SOURCE: First Midwest Bancorp, Inc.

January 25, 2006 06:55 ET

First Midwest Reports Solid Full Year and Fourth Quarter 2005 Results

ITASCA, IL -- (MARKET WIRE) -- January 25, 2006 --

--  Record Net Income:  $101.4 Million for Full Year 2005

--  Solid Profitability:  ROAA of 1.44% and ROAE of 18.8% for 2005

--  Solid Corporate Loan Growth: Up 8.2% vs. 4Q04

--  Improved Fee-Based Revenue: Up 9.6% vs. 4Q04

--  Lower Nonperforming Assets:  35.2% Decrease vs. 4Q04

--  Restructuring Lowers 4Q05 Performance:  EPS Down $0.05 vs. 4Q04

First Midwest Bancorp, Inc. ("First Midwest") (NASDAQ: FMBI) today reported net income for the quarter ended December 31, 2005 of $22.6 million, or $0.49 per diluted share, as compared to $25.2 million, or $0.54 per diluted share, for fourth quarter 2004. Fourth quarter 2005 results included $6.2 million in securities losses and $679,000 in employee severance costs, and fourth quarter 2004 included $2.9 million in securities gains. Excluding these items, net income for fourth quarter 2005 would have increased 18.0% on a per diluted share basis to $26.8 million, or $0.59 per diluted share, from net income of $23.5 million, or $0.50 per diluted share, in fourth quarter 2004. First Midwest's annualized return on average assets was 1.25% for fourth quarter 2005 as compared to 1.46% for fourth quarter 2004. Annualized return on average equity was 16.6% for fourth quarter 2005 as compared to 18.6% for fourth quarter 2004.

First Midwest's net income for 2005 increased 4.2% on a per diluted share basis to a record $101.4 million, or $2.21 per diluted share, from net income of $99.1 million, or $2.12 per diluted share, in 2004. In 2005, First Midwest's return on average assets was 1.44% as compared to 1.45% in 2004. First Midwest's return on average equity was 18.8% in 2005 as compared to 18.7% in 2004.

"2005 represented another strong year for First Midwest as measured by the fundamentals of profitability, asset formation, fee-based revenue growth and asset quality," commented First Midwest President and Chief Executive Officer, John M. O'Meara. "We, at the same time, continue to build the future strength of our franchise through measured balance sheet restructuring, a modest rationalization of our personnel complement and a meaningful return to distribution enhancement through the proposed acquisition of more than thirty Chicagoland branches in 2006."

2006 Outlook

"The synergies which our 2005 activities have created put us in a strong position to continue our forward momentum in 2006," O'Meara said. "We are especially encouraged by the values inherent in the Bank Calumet franchise represented by a strong depository base coupled with a marketplace that has strong loan expansion potential. While the challenges of a flat yield curve offer little prospect of reversing in the near term, and the competitive response in the marketplace remains vigorous, we expect 2006 earnings to be in the range of $2.42 to $2.50 per diluted share. This estimate takes into account a decrease of $0.04 per diluted share for the expensing of stock options, which is expected to be offset in part by an increase of $0.03 per diluted share resulting from the Bank Calumet acquisition anticipated to begin in the second quarter of 2006."

Net Interest Margin

First Midwest's net interest income grew 1.6% to $59.3 million in fourth quarter 2005 as compared to $58.4 million in 2004's fourth quarter.

Net interest margin for fourth quarter 2005 was 3.79%, down from 3.94% for fourth quarter 2004 and 3.88% for third quarter 2005. The decrease from third quarter 2005 to fourth quarter 2005 reflects the combined impact of the flat interest rate curve on interest-earning asset yields and increasing liability costs as the deposit mix shifted in response to higher interest rates and competitive pricing.

Loan and Deposit Growth

First Midwest's total loans as of December 31, 2005 grew 4.1% to $4.3 billion, an increase of $170.9 million as compared to December 31, 2004, as growth in corporate and real estate 1-4 family lending of $312.1 million offset planned declines in consumer indirect lending of $134.5 million. Excluding consumer indirect lending, total loans would have been up 7.9%. Corporate loans, representing commercial, real estate commercial, real estate construction and agricultural lending, increased 8.2% from December 31, 2004.

