First Midwest Bancorp, Inc. Announces 2014 Fourth Quarter and Full Year Results

ITASCA, IL--(Marketwired - Jan 20, 2015) - First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the fourth quarter of 2014. Net income for the fourth quarter of 2014 was $14.6 million, or $0.19 per share. This compares to $18.5 million, or $0.25 per share, for the third quarter of 2014 and $19.2 million, or $0.26 per share, for the fourth quarter of 2013. Excluding acquisition and integration related expenses, earnings per share was $0.27 for the fourth quarter of 2014 and $0.28 for the third quarter of 2014.

For the full year of 2014, the Company reported net income of $69.3 million, or $0.92 per share, compared to $79.3 million, or $1.06 per share, for the year ended December 31, 2013. Earnings per share was $1.03 for the year ended December 31, 2014, excluding acquisition and integration related expenses.

"Performance for the fourth quarter of 2014 was strong, benefiting from consistent, balanced business execution throughout the year," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Sales success across our business lines, combined with our acquisitions of Great Lakes Bank and the Popular Community Bank branches, significantly expanded and strengthened our balance sheet. Our acquisition of National Machine Tool added leasing capabilities and an experienced sales team to our line of commercial offerings. Importantly, our results for the year reflected balanced execution across all of our business lines, significantly improved credit metrics, and successful completion of three acquisitions during the second half of 2014."

Mr. Scudder continued, "As we enter 2015, our business momentum is building amid expectations of improving operating conditions and, ultimately, a transition to higher rates. As we navigate this environment, a talented and engaged team of colleagues combined with strong capital and core deposit foundations leave us well positioned for continued growth and enhanced shareholder value."

FOURTH QUARTER HIGHLIGHTS

Robust Operating Performance

• Earned $0.27 per share, excluding acquisition and integration related expenses, compared to $0.26 for the fourth quarter of 2013.
  
  
• Increased top-line revenue to $111 million, up 4% and 12% from September 30, 2014 and December 31, 2013, respectively.
  
  
• Improved net interest margin to 3.76%, up 4 basis points from September 30, 2014 and 14 basis points from December 31, 2013.
  
  
• Strong fee-based revenues of $29 million, consistent with the third quarter of 2014 and up 10% from the fourth quarter of 2013.
  
  
• Increase of $14.5 million in noninterest expense from September 30, 2014 primarily due to higher acquisition, integration, and operating costs of the acquisitions, targeted remediation costs, and certain other transaction related expenses.
  
  

Strengthened Balance Sheet

• Expanded total loans to nearly $7 billion at December 31, 2014, an increase of 3% from September 30, 2014 and 18% from December 31, 2013.
  
  
• Increased average core transactional deposits 6% from September 30, 2014 and 15% from December 31, 2013.
  
  

Improved Credit and Capital

• Reduced non-performing assets to loans plus OREO to 1.49%, down 27 basis points from September 30, 2014 and 64 basis points from December 31, 2013.
  
  
• Decreased the fourth quarter of 2014 net charge-offs to average loans to 13 basis points, reflecting improvement in the underlying loan portfolio.
  
  
• Grew Tier 1 common capital to risk-weighted assets to 9.54%, a 16 basis point increase from September 30, 2014.
  
  
• Increased dividends per share to $0.31 for the year ended December 31, 2014, up 94% from the same period in 2013.
  
  

Significant Quarter Event

• Completed the acquisition and operating system conversion of Great Lakes Financial Resources, Inc.

ACQUISITIONS

On August 8, 2014, the Bank completed the acquisition of the Chicago banking operations of Popular Community Bank ("Popular"). The acquisition included Popular's twelve full-service retail banking offices and its small business and middle market commercial lending activities in the Chicago metropolitan area. On the date of acquisition, the Bank acquired $550 million in loans and $732 million in deposits.

On September 26, 2014, the Bank completed the acquisition of National Machine Tool Financial Corporation ("National Machine Tool"). In business for more than 28 years and a customer of the Bank for more than 15 years, National Machine Tool provides equipment leasing and financing alternatives to traditional bank financing.

