SOURCE: First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc.

October 20, 2015 18:45 ET

First Midwest Bancorp, Inc. Announces 2015 Third Quarter Results

ITASCA, IL--(Marketwired - Oct 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 third quarter of 2015. Net income for the third quarter of 2015 was $23.3 million, or $0.30 per share. This compares to $22.6 million, or $0.29 per share, for the second quarter of 2015, and $18.5 million, or $0.25 per share, for the third quarter of 2014.

SELECT HIGHLIGHTS

  • Increased earnings per share to $0.30, up 20% from the third quarter of 2014 and 3% from the second quarter of 2015.

  • Produced a return on average tangible common equity of 12%, up from 10% for the third quarter of 2014 and consistent with the second quarter of 2015.

  • Grew fee-based revenues to $33 million, an increase of 12% from the third quarter of 2014 and 5% from the second quarter of 2015.

  • Increased total loans, excluding covered loans, to nearly $7 billion, up 7% from September 30, 2014 and 5% annualized from June 30, 2015.

  • Decreased non-performing assets to $71 million, down 33% from September 30, 2014 and 6% from June 30, 2015.

  • Reduced net loan charge-offs to $3.1 million for the third quarter of 2015, down 81% from the third quarter of 2014 and 45% from the second quarter of 2015.

"Our performance for the quarter was once again strong, reflecting balanced execution of our business objectives," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Quarterly earnings per share improved to $0.30, an increase of 20% from a year ago and 3% compared to last quarter. Business performance was solid across our sales platforms, benefiting from targeted growth in our consumer and fee-based businesses as well as reduced credit costs."

Mr. Scudder concluded, "Our sales teams are fully engaged and our balance sheet is strong, providing ample liquidity and capital for growth. Concurrently, our recently announced pending acquisition of The Peoples' Bank of Arlington Heights is expected to add to our expanding suburban Chicago footprint and provide additional business opportunities. As we look ahead, our priorities remain balanced on building and broadening our client relationships as we navigate evolving market conditions and the accompanying competitive pressures. We remain well positioned to leverage the strength of our balance sheet and infrastructure to pursue opportunities for growth and return value to our shareholders."

ACQUISITION

On September 21, 2015, the Company entered into a definitive agreement to acquire Peoples Bancorp, Inc. and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights. As part of the acquisition, the Company will acquire two banking offices in Arlington Heights, Illinois, approximately $95 million in deposits, and $57 million in loans. The acquisition is subject to customary regulatory approvals and certain closing conditions and is expected to close before the end of 2015.

OPERATING PERFORMANCE
 
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
 
    Quarters Ended
    September 30, 2015   June 30, 2015   September 30, 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   $ 820,318   $ 645     0.31   $ 669,556   $ 516     0.31   $ 476,768     $ 313     0.26
Securities (1)     1,194,711     9,559     3.20     1,177,516     9,792     3.33     1,086,105       9,689     3.57
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock     38,748     369     3.81     38,748     368     3.80     35,588       341     3.83
Loans (1)(2)     6,887,611     76,328     4.40     6,815,781     76,573     4.51     6,302,883       69,458     4.37
  Total interest-earning assets (1)     8,941,388     86,901     3.86     8,701,601     87,249     4.02     7,901,344       79,801     4.01
Cash and due from banks     132,504                 133,180                 126,279              
Allowance for loan and covered loan losses     (73,928 )               (73,865 )               (77,596 )            
Other assets     875,668                 881,613                 818,066              
    Total assets   $ 9,875,632               $ 9,642,529               $ 8,768,093              
Liabilities and Stockholders' Equity:                                                        
Interest-bearing core deposits (3)   $ 4,465,956     931     0.08   $ 4,407,168     896     0.08   $ 3,906,975       865     0.09
Time deposits     1,173,127     1,398     0.47     1,216,371     1,506     0.50     1,226,025       1,941     0.63
Borrowed funds     168,807     928     2.18     140,002     118     0.34     101,674       9     0.04
Senior and subordinated debt     201,083     3,133     6.18     200,999     3,134     6.25     191,013       3,016     6.26
  Total interest-bearing liabilities     6,008,973     6,390     0.42     5,964,540     5,654     0.38     5,425,687       5,831     0.43
Demand deposits (3)     2,601,442                 2,437,742                 2,208,450              
  Total funding sources     8,610,415                 8,402,282                 7,634,137              
Other liabilities     130,250                 116,717                 83,075              
Stockholders' equity - common     1,134,967                 1,123,530                 1,050,881              
    Total liabilities and stockholders' equity   $ 9,875,632               $ 9,642,529               $ 8,768,093              
Tax-equivalent net interest income/margin (1)           80,511     3.58           81,595     3.76             73,970     3.72
Tax-equivalent adjustment           (2,609 )               (2,693 )                 (2,939 )    
    Net interest income (GAAP)         $ 77,902               $ 78,902                 $ 71,031      
   
(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.
(3) See the deposit portfolio section for further average balance detail by category.
   

