SOURCE: First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc.

October 20, 2010 06:55 ET

First Midwest Bancorp, Inc. Announces 2010 Third Quarter Results

Solid Core Operating Performance -- Strong Capital Ratios -- Elevated Credit Costs

ITASCA, IL--(Marketwire - October 20, 2010) - First Midwest Bancorp, Inc. (NASDAQ: FMBI)

Operating Performance
--  Net income before preferred dividends and accretion on preferred stock
    of $2.6 million for third quarter 2010 vs. $7.8 million for second
    quarter 2010 and $3.4 million for third quarter 2009.
--  Pre-tax, pre-provision core operating earnings of $34.9 million for
    third quarter 2010, up $179,000, or 0.5%, from second quarter 2010 and
    up $4.7 million, or 15.6%, from third quarter 2009.
--  Average earnings assets up approximately $250 million, or 3.6%, from
    second quarter 2010.
--  Average core transactional deposits up $610.6 million, or 15.8%, from
    third quarter 2009.
--  Acquisition of approximately $297 million of loans and $460 million of
    deposits of the former Palos Bank and Trust Company in an FDIC-assisted
    transaction.

Capital, Credit and Other
--  Tier 1 common equity to risk-based assets of 10.45% compared to 10.88%
    and 8.43% at June 30, 2010 and September 30, 2009, respectively.
--  Non-performing loans of $220.5 million, up from $200.0 million at June
    30, 2010 and down from $262.8 million at September 30, 2009.
--  Allowance for credit losses of $145.0 million representing 2.81% of
    loans, excluding covered loans, compared to 2.79% at June 30, 2010 and
    2.53% at September 30, 2009.
--  Net securities gains of $6.4 million for third quarter 2010.

Today First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank, reported results of operations and financial condition for third quarter 2010. Net income for the quarter was $2.6 million, before adjustment for preferred dividends and non-vested restricted shares, with net income of $11 thousand, or $0.00 per share, available to common shareholders after such adjustments. This compares to net income available to common shareholders of $5.2 million, or $0.07 per share, for second quarter 2010 and net income available to common shareholders of $773,000, or $0.02 per share, for third quarter 2009.

Summary Update

In making the announcement, Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc., said, "The quarter evidenced continued solid underlying business performance offset by higher credit costs. Core operating earnings remained strong, reflecting the positive impact of both strategic acquisition activity and improved fee-based revenues. Mid-quarter, we acquired Palos Bank and Trust Company from the FDIC adding $297 million in loans and $460 million in deposits, representing approximately 18,000 households and significantly expanding our southeastern Chicago presence. As we closed the quarter, our core earnings stood 16% higher than the same period in 2009."

Mr. Scudder continued, "While elevated from last quarter, problem assets remain well below peak levels, with the quarter's increase largely due to three individual borrowers. During the quarter, we disposed of $30 million of nonperforming loans, contributing to the quarter's comparatively higher charge-off levels. In what remains a difficult credit environment, we are focused on problem asset remediation and continue to adjust carrying values to reflect evolving market conditions and disposition strategies."

Mr. Scudder concluded, "For 70 years, First Midwest has been committed to meeting the financial needs of our clients and communities. This ongoing commitment, supported by our leading capital foundation, leaves us well positioned to serve our clients and pursue opportunities to profitably grow our core business."

Acquisitions

On August 13, 2010, the Company acquired approximately $297.0 million in loans, $23.7 million in other real estate owned ("OREO"), and $121.5 million in cash and securities and assumed $215.2 million in core deposits and $246.6 million in time deposits of the former Palos Bank and Trust Company ("Palos") in an Federal Deposit Insurance Corporation ("FDIC")-assisted transaction. The Company also gained four retail banking centers. This represents the third such transaction since October 2009, bringing total earnings assets acquired to approximately $487.8 million at September 30, 2010. The Company continues to evaluate acquisition opportunities in the market. The majority of the loans and OREO acquired from Palos are subject to a loss sharing arrangement with the FDIC whereby the Company is indemnified against the majority of any losses incurred on these loans and, therefore, are presented separately in the asset quality presentation in this release.

Operating Performance

The Company generated pre-tax, pre-provision core operating earnings of $34.9 million for third quarter 2010 compared to $34.7 million for second quarter 2010 and $30.2 million for third quarter 2009. The increases compared to both prior periods were the result of higher net interest income and fee-based revenues, which more than offset higher non-interest expense. A reconciliation of earnings in accordance with U.S. generally accepted accounting principles ("GAAP") to the non-GAAP financial measures of pre-tax, pre-provision core operating earnings is presented on page 12 of this earnings release.

Total loans, including covered loans, were $5.7 billion as of September 30, 2010, an increase of $203.2 million and $346.4 million from June 30, 2010 and September 30, 2009, respectively. The increases were driven by the addition of covered loans acquired through FDIC-assisted transactions, which more than offset declines in the multi-family, residential, and commercial construction categories. Covered loans were $487.8 million at September 30, 2010 compared to $240.9 million at June 30, 2010 and zero at September 30, 2009.

