SOURCE: First Midwest Bancorp, Inc.

April 23, 2008 06:55 ET

First Midwest Bancorp, Inc. Reports First Quarter 2008 Earnings per Share of $0.52

ITASCA, IL--(Marketwire - April 23, 2008) - First Midwest Bancorp, Inc. (NASDAQ: FMBI)

1st QUARTER HIGHLIGHTS:

--  Strong Profitability: ROA of 1.25%, ROE of 13.75%
    
--  Commercial Loan Growth: 9.1% Annualized
    
--  Stable Net Margin: 3.53%
    
--  Controlled Expense Growth: 2.5%
    
--  Loan Loss Provisions Expanded
    

First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank, today reported results of operations and financial condition for first quarter 2008. First Midwest Chairman and Chief Executive Officer, John M. O'Meara reported, "The Company's net income for first quarter 2008 was $25.0 million, or $0.52 per diluted share, as compared to 2007's first quarter earnings of $29.0 million, or $0.58 per diluted share. Return on average equity was 13.75% for first quarter 2008 and 15.48% for first quarter 2007. Return on average assets was 1.25% and 1.42% for first quarter 2008 and 2007, respectively."

O'Meara further commented, "Performance for the first quarter was influenced by a number of counterbalancing economic events against a backdrop of aggressive Federal Reserve actions to lower interest rates and provide liquidity to the stalled financial markets. The negative trends in the residential development markets presented challenges within the quarter. Concentrated in the Chicagoland market, residential development represents a business in which we have been profitably engaged for more than 20 years and represents 15% of our $2.7 billion construction and real estate development portfolio. A number of clients in this area have been caught up in the cycle of deteriorating cash flows making timely payments of outstanding obligations untenable. We have worked aggressively to remediate these problems, which is manifested in higher credit charges, in valuation reserve expansion, in Other Real Estate Owned designations, and in ninety-day past due totals. We remain fully engaged with these customers and this marketplace as this economic circumstance unfolds.

Apart from these portfolios, we are experiencing good progress in commercial sales activity, which is expanding loan balances at a 9.1% rate. Our asset management business continues to prosper. We noted a milestone in the first quarter with more then $4.0 billion under management, making us the fifth largest manager in the State of Illinois and placing us in the top sixty in the country."

BALANCE SHEET DISCUSSION:

Loan Portfolio:

Total loans outstanding at March 31, 2008 were up $52.1 million from a year ago and up $82.1 million from December 31, 2007, an annualized increase of 6.6%, which is diminished by the inclusion of loan payments on discontinued lines of business. The increase since December 2007 was led by growth in commercial real estate and commercial and industrial categories and reflects the economic strength and diversity in the Chicago metropolitan area. Average core deposits for the quarter were up $47.8 million from first quarter 2007. Growth was primarily in the Company's savings products while average core deposits were down $37.1 million from fourth quarter 2007, reflecting a normal seasonal decline.

Credit Quality:

The Company's net loan charge-offs as a percent of average loans was 0.49% for first quarter 2008. This was an increase from the Company's historic lows of the past 2 years. Nonperforming assets plus loans past due 90 days as a percent of total loans plus foreclosed real estate was 1.17% at March 31, 2008 and 0.92% at December 31, 2007. The loan loss reserve as a percent of total loans was 1.28% at March 31, 2008, as compared to 1.25% at both March 31, 2007 and December 31, 2007. The provision for loan losses was increased above first quarter charge-offs by approximately $3.0 million providing additional protection against the uncertain duration and depth of residential real estate problems. The loan loss reserve represents more than 375% of nonperforming loans, which is an increase from December 31, 2007 levels of 330%.

Margin Performance:

Net interest margin for first quarter 2008 remained unchanged from fourth quarter 2007 and first quarter 2007 at 3.53%. With approximately one-half of the Company's loan portfolio tied to floating indices, the 200 basis point decline during first quarter 2008 in the Federal Reserve's discount rate resulted in a decline of 58 basis points in average loan yields from fourth quarter 2007. This negative impact was offset by a decline in our short-term wholesale borrowing rates, a decline in the rates paid on portions of our retail deposits, a widening of loan spreads, and expanded spreads on a portion of our investment portfolio as the yield curve steepened. The cost of liabilities over the quarter decreased 48 basis points, which offset total earning asset declines of 38 basis points.

