CHICAGO, Oct. 22, 2019 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest"), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the third quarter of 2019. Net income for the third quarter of 2019 was $54.5 million, or $0.49 per share, compared to $47.0 million, or $0.43 per share, for the second quarter of 2019, and $53.4 million, or $0.52 per share, for the third quarter of 2018.

Reported results for all periods were impacted by acquisition and integration related expenses and implementation costs related to the Company's Delivering Excellence initiative⁽¹⁾ ("Delivering Excellence"). In addition, the third quarter of  2018 was impacted by the revaluation of deferred tax assets. For additional detail on these adjustments, see the "Non-GAAP Financial Information" section presented later in this release.

Earnings per share ("EPS"), adjusted⁽²⁾ was $0.52 for the third quarter of 2019, compared to $0.50 for the second quarter of 2019 and $0.46 for the third quarter of 2018.

SELECT THIRD QUARTER HIGHLIGHTS

• Generated EPS of $0.49, compared to $0.43 for the second quarter of 2019 and $0.52 for the third quarter of 2018.
• Increased EPS, adjusted⁽²⁾ to $0.52, up 4% and 13% from the second quarter of 2019 and third quarter of 2018, respectively.
• Grew loans to $13 billion, up 8%, annualized from June 30, 2019 and 16% from September 30, 2018.
• Increased total average deposits to $13 billion, up 4% and 16% from the second quarter of 2019 and third quarter of 2018, respectively.
• Expanded noninterest income to $43 million, up 11% from the second quarter of 2019 and 20% from the third quarter of 2018.
• Grew net interest income modestly from the second quarter of 2019 and 14% from the third quarter of 2018.
• Net interest margin decreased to 3.82%, reflective of the interest rate environment and balance sheet mix.
• Consistent net loan charge-offs to average loans of 0.29%, reflective of the benign credit environment.
• Controlled noninterest expense; reported an efficiency ratio⁽²⁾ of 54%, improved from 55% and 56% in the second quarter of 2019 and third quarter of 2018, respectively.
• Increased common equity Tier 1 capital to 10.18%, up 7 basis points from the second quarter of 2019 and 25 basis points from the third quarter of 2018; capital replenished to levels last achieved prior to 2019 acquisitions.
• Announced the acquisition of Park Bank on August 28, 2019, with approximately $1.0 billion of assets, $700 million of loans, and $815 million of deposits.

"Performance for the quarter was strong, profiting from both growth and revenue diversity," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "We closed the quarter with $18.0 billion of total assets, up 3% and 20% from last quarter and year, respectively.  Operating results were solid and resilient, with the benefits of growth, stronger fee-based revenues and continued efficiency offsetting margin pressures from today’s lower rate environment."

Mr. Scudder concluded, "As we navigate the challenges of an uncertain landscape, First Midwest remains centered on our strategic and business priorities. First and foremost, we remain focused on our clients as we work to deliver a superior experience through continued investment in colleagues, systems and efficiency. Second, we continue to expand and diversify our business as evidenced by our pending acquisition of Park Bank, which will see us grow in the Milwaukee and Southeast Wisconsin marketplace. Combined with a strong balance sheet, these efforts position us well as we strive to provide our shareholders with superior, long-term returns."

PENDING ACQUISITION

Park Bank

On August 27, 2019, the Company entered into a merger agreement to acquire Bankmanagers Corp. ("Bankmanagers"), the holding company for Park Bank, based in Milwaukee, Wisconsin. As of June 30, 2019, Bankmanagers had approximately $1.0 billion of assets, $815 million of deposits, and $700 million of loans. The merger agreement provides for a fixed exchange ratio of 29.9675 shares of Company common stock, plus $623.02 in cash, for each share of Bankmanagers common stock, subject to certain adjustments. As of the date of announcement, the overall transaction was valued at approximately $195 million. The transaction is subject to customary regulatory approvals, the approval of Bankmanagers’ shareholders, and the completion of various closing conditions, and is anticipated to close by January 2020.

⁽¹⁾ The Company initiated certain actions in connection with its Delivering Excellence initiative in the second quarter of 2018, demonstrating the Company's ongoing commitment to provide service excellence to its clients and maximizing both the efficiency and scalability of its operating platform.
⁽²⁾ These metrics are non-GAAP financial measures. For details on the calculation of these metrics, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)

	Quarters Ended
	September 30, 2019												June 30, 2019												September 30, 2018
	Average Balance				Interest				Yield/ Rate (%)				Average Balance				Interest				Yield/ Rate (%)				Average Balance				Interest				Yield/ Rate (%)
Assets
Other interest-earning assets	$	283,178			$	1,702			2.38				$	210,322			$	1,240			2.36				$	162,646			$	631			1.54
Securities(1)	2,869,461				19,906				2.77				2,631,437				18,423				2.80				2,245,784				14,533				2.59
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock	108,735				831				3.06				87,815				757				3.45				83,273				734				3.53
Loans(1)	12,539,541				160,756				5.09				12,022,470				158,442				5.29				10,980,916				134,768				4.87
Total interest-earning assets(1)	15,800,915				183,195				4.60				14,952,044				178,862				4.80				13,472,619				150,666				4.44
Cash and due from banks	224,127												215,464												196,382
Allowance for loan losses	(110,616		)										(108,698		)										(100,717		)
Other assets	1,784,754												1,681,240												1,326,386
Total assets	$	17,699,180											$	16,740,050											$	14,894,670
Liabilities and Stockholders' Equity
Savings deposits	$	2,056,128			308				0.06				$	2,079,852			346				0.07				$	2,003,928			364				0.07
NOW accounts	2,483,176				3,462				0.55				2,261,103				2,776				0.49				2,164,018				2,151				0.39
Money market deposits	2,080,274				4,111				0.78				1,907,766				3,041				0.64				1,772,821				1,522				0.34
Time deposits	3,026,423				13,873				1.82				2,849,930				13,153				1.85				1,993,361				6,389				1.27
Borrowed funds	1,369,079				5,639				1.63				1,025,351				4,459				1.74				980,421				3,927				1.59
Senior and subordinated debt	233,642				3,783				6.42				220,756				3,595				6.53				195,526				3,152				6.40
Total interest-bearing liabilities	11,248,722				31,176				1.10				10,344,758				27,370				1.06				9,110,075				17,505				0.76
Demand deposits	3,800,569												3,835,567												3,624,520
Total funding sources	15,049,291								0.82				14,180,325								0.77				12,734,595								0.55
Other liabilities	322,610												318,156												250,745
Stockholders' equity - common	2,327,279												2,241,569												1,909,330
Total liabilities and stockholders' equity	$	17,699,180											$	16,740,050											$	14,894,670
Tax-equivalent net interest income/margin(1)					152,019				3.82								151,492				4.06								133,161				3.92
Tax-equivalent adjustment					(1,232		)										(1,180		)										(1,134		)
Net interest income (GAAP)(1)					$	150,787											$	150,312											$	132,027
Impact of acquired loan accretion(1)					$	9,244			0.23								$	10,308			0.28								$	4,565			0.13
Tax-equivalent net interest income/margin, adjusted(1)					$	142,775			3.59								$	141,184			3.78								$	128,596			3.79

⁽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 21%. 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 "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

Net interest income for the third quarter of 2019 was consistent with the second quarter of 2019 and up 14.2% compared to the third quarter of 2018. Compared to both prior periods, the impact of the acquisition of interest-earning assets from the Bridgeview Bancorp, Inc. ("Bridgeview") transaction that closed in the middle of the second quarter of 2019, security purchases, and loan growth was partially offset by higher cost of funds. In addition, net interest income for the third quarter of 2019 benefited from an increase in the number of days in the quarter compared to the second quarter of 2019, partially offset by lower acquired loan accretion. Compared to the third quarter of 2018, the rise in net interest income was also impacted by the acquisition of interest-earning assets from the Northern States Financial Corporation ("Northern States") transaction in the fourth quarter of 2018 and higher acquired loan accretion.