Total average deposits for fourth quarter 2005 were $5.1 billion, an increase of 3.6% as compared to fourth quarter 2004, largely as the result of a 20.1% increase in time deposits. Average time deposits for fourth quarter 2005 in comparison to fourth quarter 2004 reflect the combined impact of targeted sales promotions and higher levels of brokered deposits. The increase in time deposit balances was partially offset by decreases in savings, NOW and money market balances as consumer preferences changed in response to the higher level of interest rates and time deposit promotions.

Noninterest Income and Expense

Noninterest income in fourth quarter 2005 was $14.4 million as compared to $24.1 million in 2004. Fourth quarter 2005 included $6.2 million in securities losses, and fourth quarter 2004 included $2.9 million in securities gains and $1.7 million in gains related to the sale of various assets. Excluding this activity from both periods, noninterest income would have totaled $20.6 million for fourth quarter 2005, an increase of 5.4% as compared to fourth quarter 2004, reflecting solid growth in fee-based revenues. Fee-based revenues totaled $18.5 million for fourth quarter 2005, an increase of 9.6% as compared to fourth quarter 2004. For full year 2005, noninterest income totaled $74.6 million, as compared to $79.4 million for full year 2004. Fee-based revenues for full year 2005 totaled $70.6 million, an increase of 8.4% as compared to full year 2004.

Noninterest expense for fourth quarter 2005 totaled $42.6 million as compared to $42.8 million for fourth quarter 2004. Fourth quarter 2005 results included $679,000 in severance costs related to certain employees electing accelerated retirement. For full year 2005, noninterest expense totaled $165.7 million as compared to $163.3 million in 2004. First Midwest's efficiency ratio was 49.8% for fourth quarter 2005 as compared to 50.4% for fourth quarter 2004 and 49.4% for third quarter 2005.

Credit Quality

As of December 31, 2005, nonperforming assets, including foreclosed real estate, represented 0.35% of loans plus foreclosed real estate as compared to 0.55% as of December 31, 2004, and approximated First Midwest's historical low of 0.34% as of June 30, 2005. Nonperforming assets as of December 31, 2005 totaled $14.9 million, down 35.2% from $22.9 million as of December 31, 2004. Loans past due 90 days and still accruing interest totaled $9.0 million as of December 31, 2005, down from $10.4 million as of September 30, 2005 and up from $2.7 million as of December 31, 2004.

Net charge-offs for full year 2005 totaled $9.3 million, or 0.22% of average loans, down $3.4 million, or 26.6% from full year 2004. As of December 31, 2005, the reserve for loan losses stood at 1.31% of total loans and represented 470% of nonperforming loans.

Capital Management

As of December 31, 2005, First Midwest's Total Risk Based Capital ratio was 11.76%, compared to 11.52% as of December 31, 2004. The Tier 1 Risk Based Capital ratio was 10.72%, compared to 10.45% as of December 31, 2004. First Midwest's Tier 1 Leverage Ratio was 8.16% as of December 31, 2005 and as of December 31, 2004.

During the fourth quarter of 2005, First Midwest paid dividends of $0.275 per share, up 14.6% from $0.24 per share for the fourth quarter 2004. In 2005, First Midwest repurchased 857,444 shares of its common stock at an average price of $34.98 per share, substantially all of which were purchased prior to September 30, 2005. As of December 31, 2005, approximately 2.1 million shares remained under First Midwest's existing repurchase authorization. First Midwest anticipates suspension of share repurchase activity in 2006, as it looks to rebuild tangible capital given the expected cash acquisition of Bank Calumet in early second quarter 2006.

About First Midwest

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 70 offices located in 50 communities, primarily in northeastern Illinois. First Midwest was the only bank named by Chicago magazine as one of the 25 best places to work in Chicago.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release that are forward-looking statements are subject to various risks and uncertainties, including those factors described in First Midwest's 2004 Form 10-K and other filings with the U.S. Securities and Exchange Commission. In addition, these forward-looking statements are also subject to the timing of the closing of the acquisition, the impact of mark-to-market adjustments required by purchase accounting and issues that may arise in connection with the integration of Bank Calumet, including the inability to achieve expected cost savings within the expected time frame as well as market conditions that may impact the pricing of securities to be offered by the Company to finance the acquisition. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. First Midwest does not intend to update this information and disclaims any legal obligation to the contrary. Historical information is not necessarily indicative of future performance.

