SOURCE: First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc.

April 22, 2014 18:02 ET

First Midwest Bancorp, Inc. Announces 2014 First Quarter Results

EPS Up 20% - Improved Asset Quality - Strong Loan Growth - Lower Noninterest Expense

ITASCA, IL--(Marketwired - Apr 22, 2014) - Today, First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), reported results of operations and financial condition for the first quarter of 2014. Net income applicable to common shares for the first quarter of 2014 was $17.4 million, or $0.24 per share. This compares to $14.4 million, or $0.20 per share, for the first quarter of 2013 and $18.9 million, or $0.26 per share, for the fourth quarter of 2013.

"Performance for the quarter was solid, reflecting continued progress on a number of our strategic priorities," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Results for the first quarter of 2014 were 20% improved over this same time last year, largely on the strength of diversified business growth, continued improvement in our credit profile, and lower operating overhead. Prior quarter comparisons reflected strong growth in our commercial lending and wealth management businesses, as well as stable net interest margins. However, the positive impact of these benefits was lessened in part by the operating impact of unusually harsh weather conditions in the Midwest."

Mr. Scudder continued, "We continue to deliver on our priorities of growing and diversifying our revenues while maintaining a disciplined risk profile. Loans grew 10% from the prior year quarter reflecting continued commercial sales. Over the same period, wealth management revenues improved 11%, with trust assets under management now standing at over $7 billion."

Mr. Scudder concluded, "Looking ahead, our expectations for continuing economic recovery and the strength of our core deposit funding, asset sensitivity, and capital foundation leave us well positioned to grow and return value to our shareholders."

SELECT HIGHLIGHTS

Generating Business Momentum

  • Grew total loans, excluding covered loans, by 10% from March 31, 2013 and 8% annualized from December 31, 2013.

  • Increased earnings per share by 20% compared to the first quarter of 2013.

  • Grew wealth management fees by 11% from March 31, 2013 and achieved 12.4% growth in assets under management to over $7 billion.

  • Maintained noninterest income at $27 million, consistent with the first and fourth quarters of 2013.

  • Maintained net interest margin of 3.61%, consistent with the fourth quarter of 2013.

  • Decreased noninterest expense by 2% compared to the first and fourth quarters of 2013, despite comparatively higher weather related occupancy costs of $705,000 and $1.2 million, respectively.

Improving Credit and Strengthening Capital

  • Decreased non-performing assets by 27% compared to March 31, 2013 and 12% compared to December 31, 2013.

  • Reduced performing potential problem loans by 21% compared to March 31, 2013.

  • Recorded annualized net loan charge-offs to average loans, excluding covered loans, of 0.48%, consistent with the full year of 2013.

  • Grew Tier 1 common capital to risk-weighted assets to 10.39% as of March 31, 2014, a 77 basis point improvement from March 31, 2013.

 
 
