SOURCE: First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc.

April 21, 2015 18:21 ET

First Midwest Bancorp, Inc. Announces 2015 First Quarter Results

Strong Earnings Growth - Increased Revenue - Greater Efficiency - Improved Asset Quality

ITASCA, IL--(Marketwired - Apr 21, 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 first quarter of 2015. Net income for the first quarter of 2015 was $19.9 million, or $0.26 per share. This compares to $14.6 million, or $0.19 per share, for the fourth quarter of 2014, and $17.7 million, or $0.24 per share, for the first quarter of 2014.

"Performance for the quarter was solid and on plan," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Quarterly earnings per share of $0.26 increased 8% from a year ago, largely reflective of our acquisitions of Great Lakes Bank and Popular Community Bank branches during the second half of 2014. The resulting revenue growth, aided by building sales momentum, contributed to our improved operating efficiency."

Mr. Scudder concluded, "As we look ahead, our priorities remain focused on strengthening our lines of business and efficiently growing and diversifying revenues. We remain sensitive to the expected rise in interest rates, which in turn will require balanced navigation of short term performance and competitive pressures. At the same time, our liquidity and strong core deposit foundation provide us with an advantage that we believe few others enjoy. As we look ahead, we have the opportunity to leverage this advantage along with our strong capital foundation to grow and produce enhanced returns for our shareholders."

SELECT HIGHLIGHTS

Solid Operating Performance

  • Increased earnings per share to $0.26, up 8% from the first quarter of 2014 and 37% from the fourth quarter of 2014.

  • Expanded top-line revenue to $111 million, up 17% from the first quarter of 2014.

  • Grew total loans, excluding covered loans, to nearly $7 billion at March 31, 2015, an increase of 18% from March 31, 2014 and 5% annualized from December 31, 2014.

  • Improved efficiency ratio to 64%, compared to 67% for the first quarter of 2014 and 66%, excluding acquisition and integration related expenses, for the fourth quarter of 2014.

  • Increased tax-equivalent net interest margin to 3.79%, up 18 basis points from the first quarter of 2014 and 3 basis points from the fourth quarter of 2014.

  • Grew fee-based revenue 14% from the first quarter of 2014.

Strong Capital, Liquidity and Improved Credit

  • Improved tangible common equity to tangible assets to 8.54%, up 13 basis points from December 31, 2014.

  • Increased dividends per share to $0.09, up 29% from $0.07 for the first quarter of 2014 and 13% from $0.08 for the fourth quarter of 2014.

  • Grew average core deposits to nearly $7 billion, up 19% from March 31, 2014 and 2% from December 31, 2014.

  • Reduced non-performing assets to $81 million, down 23% from March 31, 2014 and 11% from December 31, 2014.

 
 
OPERATING PERFORMANCE
 
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
    Quarters Ended
    March 31, 2015   December 31, 2014   March 31, 2014
    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   $ 522,232     $ 398     0.31   $ 625,183     $ 527     0.33   $ 537,137     $ 382     0.29
Trading securities     17,694       24     0.54     18,100       88     1.94     17,470       28     0.64
Investment securities (1)     1,200,423       10,387     3.46     1,095,446       9,904     3.62     1,167,803       10,403     3.56
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank stock     37,822       357     3.78     36,209       342     3.78     35,161       335     3.81
Loans (1)(2)     6,740,399       74,186     4.46     6,545,967       73,371     4.45     5,722,457       61,518     4.36
  Total interest-earning assets (1)     8,518,570       85,352     4.06     8,320,905       84,232     4.02     7,480,028       72,666     3.93
Cash and due from banks     124,730                   126,317                   111,500              
Allowance for loan and covered loan losses     (73,484 )                 (74,686 )                 (86,726 )            
Other assets     891,925                   859,633                   777,685              
    Total assets   $ 9,461,741                 $ 9,232,169                 $ 8,282,487              
Liabilities and Stockholders' Equity:                                                            
Interest-bearing core deposits   $ 4,313,802       927     0.09   $ 4,144,391       984     0.09   $ 3,652,938       792     0.09
Time deposits     1,266,562       1,598     0.51     1,255,355       1,479     0.47     1,196,449       1,805     0.61
Borrowed funds     127,571       18     0.06     111,213       12     0.04     222,491       383     0.70
Senior and subordinated debt     200,910       3,144     6.35     194,137       3,015     6.16     190,949       3,015     6.40
  Total interest-bearing liabilities     5,908,845       5,687     0.39     5,705,096       5,490     0.38     5,262,827       5,995     0.46
Demand deposits     2,312,431                   2,339,298                   1,928,289              
  Total funding sources     8,221,276                   8,044,394                   7,191,116              
Other liabilities     125,703                   115,093                   75,969              
Stockholders' equity - common     1,114,762                   1,072,682                   1,015,402              
    Total liabilities and stockholders' equity   $ 9,461,741                 $ 9,232,169                 $ 8,282,487              
Tax-equivalent net interest income/margin (1)           $ 79,665     3.79           $ 78,742     3.76           $ 66,671     3.61
Tax-equivalent adjustment             (2,883 )                 (2,923 )                 (2,976 )    
    Net interest income (GAAP)           $ 76,782                 $ 75,819                 $ 63,695      
   