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)
    
This press release, the accompanying financial statements and tables and certain additional unaudited selected financial information (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 January 25, 2006


 Operating Highlights           Quarters Ended         Years Ended
 Unaudited                       December 31,          December 31,

(Amounts in thousands except
 per share data)            2005        2004         2005         2004
                        -----------  -----------  -----------  -----------

Net income              $    22,630  $    25,220  $  101,377   $    99,136
Diluted earnings
 per share              $      0.49  $      0.54  $     2.21   $      2.12
Return on average
 equity                       16.58%       18.57%      18.83%        18.68%
Return on average
 assets                        1.25%        1.46%       1.44%         1.45%
Net interest margin            3.79%        3.94%       3.87%         3.91%
Efficiency ratio              49.76%       50.43%      49.44%        50.11%


Balance Sheet Highlights
Unaudited

(Amounts in thousands
 except per share data)                             Dec. 31,    Dec. 31,
                                                      2005        2004
                                                   ----------- -----------
Total assets                                       $ 7,210,151 $ 6,863,381
Total loans                                          4,306,191   4,135,278
Total deposits                                       5,147,832   4,905,378
Stockholders' equity                                   544,068     532,038
Book value per share                               $     11.99 $     11.55
Period end shares outstanding                           45,387      46,065

 Stock Performance Data    Quarters Ended              Years Ended
 Unaudited                   December 31,              December 31,

                            2005        2004         2005         2004
                       -----------  -----------  -----------  -----------
Market Price:
  Quarter End          $     35.06  $     36.29  $     35.06  $     36.29
  High                 $     39.25  $     38.30  $     39.25  $     38.30
  Low                  $     34.66  $     33.70  $     31.25  $     31.13

Quarter end price
 to book value                 2.9 x        3.1 x        2.9 x        3.1 x
Quarter end price
 to consensus
 estimated
 2005 earnings                15.9 x        N/A         15.9 x        N/A
Dividends declared
 per share             $     0.275  $     0.240  $     1.015  $     0.900

First Midwest Bancorp, Inc.    Press Release Dated January 25, 2006


Condensed Consolidated Statements of Condition
                                              December 31,
                                              ------------
(Amounts in thousands)                     2005         2004
                                       ------------  ------------
                                       Unaudited (1)   Audited
Assets
Cash and due from banks                $    157,070  $    119,880
Funds sold and other
 short-term investments                       5,908         4,581
Securities available for sale             2,286,630     2,179,438
Securities held to maturity,
 at amortized cost                           56,772        64,576
Loans                                     4,306,191     4,135,278
Reserve for loan losses                     (56,393)      (56,718)
                                       ------------  ------------
  Net loans                               4,249,798     4,078,560
                                       ------------  ------------
Premises, furniture and equipment            95,345        89,003
Investment in corporate
 owned life insurance                       156,441       151,359
Goodwill and other
 intangible assets                           95,997        96,712
Accrued interest receivable
 and other assets                           106,190        79,272
                                       ------------  ------------
  Total assets                         $  7,210,151  $  6,863,381
                                       ------------  ------------
Liabilities and Stockholders' Equity
Deposits                               $  5,147,832  $  4,905,378
Borrowed funds                            1,294,532     1,218,332
Junior subordinated debentures              130,092       129,294
Accrued interest payable
 and other liabilities                       93,627        78,339
                                       ------------  ------------
  Total liabilities                       6,666,083     6,331,343
                                       ------------  ------------
Common stock                                    569           569
Additional paid-in capital                   60,760        61,918
Retained earnings                           762,575       707,435
Accumulated other
 comprehensive (loss) income                 (8,284)       10,115
Treasury stock, at cost                    (271,552)     (247,999)
                                       ------------  ------------
  Total stockholders' equity                544,068       532,038
                                       ------------  ------------
  Total liabilities and
   stockholders' equity                $  7,210,151  $  6,863,381
                                       ------------  ------------

(1) While unaudited, the 2005 Condensed Consolidated Statement of
    Condition has been prepared in accordance with U.S. generally
    accepted accounting principles and is derived from the 2005 financial
    statements upon which Ernst & Young LLP, First Midwest's independent
    external auditor, will issue an audit opinion upon completion of their
    audit procedures.