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
 
    Quarters Ended
    March 31, 2014   December 31, 2013   March 31, 2013
    Average Balance     Interest
Earned/
Paid
  Yield/
Rate
(%)
  Average
Balance
    Interest
Earned/
Paid
  Yield/
Rate
(%)
  Average
Balance
    Interest
Earned/
Paid
  Yield/
Rate
(%)
Assets:                                                      
Other interest-earning assets   $ 537,137     $ 382   0.29   $ 610,792     $ 448   0.29   $ 584,170     $ 434   0.30
Trading securities     17,470       28   0.64     16,569       72   1.74     14,357       36   1.00
Investment securities (1)     1,167,803       10,403   3.56     1,211,868       10,582   3.49     1,175,063       9,940   3.38
Federal Home Loan Bank and Federal Reserve Bank stock     35,161       335   3.81     35,161       332   3.78     47,232       339   2.87
Loans (1)(2)     5,722,457       61,518   4.36     5,675,293       63,728   4.45     5,372,034       63,450   4.79
  Total interest-earning assets (1)     7,480,028       72,666   3.93     7,549,683       75,162   3.95     7,192,856       74,199   4.18
Cash and due from banks     111,500                 123,128                 110,073            
Allowance for loan and covered loan losses     (86,726 )               (91,860 )               (99,086 )          
Other assets     777,685                 793,359                 867,458            
Total assets   $ 8,282,487               $ 8,374,310               $ 8,071,301            
Liabilities and Stockholders' Equity:                                                      
Interest-bearing transaction deposits   $ 3,652,938       792   0.09   $ 3,678,591       788   0.08   $ 3,503,930       892   0.10
Time deposits     1,196,449       1,805   0.61     1,234,517       1,953   0.63     1,374,529       2,428   0.72
Borrowed funds     222,491       383   0.70     213,761       390   0.72     199,891       442   0.90
Senior and subordinated debt     190,949       3,015   6.40     207,162       3,301   6.32     214,796       3,435   6.49
Total interest-bearing liabilities     5,262,827       5,995   0.46     5,334,031       6,432   0.48     5,293,146       7,197   0.55
Demand deposits     1,928,289                 1,956,570                 1,740,825            
Total funding sources     7,191,116                 7,290,601                 7,033,971            
Other liabilities     75,969                 87,250                 89,270            
Stockholders' equity - common     1,015,402                 996,459                 948,060            
    Total liabilities and stockholders' equity   $ 8,282,487               $ 8,374,310               $ 8,071,301            
Net interest income/margin (1)           $ 66,671   3.61           $ 68,730   3.62           $ 67,002   3.77
                                                       
                                                       
(1) Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This non-GAAP financial measure assists management in comparing revenue from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income.
   
(2) This item includes covered interest-earning assets consisting of loans acquired through the Company's Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements and the related FDIC indemnification asset.
   
   

For the first quarter of 2014, average interest-earning assets decreased $69.7 million from the fourth quarter of 2013 driven by a decline in other interest-earning assets and investment securities, which was partially offset by growth in the loan portfolio. Compared to the first quarter of 2013, average interest-earning assets rose $287.2 million primarily from loan growth.

The decrease in total interest-bearing liabilities of $71.2 million from the fourth quarter of 2013 resulted from lower levels of time deposits and senior and subordinated debt, in addition to seasonal declines in interest-bearing transaction deposits. Compared to the first quarter of 2013, the reduction in time deposits and senior and subordinated debt more than offset the rise in interest-bearing transaction deposits.

Tax-equivalent net interest margin for the current quarter was 3.61%, remaining stable compared to the fourth quarter of 2013 and decreasing 16 basis points from the first quarter of 2013. Compared to both prior periods, the decline in the yield on loans reflects the continued shift in the loan mix to floating rate loans as well as the decline in higher yielding covered interest earning assets. The $2.1 million decline in net interest income from the linked quarter resulted from two fewer days in the quarter and the shift in the loan mix, which was mitigated by loan growth and an improved funding mix.

 
 
Noninterest Income Analysis
(Dollar amounts in thousands)
   
    Quarters Ended   March 31, 2014
Percent Change From
 
    March 31,
2014
  December 31,
2013
    March 31,
2013
  December 31,
2013
    March 31,
2013
 
Service charges on deposit accounts   $ 8,020   $ 9,259     $ 8,677   (13.4 )   (7.6 )
Wealth management fees     6,457     6,202       5,839   4.1     10.6  
Card-based fees     5,335     5,517       5,076   (3.3 )   5.1  
Mortgage banking income     1,115     1,055       1,966   5.7     (43.3 )
Merchant servicing fees     2,709     2,585       2,554   4.8     6.1  
Other service charges, commissions, and fees     1,413     2,094       1,646   (32.5 )   (14.2 )
  Total fee-based revenues     25,049     26,712       25,758   (6.2 )   (2.8 )
Net securities gains     1,073     147       --   N/M     N/M  
Other income     937     897       781   4.5     20.0  
Net trading gains (1)     191     1,057       1,036   (81.9 )   (81.6 )
Loss on early extinguishment of debt     --     (1,034 )     --   N/M     N/M  
  Total noninterest income   $ 27,250   $ 27,779     $ 27,575   (1.9 )   (1.2 )
                                 
 
 N/M - Not meaningful.
   