For the third quarter of 2015, total average interest-earning assets rose $239.8 million from the second quarter of 2015 driven by loan growth and an increase in lower yielding other interest-earning assets. Total average funding sources increased $208.1 million from the second quarter of 2015 as a result of seasonally higher levels of interest-bearing core deposits and demand deposits.

Compared to the third quarter of 2014, the $1.0 billion increase in total average interest-earning assets and the $976.3 million rise in total average funding sources reflect the impact of the acquisitions completed in the second half of 2014 and organic loan growth over the course of the year.

Tax-equivalent net interest margin for the current quarter was 3.58%, decreasing 18 basis points from the second quarter of 2015 and 14 basis points from the third quarter of 2014. Compared to the second quarter of 2015, the reduction in tax-equivalent net interest margin was due primarily to a decrease in acquired loan accretion, a seasonally higher balance of other interest-earning assets, the continued shift in the loan mix to floating rate loans, and the flattening of the yield curve. Tax-equivalent net interest margin decreased compared to the third quarter of 2014 due primarily to a rise in other interest-earning assets, lower accretion on covered loans, the continued shift in the loan mix, and the flattening of the yield curve, which were partially offset by greater accretion on acquired loans related to the 2014 acquisitions.

Acquired loan accretion related to the 2014 acquisitions contributed $1.8 million and $3.6 million to net interest income for the third and second quarters of 2015, respectively. This acquired loan accretion includes accelerated accretion on purchased credit impaired ("PCI") loans of $556,000 and $1.7 million for the third and second quarters of 2015, respectively.

 
Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
 
    Quarters Ended   September 30, 2015
Percent Change from
 
    September 30,
 2015
  June 30,
 2015
  September 30,
 2014
  June 30,
 2015
    September 30,
 2014
 
Service charges on deposit accounts   $ 10,519   $ 9,886   $ 9,902   6.4     6.2  
Wealth management fees     7,222     7,433     6,721   (2.8 )   7.5  
Card-based fees     6,868     6,953     6,646   (1.2 )   3.3  
Merchant servicing fees (1)     3,207     2,938     2,932   9.2     9.4  
Mortgage banking income     1,402     1,439     1,125   (2.6 )   24.6  
Other service charges, commissions, and fees     3,900     2,924     2,334   33.4     67.1  
  Total fee-based revenues     33,118     31,573     29,660   4.9     11.7  
Other income     1,372     1,900     923   (27.8 )   48.6  
Net securities gains     524     515     2,570   1.7     (79.6 )
Gains on sales of properties     --     --     3,954   --     (100.0 )
  Total noninterest income   $ 35,014   $ 33,988   $ 37,107   3.0     (5.6 )
                                 
(1) Merchant servicing fees are substantially offset by merchant card expense included in noninterest expense for each period presented.
   

Total fee-based revenues of $33.1 million grew 4.9% compared to the second quarter of 2015, primarily reflecting normal seasonality. The 11.7% increase compared to the third quarter of 2014 primarily reflects organic growth across the majority of categories. In addition, the benefit from the 2014 acquisitions contributed to the increase.

Compared to the second quarter of 2015, the increase in service charges on deposit accounts was driven by seasonally higher activity. The increase in service charges on deposit accounts compared to the third quarter of 2014 also reflects services provided to customers added in the 2014 acquisitions. Continued sales of fiduciary and investment advisory services to new and existing customers drove the rise in wealth management fees compared to the third quarter of 2014.

Mortgage banking income resulted from sales of $42.2 million of 1-4 family mortgage loans in the secondary market during the third quarter of 2015, compared to $51.9 million in the second quarter of 2015 and $31.7 million in the third quarter of 2014. Compared to both prior periods presented, gains realized on the sale of leasing equipment contracts originated by First Midwest Equipment Finance, which was formed from an acquisition in September of 2014, drove the increase in other service charges, commissions, and fees. In addition, fee income generated from sales of capital market products to commercial clients contributed to the increase compared to both prior periods presented.

Total noninterest income of $35.0 million grew 3.0% and decreased 5.6% from the second quarter of 2015 and the third quarter of 2014, respectively. Other income was elevated during the second quarter of 2015 due to greater bank-owned life insurance income. The third quarter of 2014 total noninterest income reflects the net gains from the disposition of two branch properties and net securities gains.

 
Noninterest Expense Analysis
(Dollar amounts in thousands)
 
    Quarters Ended     September 30, 2015
Percent Change from
 
    September 30,
 2015
    June 30,
 2015
    September 30,
 2014
    June 30,
 2015
    September 30,
 2014
 