On December 2, 2014, the Company completed the acquisition of the south suburban Chicago-based Great Lakes Financial Resources, Inc. ("Great Lakes"). As part of the transaction, the Company acquired seven full-service retail banking offices, one drive-up location, $223 million in loans, and $466 million in deposits on the date of acquisition.

The conversion and integration of these transactions were substantially complete as of December 31, 2014.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
				Quarters Ended
				December 31, 2014									September 30, 2014									December 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				$	625,183			$	527		0.33		$	476,768			$	313		0.26		$	610,792			$	448		0.29
Trading securities					18,100				88		1.94			18,363				30		0.65			16,569				72		1.74
Investment securities (1)					1,095,446				9,904		3.62			1,067,742				9,659		3.62			1,211,868				10,582		3.49
Federal Home Loan Bank and Federal Reserve Bank stock					36,209				342		3.78			35,588				341		3.83			35,161				332		3.78
Loans (1)(2)					6,545,967				73,371		4.45			6,302,883				69,458		4.37			5,675,293				63,728		4.45
	Total interest-earning assets (1)				8,320,905				84,232		4.02			7,901,344				79,801		4.01			7,549,683				75,162		3.95
Cash and due from banks					126,317									126,279									123,128
Allowance for loan and covered loan losses					(74,686	)								(77,596	)								(91,860	)
Other assets					859,633									818,066									793,359
		Total assets		$	9,232,169								$	8,768,093								$	8,374,310
Liabilities and Stockholders' Equity:
Interest-bearing transaction deposits				$	4,144,391				984		0.09		$	3,906,975				865		0.09		$	3,678,591				788		0.08
Time deposits					1,255,355				1,479		0.47			1,226,025				1,941		0.63			1,234,517				1,953		0.63
Borrowed funds					111,213				12		0.04			101,674				9		0.04			213,761				390		0.72
Senior and subordinated debt					194,137				3,015		6.16			191,013				3,016		6.26			207,162				3,301		6.32
	Total interest-bearing liabilities				5,705,096				5,490		0.38			5,425,687				5,831		0.43			5,334,031				6,432		0.48
Demand deposits					2,339,298									2,208,450									1,956,570
	Total funding sources				8,044,394									7,634,137									7,290,601
Other liabilities					115,093									83,075									87,250
Stockholders' equity - common					1,072,682									1,050,881									996,459
		Total liabilities and stockholders' equity		$	9,232,169								$	8,768,093								$	8,374,310
Net interest income/margin (1)								$	78,742		3.76						$	73,970		3.72						$	68,730		3.62

(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 in income tax expense. These adjustments have no impact on net income. See the accompanying Supplemental Financial Information for details on the calculation of tax-equivalent net interest income.
(2)	Includes loans acquired through Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements ("covered loans") and a related FDIC indemnification asset.

For the fourth quarter of 2014, total average interest-earning assets rose $419.6 million and $771.2 million from the third quarter of 2014 and the fourth quarter of 2013, respectively, driven by loans acquired in the Popular and Great Lakes acquisitions during the second half of 2014 and solid organic loan growth over the course of the year.

Total average funding sources for the fourth quarter of 2014 increased $410.3 million from the third quarter of 2014 and $753.8 million from the fourth quarter of 2013. The rise in both prior periods resulted mainly from acquisition activity. The decline in borrowed funds from the fourth quarter of 2013 was due to the prepayment of $114.6 million of FHLB advances with a weighted-average rate of 1.08% during the second quarter of 2014, which is net of the yield earned on the cash used for the prepayment.

Tax-equivalent net interest margin for the fourth quarter of 2014 was 3.76%, a rise of 4 basis points from the third quarter of 2014 and 14 basis points from the fourth quarter of 2013. The Popular and Great Lakes acquisitions contributed to the increases, adding a greater proportion of higher yielding, fixed rate loans along with low cost deposits. In addition, net accretion resulting from the fair value adjustments on acquired assets and assumed liabilities contributed 8 basis points and 3 basis points to the tax-equivalent net interest margin in the fourth and third quarters of 2014, respectively. A decrease in the yield on covered interest-earning assets partially offset these increases. Certain loan hedging strategies and the prepayment of the FHLB advances contributed to the increase in tax-equivalent net interest margin compared to the fourth quarter of 2013.