In addition to loans, the Company also recorded OREO and indemnification assets from the completion of its FDIC-assisted acquisitions, collectively referred to as "covered assets." The quarter over quarter increase in covered assets from $251.6 million to $519.3 million is due to the acquisition of Palos on August 13, 2010.

Average core transactional deposits for third quarter 2010 were $4.5 billion, an increase of $610.6 million, or 15.8%, from third quarter 2009. Excluding core transactional deposits acquired through FDIC-assisted transactions, the year-over-year increase in core transactional deposits was $109.8 million, or 2.8%.

Net interest income for third quarter 2010 of $70.2 million was relatively unchanged from second quarter 2010, despite average earning assets that were approximately $250 million higher. The impact of higher earning assets was offset by a decline in the tax-equivalent net interest margin from 4.21% for second quarter 2010 to 4.05% for third quarter 2010.

The quarter over quarter decline in margin reflects the impact of the low interest rate environment given lower yields on our short-term investment of proceeds from securities sales, the seasonal increase of deposits from the Company's municipal customers, and the additional deposits acquired from the Palos acquisition, as well as higher reversals of interest on nonaccrual loans.

Net interest income for third quarter 2010 increased $9.2 million, or 15.1%, compared to third quarter 2009. The improvement was driven by an increase in earning assets, primarily covered loans, and a 39 basis point increase in tax-equivalent net interest margin. The margin improvement reflects reductions in rates paid on all major funding categories, led by a 105 basis point decline in rates paid on time deposits.

Fee-based revenues of $22.5 million for third quarter 2010 were up 2.6% from second quarter 2010, reflecting increases in all major fee categories. Total overdraft fee income increased 5.5% from second quarter 2010 as a result of higher transaction volume and our customers' adoption of our new overdraft protection program.

Fee-based revenues increased 2.8% compared to third quarter 2009 with the 7.9% decline in service charge fees more than offset by a 16.8% increase in other service charges, commissions and fees (primarily merchant fee income), a 13.0% increase in card-based fees, and a 4.9% increase in trust and advisory fees.

Total noninterest income grew 12.6% from second quarter 2010 and declined 1.1% from third quarter 2009 due to differences in net securities gains and the fair value adjustment related to the Company's non-qualified deferred compensation plan.

Total noninterest expense for third quarter 2010 rose approximately $1.3 million from second quarter 2010 as a result of increases in salaries and employee benefits, net occupancy and equipment expense, loan remediation, and other professional expenses. These increases were mitigated by declines in net operating expenses and losses recognized on OREO and marketing expenses included in the "other" expense category.

The $3.4 million increase in salaries and employee benefits from second quarter 2010 reflects the $2.2 million difference from the fair value adjustment related to assets held on behalf of certain employees in the Company's non-qualified deferred compensation plan, as well as the increase in retail banking employees as a result of the Company's FDIC-assisted acquisitions.

The 6.6% increase in net occupancy and equipment expense from second quarter 2010 is primarily driven by higher utilities and depreciation expense associated with acquired retail banking facilities.

Loan remediation and other professional expenses grew by 9.5% from second quarter 2010 reflecting substantially higher outsourced remediation expenses.

Total noninterest expense rose by $12.1 million, or 21.4%, in third quarter 2010 compared to third quarter 2009 due to $6.4 million of higher losses and write-downs on OREO in addition to increases of $2.5 million in salaries and benefits, $1.7 million in loan remediation costs (including costs to service certain assets acquired in the FDIC-assisted transactions), and $759 thousand in professional services fees from the valuation and integration of FDIC-acquired assets.

The increase in salaries and benefits from third quarter 2009 was driven by the addition of retail banking employees from the Company's three FDIC-assisted acquisitions, as well as standard merit increases and higher share-based compensation expense.

Similarly, the increases in loan remediation and other professional expenses result from costs associated with integrating and remediating FDIC-acquired assets. For third quarter 2010, the Company recorded $847 thousand of one-time integration expenses associated with these acquisitions.

Asset Quality

Non-performing assets, excluding covered assets, were $283.5 million at September 30, 2010, an increase of $17.5 million from June 30, 2010 and a decrease of $63.9 million from September 30, 2009. The quarter over quarter increase is substantially due to the deterioration of three borrowers. Non-performing assets represented 5.44% of total loans plus OREO at September 30, 2010 compared to 5.05% and 6.48% at June 30, 2010 and September 30, 2009, respectively. Loans 30-89 days delinquent stood at $41.6 million, an increase of $9.6 million from the June 30, 2010 level of $32.0 million.

The allowance for credit losses represented 2.81% of total loans outstanding at September 30, 2010 compared to 2.79% at June 30, 2010 and 2.53% at September 30, 2009. The allowance for credit losses as a percentage of non-performing loans, excluding covered loans, was 66% at September 30, 2010 compared to 73% at June 30, 2010 and 51% at September 30, 2009.

Net charge-offs, excluding covered loans, for third quarter 2010 were $34.0 million compared to $20.2 million and $31.3 million for second quarter 2010 and third quarter 2009, respectively. The Company disposed of approximately $30.2 million of nonperforming loans at a loss of $13.6 million and sold $8.0 million of OREO at a loss of $2.5 million during the quarter. During the quarter, the Company also recorded OREO write-downs of $5.8 million in noninterest expense.