(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.
   
(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 first quarter of 2015, total average interest-earning assets rose $197.7 million from the linked quarter driven by loans acquired late in the fourth quarter of 2014 and purchases of investment securities. Compared to the first quarter of 2014, the $1.0 billion increase in total average interest-earning assets reflects the impact of loans and securities acquired during the second half of 2014 and solid organic loan growth over the course of the year.

Total average funding sources for the first quarter of 2015 increased $176.9 million from the fourth quarter of 2014 and $1.0 billion compared to the first quarter of 2014. The rise from both prior periods resulted mainly from acquisition activity. The decline in borrowed funds from the first quarter of 2014 was due to the prepayment of $114.6 million of FHLB advances during the second quarter of 2014.

Tax-equivalent net interest margin for the current quarter was 3.79%, increasing 3 basis points from the fourth quarter of 2014 and 18 basis points from the first quarter of 2014. Excluding acquired loan accretion income and interest rate swaps, tax-equivalent net interest margin was consistent with the fourth and first quarters of 2014.

 
 
Noninterest Income Analysis
(Dollar amounts in thousands)
           
    Quarters Ended   March 31, 2015
Percent Change From
 
    March 31,
2015
  December 31,
 2014
    March 31,
 2014
  December 31,
2014
    March 31,
2014
 
Service charges on deposit accounts   $ 9,271   $ 10,015     $ 8,020   (7.4 )   15.6  
Wealth management fees     7,014     6,744       6,457   4.0     8.6  
Card-based fees     6,402     6,390       5,335   0.2     20.0  
Merchant servicing fees     2,665     2,703       2,709   (1.4 )   (1.6 )
Mortgage banking income     1,123     812       1,115   38.3     0.7  
Other service charges, commissions, and fees     2,166     2,700       1,413   (19.8 )   53.3  
  Total fee-based revenues     28,641     29,364       25,049   (2.5 )   14.3  
Net securities gains (losses)     512     (63 )     1,073   N/M     (52.3 )
BOLI income     883     843       490   4.7     80.2  
Other income     646     613       447   5.4     44.5  
Net trading gains (1)     419     311       191   34.7     N/M  
  Total noninterest income   $ 31,101   $ 31,068     $ 27,250   0.1     14.1  
                                   
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 $31.1 million remained consistent compared to the linked quarter and grew 14.1% compared to the first quarter of 2014.

Total fee-based revenues increased 14.3% from the first quarter of 2014, reflecting growth across most categories. Higher levels of service charge volume, primarily from new customers acquired in the acquisitions completed during the second half of 2014, impacted the rise in service charges on deposit accounts. Sales to new and existing customers continued to drive the increase in wealth management fees. The rise in card-based fees reflects higher transaction volumes. Fee income generated by sales of capital market products to commercial clients and gains realized on the sale of leasing equipment contracts contributed to the increase in other service charges, commissions, and fees.

Total fee-based revenues decreased 2.5% from the fourth quarter of 2014 as growth in wealth management fees from new customer relationships and higher levels of mortgage banking income were more than offset by the normal seasonal decline in service charges on deposit accounts and other service charges, commissions, and fees. Seasonally lower volumes of non-sufficient funds transactions contributed to the decrease in service charges on deposit accounts.