Compared to the third quarter of 2014, tax-equivalent net interest income rose $4.8 million due primarily to the full quarter impact of the Popular acquisition, which included approximately $1.6 million of net accretion, and the December acquisition of Great Lakes. The $10.0 million increase in tax-equivalent net interest income compared to the fourth quarter of 2013 was mainly due to the acquisitions and loan growth, which was funded by a rise in core transactional deposits that also replaced higher costing time deposits and borrowed funds.

Noninterest Income Analysis
(Dollar amounts in thousands)
				Quarters Ended												December 31, 2014 Percent Change From
				December 31, 2014				September 30, 2014				December 31, 2013				September 30, 2014			December 31, 2013
Service charges on deposit accounts				$	10,015			$	9,902			$	9,259			1.1			8.2
Wealth management fees					6,744				6,721				6,202			0.3			8.7
Card-based fees					6,390				6,646				5,517			(3.9	)		15.8
Merchant servicing fees					2,703				2,932				2,585			(7.8	)		4.6
Mortgage banking income					812				1,125				1,055			(27.8	)		(23.0	)
Other service charges, commissions, and fees					2,700				2,334				2,094			15.7			28.9
	Total fee-based revenues				29,364				29,660				26,712			(1.0	)		9.9
Net securities (losses) gains					(63	)			2,570				147			N/M			N/M
BOLI income					843				767				584			9.9			44.3
Other income					613				512				313			19.7			95.8
Net trading gains (losses) (1)					311				(356	)			1,057			N/M			(70.6	)
Gains on sales of properties					-				3,954				-			(100.0	)		-
Losses on early extinguishment of debt					-				-				(1,034	)		-			(100.0	)
		Total noninterest income		$	31,068			$	37,107			$	27,779			(16.3	)		11.8

N/M - Not meaningful.
(1)	Net trading gains (losses) 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 fee-based revenues increased 9.9% from the fourth quarter of 2013, reflecting growth across most categories. Higher levels of service charge volume, primarily from customers acquired in the Popular and Great Lakes transactions, drove the rise in service charges on deposit accounts. New customer relationships continued to drive the increase in wealth management fees. The increase in card-based fees reflects higher transaction volumes along with incentives from a renewed vendor contract.

Compared to the linked quarter, total fee-based revenues were consistent. Overall, increases in fee-based revenues due to the acquisitions were offset by lower levels of mortgage banking income, driven by a valuation adjustment relating to mortgage servicing rights, and the impact of a renewed vendor contract within card-based fees during the third quarter of 2014. The normal seasonal decline in merchant servicing fees was substantially offset by lower merchant card expense.

The rise in other service charges, commissions, and fees compared to both prior periods was driven primarily by gains realized on the sale of certain equipment leasing contracts. These sales were generated from a new commercial product offering introduced with the acquisition of National Machine Tool in the third quarter of 2014.

Total noninterest income of $31.1 million decreased 16.3% from the linked quarter and grew 11.8% from the fourth quarter of 2013. During the third quarter of 2014, the Company sold longer-duration corporate bonds out of the Company's securities portfolio at a pre-tax gain of $2.0 million and disposed of two branch properties, which generated pre-tax gains of $4.0 million. The Company repurchased and retired $23.3 million of 6.95% junior subordinated debentures during the fourth quarter of 2013, which resulted in a pre-tax loss of $1.0 million.