Acquired loan accretion contributed $9.2 million, $10.3 million, and $4.6 million to net interest income for the third quarter of 2019, the second quarter of 2019, and the third quarter of 2018, respectively.

Tax-equivalent net interest margin for the current quarter was 3.82%, decreasing 24 basis points from the second quarter of 2019 and 10 basis points from the third quarter of 2018. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 3.59%, down 19 basis points from the second quarter of 2019 and 20 basis point from the third quarter of 2018. Tax-equivalent net interest margin, adjusted reflects the impact of lower market rates on loan yields compared to the second quarter of 2019, and compression related to the mix of interest-earning assets acquired in the Bridgeview transaction compared to the third quarter of 2018. In addition, the decrease compared to both prior periods was impacted by actions taken to reduce rate sensitivity and higher cost of funds.

For the third quarter of 2019, total average interest-earning assets rose by $848.9 million and $2.3 billion from the second quarter of 2019 and third quarter of 2018, respectively. The increase compared to both prior periods resulted primarily from the Bridgeview transaction in the second quarter of 2019, security purchases, and loan growth. In addition, the rise in average interest-earning assets compared to the third quarter of 2018 was impacted by the Northern States transaction.

Total average funding sources for the third quarter of 2019 increased by $869.0 million and $2.3 billion from the second quarter of 2019 and third quarter of 2018, respectively. The increase compared to both prior periods resulted primarily from the Bridgeview transaction in the second quarter of 2019, organic growth, and FHLB advances. In addition, the rise in average funding sources compared to the third quarter of 2018 was impacted by the Northern States transaction.

Noninterest Income Analysis
(Dollar amounts in thousands)

	Quarters Ended												September 30, 2019 Percent Change From
	September 30, 2019				June 30,  2019				September 30, 2018				June 30,  2019			September 30, 2018
Service charges on deposit accounts	$	13,024			$	12,196			$	12,378			6.8			5.2
Wealth management fees	12,063				12,190				10,622				(1.0	)		13.6
Card-based fees, net	4,694				4,549				4,123				3.2			13.8
Capital market products income	4,161				2,154				1,936				93.2			114.9
Mortgage banking income	3,066				1,901				1,657				61.3			85.0
Merchant servicing fees, net	385				371				387				3.8			(0.5	)
Other service charges, commissions, and fees	2,638				2,412				2,399				9.4			10.0
Total fee-based revenues	40,031				35,773				33,502				11.9			19.5
Other income	2,920				2,753				2,164				6.1			34.9
Total noninterest income	$	42,951			$	38,526			$	35,666			11.5			20.4

Total noninterest income of $43.0 million was up 11.5% and 20.4% from the second quarter of 2019 and third quarter of 2018, respectively. The increase in service charges on deposit accounts and net card-based fees compared to both prior periods was due to services provided to customers acquired in the Bridgeview transaction, as well as seasonally higher volumes compared to the second quarter of 2019 and services provided to customers acquired in the Northern States transaction compared to the third quarter of 2018. Compared to the third quarter of 2018, growth in wealth management fees was driven primarily by customers acquired in the Northern Oak Wealth Management, Inc. ("Northern Oak") transaction completed during the first quarter of 2019.

Capital market products income increased in the third quarter of 2019 as a result of higher sales to corporate clients due to lower long-term rates.

Mortgage banking income for the third quarter of 2019 resulted from sales of $141.0 million of 1-4 family mortgage loans in the secondary market, compared to $93.5 million in the second quarter of 2019 and $61.3 million in the third quarter of 2018. Mortgage banking income is also impacted by changes in the fair value of mortgage servicing rights, which fluctuate from quarter to quarter.

Other income was elevated compared to the third quarter of 2018 due primarily to benefit settlements on bank-owned life insurance and higher fair value adjustments on equity securities.

Noninterest Expense Analysis
(Dollar amounts in thousands)

	Quarters Ended												September 30, 2019 Percent Change From
	September 30, 2019				June 30,  2019				September 30, 2018				June 30,  2019			September 30, 2018
Salaries and employee benefits:
Salaries and wages	$	50,686			$	47,776			$	44,067			6.1			15.0
Retirement and other employee benefits	10,795				10,916				10,093				(1.1	)		7.0
Total salaries and employee benefits	61,481				58,692				54,160				4.8			13.5
Net occupancy and equipment expense	13,903				13,671				13,183				1.7			5.5
Professional services	9,550				10,467				7,944				(8.8	)		20.2
Technology and related costs	5,062				4,908				4,763				3.1			6.3
Advertising and promotions	2,955				3,167				3,526				(6.7	)		(16.2	)
Net other real estate owned ("OREO") expense	381				294				(413		)		29.6			192.3
Other expenses	11,432				12,987				11,015				(12.0	)		3.8
Acquisition and integration related expenses	3,397				9,514				60				(64.3	)		N/M
Delivering Excellence implementation costs	234				442				2,239				(47.1	)		(89.5	)
Total noninterest expense	$	108,395			$	114,142			$	96,477			(5.0	)		12.4
Acquisition and integration related expenses	(3,397		)		(9,514		)		(60		)		(64.3	)		N/M
Delivering Excellence implementation costs	(234		)		(442		)		(2,239		)		(47.1	)		(89.5	)
Total noninterest expense, adjusted(1)	$	104,764			$	104,186			$	94,178			0.6			11.2

N/M – Not meaningful.

⁽¹⁾ See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

Total noninterest expense decreased 5.0% from the second quarter of 2019 and increased 12.4% from the third quarter of 2018. Noninterest expense for all periods presented was impacted by acquisition and integration related expenses and costs related to implementation of the Delivering Excellence initiative. Excluding these items, noninterest expense for the third quarter of 2019 was $104.8 million, consistent with the second quarter of 2019 and up 11.2% from the third quarter of 2018.

Operating costs associated with the Bridgeview transaction completed during the middle of the second quarter of 2019 contributed to noninterest expense for the third quarter of 2019. In addition, operating costs associated with the Northern Oak and Northern States transactions contributed to the increase in noninterest expense compared to the third quarter of 2018. These costs primarily occurred in salaries and employee benefits, net occupancy and equipment expense, professional services, and other expenses.