(1) Net trading gains result from changes in the fair value of diversified investment securities held in a grantor trust under deferred compensation agreements and are substantially offset by nonqualified plan expense for each period presented.
   
   

Total noninterest income of $27.3 million was consistent with the fourth quarter and first quarter of 2013. For the linked quarters, growth in wealth management fees, mortgage banking income, and merchant servicing fees mitigated decreases in service charges on deposit accounts and fee income generated by sales of capital market products to commercial clients. New customer relationships drove the increase in wealth management fees as trust assets under management increased 5.7% to $7.1 billion compared to the fourth quarter of 2013. Seasonally lower volumes of non-sufficient funds ("NSF") transactions contributed to the decrease in service charges on deposit accounts. Additionally, the Company recorded a pre-tax securities gain of $1.1 million from the sale of a portion of its hedge fund investment.

Compared to the first quarter of 2013, growth in wealth management fees, card-based fees, merchant servicing fees, and net securities gains substantially offset decreases in NSF transactions, mortgage banking income, and fees from sales of capital market products. Wealth management fees grew due to a 12.4% increase in assets under management compared to the first quarter of 2013. During the first quarter of 2013, we sold $54.0 million of 1-4 family mortgage loans in the secondary market compared to $50.8 million in loans sold in the first quarter of 2014. Decreases in market pricing contributed to the decline in mortgage banking income compared to the first quarter of 2013.

   
   
Noninterest Expense Analysis  
(Dollar amounts in thousands)  
   
    Quarters Ended   March 31, 2014
Percent Change From
 
    March 31,
2014
  December 31,
2013
  March 31,
2013
  December 31,
2013
    March 31,
2013
 
Salaries and employee benefits:                              
  Salaries and wages   $ 27,197   $ 27,286   $ 27,839   (0.3 )   (2.3 )
  Nonqualified plan expense (1)     186     1,305     1,124   (85.7 )   (83.5 )
  Retirement and other employee benefits     6,108     6,399     7,606   (4.5 )   (19.7 )
    Total salaries and employee benefits     33,491     34,990     36,569   (4.3 )   (8.4 )
Net occupancy and equipment expense     9,391     7,910     8,147   18.7     15.3  
Professional services     5,389     5,592     5,218   (3.6 )   3.3  
Technology and related costs     3,074     2,984     2,483   3.0     23.8  
Net OREO expense     1,556     2,815     1,799   (44.7 )   (13.5 )
Advertising and promotions     1,613     2,144     1,410   (24.8 )   14.4  
Merchant card expense     2,213     2,076     2,044   6.6     8.3  
Cardholder expenses     1,014     1,019     929   (0.5 )   9.1  
Other expenses     5,927     5,264     6,215   12.6     (4.6 )
      Total noninterest expense   $ 63,668   $ 64,794   $ 64,814   (1.7 )   (1.8 )
                               
                               
(1) Nonqualified plan expense results from changes in the Company's obligation to participants under deferred compensation agreements and is substantially offset by earnings on related assets included in noninterest income.
   
   

Total noninterest expense for the first quarter of 2014 decreased nearly 2% compared to the fourth and first quarters of 2013.

The decrease in retirement and other employee benefits expense compared to both prior periods presented was primarily the result of changes to the Company's defined benefit pension plan instituted in the second quarter of 2013, partially offset by an increase in other employee benefit accruals.

Net occupancy and equipment expense rose compared to both prior periods presented due primarily to higher utilities and snow removal costs during the first quarter of 2014.

The decline in net OREO expense from both prior periods was driven by net gains on sales of OREO properties in the first quarter of 2014 compared to net losses on sales. Higher levels of OREO valuation adjustments recorded in the first quarter of 2014 partially offset the positive variance compared to the first quarter of 2013.