Noninterest Expense Analysis
(Dollar amounts in thousands)
					Quarters Ended										December 31, 2014 Percent Change From
					December 31, 2014			September 30, 2014				December 31, 2013			September 30, 2014			December 31, 2013
Salaries and employee benefits:
	Salaries and wages				$	32,175		$	28,538			$	27,286		12.7			17.9
	Nonqualified plan expense (1)					465			(386	)			1,305		N/M			(64.4	)
	Retirement and other employee benefits					7,660			7,319				6,399		4.7			19.7
		Total salaries and employee benefits				40,300			35,471				34,990		13.6			15.2
Net occupancy and equipment expense						9,479			8,639				7,910		9.7			19.8
Professional services						6,664			5,692				5,592		17.1			19.2
Technology and related costs						3,444			3,253				2,984		5.9			15.4
Merchant card expense						2,203			2,396				2,076		(8.1	)		6.1
Advertising and promotions						2,418			1,822				2,144		32.7			12.8
Net OREO expense						2,544			1,406				2,815		80.9			(9.6	)
Cardholder expenses						1,036			1,120				1,019		(7.5	)		1.7
Other expenses						7,446			6,766				5,264		10.1			41.5
Acquisition and integration related expenses						9,294			3,748				-		N/M			100.0
			Total noninterest expense		$	84,828		$	70,313			$	64,794		20.6			30.9

N/M - Not meaningful.
(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 the related assets included in noninterest income.

Excluding acquisition and integration related expenses, total noninterest expense for the fourth quarter of 2014 increased 13.5% from the third quarter of 2014 and 16.6% from the fourth quarter of 2013. The remaining increase from the third quarter of 2014 was due to a rise in operating costs attendant to Popular, National Machine Tool, and Great Lakes, additional staffing and higher salaries in response to growth and organizational needs, targeted remediation costs, and the timing of certain compensation and benefit accruals, impacted in part by the acquisitions.

Recurring costs associated with operating the newly acquired Popular, National Machine Tool, and Great Lakes locations of approximately $3.5 million and $2.0 million for the fourth and third quarters of 2014, respectively, were primarily concentrated in salaries and employee benefits, net occupancy and equipment expense, professional services, and other expenses. The conversion and integration of these transactions is substantially complete with certain remaining efficiencies to be implemented in the first half of 2015.

Compared to both prior periods, the rise in salaries and wages also reflects the timing of certain incentive compensation accruals, impacted by acquisition results, as well as additional staff and higher salaries in response to growth and organizational needs. Lower levels of deferred loan origination costs contributed to the variance from the third quarter of 2014.

Retirement and other employee benefits increased from the third quarter of 2014 and the fourth quarter of 2013 due to the timing of certain profit sharing expenses. A reduction in pension expense as a result of changes to the Company's defined benefit pension plan partially offset these increases compared to the fourth quarter of 2013.

Professional services were elevated from the third quarter of 2014 due to remediation costs on select significant credits, contributing to the improvements in credit quality. In addition, personnel recruitment costs increased in response to growth and organizational needs compared to both prior periods.

A $1.6 million valuation adjustment on an OREO property resulted in the rise in net OREO expense compared to the third quarter of 2014.

Other expenses were lower in the fourth quarter of 2013 due to a $770,000 reduction in the reserve for unfunded commitments.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)
				As Of															December 31, 2014 Percent Change From
				December 31, 2014
				Legacy and Popular (1)			Great Lakes			Total			September 30, 2014 (1)			December 31, 2013			September 30, 2014			December 31, 2013
Corporate
Commercial and industrial				$	2,219,501		$	34,055		$	2,253,556		$	2,208,166		$	1,830,638		2.1			23.1
Agricultural					356,507			1,742			358,249			347,511			321,702		3.1			11.4
Commercial real estate:
	Office				421,306			73,331			494,637			437,222			459,202		13.1			7.7
	Retail				440,787			11,438			452,225			454,178			392,576		(0.4	)		15.2
	Industrial				528,200			3,317			531,517			531,122			501,907		0.1			5.9
	Multi-family				553,190			11,231			564,421			559,689			332,873		0.8			69.6
	Construction				196,387			7,849			204,236			193,445			186,197		5.6			9.7
	Other commercial real estate				880,720			7,177			887,897			871,825			807,071		1.8			10.0
		Total commercial real estate			3,020,590			114,343			3,134,933			3,047,481			2,679,826		2.9			17.0
		Total corporate loans			5,596,598			150,140			5,746,738			5,603,158			4,832,166		2.6			18.9
Consumer
Home equity					520,443			22,742			543,185			517,446			427,020		5.0			27.2
1-4 family mortgages					247,359			44,104			291,463			238,172			275,992		22.4			5.6
Installment					75,405			627			76,032			69,428			44,827		9.5			69.6
		Total consumer loans			843,207			67,473			910,680			825,046			747,839		10.4			21.8
Covered loans					79,435			-			79,435			90,875			134,355		(12.6	)		(40.9	)
		Total loans		$	6,519,240		$	217,613		$	6,736,853		$	6,519,079		$	5,714,360		3.3			17.9

(1)	Loan balances include $500.7 million and $533.2 million in loans as of December 31, 2014 and September 30, 2014, respectively, that were acquired in the Popular business combination and are recorded at fair value as of the acquisition date.