 
 
Noninterest Expense Analysis
(Dollar amounts in thousands)
 
    Quarters Ended     March 31, 2015
Percent Change From
 
    March 31,  December 31,   March 31,  December 31,   March 31,  
    2015     2014     2014     2014     2014  
Salaries and employee benefits:                                    
  Salaries and wages   $ 32,331     $ 32,175     $ 27,197     0.5     18.9  
  Nonqualified plan expense (1)     463       465       186     (0.4 )   N/M  
  Retirement and other employee benefits     7,922       7,660       6,108     3.4     29.7  
    Total salaries and employee benefits     40,716       40,300       33,491     1.0     21.6  
Net occupancy and equipment expense     10,436       9,479       9,391     10.1     11.1  
Professional services     5,109       6,664       5,389     (23.3 )   (5.2 )
Technology and related costs     3,687       3,444       3,074     7.1     19.9  
Merchant card expense     2,197       2,203       2,213     (0.3 )   (0.7 )
Advertising and promotions     1,223       2,418       1,613     (49.4 )   (24.2 )
Net OREO expense     1,204       2,544       1,556     (52.7 )   (22.6 )
Cardholder expenses     1,268       1,036       1,014     22.4     25.0  
Other expenses     6,817       7,446       5,927     (8.4 )   15.0  
Acquisition and integration related expenses     --       9,294       --     N/M     N/M  
    Total noninterest expense   $ 72,657     $ 84,828     $ 63,668     (14.3 )   14.1  
Efficiency ratio (2)     64 %     66 %     67 %            
 
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.
   
(2) The efficiency ratio expresses noninterest expense, excluding OREO expense, as a percentage of tax-equivalent net interest income plus total fee-based revenues, other income, net trading gains, and tax-equivalent adjusted BOLI income. In addition, acquisition and integration related expenses of $9.3 million are excluded from the efficiency ratio for the fourth quarter of 2014. See the accompanying Supplemental Financial Information for details on the calculation of the efficiency ratio.
   
   

The efficiency ratio improved to 64% from 66% for the linked quarter, after excluding acquisition and integration related expenses incurred in the fourth quarter of 2014, and 67% for the first quarter of 2014. Likewise, total noninterest expense declined 3.8% from the fourth quarter of 2014, excluding acquisition and integration related expenses. The 14.1% rise in total noninterest expense compared to the first quarter of 2014 was substantially due to operating costs of the 21 banking locations acquired during the second half of 2014.

Salaries and wages increased compared to the first quarter of 2014 driven by additional salaries resulting from the acquisitions completed during 2014 and other salary expenses associated with growth and organizational needs.

Retirement and other employee benefits rose compared to the first quarter of 2014 due to the acquisitions completed during 2014 and comparatively higher incentive compensation expenses.

Net occupancy and equipment expense increased from the fourth quarter of 2014 driven by higher costs related to winter weather conditions and a rise in depreciation and real estate taxes related to the banking locations acquired in 2014. Compared to the first quarter of 2014, increases in occupancy costs from the acquired banking locations were partially offset by lower year-over-year weather related costs.

Professional services expense declined compared to the fourth quarter of 2014 as the Company incurred lower legal and loan remediation expenses, as well as lower costs to service our covered loan portfolio.

Technology and related costs increased compared to the first quarter of 2014 due primarily to greater processing expenses associated with operating the acquired banking locations.

Advertising and promotions expense decreased compared to both prior periods presented due to the timing of certain advertising costs.

Net OREO expense decreased compared to the fourth and first quarters of 2014 due to reduced valuation adjustments and higher net gains on sales of OREO properties.

Other expense decreased from the linked quarter due primarily to signage disposal costs recorded in the fourth quarter of 2014. Compared to the first quarter of 2014 the increase in other expense resulted primarily from additional FDIC premiums, other intangibles amortization, and other miscellaneous expenses related to the 2014 acquisitions.

 
 
LOAN PORTFOLIO AND ASSET QUALITY
 
Loan Portfolio Composition
(Dollar amounts in thousands)
 
    As of   March 31, 2015
Percent Change From
 
    March 31,
 2015
  December 31,
 2014
  March 31,
 2014
  December 31,
 2014
    March 31,
 2014
 