Advertising and promotions expense was elevated in the fourth quarter of 2013 due to the timing of certain advertising costs. The rise in advertising and promotions expense in the first quarter of 2014 compared to the first quarter of 2013 reflects our "Bank with Momentum" branding campaign that was launched in the second quarter of 2013.

A $770,000 reduction in the reserve for unfunded commitments in the fourth quarter of 2013 resulted in lower other expenses compared to the first quarter of 2014.

LOAN PORTFOLIO AND ASSET QUALITY

   
   
Loan Portfolio Composition  
(Dollar amounts in thousands)  
   
    As Of   March 31, 2014
Percent Change From
 
    March 31, 2014   December 31,
2013
  March 31, 2013   December 31,
2013
    March 31, 2013  
Corporate                              
Commercial and industrial   $ 1,917,396   $ 1,830,638   $ 1,659,872   4.7     15.5  
Agricultural     321,343     321,702     274,991   (0.1 )   16.9  
Commercial real estate:                              
  Office     454,962     459,202     465,279   (0.9 )   (2.2 )
  Retail     389,010     392,576     385,413   (0.9 )   0.9  
  Industrial     504,122     501,907     493,564   0.4     2.1  
  Multi-family     337,332     332,873     298,117   1.3     13.2  
  Construction     181,012     186,197     176,242   (2.8 )   2.7  
  Other commercial real estate     822,934     807,071     743,076   2.0     10.7  
    Total commercial real estate     2,689,372     2,679,826     2,561,691   0.4     5.0  
    Total corporate loans     4,928,111     4,832,166     4,496,554   2.0     9.6  
Consumer                              
Home equity     475,103     427,020     379,352   11.3     25.2  
1-4 family mortgages     240,561     275,992     263,286   (12.8 )   (8.6 )
Installment     49,315     44,827     36,079   10.0     36.7  
    Total consumer loans     764,979     747,839     678,717   2.3     12.7  
    Total loans, excluding covered loans     5,693,090     5,580,005     5,175,271   2.0     10.0  
Covered loans     122,387     134,355     186,687   (8.9 )   (34.4 )
    Total loans   $ 5,815,477   $ 5,714,360   $ 5,361,958   1.8     8.5  
                               
                               

Total loans, excluding covered loans, of $5.7 billion rose by $113.1 million, or 8.1% on an annualized basis, from December 31, 2013 driven by strong growth in the commercial and industrial, other commercial real estate, and home equity portfolios, which more than offset the decline in the 1-4 family mortgages portfolio. In response to market conditions, the Company purchased $48.7 million of high-quality, shorter duration, floating rate home equity loans and sold $35.4 million of longer-term, fixed rate 1-4 family mortgages in the first quarter of 2014.

Compared to March 31, 2013, total loans, excluding covered loans, increased by 10.0%, or $517.8 million, from growth across the majority of the loan categories.

Overall, the loan portfolio continues to benefit from well-balanced growth reflecting credits of varying size, distributed across our market footprint. The Company experienced strong growth in the commercial and industrial and agricultural loan categories, reflecting the impact of greater resource investments and expansion into certain sector-based lending areas, such as agri-business, asset-based lending, and healthcare.

   
   
Asset Quality  
(Dollar amounts in thousands)  
   
    As Of     March 31, 2014
Percent Change From
 
    March 31,
2014
    December 31,
2013
    March 31,
2013
    December 31,
2013
    March 31,
2013
 