Compared to September 30, 2014, total loans of $6.7 billion increased by 3.3%, driven primarily by the Great Lakes acquisition, which added $217.6 million of loans at December 31, 2014. In addition, growth in our legacy loans of 3.0% on an annualized basis from September 30, 2014 was offset by anticipated paydowns on certain loans acquired in the Popular transaction.

Total loans rose $1.0 billion, or 17.9%, from December 31, 2013. Excluding loans acquired in the Popular and Great Lakes acquisitions of $718.3 million and covered loans, total loans grew $359.1 million, or 6.4%, from December 31, 2013 due primarily to well-balanced growth distributed across the commercial and industrial, agricultural, multi-family, and consumer categories. Strong growth in the commercial and industrial and agricultural loan categories, excluding acquired and covered loans, of 17.4% and 10.8%, respectively, reflects 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												December 31, 2014 Percent Change From
			December 31, 2014				September 30, 2014				December 31, 2013				September 30, 2014			December 31, 2013
Asset quality (1)
Non-accrual loans			$	58,853			$	63,858			$	59,798			(7.8	)		(1.6	)
90 days or more past due loans				771				5,983				3,708			(87.1	)		(79.2	)
	Total non-performing loans			59,624				69,841				63,506			(14.6	)		(6.1	)
Accruing troubled debt restructuring ("TDRs")				3,704				5,449				23,770			(32.0	)		(84.4	)
OREO				25,779				29,165				32,473			(11.6	)		(20.6	)
	Total non-performing assets		$	89,107			$	104,455			$	119,749			(14.7	)		(25.6	)
30-89 days past due loans			$	13,473			$	13,459			$	20,742			0.1			(35.0	)
Non-accrual loans to total loans				0.99	%			1.08	%			1.07	%
Non-performing loans to total loans				1.00	%			1.18	%			1.14	%
Non-performing assets to loans plus OREO				1.49	%			1.76	%			2.13	%
Allowance for Credit Losses
Allowance for loan and covered loan losses			$	72,694			$	73,106			$	85,505			(0.6	)		(15.0	)
Reserve for unfunded commitments				1,816				1,616				1,616			12.4			12.4
	Total allowance for credit losses		$	74,510			$	74,722			$	87,121			(0.3	)		(14.5	)
Allowance for credit losses to loans, excluding acquired loans				1.24	%			1.25	%			1.52	%
Allowance for credit losses to non-accrual loans (1)				114.33	%			103.47	%			124.69	%

(1)	Due to the impact of business combination accounting, which requires acquired loans to be recorded at fair value as of the acquisition date, and protection provided for under loss share agreements with the FDIC ("the FDIC Agreements"), acquired loans and covered loans and covered OREO are excluded from these metrics.

Total non-performing loans, excluding acquired and covered loans, were $59.6 million at December 31, 2014, decreasing $10.2 million, or 14.6%, from September 30, 2014 and 6.1% from December 31, 2013. The improvement compared to the linked quarter was due primarily to a $2.3 million paydown of a non-accrual commercial real estate loan and the return of a $3.8 million past due commercial real estate loan relationship to current status.