Commercial and industrial   $ 2,318,058   $ 2,253,556   $ 1,917,396   2.9     20.9  
Agricultural     368,836     358,249     321,343   3.0     14.8  
Commercial real estate:                              
  Office     488,263     494,637     454,962   (1.3 )   7.3  
  Retail     437,751     452,225     389,010   (3.2 )   12.5  
  Industrial     517,548     531,517     504,122   (2.6 )   2.7  
  Multi-family     560,800     564,421     337,332   (0.6 )   66.2  
  Construction     191,104     204,236     181,012   (6.4 )   5.6  
  Other commercial real estate     881,026     887,897     822,934   (0.8 )   7.1  
    Total commercial real estate     3,076,492     3,134,933     2,689,372   (1.9 )   14.4  
    Total corporate loans     5,763,386     5,746,738     4,928,111   0.3     16.9  
Home equity     599,543     543,185     475,103   10.4     26.2  
1-4 family mortgages     285,758     291,463     240,561   (2.0 )   18.8  
Installment     92,834     76,032     49,315   22.1     88.2  
    Total consumer loans     978,135     910,680     764,979   7.4     27.9  
    Total loans, excluding covered loans     6,741,521     6,657,418     5,693,090   1.3     18.4  
Covered loans     62,830     79,435     122,387   (20.9 )   (48.7 )
    Total loans   $ 6,804,351   $ 6,736,853   $ 5,815,477   1.0     17.0  
                                   
                                   

Total loans, excluding covered loans, of $6.7 billion grew 5.1% on an annualized basis from December 31, 2014 and 18.4% from March 31, 2014. As of March 31, 2015, total loans, excluding acquired loans of $660.9 million and covered loans, grew $387.5 million, or 6.8%, from March 31, 2014. The majority of this loan growth from March 31, 2014 was driven by well-balanced growth distributed across the commercial and industrial, agricultural, multi-family, and consumer categories.

Growth from December 31, 2014 was concentrated within our commercial and industrial and agricultural loan categories and reflects the continued expansion into certain sector-based lending areas such as asset-based lending and healthcare. The rise in consumer loans reflects the purchase of $55.1 million of high quality, shorter-duration, floating rate home equity loans.

 
 
Asset Quality
(Dollar amounts in thousands)
 
    As of     March 31, 2015
Percent Change From
 
    March 31,
 2015
    December 31,
 2014
    March 31,
 2014
    December 31,
 2014
    March 31,
 2014
 
Asset quality, excluding covered loans and covered OREO                                    
Non-accrual loans   $ 48,077     $ 59,971     $ 64,217     (19.8 )   (25.1 )
90 days or more past due loans     3,564       1,173       4,973     203.8     (28.3 )
  Total non-performing loans     51,641       61,144       69,190     (15.5 )   (25.4 )
Accruing troubled debt restructurings ("TDRs")     3,581       3,704       6,301     (3.3 )   (43.2 )
OREO     26,042       26,898       30,026     (3.2 )   (13.3 )
  Total non-performing assets   $ 81,264     $ 91,746     $ 105,517     (11.4 )   (23.0 )
30-89 days past due loans   $ 18,631     $ 20,073     $ 12,861     (7.2 )   44.9  
Non-accrual loans to total loans     0.71 %     0.90 %     1.13 %            
Non-performing loans to total loans     0.77 %     0.92 %     1.22 %            
Non-performing assets to loans plus OREO     1.20 %     1.37 %     1.84 %            
Allowance for Credit Losses                                    
Allowance for loan and covered loan losses   $ 70,990     $ 72,694     $ 80,632     (2.3 )   (12.0 )
Reserve for unfunded commitments     1,816       1,816       1,616     --     12.4  
  Total allowance for credit losses   $ 72,806     $ 74,510     $ 82,248     (2.3 )   (11.5 )
Allowance for credit losses to total loans     1.07 %     1.11 %     1.41 %            
Allowance for credit losses to loans, excluding acquired loans (1)     1.19 %     1.24 %     1.41 %            
Allowance for credit losses to non-accrual loans, excluding covered loans     139.62 %     112.19 %     110.28 %            
                                     
N/A - Not applicable.
 
(1) Acquired loans are recorded at fair value as of the acquisition date with no allowance for credit losses being established. As the acquisition adjustment is accreted into income over future periods, if meaningful credit deterioration occurs an allowance for credit losses will be established.
   

Total non-performing assets, excluding covered loans and covered OREO, decreased by $10.5 million, or 11.4%, from December 31, 2014 and $24.3 million, or 23.0%, from March 31, 2014. Lower levels of non-accrual loans, accruing TDRs, and OREO contributed to the decline compared to both prior periods presented. The improvement in non-accrual loans compared to December 31, 2014 was primarily related to the final resolution of a large commercial loan relationship originally identified in the third quarter of 2014, for which a specific reserve was then established.