Asset quality, excluding covered loans and covered OREO                                    
Non-accrual loans   $ 64,217     $ 59,798     $ 95,397     7.4     (32.7 )
90 days or more past due loans     4,973       3,708       5,552     34.1     (10.4 )
  Total non-performing loans     69,190       63,506       100,949     9.0     (31.5 )
Accruing troubled debt restructurings ("TDRs")     6,301       23,770       2,587     (73.5 )   N/M  
OREO     30,026       32,473       39,994     (7.5 )   (24.9 )
  Total non-performing assets   $ 105,517     $ 119,749     $ 143,530     (11.9 )   (26.5 )
30-89 days past due loans   $ 12,861     $ 20,742     $ 22,222     (38.0 )   (42.1 )
Performing potential problem loans:                                    
  Special mention   $ 84,908     $ 77,564     $ 121,041     9.5     (29.9 )
  Substandard     75,096       78,390       81,624     (4.2 )   (8.0 )
    Total performing potential problem loans (1)   $ 160,004     $ 155,954     $ 202,665     2.6     (21.1 )
Non-accrual loans to total loans     1.13 %     1.07 %     1.84 %            
Non-performing loans to total loans     1.22 %     1.14 %     1.95 %            
Non-performing assets to loans plus OREO     1.84 %     2.13 %     2.75 %            
Performing potential problem loans to total loans (1)     2.81 %     2.79 %     3.92 %            
                                     
Allowance for Credit Losses                                    
Allowance for loan losses   $ 69,203     $ 72,946     $ 85,364     (5.1 )   (18.9 )
Allowance for covered loan losses     11,429       12,559       12,227     (9.0 )   (6.5 )
    Total allowance for loan and covered loan losses     80,632       85,505       97,591     (5.7 )   (17.4 )
Reserve for unfunded commitments     1,616       1,616       2,866     --     (43.6 )
    Total allowance for credit losses   $ 82,248     $ 87,121     $ 100,457     (5.6 )   (18.1 )
Allowance for credit losses to loans, including covered loans     1.41 %     1.52 %     1.87 %            
Allowance for credit losses to loans, excluding covered loans     1.24 %     1.34 %     1.70 %            
Allowance for credit losses to non-accrual loans, excluding covered loans     110.28 %     124.69 %     92.49 %            
                                     
                                     
 N/M - Not meaningful.
   
(1) Total performing potential problem loans excludes accruing TDRs of $2.4 million as of March 31, 2014, $2.8 million as of December 31, 2013, and $1.3 million as of March 31, 2013.
   
   

Non-accrual loans, excluding covered loans, increased $4.4 million, or 7.4%, from December 31, 2013. This increase was largely driven by a single corporate loan relationship for which a specific reserve was established. Non-performing assets, excluding covered loans, decreased by $14.2 million, or 11.9%, from December 31, 2013, which resulted primarily from lower levels of accruing TDRs and OREO. Two accruing TDRs totaling $18.8 million were returned to performing status in the first quarter of 2014 due to sustained payment performance in accordance with their modified terms, which represent market rates at the time of restructuring.

Performing potential problem loans remained stable compared to the fourth quarter of 2013 and are at pre-recession levels.

Loans 30-89 days past due were $12.9 million at March 31, 2014, decreasing 38.0% from December 31, 2013.

 
 
Charge-Off Data
(Dollar amounts in thousands)
 
    Quarters Ended
    March 31, 2014     % of
Total
  December 31, 2013     % of
Total
    March 31, 2013     % of
Total
Net loan charge-offs (1):                                      
  Commercial and industrial   $ 1,367     20.5   $ 2,528     50.0     $ 996     14.6
  Agricultural     153     2.3     (58 )   (1.1 )     90     1.3
  Office, retail, and industrial     1,025     15.4     882     17.4       1,260     18.5
  Multi-family     89     1.3     (10 )   (0.2 )     160     2.3
  Construction     503     7.6     (934 )   (18.5 )     563     8.3
  Other commercial real estate     1,627     24.5     776     15.4       1,505     22.0
  Consumer     1,890     28.4     1,868     37.0       2,257     33.0
    Net loan charge-offs, excluding covered loans     6,654     100.0     5,052     100.0       6,831     100.0
Net covered loan charge-offs (1)     (340 )         271             698      
    Total net loan charge-offs   $ 6,314         $ 5,323           $ 7,529      
Net loan charge-offs to average loans, excluding covered loans, annualized:                                      
Quarter-to-date     0.48 %         0.36 %           0.54 %    
Year-to-date     0.48 %         0.48 %           0.54 %    
                                       
                                       
(1)  Amounts represent charge-offs, net of recoveries.
   