Compared to both prior periods, the increase in salaries and employee benefits was also impacted by higher commissions resulting from sales of 1-4 family mortgage loans in the secondary market. In addition, salaries and employee benefits compared to the third quarter of 2018 rose due to merit increases. The decrease in professional services compared to the second quarter of 2019 was driven primarily by the timing of certain other professional fees and the increase compared to the third quarter of 2018 resulted from organizational growth. Advertising and promotions expense decreased compared to both prior periods due to the timing of certain costs related to marketing campaigns, as well as a contribution to the First Midwest Charitable Foundation in the third quarter of 2018. Net OREO expense for the third quarter of 2018 was impacted by higher levels of gains on sales of properties. The decrease in other expenses compared to the second quarter of 2019 was driven primarily by lower property valuation adjustments and a reduction in Federal Deposit Insurance Corporation premiums due to small bank assessment credits received.

Acquisition and integration related expenses for the third quarter of 2019 resulted primarily from the acquisition of Bridgeview and the pending acquisition of Park Bank. For the second quarter of 2019, acquisition and integration related expenses resulted primarily from the acquisition of Bridgeview.

Delivering Excellence implementation costs for all periods presented resulted from certain actions initiated by the Company in connection with its Delivering Excellence initiative and include property valuation adjustments on locations identified for closure, employee severance, and general restructuring and advisory services.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

	As of												September 30, 2019 Percent Change From
	September 30, 2019				June 30,  2019				September 30, 2018				June 30,  2019			September 30, 2018
Commercial and industrial	$	4,570,361			$	4,524,401			$	3,994,142			1.0			14.4
Agricultural	417,740				430,589				432,220				(3.0	)		(3.4	)
Commercial real estate:
Office, retail, and industrial	1,892,877				1,936,577				1,782,757				(2.3	)		6.2
Multi-family	817,444				787,155				698,611				3.8			17.0
Construction	637,256				654,607				632,779				(2.7	)		0.7
Other commercial real estate	1,425,292				1,447,673				1,348,831				(1.5	)		5.7
Total commercial real estate	4,772,869				4,826,012				4,462,978				(1.1	)		6.9
Total corporate loans	9,760,970				9,781,002				8,889,340				(0.2	)		9.8
Home equity	833,955				874,686				853,887				(4.7	)		(2.3	)
1-4 family mortgages	1,686,967				1,391,814				888,797				21.2			89.8
Installment	491,427				472,102				418,524				4.1			17.4
Total consumer loans	3,012,349				2,738,602				2,161,208				10.0			39.4
Total loans	$	12,773,319			$	12,519,604			$	11,050,548			2.0			15.6

Total loans of $12.8 billion increased 8.0%, annualized from June 30, 2019 and by 15.6% from September 30, 2018. Excluding loans acquired in the Bridgeview and Northern States transactions as of September 30, 2019, total loans grew by 7.8% from September 30, 2018. In addition, total corporate loans compared to both prior periods benefited from growth in commercial and industrial loans, primarily within our sector-based lending and middle market business units, and multifamily loans. Strong production within commercial real estate loans was offset by the impact of the decision of certain customers to opportunistically sell their commercial business or investment real estate properties, as well as refinancing with non-bank lenders and real estate investors.

Growth in consumer loans compared to both prior periods resulted primarily from purchases of 1-4 family mortgages and organic growth.

Asset Quality
(Dollar amounts in thousands)

	As of												September 30, 2019 Percent Change From
	September 30, 2019				June 30,  2019				September 30, 2018				June 30,  2019			September 30, 2018
Asset quality
Non-accrual loans	$	77,692			$	63,477			$	64,766			22.4			20.0
90 days or more past due loans, still accruing interest(1)	4,657				2,615				2,949				78.1			57.9
Total non-performing loans	82,349				66,092				67,715				24.6			21.6
Accruing troubled debt restructurings ("TDRs")	1,422				1,441				1,741				(1.3	)		(18.3	)
Foreclosed assets(2)	25,266				28,488				12,244				(11.3	)		106.4
Total non-performing assets	$	109,037			$	96,021			$	81,700			13.6			33.5
30-89 days past due loans(1)	$	46,171			$	34,460			$	46,257
Non-accrual loans to total loans	0.61		%		0.51		%		0.59		%
Non-performing loans to total loans	0.64		%		0.53		%		0.61		%
Non-performing assets to total loans plus foreclosed assets	0.85		%		0.77		%		0.74		%
Allowance for credit losses
Allowance for credit losses	$	110,228			$	106,929			$	100,925
Allowance for credit losses to total loans(3)	0.86		%		0.85		%		0.91		%
Allowance for credit losses to loans, excluding acquired loans	0.98		%		0.98		%		1.01		%
Allowance for credit losses to non-accrual loans	141.88		%		168.45		%		155.83		%

⁽¹⁾ Purchased credit impaired loans with an accretable yield are considered current and are not included in past due loan totals.
⁽²⁾ Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
⁽³⁾ 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 0.85% of total loans and foreclosed assets at September 30, 2019 compared to 0.77% and 0.74% at June 30, 2019 and September 30, 2018, respectively, reflective of normal fluctuations that occur on a quarterly basis. The increase in non-accrual loans from June 30, 2019 was driven primarily by the transfer of two corporate loan relationships to non-accrual during the third quarter of 2019, for which the Company has remediation plans in place. In addition, included in foreclosed assets as of September 30, 2019 and June 30, 2019 was $3.9 million and $6.2 million, respectively, of OREO acquired in the Bridgeview transaction.

The allowance for credit losses to total loans was 0.86% at September 30, 2019, compared to 0.85% at June 30, 2019 and 0.91% at September 30, 2018. The decrease compared to September 30, 2018 was driven primarily by loans acquired in the Bridgeview transaction, for which no allowance for credit losses was established at the time of acquisition in accordance with accounting guidance applicable to business combinations.

Charge-Off Data
 (Dollar amounts in thousands)

	Quarters Ended
	September 30, 2019				% of Total			June 30,  2019				% of Total			September 30, 2018				% of Total
Net loan charge-offs(1)
Commercial and industrial	$	5,532			60.1			$	4,600			49.3			$	5,230			65.2
Agricultural	439				4.8			658				7.0			631				7.9
Office, retail, and industrial	219				2.4			1,454				15.6			596				7.4
Multi-family	(38		)		(0.4	)		—				—			1				—
Construction	(2		)		—			(10		)		(0.1	)		(4		)		—
Other commercial real estate	(43		)		(0.5	)		284				3.0			23				0.3
Consumer	3,092				33.6			2,355				25.2			1,537				19.2
Total net loan charge-offs	$	9,199			100.0			$	9,341			100.0			$	8,014			100.0
Total recoveries included above	$	2,073						$	2,083						$	1,250
Net loan charge-offs to average loans(1)(2)
Quarter-to-date	0.29		%					0.31		%					0.29		%
Year-to-date	0.31		%					0.32		%					0.42		%

⁽¹⁾ Amounts represent charge-offs, net of recoveries.
⁽²⁾ Annualized based on the actual number of days for each period presented.