Salaries and employee benefits:                              
  Salaries and wages   $ 33,554     $ 33,096     $ 28,152     1.4     19.2  
  Retirement and other employee benefits     7,807       7,198       7,319     8.5     6.7  
    Total salaries and employee benefits     41,361       40,294       35,471     2.6     16.6  
Net occupancy and equipment expense     9,406       9,622       8,639     (2.2 )   8.9  
Professional services     6,172       5,322       5,692     16.0     8.4  
Technology and related costs     3,673       3,527       3,253     4.1     12.9  
Merchant card expense (1)     2,722       2,472       2,396     10.1     13.6  
Advertising and promotions     1,828       2,344       1,822     (22.0 )   0.3  
Net other real estate owned ("OREO") expense     1,290       1,861       1,406     (30.7 )   (8.3 )
Cardholder expenses     1,354       1,292       1,120     4.8     20.9  
Other expenses     6,559       6,717       6,766     (2.4 )   (3.1 )
Acquisition and integration related expenses     --       --       3,748     --     (100.0 )
      Total noninterest expense   $ 74,365     $ 73,451     $ 70,313     1.2     5.8  
Efficiency ratio (2)     63 %     62 %     62 %            
   
(1) Merchant card expenses are substantially offset by merchant servicing fees included in noninterest income for each period presented.
(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, and tax-equivalent adjusted bank-owned life insurance ("BOLI") income. In addition, acquisition and integration related expenses of $3.7 million are excluded from the efficiency ratio for the third quarter of 2014. See the accompanying Non-GAAP Reconciliations for details on the calculation of the efficiency ratio.
   

Total noninterest expense increased 1.2% from the second quarter of 2015 and 5.8% from the third quarter of 2014. The increase from the second quarter of 2015 primarily reflects seasonal increases in benefits, as well as expenses associated with talent recruitment and organizational growth needs, including an independent cyber-risk assessment as a part of a targeted risk mitigation process.

The rise in total noninterest expense compared to the third quarter of 2014 was due primarily to operating costs of the 21 banking locations acquired during the second half of 2014, of which four have been closed. These costs primarily occurred within salaries and employee benefits, net occupancy and equipment expense, technology and related costs, and other expenses.

   
LOAN PORTFOLIO AND ASSET QUALITY  
   
Loan Portfolio Composition  
(Dollar amounts in thousands)  
   
    As of   September 30, 2015
Percent Change from
 
    September 30,
 2015
  June 30,
 2015
  September 30,
 2014
  June 30,
2015 (1)
    September 30,
 2014
 
Commercial and industrial   $ 2,392,860   $ 2,366,056   $ 2,208,166   4.5     8.4  
Agricultural     393,732     377,410     347,511   17.3     13.3  
Commercial real estate:                              
  Office     487,629     488,863     437,222   (1.0 )   11.5  
  Retail     432,107     432,880     454,178   (0.7 )   (4.9 )
  Industrial     494,341     510,759     531,122   (12.9 )   (6.9 )
  Multi-family     539,308     557,947     559,689   (13.4 )   (3.6 )
  Construction     192,086     190,970     193,445   2.3     (0.7 )
  Other commercial real estate     869,748     871,119     871,825   (0.6 )   (0.2 )
    Total commercial real estate     3,015,219     3,052,538     3,047,481   (4.9 )   (1.1 )
    Total corporate loans     5,801,811     5,796,004     5,603,158   0.4     3.5  
Home equity     647,223     599,320     517,446   32.0     25.1  
1-4 family mortgages     294,261     283,562     238,172   15.1     23.5  
Installment     131,185     113,382     69,428   62.8     89.0  
    Total consumer loans     1,072,669     996,264     825,046   30.7     30.0  
    Total loans, excluding covered loans     6,874,480     6,792,268     6,428,204   4.8     6.9  
Covered loans     51,219     57,917     90,875   (46.3 )   (43.6 )
    Total loans   $ 6,925,699   $ 6,850,185   $ 6,519,079   4.4     6.2  
   
(1) Ratios are presented on an annualized basis.
   

Total loans, excluding covered loans, of $6.9 billion grew 4.8% on an annualized basis from June 30, 2015 and 6.9% from September 30, 2014. The loan growth from September 30, 2014 related to loans obtained in the 2014 acquisition completed in the fourth quarter of 2014 and organic growth.

Compared to June 30, 2015, growth in corporate loans was concentrated within our commercial and industrial and agricultural loan categories. The increase in commercial and industrial loans primarily reflects the continued expansion into select sector-based lending areas such as healthcare, structured finance, and leasing. Agricultural loans grew due to seasonal draws on lines of credit and new relationships. The overall decline in commercial real estate loans resulted from the decision of certain customers to opportunistically sell their middle market businesses and investment real estate properties, which more than offset organic growth. The rise in consumer loans reflects the purchase of high quality, shorter-duration, floating rate home equity loans and the expansion of our web-based installment lending program.