   

Year-to-date, annualized net loan charge-offs to average loans, excluding covered loans, remained consistent at 0.48% compared to the full year of 2013 and decreased 11% compared to the first quarter of 2013.

CAPITAL MANAGEMENT

 
 
Capital Ratios
(Dollar amounts in thousands)
 
    March 31,
2014
    December 31,
2013
    March 31,
2013
    Regulatory
Minimum
For
"Well-
Capitalized"
    Excess Over
Required Minimums
at March 31, 2014
Regulatory capital ratios:                            
  Total capital to risk-weighted assets   12.20 %   12.39 %   12.05 %   10.00 %   22 %   $ 153,885
  Tier 1 capital to risk-weighted assets   10.92 %   10.91 %   10.55 %   6.00 %   82 %   $ 343,176
  Tier 1 leverage to average assets   9.53 %   9.18 %   8.75 %   5.00 %   91 %   $ 362,356
Tier 1 common capital to risk-weighted assets (1)   10.39 %   10.37 %   9.62 %   N/A     N/A       N/A
Tangible common equity ratios (2):                                    
  Tangible common equity to tangible assets   9.25 %   9.09 %   8.66 %   N/A     N/A       N/A
  Tangible common equity, excluding other comprehensive loss, to tangible assets   9.49 %   9.43 %   8.88 %   N/A     N/A       N/A
  Tangible common equity to risk-weighted assets   10.67 %   10.67 %   10.52 %   N/A     N/A       N/A
Non-performing assets to tangible common equity and allowance for credit losses   12.76 %   14.74 %   18.55 %   N/A     N/A       N/A
                                     
                                     
N/A - Ratio is not subject to formal Federal Reserve regulatory guidance.
 
(1) Excludes the impact of trust-preferred securities.
   
(2) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. In management's view, Tier 1 common capital and TCE measures are meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with competitors.
   
   

The slight decline in the total capital to risk-weighted assets ratio compared to December 31, 2013 was due to an increase in risk-weighted assets resulting from loan growth, which more than offset the increase in total capital from earnings for the first quarter of 2014 and the increase in allowable deferred tax assets. The tier 1 leverage to average assets ratio increased 35 basis points from December 31, 2013 driven by strong earnings, the increase in allowable deferred tax assets, and a reduction in average assets. The Company's regulatory ratios exceeded all regulatory mandated ratios for characterization as "well-capitalized" as of March 31, 2014.

About the Company

First Midwest is the premier relationship-based financial institution in the dynamic Chicagoland banking market. As one of Illinois' largest independent bank holding companies, First Midwest provides a full range of business and retail banking and wealth management services through approximately 90 banking offices located in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. The Company website is www.firstmidwest.com.

Safe Harbor Statement

This press release may contain "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 results or 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, 2013 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. The Company undertakes no duty to update any forward-looking statements contained in 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 23, 2014 at 10:00 AM (ET). Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. domestic) or (412) 317-6016 (international) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international) conference I.D. 10043720 beginning one hour after completion of the live call until 9:00 A.M. (ET) on April 30, 2014. 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:

  • Condensed Consolidated Statements of Financial Condition
  • Condensed Consolidated Statements of Income

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/investorrelations.

   
   
Condensed Consolidated Statements of Financial Condition  
Unaudited  
(Amounts in thousands)  
   