Securities Portfolio

Approximately 95% of the Company's $1.1 billion available-for-sale portfolio is comprised of municipals, collateralized mortgage obligations ("CMOs"), and agency pass-through securities. The remainder consists of trust-preferred collateralized debt obligation pools ("CDOs") with a fair value of $13.4 million and an unrealized loss of $36.3 million, and miscellaneous other securities totaling $37.5 million. Net securities gains were $6.4 million for third quarter 2010 and were net of other-than-temporary impairment charges of $852 thousand related to the Company's CDOs.

Capital Management

As reflected in the following table, all regulatory mandated ratios for characterization as "well-capitalized" were exceeded as of September 30, 2010.



                                           Minimum         Excess Over
                                            "Well-          Required
                     September  June 30,  Capitalized"     Minimums at
                     30, 2010     2010       Level     September 30, 2010
                     ---------  ---------  ---------  ---------------------
                                                      (Amounts in millions)
Regulatory capital
 ratios:
   Total capital to
    risk-weighted
    assets              16.83%     17.31%     10.00%       68%       $  438
   Tier 1 capital to
    risk-weighted
    assets              14.78%     15.25%      6.00%      146%       $  563
   Tier 1 leverage to
    average assets      11.98%     12.69%      5.00%      140%       $  553

Regulatory capital
 ratios, excluding
 preferred stock:
   Total capital to
    risk-weighted
    assets              13.82%     14.27%     10.00%       38%       $  245
   Tier 1 capital to
    risk-weighted
    assets              11.77%     12.21%      6.00%       96%       $  370
   Tier 1 leverage to
    average assets       9.54%     10.17%      5.00%       91%       $  360

Tier 1 common capital
 to risk-weighted
 assets                 10.45%     10.88%       N/A        N/A          N/A
Tangible equity ratios:
   Tangible common
    equity to tangible
    assets               8.34%      9.05%       N/A        N/A          N/A
   Tangible common
    equity, excluding
    other
    comprehensive
    loss, to tangible
    assets               8.46%      9.22%       N/A        N/A          N/A
   Tangible common
    equity to
    risk-weighted
    assets              10.51%     10.71%       N/A        N/A          N/A


The Board of Directors reviews the Company's capital plan each quarter, giving consideration to the current and expected operating environment, as well as an evaluation of various capital alternatives.

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 100 offices located in 65 communities, primarily in metropolitan Chicago.

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, 2009 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, October 20, 2010 at 10:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (800) 638-4817 (U.S. domestic) or (617) 614-3943 (international) and enter passcode number 253 50 917. 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 (888) 286-8010 (U.S. domestic) or (617) 801-6888 (international) passcode number 187 96 745 beginning at 1:00 P.M. (ET) on October 20, 2010 until 11:59 P.M. (ET) on October 27, 2010. 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 Capital Ratios
--  Condensed Consolidated Statements of Financial Condition
--  Condensed Consolidated Statements of Income
--  Pre-Tax, Pre-Provision Core Operating Earnings
--  Loan Portfolio Composition
--  Asset Quality, Excluding Covered Assets
--  Covered Assets
--  Non-performing Assets and Past Due Loans
--  Charge-off Data
--  Securities Available-for-Sale

Press Release and Additional Information Available on Website

This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com.



First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Operating Highlights

Unaudited

(Dollar amounts in thousands except per share data)

                                                Quarters Ended
                                     -------------------------------------
                                     September       June       September
                                      30, 2010     30, 2010      30, 2009
                                     -----------  -----------  -----------
Net income                           $     2,585  $     7,809  $     3,351
Net income applicable to common
 shares                                       11        5,171          773
Diluted earnings per common share    $      0.00  $      0.07  $      0.02
Return on average common equity             0.00%        2.16%        0.43%
Return on average assets                    0.13%        0.40%        0.17%
Net interest margin                         4.05%        4.21%        3.66%
Efficiency ratio                           59.91%       57.92%       59.13%



Balance Sheet Highlights

Unaudited

(Dollar amounts in thousands except per share data)

                                                    As Of
                                     -------------------------------------
                                     September       June       September
                                      30, 2010     30, 2010      30, 2009
                                     -----------  -----------  -----------
Total assets                         $ 8,376,494  $ 7,805,089  $ 7,678,434
Total loans, excluding covered loans   5,164,666    5,208,347    5,306,068
Covered assets (1)                       519,305      251,572            -
Total deposits                         6,677,259    6,123,565    5,749,153
Total stockholders' equity             1,160,059    1,155,512      983,579
Common stockholders' equity              967,059      962,512      790,579
Book value per share                 $     13.06  $     13.00  $     14.43
Period end shares outstanding             74,057       74,049       54,800


(1) Covered assets are subject to a loss sharing agreement with the FDIC
    whereby the Company is indemnified against the majority of any losses
    incurred related to these loans and other real estate owned. Covered
    assets were obtained through the FDIC-assisted transactions related to
    First DuPage Bank on October 23, 2009, Peotone Bank and Trust Company
    on April 23, 2010, and Palos Bank and Trust Company on August 13, 2010.