 
 
Charge-Off Data
(Dollar amounts in thousands)
 
    Quarters Ended  
    March 31,
 2015
    % of
Total
    December 31,
 2014
    % of
Total
    March 31,
 2014
    % of
Total
 
Net loan charge-offs (1):                                          
  Commercial and industrial   $ 6,657     80.6     $ 1,217     58.8     $ 1,367     21.7  
  Agricultural     --     --       --     --       153     2.4  
  Office, retail, and industrial     (166 )   (2.0 )     143     6.9       1,025     16.2  
  Multi-family     24     0.3       476     23.0       89     1.4  
  Construction     (17 )   (0.2 )     (6 )   (0.3 )     503     8.0  
  Other commercial real estate     1,051     12.7       (247 )   (11.9 )     1,627     25.8  
  Consumer     479     5.8       342     16.5       1,890     29.9  
  Covered     228     2.8       146     7.0       (340 )   (5.4 )
    Total net loan charge-offs   $ 8,256     100.0     $ 2,071     100.0     $ 6,314     100.0  
                                           
Net loan charge-offs to average loans, annualized:     0.50 %           0.13 %           0.45 %      
                                           
(1) Amounts represent charge-offs, net of recoveries.
   
   

Total net loan charge-offs for the first quarter of 2015 reflect the remediation of three corporate relationships. Included was a charge-off related to the final resolution of a large commercial loan relationship originally identified in the third quarter of 2014, for which a specific reserve was then established. In addition, charge-offs were recorded on two classified corporate credits where changes in borrower circumstances dictated accelerated remediation.

 
 
CAPITAL MANAGEMENT 
 
Capital Ratios
(Dollar amounts in thousands)
 
    March 31,
 2015
    December 31,
 2014
    March 31,
 2014
 
Company regulatory capital ratios: (1)                  
  Total capital to risk-weighted assets   11.23 %   11.23 %   12.20 %
  Tier 1 capital to risk-weighted assets   10.35 %   10.19 %   10.92 %
  Tier 1 common capital to risk-weighted assets   9.79 %   N/A     N/A  
  Tier 1 leverage to average assets   9.32 %   9.03 %   9.53 %
Company tangible common equity ratios (2)(3):                  
  Tangible common equity to tangible assets   8.54 %   8.41 %   9.25 %
  Tangible common equity, excluding other comprehensive loss, to tangible assets   8.68 %   8.59 %   9.49 %
  Tangible common equity to risk-weighted assets   9.51 %   9.73 %   10.67 %
N/A - Not applicable.
 
(1) Basel III Capital Rules became effective for the Company on January 1, 2015. These rules revise the risk-based capital requirements and introduce a new capital measure, Tier 1 common capital to risk-weighted assets. As a result, ratios at March 31, 2015 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(2) Ratio is not subject to formal Federal Reserve regulatory guidance.
(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 in assessing the Company's use of equity and in facilitating comparisons with competitors. See the accompanying Supplemental Financial Information for details of the calculation of these ratios.
   
   

The Company's capital ratios increased from December 31, 2014, driven primarily by growth in retained earnings. The decline in capital ratios compared to March 31, 2014 resulted from the addition of risk-weighted and average assets, including goodwill and other intangible assets, related to acquisitions. These declines were partially offset by earnings and an increase in allowable deferred tax assets.

The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the first quarter of 2015, which follows a dividend increase from $0.07 to $0.08 per common share during the second quarter of 2014.

About the Company

First Midwest, with assets of approximately $9.5 billion, is a premier relationship-based financial institution in the Chicago banking market and one of Illinois' largest independent publicly-traded banking companies. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of business, middle-market and retail banking and wealth management services to commercial and industrial, commercial real estate, municipal, and consumer customers through over 100 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized by J.D. Power as having the "Highest Customer Satisfaction with Retail Banking in the Midwest"* 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 (which includes interest income plus fee-based revenue), tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, the efficiency ratio, 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. See the accompanying Supplemental Financial Information for details on the calculation of these measures to the extent presented herein.

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 year ended December 31, 2014, as well as our subsequent filings made with the Securities and Exchange Commission. 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, April 22, 2015 at 10:00 A.M. (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. 10063529 beginning one hour after completion of the live call until 9:00 A.M. (ET) on April 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.