Fee-Based Revenues:

The Company's fee-based revenues for first quarter 2008 were $23.3 million, up 4.6% as compared to first quarter 2007. In fourth quarter 2007 the Company ceased originating traditional residential mortgages, which produced fee income that was virtually offset by the cost of those mortgage originations. If revenues from mortgage sales are excluded from the first quarter 2007 total, the Company's fee-based revenues would be up 8.5% centered in growth in service charges on deposits of 8.7% and growth in annuity sales and trust advisory services of 7.9%.

Securities Gains, Net:

The Company recognized net securities gains in first quarter 2008 of $4.97 million. Included in this amount was a $1.35 million gain on the redemption of a portion of the Company's ownership in VISA, Inc. as part of VISA, Inc.'s IPO. This compared with gains in the same period of 2007 of $3.4 million. Certain asset backed collateralized securities that were subject to impairment charges in fourth quarter 2007 were further reduced in carrying value by $2.3 million during the quarter.

Noninterest Expense:

Noninterest expense for first quarter 2008 was $49.3 million, up 2.5% from first quarter 2007. The Company implemented targeted staff reductions in fourth quarter 2007 and began realizing the benefit in first quarter 2008 resulting in salaries and benefits being down 4.9% from first quarter 2007. The Company's efficiency ratio for first quarter was 54.02%.

Income Taxes:

The effective income tax rate for first quarter 2008 was 16.9%, as compared to 23.5% for first quarter 2007. The decline from prior year is due primarily to the recording of an additional State tax benefit of $1.5 million associated with the non-cash securities impairment charge recognized in fourth quarter 2007.

Capital Management:

The Company's capital position continues to exceed all of the regulatory minimum levels to be considered a "well capitalized institution" by the Federal Reserve. As of March 31, 2008, the Company's Total Risk Based Capital ratio was 11.78% and its Tier 1 Risk Based Capital ratio was 9.19%. The Company's tangible capital ratio, which represents the ratio of stockholders' equity to total assets excluding intangible assets, was 5.62%. The Company continues to maintain an investment grade rating of A3 from Moody's Investor Services and BBB+ from Standard and Poors and Fitch. During first quarter 2008, the Company paid dividends of $0.310 per share, up 5.1% from 2007's first quarter dividend and represents the 101st consecutive quarterly dividend paid to our shareholders. At March 31, 2008, based on a closing stock price of $27.77, the annualized dividend yield on common stock was 4.5%.

About the Company:

First Midwest is the premier relationship-based banking franchise in the growing Chicagoland banking market. As one of the Chicago metropolitan area's largest independent bank holding companies, First Midwest provides the full range of both business and retail banking and trust and investment management services through 102 offices located in 63 communities, primarily in metropolitan Chicago. First Midwest was recently recognized by the Alfred P. Sloan Awards for Business Excellence in Workforce Flexibility in the greater Chicago Area.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that actual results and the Company's financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results, see "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management's best judgment as of the date hereof based on currently available information. Except as required by law, the Company undertakes no duty to update the contents of this press release after the date hereof.

Conference Call

A conference call to discuss the Company's results, outlook and related matters will be held on Wednesday, April 23rd, at 10:00 am (ET). Members of the public who would like to listen to the conference call should dial 1-866-800-8652 (U.S. domestic) or 1-617-614-2705 (international) and enter passcode number 169 27 765. The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's web site, www.firstmidwest.com/aboutinvestor_overview.asp. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the Company's web site or by dialing 1-888-286-8010 (U.S. domestic) or 1-617-801-6888 (international) passcode number 471 67 628, beginning approximately one hour after the event through 11:59 pm (ET) on April 30, 2008. 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.

Accompanying Financial Statements and Tables

Accompanying this press release is the following unaudited financial information:

--  Operating Highlights, Balance Sheet Highlights and Stock Performance
    Data (1 page)
--  Condensed Consolidated Statements of Condition (1 page)
--  Condensed Consolidated Statements of Income (1 page)
--  Selected Quarterly Data and Asset Quality (1 page)
    

Press Release and Additional Information Available on Website

This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information (http://www.firstmidwest.com/aboutinvestor_selected.asp)(totaling 3 pages) are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com.

