9,976 10,276 10,286 10,267 Common dividends $ 7,240 $ 7,228 $ 7,017 $ 7,014 $ 7,022 Key Ratios/Data Return on average common equity (1) (2) 8.13% 6.06% 5.55% 8.06% 7.97% Return on average tangible common equity (1) (2) 11.94% 8.87% 8.06% 11.68% 11.62% Return on average tangible common equity, excluding certain significant transactions (1) (2) (6) 12.11% 10.32% 10.94% 11.68% 11.62% Return on average assets (2) 0.93% 0.72% 0.66% 0.94% 0.94% Loans to deposits 88.94% 89.09% 88.44% 83.48% 83.41% Efficiency ratio (1) 60.98% 64.82% 64.95% 63.20% 61.70% Net interest margin (3) 3.72% 3.66% 3.59% 3.58% 3.76% Yield on average interest-earning assets (3) 3.99% 3.96% 3.89% 3.86% 4.02% Cost of funds 0.39% 0.44% 0.44% 0.42% 0.38% Net noninterest expense to average assets 1.61% 1.90% 2.08% 1.60% 1.66% Effective income tax rate 34.14% 32.11% 29.78% 32.41% 32.50% Capital Ratios Total capital to risk- weighted assets (1) 10.68% 10.64% 11.15% 11.43% 11.37% Tier 1 capital to risk-weighted assets (1) 9.83% 9.81% 10.28% 10.55% 10.49% CET1 to risk-weighted assets (1) 9.32% 9.30% 9.73% 10.00% 9.93% Tier 1 capital to average assets (1) 8.94% 9.56% 9.40% 9.29% 9.34% Tangible common equity to tangible assets (1) 8.29% 8.25% 8.59% 8.50% 8.32% Tangible common equity, excluding AOCI, to tangible assets (1) 8.37% 8.39% 8.89% 8.67% 8.54% Tangible common equity to risk-weighted assets (1) 9.14% 9.04% 9.29% 9.70% 9.55% As of or for the ---------------------- Six Months Ended ---------------------- June 30, June 30, 2016 2015 ---------- ---------- Earnings Per Share Basic earnings per common share ("EPS") (1) $ 0.54 $ 0.55 Diluted EPS (1) $ 0.54 $ 0.55 Diluted EPS, excluding certain significant transactions (1) (6) $ 0.58 $ 0.55 Common Stock and Related Per Common Share Data Book value $ 15.38 $ 14.43 Tangible book value $ 10.83 $ 10.17 Dividends declared per share $ 0.18 $ 0.18 Closing price at period end $ 17.56 $ 18.97 Closing price to book value 1.1 1.3 Period end shares outstanding 81,312 77,961 Period end treasury shares 9,965 10,267 Common dividends $ 14,468 $ 14,033 Key Ratios/Data Return on average common equity (1) (2) 7.12% 7.56% Return on average tangible common equity (1) (2) 10.44% 11.07% Return on average tangible common equity, excluding certain significant transactions (1) (2) (6) 11.24% 11.07% Return on average assets (2) 0.83% 0.90% Loans to deposits 88.94% 83.41% Efficiency ratio (1) 62.81% 63.05% Net interest margin (3) 3.69% 3.77% Yield on average interest-earning assets (3) 3.97% 4.04% Cost of funds 0.41% 0.39% Net noninterest expense to average assets 1.75% 1.73% Effective income tax rate 33.31% 31.65% Capital Ratios Total capital to risk- weighted assets (1) 10.68% 11.37% Tier 1 capital to risk-weighted assets (1) 9.83% 10.49% CET1 to risk-weighted assets (1) 9.32% 9.93% Tier 1 capital to average assets (1) 8.94% 9.34% Tangible common equity to tangible assets (1) 8.29% 8.32% Tangible common equity, excluding AOCI, to tangible assets (1) 8.37% 8.54% Tangible common equity to risk-weighted assets (1) 9.14% 9.55% Note: Selected Financial Information footnotes are located at the end of this section. First Midwest Bancorp, Inc. Selected Financial Information (Unaudited) (Amounts in thousands, except per share data) As of or for the ----------------------------------------------------- Quarters Ended --------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 -------- --------- --------- ---------- -------- Asset Quality Performance Data Non-performing assets(4) Commercial and industrial $ 6,303 $ 5,364 $ 5,587 $ 6,438 $ 11,100 Agricultural 475 295 355 112 317 Commercial real estate: Office, retail, and industrial 16,815 10,910 6,875 6,961 