 
Asset Quality
(Dollar amounts in thousands)
 
    As of     September 30, 2015
Percent Change from
 
    September 30,
 2015
    June 30,
 2015
    September 30,
 2014
    June 30,
 2015
    September 30,
 2014
 
Asset quality, excluding covered loans and covered OREO                              
Non-accrual loans   $ 32,308     $ 45,009     $ 64,528     (28.2 )   (49.9 )
90 days or more past due loans     4,559       2,744       6,062     66.1     (24.8 )
  Total non-performing loans     36,867       47,753       70,590     (22.8 )   (47.8 )
Accruing troubled debt restructurings ("TDRs")     2,771       3,067       5,449     (9.7 )   (49.1 )
OREO     31,129       24,471       29,165     27.2     6.7  
  Total non-performing assets   $ 70,767     $ 75,291     $ 105,204     (6.0 )   (32.7 )
                                     
30-89 days past due loans   $ 28,629     $ 28,625     $ 17,321              
                                     
Non-accrual loans to total loans     0.47 %     0.66 %     1.00 %            
Non-performing loans to total loans     0.54 %     0.70 %     1.10 %            
Non-performing assets to total loans plus OREO     1.02 %     1.10 %     1.63 %            
                                     
Allowance for Credit Losses                                    
Allowance for loan and covered loan losses   $ 72,500     $ 71,463     $ 73,106              
Reserve for unfunded commitments     1,225       1,816       1,616              
  Total allowance for credit losses   $ 73,725     $ 73,279     $ 74,722              
Allowance for credit losses to total loans (1)     1.06 %     1.07 %     1.15 %            
Allowance for credit losses to non-accrual loans, excluding covered loans     215.45 %     152.01 %     102.39 %            
   
(1) Acquired loans are recorded at fair value as of the acquisition date with no allowance for credit losses being established. Included within total loans are loans acquired during 2014 which totaled $545.9 million at September 30, 2015, $587.0 million at June 30, 2015, and $533.2 million at September 30, 2014. These loans have an allowance for loan losses of $1.2 million at September 30, 2015 and $821,000 at June 30, 2015. In addition, there was a remaining acquisition adjustment of $15.5 million at September 30, 2015, $17.5 million at June 30, 2015, and $13.6 million at September 30, 2014. This acquisition adjustment represents the difference between the contractual loan balances and the carrying value of these loans.
   

Asset quality continued to improve across all metrics. Total non-performing assets, excluding covered loans and covered OREO, decreased by $4.5 million, or 6.0%, from June 30, 2015 and $34.4 million, or 32.7%, from September 30, 2014.

 
Charge-Off Data
(Dollar amounts in thousands)
 
    Quarters Ended
    September 30,
 2015
    % of
Total
    June 30,
 2015
    % of
Total
    September 30,
 2014
    % of
Total
Net loan charge-offs (1):                                  
  Commercial and industrial   $ 1,601     52.3     $ 3,273     59.2     $ 9,047     56.7
  Agricultural     --     --       --     --       --     --
  Office, retail, and industrial     457     14.9       1,862     33.7       2,459     15.4
  Multi-family     67     2.2       466     8.4       26     0.2
  Construction     (114 )   (3.7 )     (188 )   (3.4 )     157     1.0
  Other commercial real estate     92     3.0       (603 )   (10.9 )     1,255     7.9
  Consumer     959     31.3       432     7.8       2,998     18.8
  Covered     1     --       285     5.2       5     --
    Total net loan charge-offs   $ 3,063     100.0     $ 5,527     100.0     $ 15,947     100.0
                                         
Net loan charge-offs to average loans, annualized:                                        
  Quarter-to-date     0.18 %           0.33 %           1.01 %    
  Year-to-date     0.33 %           0.41 %           0.67 %    
   
(1) Amounts represent charge-offs, net of recoveries.
   

Total net loan charge-offs for the third quarter of 2015 were 18 basis points of average loans, or $3.1 million, decreasing from 33 basis points for the second quarter of 2015 and 101 basis points for the third quarter of 2014.

 
DEPOSIT PORTFOLIO
 
Deposit Composition
(Dollar amounts in thousands)
 
    Quarters Ended (1)   September 30, 2015
Percent Change from
 
    September 30,
 2015
  June 30,
 2015
  September 30,
 2014
  June 30,
2015
    September 30,
2014
 
Demand deposits   $ 2,601,442   $ 2,437,742   $ 2,208,450   6.7     17.8  
Savings deposits     1,471,003     1,470,441     1,231,700   --     19.4  
NOW accounts     1,405,371     1,379,508     1,261,522   1.9     11.4  
Money market accounts     1,589,582     1,557,219     1,413,753   2.1     12.4  
  Core deposits     7,067,398     6,844,910     6,115,425   3.3     15.6  
Time deposits and other     1,173,127     1,216,371     1,226,025   (3.6 )   (4.3 )
    Total deposits   $ 8,240,525   $ 8,061,281   $ 7,341,450   2.2     12.2  
   
(1) Amounts presented are average balances.
   

Average core deposits of $7.1 billion for the third quarter of 2015 increased 3.3% and 15.6% compared to the second quarter of 2015 and the third quarter of 2014, respectively. The rise in average core deposits compared to the second quarter of 2015 resulted primarily from a seasonal increase in average municipal deposits of $221.9 million. Compared to the third quarter of 2014, the rise was due primarily to the full impact of deposits assumed in the acquisitions completed during the second half of 2014, which further strengthened the Company's core deposit base.