First Midwest Bancorp, Inc.           Press Release Dated April 23, 2008

Operating Highlights                     Quarters Ended
Unaudited                -----------------------------------------------
(Amounts in thousands,      March 31,      December 31,       March 31,
 except per share data)       2008             2007             2007
                         -------------    -------------    -------------
Net income               $      25,038    $      (5,418)   $      29,029
Diluted earnings per
 share                   $        0.52    $       (0.11)   $        0.58
Return on average
 equity                         13.75%           (2.91%)           15.48%
Return on average
 assets                          1.25%           (0.27%)            1.42%
Net interest margin              3.53%            3.53%            3.53%
Efficiency ratio                54.02%           53.87%           52.19%


Balance Sheet Highlights
Unaudited                          Ending Balances As Of
(Amounts in thousands,  -----------------------------------------------
 except per share data) Mar. 31, 2008    Dec. 31, 2007    Mar. 31, 2007
                        -------------    -------------    -------------
Total assets            $   8,315,368    $   8,091,518    $   8,235,110
Total loans                 5,045,765        4,963,672        4,993,620
Total deposits              5,721,562        5,778,861        5,907,442
Stockholders' equity          737,927          723,975          753,988
Book value per share    $       15.20    $       14.94    $       15.16
Shares outstanding             48,561           48,453           49,747


Stock Performance Data                  Quarters Ended
                         -----------------------------------------------
Unaudited                   March 31,     December 31,        March 31,
                              2008             2007             2007
                         -------------    -------------    -------------
Market Price:
    Quarter End          $       27.77    $       30.60    $       36.75
    High                 $       31.98    $       36.50    $       39.31
    Low                  $       24.38    $       29.67    $       36.00
Quarter end price to
 book value                        1.8x             2.0x             2.4x
Quarter end price to
 consensus estimated
 2008 earnings           $        12.9x             N/A              N/A
Dividends declared
 per share               $       0.310    $       0.310    $       0.295






First Midwest Bancorp, Inc.           Press Release Dated April 23, 2008

Condensed Consolidated Statements of Condition
Unaudited                                                March 31,
                                                 ------------------------
(Amounts in thousands)                              2008         2007
                                                 -----------  -----------
Assets
Cash and due from banks                          $   171,037  $   156,585
Funds sold and other short-term investments            1,808        4,834
Trading account securities                            17,305       16,708
Securities available for sale                      2,100,602    2,241,608
Securities held to maturity, at amortized cost        95,651      103,697
Federal Home Loan Bank and Federal Reserve Bank
 stock, at cost                                       54,767       54,767
Loans                                              5,045,765    4,993,620
Reserve for loan losses                              (64,780)     (62,400)
                                                 -----------  -----------

  Net loans                                        4,980,985    4,931,220
                                                 -----------  -----------

Premises, furniture, and equipment                   123,257      126,483
Investment in corporate owned life insurance         203,987      197,421
Goodwill and other intangible assets                 287,141      291,552
Accrued interest receivable and other assets         278,828      110,235
                                                 -----------  -----------
  Total assets                                   $ 8,315,368  $ 8,235,110
                                                 -----------  -----------
Liabilities and Stockholders' Equity
Deposits                                         $ 5,721,562  $ 5,907,442
Borrowed funds                                     1,413,726    1,237,656
Subordinated debt                                    232,509      228,274
Accrued interest payable and other liabilities       209,644      107,750
                                                 -----------  -----------
  Total liabilities                                7,577,441    7,481,122
                                                 -----------  -----------
Common stock                                             613          613
Additional paid-in capital                           206,011      205,311
Retained earnings                                    854,931      837,909
Accumulated other comprehensive (loss)                (9,333)     (16,338)
Treasury stock, at cost                             (314,295)    (273,507)
                                                 -----------  -----------
  Total stockholders' equity                         737,927      753,988
                                                 -----------  -----------
  Total liabilities and stockholders' equity     $ 8,315,368  $ 8,235,110
                                                 -----------  -----------






First Midwest Bancorp, Inc.              Press Release Dated April 23, 2008


Condensed Consolidated Statements of Income            Quarters Ended
Unaudited                                                 March 31,
                                                  -------------------------
(Amounts in thousands, except per share data)         2008         2007
                                                  -----------  ------------

Interest Income
Loans                                             $    81,334  $     92,079
Securities                                             27,120        29,300
Other                                                      21           210
                                                  -----------  ------------
   Total interest income                              108,475       121,589
                                                  -----------  ------------