    March 31, 2014     December 31,
2013
    March 31, 2013  
Assets                        
Cash and due from banks   $ 198,544     $ 110,417     $ 95,983  
Interest-bearing deposits in other banks     393,768       476,824       457,333  
Trading securities, at fair value     17,774       17,317       15,544  
Securities available-for-sale, at fair value     1,080,750       1,112,725       1,246,679  
Securities held-to-maturity, at amortized cost     43,251       44,322       31,443  
Federal Home Loan Bank and Federal Reserve Bank stock, at cost     35,161       35,161       47,232  
Loans, excluding covered loans     5,693,090       5,580,005       5,175,271  
Covered loans     122,387       134,355       186,687  
Allowance for loan and covered loan losses     (80,632 )     (85,505 )     (97,591 )
  Net loans     5,734,845       5,628,855       5,264,367  
OREO, excluding covered OREO     30,026       32,473       39,994  
Covered OREO     7,355       8,863       14,774  
FDIC indemnification asset     15,537       16,585       28,958  
Premises, furniture, and equipment     119,219       120,204       118,617  
Investment in BOLI     193,673       193,167       206,706  
Goodwill and other intangible assets     275,605       276,366       280,240  
Accrued interest receivable and other assets     183,011       180,128       207,949  
  Total assets   $ 8,328,519     $ 8,253,407     $ 8,055,819  
Liabilities and Stockholders' Equity                        
Noninterest-bearing deposits   $ 1,961,371     $ 1,911,602     $ 1,738,110  
Interest-bearing deposits     4,855,386       4,854,499       4,862,685  
  Total deposits     6,816,757       6,766,101       6,600,795  
Borrowed funds     223,699       224,342       208,854  
Senior and subordinated debt     190,964       190,932       214,811  
Accrued interest payable and other liabilities     76,674       70,590       77,908  
  Total liabilities     7,308,094       7,251,965       7,102,368  
Common stock     858       858       858  
Additional paid-in capital     406,009       414,293       409,077  
Retained earnings     866,132       853,740       800,343  
Accumulated other comprehensive loss, net of tax     (19,772 )     (26,792 )     (16,889 )
Treasury stock, at cost     (232,802 )     (240,657 )     (239,938 )
  Total stockholders' equity     1,020,425       1,001,442       953,451  
  Total liabilities and stockholders' equity   $ 8,328,519     $ 8,253,407     $ 8,055,819  
                         
                         
   
   
Condensed Consolidated Statements of Income  
Unaudited  
(Amounts in thousands, except per share data)  
   
    Quarters Ended  
    March 31, 2014     December 31,
2013
    March 31, 2013  
Interest Income                        
Loans, excluding covered loans   $ 59,002     $ 60,068     $ 59,431  
Covered loans     1,938       3,062       3,449  
Investment securities     8,005       8,138       7,356  
Other short-term investments     745       852       809  
  Total interest income     69,690       72,120       71,045  
Interest Expense                        
Deposits     2,597       2,741       3,320  
Borrowed funds     383       390       442  
Senior and subordinated debt     3,015       3,301       3,435  
  Total interest expense     5,995       6,432       7,197  
  Net interest income     63,695       65,688       63,848  
Provision for loan and covered loan losses     1,441       --       5,674  
  Net interest income after provision for loan and covered loan losses     62,254       65,688       58,174  
Noninterest Income                        
Service charges on deposit accounts     8,020       9,259       8,677  
Wealth management fees     6,457       6,202       5,839  
Card-based fees     5,335       5,517       5,076  
Mortgage banking income     1,115       1,055       1,966  
Other service charges, commissions, and fees     4,122       4,679       4,200  
Net securities gains     1,073       147       --  
Other income     1,128       920       1,817  
  Total noninterest income     27,250       27,779       27,575  
Noninterest Expense                        
Salaries and employee benefits     33,491       34,990       36,569  
Net occupancy and equipment expense     9,391       7,910       8,147  
Professional services     5,389       5,592       5,218  
Technology and related costs     3,074       2,984       2,483  
Net OREO expense     1,556       2,815       1,799  
Other expenses     10,767       10,503       10,598  
Total noninterest expense     63,668       64,794       64,814  
  Income before income tax expense     25,836       28,673       20,935  
  Income tax expense     8,172       9,508       6,293  
  Net income     17,664       19,165       14,642  
Net income applicable to non-vested restricted shares     (225 )     (260 )     (212 )
  Net income applicable to common shares   $ 17,439     $ 18,905     $ 14,430  
Diluted earnings per common share   $ 0.24     $ 0.26     $ 0.20  
Dividends declared per common share   $ 0.07     $ 0.07     $ 0.01  
Weighted average diluted common shares outstanding     74,159       74,042       73,874  
                         
                         

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