Capital Ratios

Unaudited

                                                    As Of
                                     -------------------------------------
                                     September       June       September
                                      30, 2010     30, 2010      30, 2009
                                     -----------  -----------  -----------
Regulatory capital ratios:
  Total capital to risk-weighted
   assets                                 16.83%       17.31%       15.27%
  Tier 1 capital to risk-weighted
   assets                                 14.78%       15.25%       12.88%
  Tier 1 leverage to average assets       11.98%       12.69%       10.52%

Regulatory capital ratios, excluding
 preferred stock:
  Total capital to risk-weighted
   assets                                 13.82%       14.27%       12.18%
  Tier 1 capital to risk-weighted
   assets                                 11.77%       12.21%        9.78%
  Tier 1 leverage to average assets        9.54%       10.17%        7.99%

Tier 1 common capital
 to risk-weighted
 assets                                   10.45%       10.88%        8.43%

Tangible common equity ratios:
  Tangible common equity to
   tangible assets                        8.34%        9.05%        6.88%
  Tangible common equity, excluding
   other comprehensive loss, to
   tangible assets                        8.46%        9.22%        7.10%
  Tangible common equity to
   risk-weighted assets                  10.51%       10.71%        8.16%





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Condensed Consolidated Statements of Financial Condition

Unaudited                                              September 30,
                                                 -------------------------
(Amounts in thousands)                              2010          2009
                                                 -----------   -----------

Assets
Cash and due from banks                          $   177,537   $   115,905
Federal funds sold and other short-term
 investments                                         558,408        81,693
Trading account securities, at fair value             13,784        13,231
Securities available-for-sale, at fair value       1,058,609     1,349,669
Securities held-to-maturity, at amortized cost        85,687        83,860
Federal Home Loan Bank and Federal Reserve Bank
 stock, at cost                                       62,038        54,768
Loans, excluding covered loans                     5,164,666     5,306,068
Covered loans (1)                                    487,755             -
Allowance for loan losses                           (144,569)     (134,269)
                                                 -----------   -----------

  Net loans                                        5,507,852     5,171,799
                                                 -----------   -----------
Other real estate owned, excluding covered OREO       52,044        57,945
Covered other real estate owned (1)                   31,550             -
Premises, furniture, and equipment                   131,845       122,083
Investment in bank owned life insurance              198,666       197,681
Goodwill and other intangible assets                 292,523       281,614
Accrued interest receivable and other assets         205,951       148,186
                                                 -----------   -----------

  Total assets                                   $ 8,376,494   $ 7,678,434
                                                 ===========   ===========

Liabilities and Stockholders' Equity
Deposits
Transactional deposits                           $ 4,533,662   $ 3,833,267
Time deposits                                      2,143,597     1,915,886
                                                 -----------   -----------

  Total deposits                                   6,677,259     5,749,153
Borrowed funds                                       323,077       716,299
Subordinated debt                                    137,741       157,717
Accrued interest payable and other liabilities        78,358        71,686
                                                 -----------   -----------

  Total liabilities                                7,216,435     6,694,855
                                                 -----------   -----------
Preferred stock                                      190,716       190,076
Common stock                                             858           670
Additional paid-in capital                           436,774       251,423
Retained earnings                                    819,157       851,178
Accumulated other comprehensive loss, net of tax      (9,203)      (16,217)
Treasury stock, at cost                             (278,243)     (293,551)
                                                 -----------   -----------

  Total stockholders' equity                       1,160,059       983,579
                                                 -----------   -----------

  Total liabilities and stockholders' equity     $ 8,376,494   $ 7,678,434
                                                 ===========   ===========


(1) Total covered assets equal $519,305 and are comprised of covered loans,
    which include an FDIC indemnification asset, and covered OREO.





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Condensed Consolidated Statements of Income