Charge-Off Data
(Dollar amounts in thousands)
				Quarters Ended
				December 31, 2014				% of Total		September 30, 2014			% of Total		December 31, 2013				% of Total
Net loan charge-offs (1):
	Commercial and industrial			$	1,217			58.8		$	9,047		56.7		$	2,528			47.5
	Agricultural				--			--			--		--			(58	)		(1.1	)
	Office, retail, and industrial				143			6.9			2,459		15.4			882			16.5
	Multi-family				476			23.0			26		0.2			(10	)		(0.2	)
	Construction				(6	)		(0.3	)		157		1.0			(934	)		(17.5	)
	Other commercial real estate				(247	)		(11.9	)		1,255		7.9			776			14.6
	Consumer				342			16.5			2,998		18.8			1,868			35.1
	Covered				146			7.0			5		--			271			5.1
		Net loan charge-offs		$	2,071			100.0		$	15,947		100.0		$	5,323			100.0
Net loan charge-offs to average loans, excluding acquired and covered loans, annualized:
Quarter-to-date					0.13	%					1.08	%				0.36	%
Year-to-date					0.56	%					0.70	%				0.48	%

(1) These amounts represent gross charge-offs, net of recoveries.

Net loan charge-offs for the fourth quarter of 2014 represents one of the lowest levels in over seven years. Continued progress in consumer delinquencies and a $1.3 million recovery on an other commercial real estate loan relationship contributed to the decrease compared to the third quarter of 2014. In addition, net loan charge-offs for the third quarter of 2014 were elevated due to the recognition of a $7.5 million loss on a commercial loan relationship, for which the Company continues to aggressively pursue all collection and other remedies.

DEPOSIT PORTFOLIO

Deposits - Average Balances
(Dollar amounts in thousands)
				Quarters Ended									December 31, 2014 Percent Change From
				December 31, 2014			September 30, 2014			December 31, 2013			September 30, 2014		December 31, 2013
Demand deposits				$	2,339,298		$	2,208,450		$	1,956,570		5.9		19.6
Savings deposits					1,306,388			1,231,700			1,126,737		6.1		15.9
NOW accounts					1,331,360			1,261,522			1,195,471		5.5		11.4
Money market accounts					1,506,643			1,413,753			1,356,383		6.6		11.1
	Core transactional deposits				6,483,689			6,115,425			5,635,161		6.0		15.1
Time deposits					1,239,257			1,209,935			1,218,450		2.4		1.7
Brokered deposits					16,098			16,090			16,067		--		0.2
	Total time deposits				1,255,355			1,226,025			1,234,517		2.4		1.7
		Total deposits		$	7,739,044		$	7,341,450		$	6,869,678		5.4		12.7

Average core transactional deposits of $6.5 billion for the fourth quarter of 2014 increased 6.0% and 15.1% compared to the third quarter of 2014 and the fourth quarter of 2013, respectively. The rise was due primarily to deposits assumed in the Popular and Great Lakes acquisitions, further strengthening the Company's core transactional deposit base, led by an increase in average demand deposits of $382.7 million, or 19.6%, from December 31, 2013.

CAPITAL MANAGEMENT

Capital Ratios
(Dollar amounts in thousands)
			December 31, 2014			September 30, 2014			December 31, 2013			Regulatory Minimum For "Well- Capitalized"			Excess Over Required Minimums at December 31, 2014
Bank regulatory capital ratios:
	Total capital to risk-weighted assets		12.30	%		11.70	%		13.86	%		10.00	%		23	%		$	174,021
	Tier 1 capital to risk-weighted assets		11.31	%		10.69	%		12.61	%		6.00	%		89	%		$	402,677
	Tier 1 leverage to average assets		9.76	%		9.42	%		10.24	%		5.00	%		95	%		$	418,334
Company regulatory capital ratios:
	Total capital to risk-weighted assets		11.23	%		10.94	%		12.39	%		N/A			N/A				N/A
	Tier 1 capital to risk-weighted assets		10.18	%		9.86	%		10.91	%		N/A			N/A				N/A
	Tier 1 leverage to average assets		9.03	%		8.93	%		9.18	%		N/A			N/A				N/A
Company tier 1 common capital to risk-weighted assets (1)(2)			9.54	%		9.38	%		10.37	%		N/A			N/A				N/A
Company tangible common equity ratios (1)(3):
	Tangible common equity to tangible assets		8.41	%		8.33	%		9.09	%		N/A			N/A				N/A
	Tangible common equity, excluding other comprehensive loss, to tangible assets		8.59	%		8.54	%		9.43	%		N/A			N/A				N/A
	Tangible common equity to risk-weighted assets		9.73	%		9.57	%		10.67	%		N/A			N/A				N/A