   
CAPITAL MANAGEMENT  
   
Capital Ratios  
(Dollar amounts in thousands)  
   
  As of  
  September 30, 2015   June 30, 2015   December 31, 2014   September 30, 2014  
Company regulatory capital ratios: (1)                
  Total capital to risk-weighted assets 11.43 % 11.37 % 11.23 % 10.94 %
  Tier 1 capital to risk-weighted assets 10.55 % 10.49 % 10.19 % 9.86 %
  Tier 1 common capital to risk-weighted assets 10.00 % 9.93 % N/A   N/A  
  Tier 1 leverage to average assets 9.29 % 9.34 % 9.03 % 8.93 %
Company tangible common equity ratios (2)(3):                
  Tangible common equity to tangible assets 8.50 % 8.32 % 8.41 % 8.33 %
  Tangible common equity, excluding other comprehensive loss, to tangible assets 8.67 % 8.54 % 8.59 % 8.54 %
  Tangible common equity to risk-weighted assets 9.70 % 9.55 % 9.73 % 9.57 %
                   

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 subsequent to December 31, 2014 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 to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with competitors. See the accompanying Non-GAAP Reconciliations for details of the calculation of these ratios.
   

The Company's capital ratios increased from June 30, 2015 and September 30, 2014 driven primarily by growth in retained earnings partially offset by an increase in assets.

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

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 21, 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. 10073929 beginning one hour after completion of the live call until 9:00 A.M. (ET) on October 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.

Press Release and Additional Information Available on Website

This press release and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.

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, including First Midwest's proposed acquisition of The Peoples' Bank of Arlington Heights, 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.

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. 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 following reconciliations for details on the calculation of these measures to the extent presented herein.

About the Company

First Midwest is a relationship-focused financial institution and one of Illinois' largest independent publicly-traded bank holding companies. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of business, middle market and retail banking as well as wealth management and private banking services through over 100 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized as having the "Highest Customer Satisfaction with Retail Banking in the Midwest, Two Years in a Row"* according to the J.D. Power 2014 and 2015 Retail Banking Satisfaction Studies(SM). First Midwest's 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 and 2015 Retail Banking Satisfaction Studies(SM). The 2015 study is based on 82,030 total responses measuring 20 providers in the Midwest region (IA, IL, KS, MO, WI) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed April 2014 - February 2015. Your experiences may vary. Visit jdpower.com.

Accompanying Unaudited Selected Financial Information

   
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
 
       
    As of  
    September 30,     June 30,     March 31,     December 31,     September 30,  
    2015     2015     2015     2014     2014  
Period-End Balance Sheet                              
Assets                              
Cash and due from banks   $ 125,279     $ 135,546     $ 126,450     $ 117,315     $ 125,977  
Interest-bearing deposits in other banks     822,264       811,287       492,607       488,947       550,606  
Trading securities, at fair value     17,038       18,172       18,374       17,460       17,928  
Securities available-for-sale, at fair value     1,151,418       1,142,407       1,151,603       1,187,009       997,420  
Securities held-to-maturity, at amortized cost     23,723       24,292       25,861       26,555       26,776  
FHLB and FRB stock     38,748       38,748       38,748       37,558       35,588  
Loans, excluding covered loans:                                        
  Commercial and industrial     2,392,860       2,366,056       2,318,058       2,253,556       2,208,166  
  Agricultural     393,732       377,410       368,836       358,249       347,511  
  Commercial real estate:                                        
    Office, retail, and industrial     1,414,077       1,432,502       1,443,562       1,478,379       1,422,522  
    Multi-family     539,308       557,947       560,800       564,421       559,689  
    Construction     192,086       190,970       191,104       204,236       193,445  
    Other commercial real estate     869,748       871,119       881,026       887,897       871,825  
  Home equity     647,223       599,320       599,543       543,185       517,446  
  1-4 family mortgages     294,261       283,562       285,758       291,463       238,172  
  Installment     131,185       113,382       92,834       76,032       69,428  
    Total loans, excluding covered loans     6,874,480       6,792,268       6,741,521       6,657,418       6,428,204  
Covered loans     51,219       57,917       62,830       79,435       90,875  
Allowance for loan and covered loan losses     (72,500 )     (71,463 )     (70,990 )     (72,694 )     (73,106 )
  Net loans     6,853,199       6,778,722       6,733,361       6,664,159       6,445,973  
OREO, excluding covered OREO     31,129       24,471       26,042       26,898       29,165  
Covered OREO     906       3,759       7,309       8,068       9,277  
FDIC indemnification asset     6,106       7,335       8,540       8,452       8,699  
Premises, furniture, and equipment, net     127,443       128,621       128,698       131,109       123,473  
Investment in BOLI     208,666       207,814       207,190       206,498       195,270  
Goodwill and other intangible assets     331,250       332,223       333,202       334,199       318,511  
Accrued interest receivable and other assets     197,877       209,630       200,611       190,912       211,688  
  Total assets   $ 9,935,046     $ 9,863,027     $ 9,498,596     $ 9,445,139     $ 9,096,351  
Liabilities and Stockholders' Equity                                        
Noninterest-bearing deposits   $ 2,671,793     $ 2,508,316     $ 2,339,492     $ 2,301,757     $ 2,295,679  
Interest-bearing deposits     5,624,657       5,704,355       5,575,187       5,586,001       5,320,454  
  Total deposits     8,296,450       8,212,671       7,914,679       7,887,758       7,616,133  
Borrowed funds     169,943       189,036       131,200       137,994       132,877  
Senior and subordinated debt     201,123       201,039       200,954       200,869       191,028  
Accrued interest payable and other liabilities     119,861       135,324       135,813       117,743       106,637  
Stockholders' equity     1,147,669       1,124,957       1,115,950       1,100,775       1,049,676  
  Total liabilities and stockholders' equity   $ 9,935,046     $ 9,863,027     $ 9,498,596     $ 9,445,139     $ 9,096,351  
Stockholders' equity, excluding accumulated other comprehensive income ("AOCI")   $ 1,163,487     $ 1,146,189     $ 1,128,755     $ 1,116,630     $ 1,068,528  
Stockholders' equity, common     1,147,669       1,124,957       1,115,950       1,100,775       1,049,676  
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
                                 