Unaudited                                       Quarters Ended
                                     -------------------------------------
(Amounts in thousands, except        September       June       September
 per share data)                      30, 2010     30, 2010      30, 2009
                                     -----------  -----------  -----------
Interest Income
Loans                                $    65,416  $    65,439  $    66,035
Securities                                11,920       13,699       16,278
Covered assets, excluding covered
 OREO                                      4,294        2,598            -
Federal funds sold and other
 short-term investments                      708          538          449
                                     -----------  -----------  -----------
  Total interest income                   82,338       82,274       82,762
                                     -----------  -----------  -----------
Interest Expense
Deposits                                   9,049        9,626       15,324
Borrowed funds                               797          749        2,768
Subordinated debt                          2,279        2,280        3,689
                                     -----------  -----------  -----------
  Total interest expense                  12,125       12,655       21,781
                                     -----------  -----------  -----------
  Net interest income                     70,213       69,619       60,981
Provision for loan losses                 33,576       21,526       38,000
                                     -----------  -----------  -----------
  Net interest income after
   provision for loan losses              36,637       48,093       22,981
                                     -----------  -----------  -----------
Noninterest Income
Service charges on deposit accounts        9,249        9,052       10,046
Trust and investment advisory fees         3,728        3,702        3,555
Other service charges, commissions,
 and fees                                  4,932        4,628        4,222
Card-based fees                            4,547        4,497        4,023
                                     -----------  -----------  -----------
  Total fee-based revenues                22,456       21,879       21,846
Bank owned life insurance income             267          349          282
Securities gains (losses), net             6,376        1,121       (6,975)
Gain on FDIC-assisted transaction              -        4,303            -
Gains on early extinguishment of
 debt                                          -            -       13,991
Other                                      1,654         (342)       1,946
                                     -----------  -----------  -----------
  Total noninterest income                30,753       27,310       31,090
                                     -----------  -----------  -----------
Noninterest Expense
Salaries and employee benefits            29,926       26,540       27,416
Losses realized on other real
 estate owned                              8,265        8,924        1,801
Other real estate owned expense, net       1,312        2,926        1,660
FDIC insurance                             2,835        2,546        2,558
Net occupancy and equipment expense        8,326        7,808        7,837
Loan remediation expense                   2,817        2,649        1,833
Other professional fees                    3,370        3,003        1,936
Other                                     11,926       13,059       11,599
                                     -----------  -----------  -----------
  Total noninterest expense               68,777       67,455       56,640
                                     -----------  -----------  -----------
(Loss) income before income tax
 (benefit) expense                        (1,387)       7,948       (2,569)
Income tax (benefit) expense              (3,972)         139       (5,920)
                                     -----------  -----------  -----------
  Net income                               2,585        7,809        3,351
Preferred dividends                       (2,575)      (2,573)      (2,567)
Net income applicable to non-vested
 restricted shares                             1          (65)         (11)
                                     -----------  -----------  -----------
  Net Income Applicable to Common
   Shares                            $        11  $     5,171  $       773
                                     ===========  ===========  ===========
  Diluted Earnings Per Common Share  $      0.00  $      0.07  $      0.02
  Dividends Declared Per Common
   Share                             $      0.01  $      0.01  $      0.01
  Weighted Average Diluted Common
   Shares Outstanding                     73,072       73,028       48,942





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Pre-Tax, Pre-Provision Core Operating Earnings (1)

Unaudited

(Dollar amounts in thousands)

                                                Quarters Ended
                                     -------------------------------------
                                     September       June       September
                                      30, 2010     30, 2010      30, 2009
                                     -----------  -----------  -----------
(Loss) income before income tax
 (benefit) expense                   $    (1,387) $     7,948  $    (2,569)
Provision for loan losses                 33,576       21,526       38,000
                                     -----------  -----------  -----------
   Pre-tax, pre-provision earnings        32,189       29,474       35,431
                                     -----------  -----------  -----------

Non-Operating Items

Securities gains (losses), net             6,376        1,121       (6,975)
Gain on FDIC-assisted transaction              -        4,303            -
Gains on early extinguishment of
 debt                                          -            -       13,991
Losses realized on other real
 estate owned                             (8,265)      (8,924)      (1,801)
Integration costs associated with
 FDIC-assisted acquisitions                 (847)      (1,772)           -
                                     -----------  -----------  -----------
   Total non-operating items              (2,736)      (5,272)       5,215
                                     -----------  -----------  -----------

Pre-tax, pre-provision core
 operating earnings                  $    34,925  $    34,746  $    30,216
                                     ===========  ===========  ===========
Pre-tax, pre-provision core
 operating earnings to
 risk-weighted assets                       2.18%        2.19%        1.94%


(1) The Company's accounting and reporting policies conform to U.S.
    generally accepted accounting principles ("GAAP") and general practice
    within the banking industry. As a supplement to GAAP, the Company has
    provided this non-GAAP performance result. The Company believes that
    this non-GAAP financial measure is useful because it allows investors
    to assess the Company's operating performance. Although this non-GAAP
    financial measure is intended to enhance investors' understanding of
    the Company's business and performance, this non-GAAP financial measure
    should not be considered an alternative to GAAP.





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Loan Portfolio Composition

Unaudited

(Dollar amounts in thousands)
                                                            Percent Change
                                  As Of                          From
               ------------------------------------------  ----------------
                           % of
                9/30/10    Total    6/30/10     9/30/09    6/30/10  9/30/09
               ----------  ------  ----------  ----------  -------  -------
Corporate:
  Commercial
   and
   industrial  $1,472,439   28.5%  $1,494,119  $1,484,601  (1.5%)    (0.8%)
  Agricultural
   and farmland   212,800    4.1%     199,597     200,955   6.6%      5.9%
  Commercial
   real estate:
    Office        402,947    7.8%     415,846     376,897   (3.1%)    6.9%
    Retail        329,153    6.4%     310,819     314,586    5.9%     4.6%
    Industrial    483,549    9.4%     493,526     459,793   (2.0%)    5.2%
               ----------  ------  ----------  ----------  -------  -------
      Total
       office,
       retail,
       and
       indust-
       rial     1,215,649   23.6%   1,220,191   1,151,276   (0.4%)    5.6%
               ----------  ------  ----------  ----------  -------  -------
Construction:
  Residential
   construction   226,126    4.4%     241,094     400,502   (6.2%)  (43.5%)
  Commercial
   construction    98,562    1.9%     107,572     196,198   (8.4%)  (49.8%)
  Commercial
   land            94,479    1.8%      94,469     105,264    0.0%   (10.2%)
               ----------  ------  ----------  ----------  -------  -------
    Total
     construc-
     tion         419,167    8.1%     443,135     701,964   (5.4%)  (40.3%)
               ----------  ------  ----------  ----------  -------  -------
Multifamily       350,458    6.8%     369,281     342,807   (5.1%)    2.2%
Investor-owned
 rental property  119,974    2.3%     120,436     117,276   (0.4%)    2.3%
Other commercial
 real estate      717,903   13.9%     711,287     636,153    0.9%    12.9%
               ----------  ------  ----------  ----------  -------  -------
    Total
     commercial
     real
     estate     2,823,151   54.7%   2,864,330   2,949,476   (1.4%)   (4.3%)
               ----------  ------  ----------  ----------  -------  -------
      Total
       corporate
       loans    4,508,390   87.3%   4,558,046   4,635,032   (1.1%)   (2.7%)
               ----------  ------  ----------  ----------  -------  -------