Net loan charge-offs to average loans, annualized were 0.29%, compared to 0.31% for the second quarter of 2019 and 0.29% for the third quarter of 2018.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

	Average for the Quarters Ended												September 30, 2019 Percent Change From
	September 30, 2019				June 30,  2019				September 30, 2018				June 30,  2019			September 30, 2018
Demand deposits	$	3,800,569			$	3,835,567			$	3,624,520			(0.9	)		4.9
Savings deposits	2,056,128				2,079,852				2,003,928				(1.1	)		2.6
NOW accounts	2,483,176				2,261,103				2,164,018				9.8			14.7
Money market accounts	2,080,274				1,907,766				1,772,821				9.0			17.3
Core deposits	10,420,147				10,084,288				9,565,287				3.3			8.9
Time deposits	3,026,423				2,849,930				1,993,361				6.2			51.8
Total deposits	$	13,446,570			$	12,934,218			$	11,558,648			4.0			16.3

Total average deposits were $13.4 billion for the third quarter of 2019, up 4.0% and 16.3% from the second quarter of 2019 and third quarter of 2018, respectively. The increase in total average deposits compared to both prior periods was driven primarily by deposits assumed in the Bridgeview transaction during the middle of the second quarter of 2019 and organic growth. In addition, growth in total average deposits was impacted by the normal seasonal increase in municipal deposits compared to the second quarter of 2019 and deposits assumed in the Northern States transaction, as well as various time deposit marketing initiatives compared to the third quarter of 2018.

CAPITAL MANAGEMENT

Capital Ratios

	As of
	September 30, 2019			June 30,  2019			December 31,  2018			September 30, 2018
Company regulatory capital ratios:
Total capital to risk-weighted assets	12.62	%		12.57	%		12.62	%		12.32	%
Tier 1 capital to risk-weighted assets	10.18	%		10.11	%		10.20	%		10.34	%
Common equity Tier 1 ("CET1") to risk-weighted assets	10.18	%		10.11	%		10.20	%		9.93	%
Tier 1 capital to average assets	8.67	%		8.96	%		8.90	%		9.10	%
Company tangible common equity ratios(1)(2):
Tangible common equity to tangible assets	8.54	%		8.57	%		8.59	%		8.21	%
Tangible common equity, excluding accumulated other comprehensive income ("AOCI"), to tangible assets	8.50	%		8.59	%		8.95	%		8.74	%
Tangible common equity to risk-weighted assets	10.24	%		10.11	%		9.81	%		9.33	%

⁽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. For details of the calculation of these ratios, see the sections titled, "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

Capital ratios were consistent compared to December 31, 2018 as strong earnings and deferred gains recognized due to the adoption of lease accounting guidance at the beginning of 2019 were offset by the Bridgeview and Northern Oak acquisitions, the impact of loan growth and securities purchases on risk-weighted assets, and stock repurchases. In addition, capital ratios compared to September 30, 2018 were impacted by the phase-out of Tier 1 treatment of the Company's trust-preferred securities and the Northern States transaction in the fourth quarter of 2018.

During the first quarter of 2019, the Company announced a new stock repurchase program that authorizes the Company to repurchase up to $180 million of its common stock. Stock repurchases under this program may be made from time to time on the open market or in privately negotiated transactions, at the discretion of the Company. The Company repurchased approximately 645,000 shares of its common stock at a total cost of $12.7 million during the third quarter of 2019. As of September 30, 2019, the Company had remaining authorization to purchase $146.1 million of its common stock.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the third quarter of 2019, which follows an increase of 17% from the first quarter of 2019 and is a 27% increase from the third quarter of 2018. This dividend represents the 147^th consecutive cash dividend paid by the Company since its inception in 1983.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 23, 2019 at 11 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. 10135664 beginning one hour after completion of the live call until 9:00 A.M. (ET) on November 6, 2019. 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, Presentation Materials, and Additional Information Available on Website

This press release, the presentation materials to be discussed during the conference call, 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, as well as any oral statements made by or on behalf of First Midwest, 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," "outlook," "predict," "project," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts or guarantees of future performance 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. First Midwest cautions you not to place undue reliance on these statements. Forward-looking statements speak only as of the date made, and First Midwest undertakes no obligation to update any forward-looking statements.

Forward-looking statements may be deemed to include, among other things, statements relating to First Midwest's future financial performance, including the related outlook for 2019, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, including the impact of certain actions and initiatives, First Midwest's Delivering Excellence initiative, including costs and benefits associated therewith and the timing thereof, anticipated trends in First Midwest's business, regulatory developments, the impact of federal income tax reform legislation, acquisition transactions, including First Midwest's proposed acquisition of Bankmanagers, estimated synergies, cost savings and financial benefits of announced and completed transactions, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions, including those discussed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in First Midwest's Annual Report on Form 10-K for the year ended December 31, 2018, and in First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). These risks and uncertainties are not exhaustive, and other sections of these reports describe additional factors that could adversely impact First Midwest's 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 the Company believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include EPS, adjusted, the efficiency ratio, return on average assets, adjusted, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, adjusted, noninterest expense, adjusted, effective income tax rate, adjusted, tangible common equity to tangible assets, tangible common equity, excluding AOCI, to tangible assets, tangible common equity to risk-weighted assets, return on average common equity, adjusted, return on average tangible common equity, and return on average tangible common equity, adjusted.

The Company presents EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity, all adjusted for certain significant transactions. These transactions include acquisition and integration related expenses associated with completed and pending acquisitions (all periods), Delivering Excellence implementation costs (all periods), and certain income tax benefits resulting from tax reform (third quarter of 2018). Management believes excluding these transactions from EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these transactions from these metrics may enhance comparability for peer comparison purposes.

The Company presents noninterest expense, adjusted, which excludes acquisition and integration related expenses and Delivering Excellence implementation costs. In addition, the Company presents the effective income tax rate, adjusted, which excludes certain income tax benefits aligned with tax reform. Management believes that excluding these items from noninterest expense and the effective income tax rate may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. 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 may enhance comparability for peer comparison purposes. In addition, management believes that presenting tax-equivalent net interest margin, adjusted, may enhance comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate based on the size of each acquisition, as well as from period to period.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

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. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

Additional Information

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 Bankmanagers, First Midwest has filed a registration statement on Form S-4 (file no. 333-234242) with the SEC. The registration statement includes a proxy statement of Bankmanagers, which also constitutes a prospectus of First Midwest, that will be sent to Bankmanagers' shareholders. Investors and shareholders are advised to read the registration statement and proxy statement/prospectus because it contains important information about First Midwest, Bankmanagers, and the proposed transaction. This document and other documents relating to the transaction 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 can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, 8750 West Bryn Mawr Avenue, Suite 1300, Chicago, Illinois 60631 or by calling (708) 831-7483, or from Bankmanagers upon written request to Bankmanagers Corp., Attn: P. Michael Mahoney, President, 330 East Kilbourn Avenue, Milwaukee, Wisconsin 53202 or by calling (414) 466-8000.