    Quarters Ended   Nine Months Ended  
    September 30,   June 30,   March 31,   December 31,     September 30,   September 30,   September 30,  
    2015   2015   2015   2014     2014   2015   2014  
Income Statement                                
Interest income   $ 84,292   $ 84,556   $ 82,469   $ 81,309     $ 76,862   $ 251,317   $ 218,555  
Interest expense     6,390     5,654     5,687     5,490       5,831     17,731     17,522  
  Net interest income     77,902     78,902     76,782     75,819       71,031     233,586     201,033  
Provision for loan and covered loan losses     4,100     6,000     6,552     1,659       10,727     16,652     17,509  
      Net interest income after provision for loan and covered loan losses     73,802     72,902     70,230     74,160       60,304     216,934     183,524  
Noninterest Income                                              
    Service charges on deposit accounts     10,519     9,886     9,271     10,015       9,902     29,676     26,895  
    Wealth management fees     7,222     7,433     7,014     6,744       6,721     21,669     19,730  
    Card-based fees     6,868     6,953     6,402     6,390       6,646     20,223     17,950  
    Merchant servicing fees     3,207     2,938     2,665     2,703       2,932     8,810     8,557  
    Mortgage banking income     1,402     1,439     1,123     812       1,125     3,964     3,199  
    Other service charges, commissions, and fees     3,900     2,924     2,166     2,700       2,334     8,990     5,386  
      Total fee-based revenues     33,118     31,573     28,641     29,364       29,660     93,332     81,717  
    Other income     1,372     1,900     1,948     1,767       923     5,220     3,778  
    Net securities gains (losses)     524     515     512     (63 )     2,570     1,551     8,160  
    Gains on sales of properties     --     --     --     --       3,954     --     3,954  
    Loss on early extinguishment of debt     --     --     --     --       --     --     (2,059 )
      Total noninterest income     35,014     33,988     31,101     31,068       37,107     100,103     95,550  
Noninterest Expense                                              
  Salaries and employee benefits:                                              
    Salaries and wages     33,554     33,096     32,794     32,640       28,152     99,444     83,938  
    Retirement and other employee benefits     7,807     7,198     7,922     7,660       7,319     22,927     19,585  
      Total salaries and employee benefits     41,361     40,294     40,716     40,300       35,471     122,371     103,523  
    Net occupancy and equipment expense     9,406     9,622     10,436     9,479       8,639     29,464     25,702  
    Professional services     6,172     5,322     5,109     6,664       5,692     16,603     16,772  
    Technology and related costs     3,673     3,527     3,687     3,444       3,253     10,887     9,431  
    Merchant card expense     2,722     2,472     2,197     2,203       2,396     7,391     6,992  
    Advertising and promotions     1,828     2,344     1,223     2,418       1,822     5,395     5,741  
    Net OREO expense     1,290     1,861     1,204     2,544       1,406     4,355     4,531  
    Cardholder expenses     1,354     1,292     1,268     1,036       1,120     3,914     3,215  
    Other expenses     6,559     6,717     6,817     7,446       6,766     20,093     18,513  
    Acquisition and integration related expense     --     --     --     9,294       3,748     --     4,578  
      Total noninterest expense     74,365     73,451     72,657     84,828       70,313     220,473     198,998  
    Income before income tax expense     34,451     33,439     28,674     20,400       27,098     96,564     80,076  
    Income tax expense     11,167     10,865     8,792     5,807       8,549     30,824     25,363  
      Net income   $ 23,284   $ 22,574   $ 19,882   $ 14,593     $ 18,549   $ 65,740   $ 54,713  
  Net income applicable to common shares   $ 23,058   $ 22,325   $ 19,654   $ 14,454     $ 18,307   $ 65,037   $ 54,016  
  Net income applicable to common shares, excluding acquisition and integration related expenses   $ 23,058   $ 22,325   $ 19,654   $ 20,030     $ 20,556   $ 65,037   $ 49,438  
 
 
 