Consumer:
  Home equity     457,981    8.9%     458,066     478,204    0.0%    (4.2%)
  Real estate
   1-4 family     150,110    2.9%     145,457     138,862    3.2%     8.1%
  Other
   consumer        48,185    0.9%      46,778      53,970    3.0%   (10.7%)
               ----------  ------  ----------  ----------  -------  -------
      Total
       consumer
       loans      656,276   12.7%     650,301     671,036    0.9%    (2.2%)
               ----------  ------  ----------  ----------  -------  -------
    Total loans,
     excluding
     covered
     loans      5,164,666  100.0%   5,208,347   5,306,068   (0.8%)   (2.7%)
                           ======                          =======  =======
    Covered
     loans        487,755             240,915           -
               ----------          ----------  ----------
      Total
       loans   $5,652,421          $5,449,262  $5,306,068
               ==========          ==========  ==========





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Asset Quality, Excluding Covered Assets

Unaudited

(Dollar amounts in thousands)
                                               As Of
                          ------------------------------------------------
                                   % of Loan   % of
                          9/30/10   Category   Total    6/30/10   9/30/09
                          --------  --------  --------  --------  --------
Non-accrual loans:
  Commercial and
   industrial             $ 40,955    2.78%     19.4%   $ 39,942  $ 45,134
  Agricultural and
   farmland                  3,495    1.64%      1.6%      1,139     2,384
  Office, retail, and
   industrial               21,721    1.79%     10.3%     17,170    15,738
  Residential
   construction             61,050   27.00%     28.9%     71,148   138,593
  Commercial construction        -    0.00%      0.0%          -         -
  Commercial land           21,471   22.73%     10.2%     20,457     2,908
  Multi-family               6,813    1.94%      3.2%      7,904    15,910
  Investor-owned rental
   property                  4,107    3.42%      1.9%      6,083     4,069
  Other commercial real
   estate                   40,409    5.62%     19.1%     15,867    18,841
  Consumer                  11,345    1.73%      5.4%     13,979    13,228
                          --------  --------  --------  --------  --------
    Total non-accrual
     loans                 211,366    4.09%    100.0%    193,689   256,805
                          --------  --------  --------  --------  --------
90 days past due loans
 (still accruing interest):
  Commercial and
   industrial                2,909    0.20%     31.8%      2,209     3,216
  Agricultural and
   farmland                      2    0.00%      0.0%          -         -
  Office, retail, and
   industrial                  460    0.04%      5.0%      1,550     1,036
  Residential
   construction                408    0.18%      4.5%          -        66
  Commercial construction        -    0.00%      0.0%          -         -
  Commercial land                -    0.00%      0.0%          -         -
  Multi-family                   -    0.00%      0.0%          -       238
  Investor-owned rental
   property                    562    0.47%      6.2%        116       338
  Other commercial real
   estate                    2,858    0.40%     31.3%      1,387         -
  Consumer                   1,937    0.29%     21.2%      1,018     1,066
                          --------  --------  --------  --------  --------
    Total 90 days past
     due loans               9,136    0.18%    100.0%      6,280     5,960
                          --------  --------  --------  --------  --------
    Total non-performing
     loans                 220,502                       199,969   262,765
Restructured loans, still
 accruing interest          11,002                         9,030    26,718
OREO, excluding covered
 OREO                       52,044                        57,023    57,945
                          --------                      --------  --------
    Total non-performing
     assets               $283,548                      $266,022  $347,428
                          ========                      ========  ========
30-89 days past due loans $ 41,590                      $ 32,012  $ 44,346
Allowance for credit
 losses (1)               $145,019                      $145,477  $134,269
Asset Quality Ratios,
 Excluding Covered Assets
Non-accrual loans to
 loans                      4.09%                         3.72%     4.84%
Non-performing loans
 to loans                   4.27%                         3.84%     4.95%
Non-performing assets
 to loans plus OREO         5.44%                         5.05%     6.48%
Allowance for credit
 losses to loans            2.81%                         2.79%     2.53%
Allowance for credit
 losses to non-accrual
 loans                        69%                           75%       52%
Allowance for credit
 losses to
 non-performing loans         66%                           73%       51%


(1) The allowance for credit losses includes the liability for unfunded
    commitments of $450 thousand.