N/A - Not applicable.
(1)		Ratio is not subject to formal Federal Reserve regulatory guidance.
(2)		Excludes the impact of trust-preferred securities.
(3)		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 Company's capital ratios increased from September 30, 2014, driven primarily by continued earnings and the $38.4 million of common stock issued as consideration for the Great Lakes acquisition. The decline in capital ratios compared to December 31, 2013 resulted from the addition of risk-weighted and average assets, including goodwill and other intangible assets, related to the Popular and Great Lakes acquisitions. These declines were partially offset by earnings and the increase in allowable deferred tax assets. The Bank's regulatory ratios exceeded all regulatory mandated ratios for characterization as "well-capitalized" as of December 31, 2014.

The Board of Directors approved a quarterly cash dividend of $0.08 per common share during the fourth quarter of 2014, consistent with the third quarter of 2014, and an increase compared to dividends of $0.07 per common share during the fourth quarter of 2013.

About the Company

First Midwest, with assets of approximately $9.4 billion, is the premier relationship-based financial institution in the Chicago banking market. As one of Illinois' largest independent bank holding companies, First Midwest, through its subsidiary bank and other affiliates, provides a full range of business, middle-market and retail banking and wealth management services through approximately 110 banking offices located in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest has been recognized by J.D. Power as having the "Highest Customer Satisfaction with Retail Banking in the Midwest Region*" according to the 2014 Retail Banking Satisfaction Study(SM). The Company website is www.firstmidwest.com.

* First Midwest Bank received the highest numerical score among retail banks in the Midwest region in the proprietary J.D. Power 2014 Retail Banking Satisfaction Study(SM). The Study is based on 80,445 total responses measuring 21 providers in the Midwest region (Iowa, Illinois, Kansas, Missouri, Minnesota, and Wisconsin) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed January 2014. Individual experiences may vary. Visit JDPower.com.

Non-GAAP Financial Information

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 provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. This includes, but is not limited to, earnings per share, excluding acquisition and integration related expenses, top-line revenue, tax-equivalent net interest income (including its individual components), tier 1 common capital to risk-weighted assets, tangible common equity to tangible assets, tangible common equity, excluding other comprehensive loss, to tangible assets, and tangible common equity to risk-weighted assets. Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "probable," "potential," "possible," "target," or "continue" and words of similar import. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and we undertake no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.

Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as well as our subsequent filings made with the Securities and Exchange Commission ("SEC"). However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, January 21, 2015 at 10:00 AM (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10058797 beginning one hour after completion of the live call until 9:00 A.M. (ET) on January 29, 2015. 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)
			December 31, 2014				September 30, 2014				December 31, 2013
Assets
Cash and due from banks			$	117,315			$	125,977			$	110,417
Interest-bearing deposits in other banks				488,947				550,606				476,824
Trading securities, at fair value				17,460				17,928				17,317
Securities available-for-sale, at fair value				1,187,009				997,420				1,112,725
Securities held-to-maturity, at amortized cost				26,555				26,776				44,322
Federal Home Loan Bank and Federal Reserve Bank stock, at cost				37,558				35,588				35,161
Loans, excluding covered loans				6,657,418				6,428,204				5,580,005
Covered loans				79,435				90,875				134,355
Allowance for loan and covered loan losses				(72,694	)			(73,106	)			(85,505	)
	Net loans			6,664,159				6,445,973				5,628,855
OREO, excluding covered OREO				26,898				29,165				32,473
Covered OREO				8,068				9,277				8,863
FDIC indemnification asset				8,452				8,699				16,585
Premises, furniture, and equipment				131,109				123,473				120,204
Investment in BOLI				206,498				195,270				193,167
Goodwill and other intangible assets				334,199				318,511				276,366
Accrued interest receivable and other assets				190,912				211,688				180,128
	Total assets		$	9,445,139			$	9,096,351			$	8,253,407
Liabilities and Stockholders' Equity
Noninterest-bearing deposits			$	2,301,757				2,295,679				1,911,602
Interest-bearing deposits				5,586,001				5,320,454				4,854,499
	Total deposits			7,887,758				7,616,133				6,766,101
Borrowed funds				137,994				132,877				224,342
Senior and subordinated debt				200,869				191,028				190,932
Accrued interest payable and other liabilities				117,743				106,637				70,590
	Total liabilities			8,344,364				8,046,675				7,251,965
Common stock				882				858				858
Additional paid-in capital				449,798				408,789				414,293
Retained earnings				899,516				891,129				853,740
Accumulated other comprehensive loss, net of tax				(15,855	)			(18,852	)			(26,792	)
Treasury stock, at cost				(233,566	)			(232,248	)			(240,657	)
	Total stockholders' equity			1,100,775				1,049,676				1,001,442
	Total liabilities and stockholders' equity		$	9,445,139			$	9,096,351			$	8,253,407