Interest Expense
Deposits                                               34,210        42,127
Borrowed funds                                         12,076        15,349
Subordinated debt                                       3,689         3,743
                                                  -----------  ------------
   Total interest expense                              49,975        61,219
                                                  -----------  ------------
   Net interest income                                 58,500        60,370
Provision for loan losses                               9,060         2,960
                                                  -----------  ------------
   Net interest income after provision for loan
    losses                                             49,440        57,410
                                                  -----------  ------------
Noninterest Income
Service charges on deposit accounts                    10,422         9,587
Trust and investment management fees                    3,947         3,790
Other service charges, commissions, and fees            5,002         5,159
Card-based fees                                         3,898         3,711
                                                  -----------  ------------
   Subtotal, fee-based revenues                        23,269        22,247
                                                  -----------  ------------
Corporate owned life insurance income                   2,462         1,911
Securities gains, net                                   4,968         3,444
Other                                                    (680)        1,098
                                                  -----------  ------------
   Total noninterest income                            30,019        28,700
                                                  -----------  ------------
Noninterest Expense
Salaries and employee benefits                         26,190        27,550
Net occupancy expense                                   6,151         5,502
Equipment expense                                       2,567         2,626
Technology and related costs                            1,771         1,708
Other                                                  12,664        10,769
                                                  -----------  ------------
   Total noninterest expense                           49,343        48,155
                                                  -----------  ------------
Income before taxes                                    30,116        37,955
Income tax expense                                      5,078         8,926
                                                  -----------  ------------
   Net Income                                     $    25,038  $     29,029
                                                  -----------  ------------
   Diluted Earnings Per Share                     $      0.52  $       0.58
                                                  -----------  ------------
   Dividends Declared Per Share                   $     0.310  $      0.295
                                                  -----------  ------------
   Weighted Average Diluted Shares Outstanding         48,589        50,322
                                                  -----------  ------------





First Midwest Bancorp, Inc.              Press Release Dated April 23, 2008


Selected Quarterly Data
Unaudited                                  Quarters Ended
                          ------------------------------------------------
(Amounts in thousands,
 except per share data)   3/31/08   12/31/07  9/30/07   6/30/07    3/31/07
                          --------  --------  --------  --------  --------
Net interest income       $ 58,500  $ 58,098  $ 60,697  $ 60,964  $ 60,370
Provision for loan losses    9,060     2,042       470     1,761     2,960
Noninterest income          30,019   (22,465)   23,395    30,623    28,700
Noninterest expense         49,343    50,264    49,981    50,737    48,155
Net income                  25,038    (5,418)   27,237    29,311    29,029
Diluted earnings per
 share                    $   0.52  $  (0.11) $   0.55  $   0.59  $   0.58
Return on average equity     13.75%  (2.91%)     14.57%    15.47%    15.48%
Return on average assets      1.25%  (0.27%)      1.35%     1.44%     1.42%
Net interest margin           3.53%     3.53%     3.63%     3.61%     3.53%
Efficiency ratio             54.02%    53.87%    51.87%    52.13%    52.19%
                          --------  --------  --------  --------  --------

Period end shares
 outstanding                48,561    48,453    48,735    49,494    49,747
Book value per share      $  15.20  $  14.94  $  14.94  $  14.97  $  15.16
Dividends declared per
 share                    $  0.310  $  0.310  $  0.295  $  0.295  $  0.295
                          --------  --------  --------  --------  --------


Asset Quality
Unaudited                                  Quarters Ended
                          ------------------------------------------------
(Amounts in thousands)    3/31/08   12/31/07  9/30/07   6/30/07    3/31/07
                          --------  --------  --------  --------  --------

Nonaccrual loans          $ 17,073  $ 18,447  $ 12,771  $ 14,927  $ 17,582
Restructured loans             140       280         -         -         -
                          --------  --------  --------  --------  --------
  Total nonperforming
   loans                    17,213    18,727    12,771    14,927    17,582
                          --------  --------  --------  --------  --------
Foreclosed real estate       8,607     6,053     4,032     3,683     3,195
Loans past due 90 days
 and still accruing         33,479    21,149    21,421    19,633    15,603
                          --------  --------  --------  --------  --------
Nonperforming loans to
 loans                        0.34%     0.38%     0.26%     0.30%     0.35%
Nonperforming assets to
 loans plus foreclosed
 real estate                  0.51%     0.50%     0.34%     0.38%     0.42%
Nonperforming assets plus
 loans past due 90 days
 to loans plus foreclosed
 real estate                  1.17%     0.92%     0.77%     0.78%     0.73%
Reserve for loan losses
 to loans                     1.28%     1.25%     1.25%     1.27%     1.25%
Reserve for loan losses
 to nonperforming loans        376%      330%      481%      418%      355%
                          --------  --------  --------  --------  --------
Provision for loan losses $  9,060  $  2,042  $    470  $  1,761  $  2,960
Net loan charge-offs         6,080     1,654     1,449     1,770     2,930
                          --------  --------  --------  --------  --------
Net loan charge-offs to
 average loans                0.49%     0.13%     0.12%     0.14%     0.24%
                          --------  --------  --------  --------  --------

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