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Covered Assets (1)

Unaudited

(Dollar amounts in thousands)                       As Of
                                     -------------------------------------
                                     September       June       December
                                      30, 2010     30, 2010     31, 2009
                                     -----------  -----------  -----------

Loans                                $   399,032  $   164,924  $   146,319

FDIC indemnification asset                88,723       75,991       67,945
                                     -----------  -----------  -----------

  Total covered loans                    487,755      240,915      214,264

Other real estate owned                   31,550       10,657        8,981
                                     -----------  -----------  -----------

  Total covered assets               $   519,305  $   251,572  $   223,245
                                     ===========  ===========  ===========

90 days or more past due loans       $    74,777  $    47,912  $    30,286

30-89 days past due loans            $    24,005  $    13,725  $    22,988

Net (recoveries) charge-offs
 -- quarter to date                  $       (11) $       651  $         -


(1) Covered assets are subject to a loss sharing agreement with the FDIC
    whereby the Company is indemnified against the majority of any losses
    incurred related to these loans and other real estate owned. Covered
    assets were obtained through the FDIC-assisted transactions related
    to First DuPage Bank on October 23, 2009, Peotone Bank and Trust
    Company on April 23, 2010, and Palos Bank and Trust Company on
    August 13, 2010.





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Non-performing Assets and Past Due Loans

Unaudited

(Dollar amounts in thousands)
                                              As Of
                     -----------------------------------------------------
                                  2010                        2009
                     -------------------------------  --------------------
                     September                        December   September
                        30       June 30   March 31      31         30
                     ---------  ---------  ---------  ---------  ---------
Non-performing
 assets, excluding
 covered assets
Non-accrual loans    $ 211,366  $ 193,689  $ 216,073  $ 244,215  $ 256,805
90 days or more past
 due loans               9,136      6,280      7,995      4,079      5,960
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   loans               220,502    199,969    224,068    248,294    262,765

Restructured loans
 (still accruing
 interest)              11,002      9,030      5,168     30,553     26,718
Other real estate
 owned                  52,044     57,023     62,565     57,137     57,945
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   assets            $ 283,548  $ 266,022  $ 291,801  $ 335,984  $ 347,428
                     =========  =========  =========  =========  =========
30-89 days past
 due loans           $  41,590  $  32,012  $  28,018  $  37,912  $  44,346

Non-accrual loans
 to total loans           4.09%      3.72%      4.16%      4.69%      4.84%
Non-performing loans
 to total loans           4.27%      3.84%      4.31%      4.77%      4.95%
Non-performing
 assets to loans
 plus OREO                5.44%      5.05%      5.55%      6.39%      6.48%

Covered assets (1)
Non-accrual loans    $       -  $       -  $       -  $       -  $       -
90 days or more
 past due loans         74,777     47,912     52,464     30,286          -
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   loans                74,777     47,912     52,464     30,286          -

Restructured loans
 (still accruing
 interest)                   -          -          -          -          -
Other real estate
 owned                  31,550     10,657      8,649      8,981          -
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   assets            $ 106,327  $  58,569  $  61,113  $  39,267  $       -
                     =========  =========  =========  =========  =========
30-89 days past due
 loans               $  24,005  $  13,725  $  10,175  $  22,988  $       -

Non-performing
 assets, including
 covered assets
Non-accrual loans    $ 211,366  $ 193,689  $ 216,073  $ 244,215  $ 256,805
90 days or more
 past due loans         83,913     54,192     60,459     34,365      5,960
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   loans               295,279    247,881    276,532    278,580    262,765

Restructured loans
 (still accruing
 interest)              11,002      9,030      5,168     30,553     26,718
Other real estate
 owned                  83,594     67,680     71,214     66,118     57,945
                     ---------  ---------  ---------  ---------  ---------
  Total
   non-performing
   assets            $ 389,875  $ 324,591  $ 352,914  $ 375,251  $ 347,428
                     =========  =========  =========  =========  =========
30-89 days past
 due loans           $  65,595  $  45,737  $  38,193  $  60,900  $  44,346

Non-accrual loans
 to total loans           3.74%      3.55%      4.01%      4.51%      4.84%
Non-performing loans
 to total loans           5.22%      4.55%      5.13%      5.14%      4.95%
Non-performing
 assets to loans
 plus OREO                6.80%      5.88%      6.46%      6.84%      6.48%


(1) The non-performing covered assets were recorded at their estimated fair
    values at the time of acquisition. These assets are covered by loss
    sharing agreements with the FDIC that substantially mitigate the risk
    of loss.