Participants in this Transaction

First Midwest, Bankmanagers 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 Bankmanagers' shareholders in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus regarding the proposed Bankmanagers transaction. Additional information about First Midwest and its directors and certain of its officers may be found in First Midwest’s definitive proxy statement relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 4, 2019 and First Midwest’s annual report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 1, 2019. The definitive proxy statement and annual report can be obtained free of charge from the SEC’s website at www.sec.gov.

About First Midwest

First Midwest (NASDAQ: FMBI) is a relationship-focused financial institution and one of the largest independent publicly traded bank holding companies based on assets headquartered in Chicago and the Midwest, with approximately $18 billion of assets and $12 billion of assets under management. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, treasury management, equipment leasing, consumer, wealth management, trust and private banking products and services through locations in metropolitan Chicago, southeast Wisconsin, northwest Indiana, central and western Illinois, and eastern Iowa. Visit First Midwest at www.firstmidwest.com.

CONTACTS:

Investors Patrick S. Barrett EVP, Chief Financial Officer (708) 831-7231 pat.barrett@firstmidwest.com		Media Maurissa Kanter SVP, Director of Corporate Communications (708) 831-7345 maurissa.kanter@firstmidwest.com

 

 

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited) (Dollar amounts in thousands)
	As of
	September 30,				June 30,				March 31,				December 31,				September 30,
	2019				2019				2019				2018				2018
Period-End Balance Sheet
Assets
Cash and due from banks	$	273,613			$	199,684			$	186,230			$	211,189			$	185,239
Interest-bearing deposits in other banks	202,054				126,966				76,529				78,069				111,360
Equity securities, at fair value	40,723				40,690				33,304				30,806				29,046
Securities available-for-sale, at fair value	2,905,738				2,793,316				2,350,195				2,272,009				2,179,410
Securities held-to-maturity, at amortized cost	22,566				23,277				12,842				10,176				12,673
FHLB and FRB stock	112,845				109,466				85,790				80,302				87,728
Loans:
Commercial and industrial	4,570,361				4,524,401				4,183,262				4,120,293				3,994,142
Agricultural	417,740				430,589				438,461				430,928				432,220
Commercial real estate:
Office, retail, and industrial	1,892,877				1,936,577				1,806,892				1,820,917				1,782,757
Multi-family	817,444				787,155				752,943				764,185				698,611
Construction	637,256				654,607				683,475				649,337				632,779
Other commercial real estate	1,425,292				1,447,673				1,309,878				1,361,810				1,348,831
Home equity	833,955				874,686				862,068				851,607				853,887
1-4 family mortgages	1,686,967				1,391,814				1,086,264				1,017,181				888,797
Installment	491,427				472,102				445,760				430,525				418,524
Total loans	12,773,319				12,519,604				11,569,003				11,446,783				11,050,548
Allowance for loan losses	(109,028		)		(105,729		)		(103,579		)		(102,219		)		(99,925		)
Net loans	12,664,291				12,413,875				11,465,424				11,344,564				10,950,623
OREO	12,428				15,313				10,818				12,821				12,244
Premises, furniture, and equipment, net	147,064				148,347				131,014				132,502				126,389
Investment in bank-owned life insurance ("BOLI")	297,610				297,118				295,899				296,733				284,074
Goodwill and other intangible assets	876,219				878,802				808,852				790,744				751,248
Accrued interest receivable and other assets	458,303				415,379				360,872				245,734				231,465
Total assets	$	18,013,454			$	17,462,233			$	15,817,769			$	15,505,649			$	14,961,499
Liabilities and Stockholders' Equity
Noninterest-bearing deposits	$	3,832,744			$	3,748,316			$	3,588,943			$	3,642,989			$	3,618,384
Interest-bearing deposits	9,608,183				9,440,272				8,572,039				8,441,123				7,908,730
Total deposits	13,440,927				13,188,588				12,160,982				12,084,112				11,527,114
Borrowed funds	1,653,490				1,407,378				973,852				906,079				1,073,546
Senior and subordinated debt	233,743				233,538				203,984				203,808				195,595
Accrued interest payable and other liabilities	345,695				332,156				319,480				256,652				247,569
Stockholders' equity	2,339,599				2,300,573				2,159,471				2,054,998				1,917,675
Total liabilities and stockholders' equity	$	18,013,454			$	17,462,233			$	15,817,769			$	15,505,649			$	14,961,499
Stockholders' equity, excluding AOCI	$	2,332,861			$	2,303,383			$	2,191,630			$	2,107,510			$	1,992,808
Stockholders' equity, common	2,339,599				2,300,573				2,159,471				2,054,998				1,917,675

First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands)
	Quarters Ended																					Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
	2019				2019				2019				2018				2018					2019				2018
Income Statement
Interest income	$	181,963			$	177,682			$	162,490			$	159,527			$	149,532				$	522,135			$	422,965
Interest expense	31,176				27,370				23,466				20,898				17,505					82,012				44,972
Net interest income	150,787				150,312				139,024				138,629				132,027					440,123				377,993
Provision for loan losses	12,498				11,491				10,444				9,811				11,248					34,433				38,043
Net interest income after provision for loan losses	138,289				138,821				128,580				128,818				120,779					405,690				339,950
Noninterest Income
Service charges on deposit accounts	13,024				12,196				11,540				12,627				12,378					36,760				36,088
Wealth management fees	12,063				12,190				11,600				10,951				10,622					35,853				32,561
Card-based fees, net	4,694				4,549				4,378				4,574				4,123					13,621				12,450
Capital market products income	4,161				2,154				1,279				1,408				1,936					7,594				6,313
Mortgage banking income	3,066				1,901				1,004				1,304				1,657					5,971				5,790
Merchant servicing fees, net	385				371				337				365				387					1,093				1,100
Other service charges, commissions, and fees	2,638				2,412				2,274				2,353				2,399					7,324				7,072
Total fee-based revenues	40,031				35,773				32,412				33,582				33,502					108,216				101,374
Other income	2,920				2,753				2,494				2,880				2,164					8,167				6,756
Total noninterest income	42,951				38,526				34,906				36,462				35,666					116,383				108,130
Noninterest Expense
Salaries and employee benefits:
Salaries and wages	50,686				47,776				46,135				45,011				44,067					144,597				136,153
Retirement and other employee benefits	10,795				10,916				11,238				10,378				10,093					32,949				32,726
Total salaries and employee benefits	61,481				58,692				57,373				55,389				54,160					177,546				168,879
Net occupancy and equipment expense	13,903				13,671				14,770				12,827				13,183					42,344				40,607
Professional services	9,550				10,467				7,788				8,859				7,944					27,805				23,822
Technology and related costs	5,062				4,908				4,596				4,849				4,763					14,566				14,371
Advertising and promotions	2,955				3,167				2,372				2,011				3,526					8,494				7,237
Net OREO expense	381				294				681				763				(413		)			1,356				399
Other expenses	11,432				12,987				10,581				13,418				11,015					35,000				32,846
Acquisition and integration related expenses	3,397				9,514				3,691				9,553				60					16,602				60
Delivering Excellence implementation costs	234				442				258				3,159				2,239					934				17,254
Total noninterest expense	108,395				114,142				102,110				110,828				96,477					324,647				305,475
Income before income tax expense	72,845				63,205				61,376				54,452				59,968					197,426				142,605
Income tax expense	18,300				16,191				15,318				13,044				6,616					49,809				26,143
Net income	$	54,545			$	47,014			$	46,058			$	41,408			$	53,352				$	147,617			$	116,462
Net income applicable to common shares	$	54,080			$	46,625			$	45,655			$	41,088			$	52,911				$	146,360			$	115,470
Net income applicable to common shares, adjusted(1)	56,803				54,091				48,616				50,622				46,837					159,511				120,657

Footnotes to Condensed Consolidated Statements of Income

(1)		See the "Non-GAAP Reconciliations" section for the detailed calculation.