Condensed Consolidated Statements of Income
Unaudited
(Amounts in thousands, except per share data)
		Quarters Ended									Years Ended
		December 31, 2014			September 30, 2014			December 31, 2013			December 31, 2014			December 31, 2013
Interest Income
Loans, excluding covered loans		$	71,089		$	66,117		$	60,068		$	256,842		$	239,224
Covered loans			1,520			2,596			3,062			8,659			13,804
Investment securities			7,743			7,465			8,138			31,232			30,893
Other short-term investments			957			684			852			3,131			3,326
	Total interest income		81,309			76,862			72,120			299,864			287,247
Interest Expense
Deposits			2,463			2,806			2,741			10,377			11,901
Borrowed funds			12			9			390			573			1,607
Senior and subordinated debt			3,015			3,016			3,301			12,062			13,607
	Total interest expense		5,490			5,831			6,432			23,012			27,115
	Net interest income		75,819			71,031			65,688			276,852			260,132
Provision for loan and covered loan losses			1,659			10,727			--			19,168			16,257
	Net interest income after provision for loan and covered loan losses		74,160			60,304			65,688			257,684			243,875
Noninterest Income
Service charges on deposit accounts			10,015			9,902			9,259			36,910			36,526
Wealth management fees			6,744			6,721			6,202			26,474			24,185
Card-based fees			6,390			6,646			5,517			24,340			21,649
Mortgage banking income			812			1,125			1,055			4,011			5,306
Other service charges, commissions, and fees			5,403			5,266			4,679			19,346			18,616
Gains on sales of properties			--			3,954			--			3,954			--
Net securities (losses) gains			(63	)		2,570			147			8,097			34,164
BOLI income (loss)			843			767			584			2,873			(11,844	)
Other income			924			156			1,370			2,672			5,486
Loss on early extinguishment of debt			--			--			(1,034	)		(2,059	)		(1,034	)
Gain on termination of FHLB forward commitments			--			--			--			--			7,829
	Total noninterest income		31,068			37,107			27,779			126,618			140,883
Noninterest Expense
Salaries and employee benefits			40,300			35,471			34,990			143,823			138,750
Net occupancy and equipment expense			9,479			8,639			7,910			35,181			31,832
Professional services			6,664			5,692			5,592			23,436			21,922
Technology and related costs			3,444			3,253			2,984			12,875			11,335
Net OREO expense			2,544			1,406			2,815			7,075			8,547
Other expenses			13,103			12,104			10,503			47,564			44,351
Acquisition and integration related expenses			9,294			3,748			--			13,872			--
	Total noninterest expense		84,828			70,313			64,794			283,826			256,737
	Income before income tax expense		20,400			27,098			28,673			100,476			128,021
	Income tax expense		5,807			8,549			9,508			31,170			48,715
	Net income		14,593			18,549			19,165			69,306			79,306
Diluted earnings per common share		$	0.19		$	0.25		$	0.26		$	0.92		$	1.06
Dividends declared per common share		$	0.08		$	0.08		$	0.07		$	0.31		$	0.16
Weighted average diluted common shares outstanding			75,131			74,352			74,042			74,496			73,994