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Charge-off Data

Unaudited

(Dollar amounts in thousands)

                                           Quarters Ended
                          ------------------------------------------------
                                   % of Loan   % of
                          9/30/10   Category   Total    6/30/10   9/30/09
                          --------  --------  --------  --------  --------

Net loans charged-off:
  Commercial and
   industrial             $ 13,262    0.90%     38.9%   $  2,679  $ 12,585
  Agricultural and
   farmland                    489    0.23%      1.4%        546         0
  Office, retail, and
   industrial                2,825    0.23%      8.3%      2,353     3,496
  Residential
   construction              4,460    1.97%     13.0%      9,994     5,181
  Commercial construction        -    0.00%      0.0%          -         -
  Commercial land              228    0.24%      0.7%        115      (228)
  Multifamily                  222    0.06%      0.7%        485        29
  Investor-owned rental
   property                    748    0.62%      2.2%        982       622
  Other commercial real
   estate                    9,469    1.32%     27.8%        525     6,006
  Consumer                   2,342    0.36%      6.9%      2,543     3,568
                          --------  --------  --------  --------  --------
    Total net loans
     charged-off,
     excluding
     covered assets         34,045    0.66%    100.0%     20,222    31,259
                                    ========  ========
    Net (recoveries)
     charge-offs on
     covered loans             (11)                          651         -
                          --------                      --------  --------
      Total net
       charge-offs        $ 34,034                      $ 20,873  $ 31,259
                          ========                      ========  ========



Net loan charge-offs,
 excluding covered
 charge-offs, to average
 loans, annualized:
  Quarter-to-date           2.59%                         1.56%      2.32%
  Year-to-date              1.87%                         1.49%      2.05%
Net loan charge-offs to
 average loans,
 annualized:
  Quarter-to-date           2.42%                         1.54%      2.32%
  Year-to-date              1.79%                         1.46%      2.05%





First Midwest Bancorp, Inc.           Press Release Dated October 20, 2010

Securities Available-For-Sale

Unaudited

(Dollar amounts in thousands)

                                   Collateralized   Other        State
                           U.S.       Mortgage     Mortgage       and
                          Agency     Obligations    Backed      Municipal
                        -----------  -----------  -----------  -----------
As of September 30, 2010
Amortized cost          $    24,088  $   297,935  $   107,966  $   549,505
Gross unrealized gains
 (losses):
  Gross unrealized gains         68        4,702        6,070       19,834
  Gross unrealized losses       (21)      (1,639)         (28)        (805)
                        -----------  -----------  -----------  -----------
    Net unrealized gains
     (losses)                    47        3,063        6,042       19,029
                        -----------  -----------  -----------  -----------

Fair value              $    24,135  $   300,998  $   114,008  $   568,534
                        ===========  ===========  ===========  ===========

As of June 30, 2010
Amortized cost          $     9,919  $   264,240  $   119,933  $   622,268
Gross unrealized gains
 (losses):
  Gross unrealized gains         12        7,055        7,779       13,413
  Gross unrealized losses        (1)      (1,582)         (19)      (3,079)
                        -----------  -----------  -----------  -----------
    Net unrealized gains
     (losses)                    11        5,473        7,760       10,334
                        -----------  -----------  -----------  -----------

Fair value              $     9,930  $   269,713  $   127,693  $   632,602
                        ===========  ===========  ===========  ===========

As of September 30, 2009
Amortized cost          $       757  $   322,780  $   233,396  $   680,216
Gross unrealized gains
 (losses):
  Gross unrealized gains          -       10,651       10,782       29,176
  Gross unrealized losses         -       (2,224)          (3)      (1,078)
                        -----------  -----------  -----------  -----------
    Net unrealized gains
     (losses)                     -        8,427       10,779       28,098
                        -----------  -----------  -----------  -----------

Fair value              $       757  $   331,207  $   244,175  $   708,314
                        ===========  ===========  ===========  ===========


                      Collateralized
                           Debt
                        Obligations     Other        Total
                        -----------  -----------  -----------
As of September 30, 2010
Amortized cost          $    49,695  $    35,270  $ 1,064,459
Gross unrealized gains
 (losses):
  Gross unrealized gains          -        2,368       33,042
  Gross unrealized losses   (36,271)        (128)     (38,892)
                        -----------  -----------  -----------
    Net unrealized gains
     (losses)               (36,271)       2,240       (5,850)
                        -----------  -----------  -----------

Fair value              $    13,424  $    37,510  $ 1,058,609
                        ===========  ===========  ===========

As of June 30, 2010
Amortized cost          $    50,547  $    34,966  $ 1,101,873
Gross unrealized gains
 (losses):
  Gross unrealized gains          0        1,734       29,993
  Gross unrealized losses   (36,883)        (193)     (41,757)
                        -----------  -----------  -----------
    Net unrealized gains
     (losses)               (36,883)       1,541      (11,764)
                        -----------  -----------  -----------

Fair value              $    13,664  $    36,507  $ 1,090,109
                        ===========  ===========  ===========

As of September 30, 2009
Amortized cost          $    60,290  $    50,929  $ 1,348,368
Gross unrealized gains
 (losses):
  Gross unrealized gains          -          578       51,187
  Gross unrealized losses   (44,747)      (1,834)     (49,886)
                        -----------  -----------  -----------
    Net unrealized gains
     (losses)               (44,747)      (1,256)       1,301
                        -----------  -----------  -----------

Fair value              $    15,543  $    49,673  $ 1,349,669
                        ===========  ===========  ===========

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