First Midwest Bancorp, Inc.           Press Release Dated January 25, 2006


Condensed Consolidated Statements     Quarters Ended      Years Ended
 of Income                              December 31,      December 31,
                                   ------------------- -------------------
(Amounts in thousands except          2005      2004      2005     2004
per share data)                    --------- --------- --------- ---------

                                       Unaudited(1)  Unaudited(2)  Audited
 Interest Income
 Loans                             $  73,503 $  59,033 $ 266,925 $ 225,099
 Securities                           26,412    22,580    99,404    89,610
 Other                                   115       152       371       633
                                   --------- --------- --------- ---------
         Total interest income       100,030    81,765   366,700   315,342
                                   --------- --------- --------- ---------

 Interest Expense
 Deposits                             26,174    15,539    86,675    57,432
 Borrowed funds                       12,363     5,780    35,834    20,980
 Junior subordinated debentures        2,144     2,053     8,341     8,066
                                   --------- --------- --------- ---------
         Total interest expense       40,681    23,372   130,850    86,478
                                   --------- --------- --------- ---------
         Net interest income          59,349    58,393   235,850   228,864
 Provision for Loan Losses             2,780     5,350     8,930    12,923
                                   --------- --------- --------- ---------
         Net interest income after
          provision for loan losses   56,569    53,043   226,920   215,941
                                   --------- --------- --------- ---------

 Noninterest Income
  Service charges on deposit
 accounts                              8,308     7,682    30,199    28,837
 Trust and investment management fees  3,059     3,005    12,593    11,888
 Other service charges, commissions,
  and fees                             4,479     3,739    17,572    15,147
 Card-based fees                       2,615     2,413    10,207     9,252
                                   --------- --------- --------- ---------
        Subtotal, fee-based revenues  18,461    16,839    70,571    65,124
                                   --------- --------- --------- ---------
 Corporate owned life insurance income 1,437     1,195     5,163     4,939
 Security (losses) gains, net         (6,152)    2,872    (3,315)    8,222
 (Losses) on early extinguishments
  of debt                                  -         -         -    (2,653)
 Other                                   664     3,170     2,193     3,749
                                   --------- --------- --------- ---------
         Total noninterest income     14,410    24,076    74,612    79,381
                                   --------- --------- --------- ---------

 Noninterest Expense
 Salaries and employee benefits       23,991    25,291    95,179    92,171
 Net occupancy expense                 4,340     4,176    16,618    16,015
 Equipment expenses                    2,117     2,242     8,555     8,847
 Technology and related costs          1,513     1,304     5,677     6,681
 Other                                10,617     9,784    39,674    39,624
                                   --------- --------- --------- ---------
         Total noninterest expense    42,578    42,797   165,703   163,338
                                   --------- --------- --------- ---------
 Income before taxes                  28,401    34,322   135,829   131,984
 Income tax expense                    5,771     9,102    34,452    32,848
                                   --------- --------- --------- ---------
         Net Income                $  22,630 $  25,220 $ 101,377 $  99,136
                                   --------- --------- --------- ---------
         Diluted Earnings
          Per Share                $    0.49 $    0.54 $    2.21 $    2.12
                                   --------- --------- --------- ---------
         Dividends Declared
          Per Share                $   0.275 $   0.240 $   1.015 $   0.900
                                   --------- --------- --------- ---------
         Weighted Average Diluted
          Shares Outstanding          45,753    46,664    45,893    46,860
                                   --------- --------- --------- ---------

(1)  While unaudited, the Condensed Consolidated Statements of Income for
     the quarters ended December 31, 2005 and 2004 have been prepared in
     accordance with U.S. generally accepted accounting principles and are
     derived from quarterly financial statements.

(2)  While unaudited, the Condensed Consolidated Statement of Income for
     the year ended December 31, 2005 has been prepared in accordance with
     U.S. generally accepted accounting principles and is derived from the
     2005 financial statements upon which Ernst & Young LLP, First
     Midwest's independent external auditor, will issue an audit opinion
     upon completion of their audit procedures.

First Midwest Bancorp, Inc.            Press Release Dated January 25, 2006

Selected Quarterly Data
Unaudited                                             Year to Date
                                              ----------------------------
(Amounts in thousands except per share data)  12/31/05            12/31/04
                                              --------            --------
Net interest income                           $235,850            $228,864
Provision for loan losses                        8,930              12,923
Noninterest income                              74,612              79,381
Noninterest expense                            165,703             163,338
Net income                                     101,377              99,136
Diluted earnings per share                    $   2.21            $   2.12
Return on average equity                         18.83%              18.68%
Return on average assets                          1.44%               1.45%
Net interest margin                               3.87%               3.91%
Efficiency ratio                                 49.44%              50.11%
                                              --------            --------
Period end shares
 outstanding                                    45,387              46,065
Book value per share                          $  11.99            $  11.55
Dividends declared per
 share                                        $  1.015            $  0.900
                                              --------            --------