First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited) (Amounts in thousands, except per share data)
	As of or for the
	Quarters Ended																					Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
	2019				2019				2019				2018				2018					2019				2018
EPS
Basic EPS	$	0.49			$	0.43			$	0.43			$	0.39			$	0.52				$	1.36			$	1.13
Diluted EPS	$	0.49			$	0.43			$	0.43			$	0.39			$	0.52				$	1.36			$	1.13
Diluted EPS, adjusted(1)	$	0.52			$	0.50			$	0.46			$	0.48			$	0.46				$	1.48			$	1.18
Common Stock and Related Per Common Share Data
Book value	$	21.27			$	20.80			$	20.20			$	19.32			$	18.61				$	21.27			$	18.61
Tangible book value	$	13.31			$	12.86			$	12.63			$	11.88			$	11.32				$	13.31			$	11.32
Dividends declared per share	$	0.14			$	0.14			$	0.12			$	0.12			$	0.11				$	0.40			$	0.33
Closing price at period end	$	19.48			$	20.47			$	20.46			$	19.81			$	26.59				$	19.48			$	26.59
Closing price to book value	0.9				1.0				1.0				1.0				1.4					0.9				1.4
Period end shares outstanding	109,970				110,589				106,900				106,375				103,058					109,970				103,058
Period end treasury shares	10,441				9,818				8,775				9,297				9,301					10,441				9,301
Common dividends	$	15,406			$	15,503			$	12,837			$	12,774			$	11,326				$	43,746			$	34,008
Dividend payout ratio	28.57		%		32.56		%		27.91		%		30.77		%		21.15		%			29.41		%		29.20		%
Dividend payout ratio, adjusted(1)	26.92		%		28.00		%		26.09		%		25.00		%		23.91		%			27.03		%		27.97		%
Key Ratios/Data
Return on average common equity(2)	9.22		%		8.34		%		8.66		%		8.09		%		10.99		%			8.75		%		8.16		%
Return on average common equity, adjusted(1)(2)	9.68		%		9.68		%		9.22		%		9.97		%		9.73		%			9.54		%		8.53		%
Return on average tangible common equity(2)	15.36		%		13.83		%		14.41		%		13.42		%		18.60		%			14.55		%		14.03		%
Return on average tangible common equity, adjusted(1)(2)	16.10		%		15.95		%		15.31		%		16.42		%		16.51		%			15.80		%		14.64		%
Return on average assets(2)	1.22		%		1.13		%		1.19		%		1.06		%		1.42		%			1.18		%		1.07		%
Return on average assets, adjusted(1)(2)	1.28		%		1.31		%		1.27		%		1.30		%		1.26		%			1.29		%		1.12		%
Loans to deposits	95.03		%		94.93		%		95.13		%		94.73		%		95.87		%			95.03		%		95.87		%
Efficiency ratio(1)	53.54		%		54.67		%		55.69		%		55.25		%		56.03		%			54.60		%		58.81		%
Net interest margin(2)(3)	3.82		%		4.06		%		4.04		%		3.96		%		3.92		%			3.97		%		3.88		%
Yield on average interest-earning assets(2)(3)	4.60		%		4.80		%		4.72		%		4.56		%		4.44		%			4.70		%		4.34		%
Cost of funds(2)(4)	0.82		%		0.77		%		0.72		%		0.63		%		0.55		%			0.77		%		0.48		%
Net noninterest expense to average assets(2)	1.47		%		1.81		%		1.74		%		1.90		%		1.62		%			1.67		%		1.81		%
Effective income tax rate	25.12		%		25.62		%		24.96		%		23.96		%		11.03		%			25.23		%		18.33		%
Effective income tax rate, adjusted(1)	25.12		%		25.62		%		24.96		%		23.96		%		24.04		%			25.23		%		23.80		%
Capital Ratios
Total capital to risk-weighted assets(1)	12.62		%		12.57		%		12.91		%		12.62		%		12.32		%			12.62		%		12.32		%
Tier 1 capital to risk-weighted assets(1)	10.18		%		10.11		%		10.52		%		10.20		%		10.34		%			10.18		%		10.34		%
CET1 to risk-weighted assets(1)	10.18		%		10.11		%		10.52		%		10.20		%		9.93		%			10.18		%		9.93		%
Tier 1 capital to average assets(1)	8.67		%		8.96		%		9.28		%		8.90		%		9.10		%			8.67		%		9.10		%
Tangible common equity to tangible assets(1)	8.54		%		8.57		%		9.00		%		8.59		%		8.21		%			8.54		%		8.21		%
Tangible common equity, excluding AOCI, to tangible assets(1)	8.50		%		8.59		%		9.21		%		8.95		%		8.74		%			8.50		%		8.74		%
Tangible common equity to risk-weighted assets(1)	10.24		%		10.11		%		10.29		%		9.81		%		9.33		%			10.24		%		9.33		%
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																					Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
	2019				2019				2019				2018				2018					2019				2018
Asset Quality Performance Data
Non-performing assets
Commercial and industrial	$	26,739			$	19,809			$	34,694			$	33,507			$	37,981				$	26,739			$	37,981
Agricultural	6,242				6,712				2,359				1,564				2,104					6,242				2,104
Commercial real estate:
Office, retail, and industrial	26,812				17,875				17,484				6,510				6,685					26,812				6,685
Multi-family	2,152				5,322				2,959				3,107				3,184					2,152				3,184
Construction	152				152				—				144				208					152				208
Other commercial real estate	4,680				3,982				2,971				2,854				4,578					4,680				4,578
Consumer	10,915				9,625				9,738				9,249				10,026					10,915				10,026
Total non-accrual loans	77,692				63,477				70,205				56,935				64,766					77,692				64,766
90 days or more past due loans, still accruing interest	4,657				2,615				8,446				8,282				2,949					4,657				2,949
Total non-performing loans	82,349				66,092				78,651				65,217				67,715					82,349				67,715
Accruing TDRs	1,422				1,441				1,844				1,866				1,741					1,422				1,741
Foreclosed assets(5)	25,266				28,488				10,818				12,821				12,244					25,266				12,244
Total non-performing assets	$	109,037			$	96,021			$	91,313			$	79,904			$	81,700				$	109,037			$	81,700
30-89 days past due loans	$	46,171			$	34,460			$	45,764			$	37,524			$	46,257				$	46,171			$	46,257
Allowance for credit losses
Allowance for loan losses	$	109,028			$	105,729			$	103,579			$	102,219			$	99,925				$	109,028			$	99,925
Reserve for unfunded commitments	1,200				1,200				1,200				1,200				1,000					1,200				1,000
Total allowance for credit losses	$	110,228			$	106,929			$	104,779			$	103,419			$	100,925				$	110,228			$	100,925
Provision for loan losses	$	12,498			$	11,491			$	10,444			$	9,811			$	11,248				$	34,433			$	38,043
Net charge-offs by category
Commercial and industrial	$	5,532			$	4,600			$	5,061			$	5,558			$	5,230				$	15,193			$	25,460
Agricultural	439				658				89				71				631					1,186				2,442
Commercial real estate:
Office, retail, and industrial	219				1,454				618				713				596					2,291				1,239
Multi-family	(38		)		—				339				(3		)		1					301				5
Construction	(2		)		(10		)		—				(99		)		(4		)			(12		)		(25		)
Other commercial real estate	(43		)		284				189				(817		)		23					430				(305		)
Consumer	3,092				2,355				2,788				2,094				1,537					8,235				5,031
Total net charge-offs	$	9,199			$	9,341			$	9,084			$	7,517			$	8,014				$	27,624			$	33,847
Total recoveries included above	$	2,073			$	2,083			$	1,693			$	2,810			$	1,250				$	5,849			$	3,811
Note: Selected Financial Information footnotes are located at the end of this section.