12,599 Multi-family 321 410 796 1,046 1,287 Construction 360 778 905 3,332 4,940 Other commercial real estate 4,797 5,555 5,611 5,898 5,513 Consumer 7,788 8,071 8,746 8,521 9,253 -------- --------- --------- ---------- -------- Total non-accrual loans 36,859 31,383 28,875 32,308 45,009 90 days or more past due loans, still accruing interest 5,406 5,483 2,883 4,559 2,744 -------- --------- --------- ---------- -------- Total non-performing loans 42,265 36,866 31,758 36,867 47,753 Accruing TDRs 2,491 2,702 2,743 2,771 3,067 OREO 29,452 29,238 27,349 31,129 24,471 -------- --------- --------- ---------- -------- Total non-performing assets $ 74,208 $ 68,806 $ 61,850 $ 70,767 $ 75,291 ======== ========= ========= ========== ======== 30-89 days past due loans (4) $ 22,770 $ 29,826 $ 16,329 $ 28,629 $ 28,625 Allowance for credit losses Allowance for loan losses $ 78,711 $ 75,582 $ 71,992 $ 68,384 $ 66,602 Allowance for covered loan losses 1,394 1,568 1,638 4,116 4,861 Reserve for unfunded commitments 1,400 1,225 1,225 1,225 1,816 -------- --------- --------- ---------- -------- Total allowance for credit losses $ 81,505 $ 78,375 $ 74,855 $ 73,725 $ 73,279 ======== ========= ========= ========== ======== Provision for loan losses $ 8,085 $ 7,593 $ 4,500 $ 4,100 $ 6,000 Net charge-offs by category Commercial and industrial $ 1,450 $ 1,396 $ 1,781 $ 1,601 $ 3,273 Agricultural -- -- -- -- -- Commercial real estate: Office, retail, and industrial 1,633 421 267 457 1,862 Multi-family 83 179 (27) 67 466 Construction (12) 111 105 (114) (188) Other commercial real estate 810 1,294 110 92 (603) Consumer 1,164 672 1,134 959 432 Covered loans 2 -- -- 1 285 -------- --------- --------- ---------- -------- Total net charge- offs $ 5,130 $ 4,073 $ 3,370 $ 3,063 $ 5,527 ======== ========= ========= ========== ======== Total recoveries included above $ 1,003 $ 1,116 $ 1,031 $ 1,294 $ 2,579 As of or for the --------------------- Six Months Ended --------------------- June 30, June 30, 2016 2015 ---------- ---------- Asset Quality Performance Data Non-performing assets(4) Commercial and industrial $ 6,303 $ 11,100 Agricultural 475 317 Commercial real estate: Office, retail, and industrial 16,815 12,599 Multi-family 321 1,287 Construction 360 4,940 Other commercial real estate 4,797 5,513 Consumer 7,788 9,253 ---------- ---------- Total non-accrual loans 36,859 45,009 90 days or more past due loans, still accruing interest 5,406 2,744 ---------- ---------- Total non-performing loans 42,265 47,753 Accruing TDRs 2,491 3,067 OREO 29,452 24,471 ---------- ---------- Total non-performing assets $ 74,208 $ 75,291 ========== ========== 30-89 days past due loans (4) $ 22,770 $ 28,625 Allowance for credit losses Allowance for loan losses $ 78,711 $ 66,602 Allowance for covered loan losses 1,394 4,861 Reserve for unfunded commitments 1,400 1,816 ---------- ---------- Total allowance for credit losses $ 81,505 $ 73,279 ========== ========== Provision for loan losses $ 15,678 $ 12,552 Net charge-offs by category Commercial and industrial $ 2,846 $ 9,930 Agricultural -- -- Commercial real estate: Office, retail, and industrial 2,054 1,696 Multi-family 262 490 Construction 99 (205) Other commercial real estate 2,104 448 Consumer 1,836 911 Covered loans 2 513 ---------- ---------- Total net charge- offs $ 9,203 $ 13,783 ========== ========== Total recoveries included above $ 2,119 $ 4,376 Note: Selected Financial Information footnotes are located at the end of this section. First Midwest Bancorp, Inc. Selected Financial Information (Unaudited) (Amounts in thousands, except per share data) As of or for the ----------------------------------------------------- Quarters