Asset Quality
Unaudited                                             Year to Date
                                              ----------------------------
(Amounts in thousands)                        12/31/05            12/31/04
                                              --------            --------
Nonaccrual loans                              $ 11,990            $ 19,197
Foreclosed real estate                           2,878               3,736
Loans past due 90 days
 and still accruing                              8,958               2,658
                                              --------            --------
Nonperforming loans to
 loans                                            0.28%               0.46%
Nonperforming assets to
 loans plus foreclosed
 real estate                                      0.35%               0.55%
Nonperforming assets plus
 loans past due 90 days to
 loans plus foreclosed
 real estate                                      0.55%               0.62%
Reserve for loan losses to
 loans                                            1.31%               1.37%
Reserve for loan losses to
 nonperforming loans                               470%                295%
                                              --------            --------
Provision for loan losses                     $  8,930            $ 12,923
Net loan charge-offs                             9,255              12,609
                                              --------            --------
Net loan charge-offs to
 average loans                                    0.22%               0.30%
                                              --------            --------

First Midwest Bancorp, Inc.            Press Release Dated January 25, 2006

Selected Quarterly Data
Unaudited                                  Quarters Ended
                          ------------------------------------------------
(Amounts in thousands
 except per share data)   12/31/05   9/30/05   6/30/05   3/31/05  12/31/04
                          --------  --------  --------  --------  --------
Net interest income       $ 59,349  $ 59,981  $ 59,411  $ 57,109  $ 58,393
Provision for loan losses    2,780     1,200     1,800     3,150     5,350
Noninterest income          14,410    20,383    19,673    20,146    24,076
Noninterest expense         42,578    42,108    41,245    39,772    42,797
Net income                  22,630    27,030    26,510    25,207    25,220
Diluted earnings per
 share                    $   0.49  $   0.59  $   0.58  $   0.55  $   0.54
Return on average equity     16.58%    19.76%    19.85%    19.14%    18.57%
Return on average assets      1.25%     1.51%     1.52%     1.49%     1.46%
Net interest margin           3.79%     3.88%     3.93%     3.87%     3.94%
Efficiency ratio             49.76%    49.39%    48.75%    49.88%    50.43%
                          --------  --------  --------  --------  --------
Period end shares
 outstanding                45,387    45,385    45,399    45,732    46,065
Book value per share      $  11.99  $  11.81  $  11.83  $  11.35  $  11.55
Dividends declared per
 share                    $  0.275  $  0.250  $  0.250  $  0.240  $  0.240
                          --------  --------  --------  --------  --------


Asset Quality
Unaudited                                  Quarters Ended
                          ------------------------------------------------
(Amounts in thousands)    12/31/05   9/30/05   6/30/05   3/31/05  12/31/04
                          --------  --------  --------  --------  --------
Nonaccrual loans          $ 11,990  $ 12,206  $ 11,419  $ 16,407  $ 19,197
Foreclosed real estate       2,878     2,711     2,905     3,270     3,736
Loans past due 90 days
 and still accruing          8,958    10,386     7,463     4,625     2,658
                          --------  --------  --------  --------  --------
Nonperforming loans to
 loans                        0.28%     0.28%     0.27%     0.39%     0.46%
Nonperforming assets to
 loans plus foreclosed
 real estate                  0.35%     0.35%     0.34%     0.47%     0.55%
Nonperforming assets plus
 loans past due 90 days to
 loans plus foreclosed
 real estate                  0.55%     0.59%     0.52%     0.58%     0.62%
Reserve for loan losses to
 loans                        1.31%     1.31%     1.33%     1.35%     1.37%
Reserve for loan losses to
 nonperforming loans           470%      461%      493%      343%      295%
                          --------  --------  --------  --------  --------
Provision for loan losses $  2,780  $  1,200  $  1,800  $  3,150  $  5,350
Net loan charge-offs         2,670     1,179     1,782     3,624     5,339
                          --------  --------  --------  --------  --------
Net loan charge-offs to
 average loans                0.25%     0.11%     0.17%     0.36%     0.51%
                          --------  --------  --------  --------  --------

Contact Information

  • Steven H. Shapiro
    EVP, Corporate Secretary
    (630) 875-7345

    Michael L. Scudder
    EVP, Chief Financial Officer
    (630) 875-7283