First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
	As of or for the
	Quarters Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2019			2019			2019			2018			2018
Asset quality ratios
Non-accrual loans to total loans	0.61	%		0.51	%		0.61	%		0.50	%		0.59	%
Non-performing loans to total loans	0.64	%		0.53	%		0.68	%		0.57	%		0.61	%
Non-performing assets to total loans plus foreclosed assets	0.85	%		0.77	%		0.79	%		0.70	%		0.74	%
Non-performing assets to tangible common equity plus allowance for credit losses	6.93	%		6.28	%		6.27	%		5.84	%		6.45	%
Non-accrual loans to total assets	0.43	%		0.36	%		0.44	%		0.37	%		0.43	%
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans(6)	0.86	%		0.85	%		0.91	%		0.90	%		0.91	%
Allowance for credit losses to loans, excluding acquired loans	0.98	%		0.98	%		1.00	%		1.01	%		1.01	%
Allowance for credit losses to non-accrual loans	141.88	%		168.45	%		149.25	%		181.64	%		155.83	%
Allowance for credit losses to non-performing loans	133.85	%		161.79	%		133.22	%		158.58	%		149.04	%
Net charge-offs to average loans(2)	0.29	%		0.31	%		0.32	%		0.26	%		0.29	%

Footnotes to Selected Financial Information

(1)		See the "Non-GAAP Reconciliations" section for the detailed calculation.
(2)		Annualized based on the actual number of days for each period presented.
(3)		Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%.
(4)		Cost of funds expresses total interest expense as a percentage of total average funding sources.
(5)		Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
(6)		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.