Ended ----------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 --------- --------- --------- --------- --------- Asset Quality ratios(4) Non-accrual loans to total loans 0.46% 0.40% 0.40% 0.47% 0.66% Non-performing loans to total loans 0.53% 0.47% 0.45% 0.54% 0.70% Non-performing assets to total loans plus OREO 0.93% 0.88% 0.86% 1.02% 1.10% Non-performing assets to tangible common equity plus allowance for credit losses 7.72% 7.39% 7.03% 7.99% 8.74% Non-accrual loans to total assets 0.34% 0.29% 0.30% 0.33% 0.46% Allowance for credit losses and net charge-off ratios Allowance for credit losses to total loans (5) 1.02% 1.00% 1.05% 1.06% 1.07% Allowance for credit losses to loans, excluding acquired loans. 1.11% 1.11% 1.11% 1.14% 1.16% Allowance for credit losses to non- accrual loans (4) 217.34% 244.74% 253.57% 215.45% 152.01% Allowance for credit losses to non- performing loans (4) 189.54% 208.34% 230.55% 188.81% 143.27% Net charge-offs to average loans (2) 0.26% 0.22% 0.19% 0.18% 0.33% Footnotes to Selected Financial Information (1) See the Non-GAAP Reconciliations section for detailed calculation. (2) Annualized based on the actual number of days for each period presented. (3) Presented on a tax equivalent basis, which reflects federal and state tax benefits. (4) Excludes covered loans and covered OREO. (5) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established on acquired loans as necessary to reflect credit deterioration. (6) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives. First Midwest Bancorp, Inc. Non-GAAP Reconciliations (Unaudited) (Amounts in thousands, except per share data) Quarters Ended ---------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 -------- --------- --------- ---------- -------- Earnings Per Share Net income $ 25,267 $ 17,962 $ 16,324 $ 23,284 $ 22,574 Net income applicable to non-vested restricted shares (290) (212) (179) (226) (249) -------- --------- --------- ---------- -------- Net income applicable to common shares 24,977 17,750 16,145 23,058 22,325 Acquisition and integration related expenses 618 5,020 1,389 -- -- Tax-equivalent adjustment of acquisition and integration related expenses (2) (247) (2,008) (556) -- -- Property valuation adjustments. -- -- 8,581 -- -- Tax-equivalent adjustment of property valuation adjustments (2) -- -- (3,432) -- -- -------- --------- --------- ---------- -------- Net income applicable to common shares, excluding certain significant transactions (1) $ 25,348 $ 20,762 $ 22,127 $ 23,058 $ 22,325 ======== ========= ========= ========== ======== Weighted-average common shares outstanding: Weighted-average common shares outstanding (basic) 80,383 77,980 77,121 77,106 77,089 Dilutive effect of common stock equivalents 13 12 13 13 12 -------- --------- --------- ---------- -------- Weighted-average diluted common shares outstanding 80,396 77,992 77,134 77,119 77,101 ======== ========= ========= ========== ======== Basic EPS $ 0.31 $ 0.23 $ 0.21 $ 0.30 $ 0.29 Diluted EPS $ 0.31 $ 0.23 $ 0.21 $ 0.30 $ 0.29 Diluted EPS, excluding certain significant transactions (1) $ 0.32 $ 0.27 $ 0.29 $ 0.30 $ 0.29 Anti-dilutive shares not included in the computation of diluted EPS 469 608 735 751 768 Tax Equivalent Net Interest Income Net interest income $ 89,981 $ 80,714 $ 78,012 $ 77,902 $ 78,902 Tax-equivalent adjustment 2,193 2,307 2,494 2,609 2,693 -------- --------- --------- ---------- -------- Tax-equivalent net interest income (2) $ 92,174 $ 83,021 $ 80,506 $ 80,511 $ 81,595 ======== ========= ========= ========== ======== Efficiency Ratio Calculation Noninterest expense $ 81,354 $ 82,589 $ 86,743 $ 74,365 $ 73,451 Less: -- Net OREO expense (1,122) (664) (926) (1,290) (1,861) Acquisition and integration related expenses (618) (5,020) (1,389) -- -- Property valuation adjustments -- -- (8,581) -- -- -------- --------- --------- ---------- -------- Total $ 79,614 $ 76,905 $ 75,847 $ 73,075 $ 71,590 ======== ========= ========= ========== ======== Tax-equivalent net interest income (2) $ 92,174 $ 83,021 $ 80,506 $ 80,511 $ 81,595 Fee-based revenues 35,934 33,594 33,927 33,118 31,573 Add: Other income, excluding BOLI income 984 579 807 446 446 BOLI 881 866 922 926 1,454 Tax-equivalent adjustment of BOLI 587 577 615 617 969 -------- --------- --------- ---------- -------- Total $130,560 $ 118,637 $ 116,777 $ 115,618 $116,037 ======== ========= ========= ========== ======== Efficiency ratio 60.98% 64.82% 64.95% 63.20% 61.70% Six Months Ended ---------------------- June 30, June 30, 2016 2015 ---------- ---------- Earnings Per Share Net income $ 43,229 $ 42,456 Net income applicable to non-vested restricted shares (502) (477) ---------- ---------- Net income applicable to common shares 42,727 41,979 Acquisition and integration related expenses 5,638 -- Tax-equivalent adjustment of acquisition and integration related expenses (2) (2,255) -- Property valuation adjustments. -- -- Tax-equivalent adjustment of property valuation adjustments (2) -- -- ---------- ---------- Net income applicable to common shares, excluding certain significant transactions (1) $ 46,110 $ 41,979 ========== ========== Weighted-average common shares outstanding: Weighted-average common shares outstanding (basic) 79,182 77,004 Dilutive effect of common stock equivalents 12 12 ---------- ---------- Weighted-average diluted common shares outstanding 79,194 77,016 ========== ========== Basic EPS $ 0.54 $ 0.55 Diluted EPS $ 0.54 $ 0.55 Diluted EPS, excluding certain significant transactions (1) $ 0.58 $ 0.55 Anti-dilutive shares not included in the computation of diluted EPS 539 857 Tax Equivalent Net Interest Income Net interest income $ 170,695 $ 155,684 Tax-equivalent adjustment 4,500 5,576 ---------- ---------- Tax-equivalent net interest income (2) $ 175,195 $ 161,260 ========== ========== Efficiency Ratio Calculation Noninterest expense $ 163,943 $ 146,108 Less: Net OREO expense (1,786) (3,065) Acquisition and integration related expenses (5,638) -- Property valuation adjustments -- -- ---------- ---------- Total $ 156,519 $ 143,043 ========== ========== Tax-equivalent net interest income (2) $ 175,195 $ 161,260 Fee-based revenues 69,528 60,214 Add: Other income, excluding BOLI income 1,563 1,511 BOLI 1,747 2,337 Tax-equivalent adjustment of BOLI 1,165 1,558 ---------- ---------- Total $ 249,198 $ 226,880 ========== ========== Efficiency ratio 62.81% 63.05% Note: Non-GAAP Reconciliations footnotes are located at the end of this section. First Midwest Bancorp, Inc. Non-GAAP Reconciliations (Unaudited) (Amounts in thousands, except per share data) As of or for the --------------------------------------------------------- Quarters Ended -------------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 ----------- ----------- ---------- ---------- ---------- Risk-Based Capital Data Common stock $ 913 $ 913 $ 882 $ 882 $ 882 Additional paid-in capital 495,159 493,153 446,672 445,037 443,558 Retained earnings 982,277 964,250 953,516 944,209 927,939 Treasury stock, at cost (218,657) (218,710) (226,413) (226,641) (226,190) Goodwill and other intangible assets (358,582) (357,895) (327,115) (318,854) (319,243) Disallowed deferred tax assets (2,263) (2,956) (1,902) (2,889) (3,046) ----------- ----------- ---------- ---------- ---------- CET1 capital 898,847 878,755 845,640 841,744 823,900 Trust-preferred