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
    As of or for the  
    Quarters Ended     Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2015     2015     2015     2014     2014     2015     2014  
Earnings Per Share                                          
Basic earnings per common share ("EPS")   $ 0.30     $ 0.29     $ 0.26     $ 0.19     $ 0.25     $ 0.84     $ 0.73  
Diluted EPS   $ 0.30     $ 0.29     $ 0.26     $ 0.19     $ 0.25     $ 0.84     $ 0.73  
Diluted EPS, excluding acquisition and integration related expenses   $ 0.30     $ 0.29     $ 0.26     $ 0.27     $ 0.28     $ 0.84     $ 0.76  
Common Stock and Related Per Common Share Data                                                        
Book value   $ 14.72     $ 14.43     $ 14.31     $ 14.17     $ 13.94     $ 14.72     $ 13.94  
Tangible book value     10.47       10.17       10.04       9.87       9.71       10.47       9.71  
Dividends declared per share     0.09       0.09       0.09       0.08       0.08       0.27       0.23  
Closing price at period end     17.54       18.97       17.37       17.11       16.09       17.54       16.09  
Closing price to book value     1.2       1.3       1.2       1.2       1.2       1.2       1.2  
Period end shares outstanding     77,942       77,961       77,957       77,695       75,295       77,942       75,295  
Period end treasury shares     10,286       10,267       10,271       10,533       10,492       10,286       10,492  
Common dividends   $ 7,014     $ 7,022     $ 7,011     $ 6,206     $ 6,027     $ 21,047     $ 17,324  
Key Ratios/Data                                                        
Return on average common equity (1)     8.06 %     7.97 %     7.15 %     5.35 %     6.91 %     7.73 %     6.99 %
Return on average tangible common equity (1)     11.68 %     11.62 %     10.52 %     7.89 %     9.73 %     11.28 %     9.80 %
Return on average tangible common equity, excluding acquisition and integration related expenses (1)     11.68 %     11.62 %     10.52 %     10.83 %     10.90 %     11.28 %     10.29 %
Return on average assets (1)     0.94 %     0.94 %     0.85 %     0.63 %     0.84 %     0.91 %     0.86 %
Efficiency ratio     63.20 %     61.70 %     64.46 %     66.09 %     62.02 %     63.10 %     64.00 %
Net interest margin (2)     3.58 %     3.76 %     3.79 %     3.76 %     3.72 %     3.70 %     3.66 %
Loans-to-deposits     83.48 %     83.41 %     85.97 %     85.41 %     85.60 %     83.48 %     85.60 %
Yield on average interest-earning assets (2)     3.86 %     4.02 %     4.06 %     4.02 %     4.01 %     3.98 %     3.97 %
Cost of funds     0.42 %     0.38 %     0.39 %     0.38 %     0.43 %     0.40 %     0.44 %
Net noninterest expense to average assets     1.60 %     1.66 %     1.80 %     2.31 %     1.80 %     1.69 %     1.79 %
Effective income tax rate     32.41 %     32.50 %     30.66 %     28.47 %     31.55 %     31.92 %     31.67 %
Capital Ratios                                                        
Total capital to risk-weighted assets     11.43 %     11.37 %     11.23 %     11.23 %     10.94 %     11.43 %     10.94 %
Tier 1 capital to risk-weighted assets     10.55 %     10.49 %     10.35 %     10.19 %     9.86 %     10.55 %     9.86 %
Tier 1 common capital to risk- weighted assets (CET1) (3)     10.00 %     9.93 %     9.79 %     N/A       N/A       10.00 %     N/A  
Tier 1 leverage to average assets     9.29 %     9.34 %     9.32 %     9.03 %     8.93 %     9.29 %     8.93 %
Tangible common equity to tangible assets     8.50 %     8.32 %     8.54 %     8.41 %     8.33 %     8.50 %     8.33 %
Tangible common equity, excluding AOCI, to tangible assets     8.67 %     8.54 %     8.68 %     8.59 %     8.54 %     8.67 %     8.54 %
Tangible common equity to risk- weighted assets     9.70 %     9.55 %     9.51 %     9.73 %     9.57 %     9.70 %     9.57 %
   
Note: Selected Financial Information footnotes are located at the end of this section.  
   
 
 