 
 
Consolidated Statements of Financial Condition
Unaudited
(Amounts in thousands)
 
    March 31,
 2015
    December 31,
2014
    March 31,
 2014
 
Assets                        
Cash and due from banks   $ 126,450     $ 117,315     $ 198,544  
Interest-bearing deposits in other banks     492,607       488,947       393,768  
Trading securities, at fair value     18,374       17,460       17,774  
Securities available-for-sale, at fair value     1,151,603       1,187,009       1,080,750  
Securities held-to-maturity, at amortized cost     25,861       26,555       43,251  
Federal Home Loan Bank and Federal Reserve Bank stock, at cost     38,748       37,558       35,161  
Loans, excluding covered loans     6,741,521       6,657,418       5,693,090  
Covered loans     62,830       79,435       122,387  
Allowance for loan and covered loan losses     (70,990 )     (72,694 )     (80,632 )
  Net loans     6,733,361       6,664,159       5,734,845  
OREO, excluding covered OREO     26,042       26,898       30,026  
Covered OREO     7,309       8,068       7,355  
FDIC indemnification asset     8,540       8,452       15,537  
Premises, furniture, and equipment, net     128,698       131,109       119,219  
Investment in BOLI     207,190       206,498       193,673  
Goodwill and other intangible assets     333,202       334,199       275,605  
Accrued interest receivable and other assets     200,611       190,912       183,011  
  Total assets   $ 9,498,596     $ 9,445,139     $ 8,328,519  
Liabilities and Stockholders' Equity                        
Noninterest-bearing deposits   $ 2,339,492     $ 2,301,757     $ 1,961,371  
Interest-bearing deposits     5,575,187       5,586,001       4,855,386  
  Total deposits     7,914,679       7,887,758       6,816,757  
Borrowed funds     131,200       137,994       223,699  
Senior and subordinated debt     200,954       200,869       190,964  
Accrued interest payable and other liabilities     135,813       117,743       76,674  
  Total liabilities     8,382,646       8,344,364       7,308,094  
Stockholders' Equity                        
Common stock     882       882       858  
Additional paid-in capital     441,689       449,798       406,009  
Retained earnings     912,387       899,516       866,132  
Accumulated other comprehensive loss, net of tax     (12,805 )     (15,855 )     (19,772 )
Treasury stock, at cost     (226,203 )     (233,566 )     (232,802 )
  Total stockholders' equity     1,115,950       1,100,775       1,020,425  
  Total liabilities and stockholders' equity   $ 9,498,596     $ 9,445,139     $ 8,328,519  
                           
                           
 
Condensed Consolidated Statements of Income
Unaudited
(Amounts in thousands, except per share data)
 
    Quarters Ended
    March 31,
 2015
  December 31,
 2014
    March 31,
 2014
Interest Income                    
Loans   $ 73,397   $ 72,609     $ 60,940
Investment securities     8,293     7,743       8,005
Other short-term investments     779     957       745
  Total interest income     82,469     81,309       69,690
Interest Expense                    
Deposits     2,525     2,463       2,597
Borrowed funds     18     12       383
Senior and subordinated debt     3,144     3,015       3,015
  Total interest expense     5,687     5,490       5,995
  Net interest income     76,782     75,819       63,695
Provision for loan and covered loan losses     6,552     1,659       1,441
  Net interest income after provision for loan and covered loan losses     70,230     74,160       62,254
Noninterest Income                    
Service charges on deposit accounts     9,271     10,015       8,020
Wealth management fees     7,014     6,744       6,457
Card-based fees     6,402     6,390       5,335
Mortgage banking income     1,123     812       1,115
Other service charges, commissions, and fees     4,831     5,403       4,122
Net securities gains (losses)     512     (63 )     1,073
Other income     1,948     1,767       1,128
  Total noninterest income     31,101     31,068       27,250
Noninterest Expense                    
Salaries and employee benefits     40,716     40,300       33,491
Net occupancy and equipment expense     10,436     9,479       9,391
Professional services     5,109     6,664       5,389
Technology and related costs     3,687     3,444       3,074
Net OREO expense     1,204     2,544       1,556
Other expenses     11,505     13,103       10,767
Acquisition and integration related expenses     --     9,294       --
  Total noninterest expense     72,657     84,828       63,668
  Income before income tax expense     28,674     20,400       25,836
  Income tax expense     8,792     5,807       8,172
  Net income   $ 19,882   $ 14,593     $ 17,664
Diluted earnings per common share   $ 0.26   $ 0.19     $ 0.24
Dividends declared per common share   $ 0.09   $ 0.08     $ 0.07
Weighted average diluted common shares outstanding     76,930     75,131       74,159
                     
                     

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