securities 50,690 50,690 50,690 50,690 50,690 Other disallowed deferred tax assets (1,508) (1,970) (2,868) (4,334) (4,568) ----------- ----------- ---------- ---------- ---------- Tier 1 capital 948,029 927,475 893,462 888,100 870,022 Tier 2 capital 81,505 78,375 74,855 73,725 73,279 ----------- ----------- ---------- ---------- ---------- Total capital $ 1,029,534 $ 1,005,850 $ 968,317 $ 961,825 $ 943,301 =========== =========== ========== ========== ========== Risk-weighted assets $ 9,641,953 $ 9,452,551 $8,687,864 $8,414,729 $8,296,679 Adjusted average assets $10,608,085 $ 9,700,671 $9,501,087 $9,559,796 $9,318,347 Total capital to risk-weighted assets 10.68% 10.64% 11.15% 11.43% 11.37% Tier 1 capital to risk-weighted assets 9.83% 9.81% 10.28% 10.55% 10.49% CET1 to risk- weighted assets 9.32% 9.30% 9.73% 10.00% 9.93% Tier 1 capital to average assets 8.94% 9.56% 9.40% 9.29% 9.34% Tangible Common Equity Stockholders' equity $ 1,250,889 $ 1,224,565 $1,146,268 $1,147,669 $1,124,957 Less: goodwill and other intangible assets (369,962) (369,979) (339,277) (331,250) (332,223) ----------- ----------- ---------- ---------- ---------- Tangible common equity 880,927 854,586 806,991 816,419 792,734 Less: AOCI 8,803 15,041 28,389 15,818 21,232 ----------- ----------- ---------- ---------- ---------- Tangible common equity, excluding AOCI $ 889,730 $ 869,627 $ 835,380 $ 832,237 $ 813,966 =========== =========== ========== ========== ========== Total assets $10,995,810 $10,728,922 $9,732,676 $9,935,046 $9,863,027 Less: goodwill and other intangible assets (369,962) (369,979) (339,277) (331,250) (332,223) ----------- ----------- ---------- ---------- ---------- Tangible assets $10,625,848 $10,358,943 $9,393,399 $9,603,796 $9,530,804 =========== =========== ========== ========== ========== Tangible common equity to tangible assets 8.29% 8.25% 8.59% 8.50% 8.32% Tangible common equity, excluding AOCI, to tangible assets 8.37% 8.39% 8.89% 8.67% 8.54% Tangible common equity to risk- weighted assets 9.14% 9.04% 9.29% 9.70% 9.55% As of or for the ------------------------- Six Months Ended ------------------------ June 30, June 30, 2016 2015 ----------- ----------- Risk-Based Capital Data Common stock $ 913 $ 882 Additional paid-in capital 495,159 443,558 Retained earnings 982,277 927,939 Treasury stock, at cost (218,657) (226,190) Goodwill and other intangible assets (358,582) (319,243) Disallowed deferred tax assets (2,263) (3,046) ----------- ----------- CET1 capital 898,847 823,900 Trust-preferred securities 50,690 50,690 Other disallowed deferred tax assets (1,508) (4,568) ----------- ----------- Tier 1 capital 948,029 870,022 Tier 2 capital 81,505 73,279 ----------- ----------- Total capital $ 1,029,534 $ 943,301 =========== =========== Risk-weighted assets $ 9,641,953 $ 8,296,679 Adjusted average assets $10,608,085 $ 9,318,347 Total capital to risk-weighted assets 10.68% 11.37% Tier 1 capital to risk-weighted assets 9.83% 10.49% CET1 to risk- weighted assets 9.32% 9.93% Tier 1 capital to average assets 8.94% 9.34% Tangible Common Equity Stockholders' equity $ 1,250,889 $ 1,124,957 Less: goodwill and other intangible assets (369,962) (332,223) ----------- ----------- Tangible common equity 880,927 792,734 Less: AOCI 8,803 21,232 ----------- ----------- Tangible common equity, excluding AOCI $ 889,730 $ 813,966 =========== =========== Total assets $10,995,810 $ 9,863,027 Less: goodwill and other intangible assets (369,962) (332,223) ----------- ----------- Tangible assets $10,625,848 $ 9,530,804 =========== =========== Tangible common equity to tangible assets 8.29% 8.32% Tangible common equity, excluding AOCI, to tangible assets 8.37% 8.54% Tangible common equity to risk- weighted assets 9.14% 9.55% Note: Non-GAAP Reconciliations footnotes are located at the end of this section. First Midwest Bancorp, Inc. Non-GAAP Reconciliations (Unaudited) (Amounts in thousands, except per share data)