First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited) (Amounts in thousands, except per share data)
	Quarters Ended																					Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
	2019				2019				2019				2018				2018					2019				2018
EPS
Net income	$	54,545			$	47,014			$	46,058			$	41,408			$	53,352				$	147,617			$	116,462
Net income applicable to non-vested restricted shares	(465		)		(389		)		(403		)		(320		)		(441		)			(1,257		)		(992		)
Net income applicable to common shares	54,080				46,625				45,655				41,088				52,911					146,360				115,470
Adjustments to net income:
Acquisition and integration related expenses	3,397				9,514				3,691				9,553				60					16,602				60
Tax effect of acquisition and integration related expenses	(849		)		(2,379		)		(923		)		(2,388		)		(15		)			(4,151		)		(15		)
Delivering Excellence implementation costs	234				442				258				3,159				2,239					934				17,254
Tax effect of Delivering Excellence implementation costs	(59		)		(111		)		(65		)		(790		)		(560		)			(234		)		(4,314		)
Income tax benefits	—				—				—				—				(7,798		)			—				(7,798		)
Total adjustments to net income, net of tax	2,723				7,466				2,961				9,534				(6,074		)			13,151				5,187
Net income applicable to common shares, adjusted(1)	$	56,803			$	54,091			$	48,616			$	50,622			$	46,837				$	159,511			$	120,657
Weighted-average common shares outstanding:
Weighted-average common shares outstanding (basic)	109,281				108,467				105,770				105,116				102,178					107,852				102,087
Dilutive effect of common stock equivalents	—				—				—				—				—					—				5
Weighted-average diluted common shares outstanding	109,281				108,467				105,770				105,116				102,178					107,852				102,092
Basic EPS	$	0.49			$	0.43			$	0.43			$	0.39			$	0.52				$	1.36			$	1.13
Diluted EPS	$	0.49			$	0.43			$	0.43			$	0.39			$	0.52				$	1.36			$	1.13
Diluted EPS, adjusted(1)	$	0.52			$	0.50			$	0.46			$	0.48			$	0.46				$	1.48			$	1.18
Anti-dilutive shares not included in the computation of diluted EPS	—				—				—				—				—					—				36
Dividend Payout Ratio
Dividends declared per share	$	0.14			$	0.14			$	0.12			$	0.12			$	0.11				$	0.40			$	0.33
Dividend payout ratio	28.57		%		32.56		%		27.91		%		30.77		%		21.15		%			29.41		%		29.20		%
Dividend payout ratio, adjusted(1)	26.92		%		28.00		%		26.09		%		25.00		%		23.91		%			27.03		%		27.97		%
Effective Tax Rate
Income before income tax expense	$	72,845			$	63,205			$	61,376			$	54,452			$	59,968				$	197,426			$	142,605
Income tax expense	$	18,300			$	16,191			$	15,318			$	13,044			$	6,616				$	49,809			$	26,143
Income tax benefits	—				—				—				—				7,798					—				7,798
Income tax expense, adjusted	$	18,300			$	16,191			$	15,318			$	13,044			$	14,414				$	49,809			$	33,941
Effective income tax rate	25.12		%		25.62		%		24.96		%		23.96		%		11.03		%			25.23		%		18.33		%
Effective income tax rate, adjusted	25.12		%		25.62		%		24.96		%		23.96		%		24.04		%			25.23		%		23.80		%
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																					Nine Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,					September 30,				September 30,
	2019				2019				2019				2018				2018					2019				2018
Return on Average Common and Tangible Common Equity
Net income applicable to common shares	$	54,080			$	46,625			$	45,655			$	41,088			$	52,911				$	146,360			$	115,470
Intangibles amortization	2,750				2,624				2,363				2,077				1,772					7,737				5,368
Tax effect of intangibles amortization	(688		)		(656		)		(591		)		(519		)		(443		)			(1,934		)		(1,400		)
Net income applicable to common shares, excluding intangibles amortization	56,142				48,593				47,427				42,646				54,240					152,163				119,438
Total adjustments to net income, net of tax(1)	2,723				7,466				2,961				9,534				(6,074		)			13,151				5,187
Net income applicable to common shares, adjusted(1)	$	58,865			$	56,059			$	50,388			$	52,180			$	48,166				$	165,314			$	124,625
Average stockholders' equity	$	2,327,279			$	2,241,569			$	2,138,281			$	2,015,217			$	1,909,330				$	2,236,402			$	1,891,290
Less: average intangible assets	(877,069		)		(832,263		)		(803,408		)		(754,495		)		(752,109		)			(837,850		)		(753,282		)
Average tangible common equity	$	1,450,210			$	1,409,306			$	1,334,873			$	1,260,722			$	1,157,221				$	1,398,552			$	1,138,008
Return on average common equity(2)	9.22		%		8.34		%		8.66		%		8.09		%		10.99		%			8.75		%		8.16		%
Return on average common equity, adjusted(1)(2)	9.68		%		9.68		%		9.22		%		9.97		%		9.73		%			9.54		%		8.53		%
Return on average tangible common equity(2)	15.36		%		13.83		%		14.41		%		13.42		%		18.60		%			14.55		%		14.03		%
Return on average tangible common equity, adjusted(1)(2)	16.10		%		15.95		%		15.31		%		16.42		%		16.51		%			15.80		%		14.64		%
Return on Average Assets
Net income	$	54,545			$	47,014			$	46,058			$	41,408			$	53,352				$	147,617			$	116,462
Total adjustments to net income, net of tax(1)	2,723				7,466				2,961				9,534				(6,074		)			13,151				5,187
Net income, adjusted(1)	$	57,268			$	54,480			$	49,019			$	50,942			$	47,278				$	160,768			$	121,649
Average assets	$	17,699,180			$	16,740,050			$	15,667,839			$	15,503,399			$	14,894,670				$	16,709,797			$	14,565,071
Return on average assets(2)	1.22		%		1.13		%		1.19		%		1.06		%		1.42		%			1.18		%		1.07		%
Return on average assets, adjusted(1)(2)	1.28		%		1.31		%		1.27		%		1.30		%		1.26		%			1.29		%		1.12		%
Efficiency Ratio Calculation
Noninterest expense	$	108,395			$	114,142			$	102,110			$	110,828			$	96,477				$	324,647			$	305,475
Less:
Net OREO expense	(381		)		(294		)		(681		)		(763		)		413					(1,356		)		(399		)
Acquisition and integration related expenses	(3,397		)		(9,514		)		(3,691		)		(9,553		)		(60		)			(16,602		)		(60		)
Delivering Excellence implementation costs	(234		)		(442		)		(258		)		(3,159		)		(2,239		)			(934		)		(17,254		)
Total	$	104,383			$	103,892			$	97,480			$	97,353			$	94,591				$	305,755			$	287,762
Tax-equivalent net interest income(3)	$	152,019			$	151,492			$	140,132			$	139,755			$	133,161				$	443,643			$	381,141
Noninterest income	42,951				38,526				34,906				36,462				35,666					116,383				108,130
Total	$	194,970			$	190,018			$	175,038			$	176,217			$	168,827				$	560,026			$	489,271
Efficiency ratio	53.54		%		54.67		%		55.69		%		55.25		%		56.03		%			54.60		%		58.81		%
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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2019				2019				2019				2018				2018
Risk-Based Capital Data
Common stock	$	1,204			$	1,204			$	1,157			$	1,157			$	1,124
Additional paid-in capital	1,208,030				1,205,396				1,103,991				1,114,580				1,028,635
Retained earnings	1,343,895				1,304,756				1,273,245				1,192,767				1,164,133
Treasury stock, at cost	(220,268		)		(207,973		)		(186,763		)		(200,994		)		(201,084		)
Goodwill and other intangible assets, net of deferred tax liabilities	(876,219		)		(878,802		)		(808,852		)		(790,744		)		(751,248		)
Disallowed DTAs	(1,688		)		(2,804		)		(809		)		(1,334		)		—
CET1 capital	1,454,954				1,421,777				1,381,969				1,315,432				1,241,560
Trust-preferred securities	—				—				—				—				50,690
Other disallowed DTAs	—				—				—				(334		)		—
Tier 1 capital	1,454,954				1,421,777				1,381,969				1,315,098				1,292,250
Tier 2 capital	348,466				345,078				312,840				311,391				248,118
Total capital	$	1,803,420			$	1,766,855			$	1,694,809			$	1,626,489			$	1,540,368
Risk-weighted assets	$	14,294,011			$	14,056,482			$	13,131,237			$	12,892,180			$	12,500,342
Adjusted average assets	$	16,787,720			$	15,863,145			$	14,891,534			$	14,782,327			$	14,202,776
Total capital to risk-weighted assets	12.62		%		12.57		%		12.91		%		12.62		%		12.32		%
Tier 1 capital to risk-weighted assets	10.18		%		10.11		%		10.52		%		10.20		%		10.34		%
CET1 to risk-weighted assets	10.18		%		10.11		%		10.52		%		10.20		%		9.93		%
Tier 1 capital to average assets	8.67		%		8.96		%		9.28		%		8.90		%		9.10		%
Tangible Common Equity
Stockholders' equity	$	2,339,599			$	2,300,573			$	2,159,471			$	2,054,998			$	1,917,675
Less: goodwill and other intangible assets	(876,219		)		(878,802		)		(808,852		)		(790,744		)		(751,248		)
Tangible common equity	1,463,380				1,421,771				1,350,619				1,264,254				1,166,427
Less: AOCI	(6,738		)		2,810				32,159				52,512				75,133
Tangible common equity, excluding AOCI	$	1,456,642			$	1,424,581			$	1,382,778			$	1,316,766			$	1,241,560
Total assets	$	18,013,454			$	17,462,233			$	15,817,769			$	15,505,649			$	14,961,499
Less: goodwill and other intangible assets	(876,219		)		(878,802		)		(808,852		)		(790,744		)		(751,248		)
Tangible assets	$	17,137,235			$	16,583,431			$	15,008,917			$	14,714,905			$	14,210,251
Tangible common equity to tangible assets	8.54		%		8.57		%		9.00		%		8.59		%		8.21		%
Tangible common equity, excluding AOCI, to tangible assets	8.50		%		8.59		%		9.21		%		8.95		%		8.74		%
Tangible common equity to risk-weighted assets	10.24		%		10.11		%		10.29		%		9.81		%		9.33		%

Footnotes to Non-GAAP Reconciliations

(1)		Adjustments to net income for each period presented are detailed in the EPS non-GAAP reconciliation above. For additional discussion of adjustments, see the "Non-GAAP Financial Information" section.
(2)		Annualized based on the actual number of days for each period presented.
(3)		Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%.