As of or for the ----------------------------------------------------------- Quarters Ended ---------------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 ---------- ---------- ---------- ---------- ---------- Return on Average Common and Tangible Common Equity Net income applicable to common shares $ 24,977 $ 17,750 $ 16,145 $ 23,058 $ 22,325 Intangibles amortization 1,245 985 971 973 978 Tax-equivalent adjustment of intangibles amortization (498) (394) (388) (389) (391) ---------- ---------- ---------- ---------- ---------- Net income applicable to common shares, excluding intangibles amortization 25,724 18,341 16,728 23,642 22,912 Acquisition and integration related expenses 618 5,020 1,389 -- -- Tax-equivalent adjustment of acquisition and integration related expenses (2) (247) (2,008) (556) -- -- Property valuation adjustments -- -- 8,581 -- -- Tax-equivalent adjustment of property valuation adjustments (2) -- -- (3,432) -- -- ---------- ---------- ---------- ---------- ---------- Net income applicable to common shares, excluding intangibles amortization and certain significant transactions (1) $ 26,095 $ 21,353 $ 22,710 $ 23,642 $ 22,912 ========== ========== ========== ========== ========== Average stockholders' equity $1,235,497 $1,178,588 $1,154,506 $1,134,967 $1,123,530 Less: average intangible assets (369,177) (346,549) (331,013) (331,720) (332,694) ---------- ---------- ---------- ---------- ---------- Average tangible common equity $ 866,320 $ 832,039 $ 823,493 $ 803,247 $ 790,836 ========== ========== ========== ========== ========== Return on average common equity (3) 8.13% 6.06% 5.55% 8.06% 7.97% Return on average tangible common equity (3) 11.94% 8.87% 8.06% 11.68% 11.62% Return on average tangible common equity, excluding certain significant transactions (1) (3) 12.11% 10.32% 10.94% 11.68% 11.62% As of or for the ----------------------- Six Months Ended ---------------------- June 30, June 30, 2016 2015 ---------- ---------- Return on Average Common and Tangible Common Equity Net income applicable to common shares $ 42,727 $ 41,979 Intangibles amortization 2,230 1,976 Tax-equivalent adjustment of intangibles amortization (892) (790) ---------- ---------- Net income applicable to common shares, excluding intangibles amortization 44,065 43,165 Acquisition and integration related expenses 5,638 -- Tax-equivalent adjustment of acquisition and integration related expenses (2) (2,255) -- Property valuation adjustments -- -- Tax-equivalent adjustment of property valuation adjustments (2) -- -- ---------- ---------- Net income applicable to common shares, excluding intangibles amortization and certain significant transactions (1) $ 47,448 $ 43,165 ========== ========== Average stockholders' equity 1,207,043 $1,119,170 Less: average intangible assets (357,863) (333,186) ---------- ---------- Average tangible common equity $ 849,180 $ 785,984 ========== ========== Return on average common equity (3) 7.12% 7.56% Return on average tangible common equity (3) 10.44% 11.07% Return on average tangible common equity, excluding certain significant transactions (1) (3) 11.24% 11.07% Footnotes to Non-GAAP Reconciliations (1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives. (2) Presented on a tax equivalent basis, which reflects federal and state tax benefits. (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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