 
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
    As of or for the  
    Quarters Ended   Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,   September 30,     September 30,  
    2015     2015     2015     2014     2014   2015     2014  
Asset Quality Performance Data                                        
Non-performing assets(4)                                        
Commercial and industrial   $ 6,438     $ 11,100     $ 12,913     $ 22,693     $ 19,696   $ 6,438     $ 19,696  
Agricultural     112       317       358       360       361     112       361  
Commercial real estate:                                                      
  Office, retail, and industrial     6,961       12,599       11,363       12,939       16,963     6,961       16,963  
  Multi-family     1,046       1,287       700       754       1,536     1,046       1,536  
  Construction     3,332       4,940       7,488       6,981       7,082     3,332       7,082  
  Other commercial real estate     5,898       5,513       5,915       6,970       7,912     5,898       7,912  
Consumer     8,521       9,253       9,340       9,274       10,978     8,521       10,978  
  Total non-accrual loans     32,308       45,009       48,077       59,971       64,528     32,308       64,528  
90 days or more past due loans     4,559       2,744       3,564       1,173       6,062     4,559       6,062  
  Total non-performing loans     36,867       47,753       51,641       61,144       70,590     36,867       70,590  
Accruing troubled debt restructurings     2,771       3,067       3,581       3,704       5,449     2,771       5,449  
Other real estate owned     31,129       24,471       26,042       26,898       29,165     31,129       29,165  
  Total non-performing assets   $ 70,767     $ 75,291     $ 81,264     $ 91,746     $ 105,204   $ 70,767     $ 105,204  
30-89 days past due loans (4)   $ 28,629     $ 28,625     $ 18,631     $ 20,073     $ 17,321   $ 28,629     $ 17,321  
Allowance for credit losses                                                      
Allowance for loan losses   $ 68,384     $ 66,602     $ 65,311     $ 65,468     $ 64,457   $ 68,384     $ 64,457  
Allowance for covered loan losses     4,116       4,861       5,679       7,226       8,649     4,116       8,649  
Reserve for unfunded commitments     1,225       1,816       1,816       1,816       1,616     1,225       1,616  
Total allowance for credit losses   $ 73,725     $ 73,279     $ 72,806     $ 74,510     $ 74,722   $ 73,725     $ 74,722  
Provision for loan and covered loan losses   $ 4,100     $ 6,000     $ 6,552     $ 1,659     $ 10,727   $ 16,652     $ 17,509  
Net charge-offs by category                                                      
Commercial and industrial   $ 1,601     $ 3,273     $ 6,657     $ 1,217     $ 9,047   $ 11,531     $ 12,254  
Agricultural     --       --       --       --       --     --       153  
Commercial real estate:                                                      
  Office, retail, and industrial     457       1,862       (166 )     143       2,459     2,153       6,705  
  Multi-family     67       466       24       476       26     557       380  
  Construction     (114 )     (188 )     (17 )     (6 )     157     (319 )     892  
  Other commercial real estate     92       (603 )     1,051       (247 )     1,255     540       3,354  
Consumer     959       432       479       342       2,998     1,870       6,503  
  Net charge-offs, excluding covered loans     3,062       5,242       8,028       1,925       15,942     16,332       30,241  
Charge-offs on covered loans     1       285       228       146       5     514       (333 )
    Total net charge-offs   $ 3,063     $ 5,527     $ 8,256     $ 2,071     $ 15,947   $ 16,846     $ 29,908  
Total recoveries included above   $ 1,294     $ 2,579     $ 1,797     $ 2,669     $ 1,159   $ 5,670     $ 5,536  
   
Note: Selected Financial Information footnotes are located at the end of this section.  
 
 
 
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
    As of or for the  
    Quarters Ended     Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2015     2015     2015     2014     2014     2015     2014  
Asset Quality ratios(4)                                          
Non-accrual loans to total loans   0.47 %   0.66 %   0.71 %   0.90 %   1.00 %   0.47 %   1.00 %
Non-performing loans to total loans   0.54 %   0.70 %   0.77 %   0.92 %   1.10 %   0.54 %   1.10 %
Non-performing assets to total loans plus OREO   1.02 %   1.10 %   1.20 %   1.37 %   1.63 %   1.02 %   1.63 %
Non-performing assets to tangible common equity plus allowance for credit losses   7.99 %   8.74 %   9.56 %   11.00 %   13.20 %   7.99 %   13.20 %
Non-accrual loans to total assets   0.33 %   0.46 %   0.51 %   0.64 %   0.72 %   0.33 %   0.72 %
Allowance for credit losses and net charge-off ratios                                          
Allowance for credit losses to total loans (5)   1.06 %   1.07 %   1.07 %   1.11 %   1.15 %   1.06 %   1.15 %
Allowance for credit losses to non-accrual loans (4)   215.45 %   152.01 %   139.62 %   112.19 %   102.39 %   215.45 %   102.39 %
Allowance for credit losses to non-performing loans (4)   188.81 %   143.27 %   129.99 %   110.04 %   93.60 %   188.81 %   93.60 %
Net charge-offs to average loans (1)   0.18 %   0.33 %   0.50 %   0.13 %   1.01 %   0.33 %   0.67 %
                                           
                                           
 
Footnotes to Selected Financial Information 
   
(1) Annualized based on the actual number of days for each period presented.
(2) Tax equivalent basis reflects federal and state tax benefits.
(3) 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 subsequent to December 31, 2014 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(4) Excludes covered loans and covered OREO.
(5) Acquired loans are recorded at fair value as of the acquisition date with no allowance for credit losses being established. Included within total loans are loans acquired during 2014 which totaled $545.9 million at September 30, 2015, $587.0 million at June 30, 2015, $660.9 million at March 31, 2015, $718.3 million at December 31, 2014, and $533.2 million at September 30, 2014. These loans have an allowance for loan losses of $1.2 million at September 30, 2015 and $821,000 at June 30, 2015. In addition, there was a remaining acquisition adjustment of $15.5 million at September 30, 2015, $17.5 million at June 30, 2015, $22.4 million at March 31, 2015, $24.7 million at December 31, 2014, and $13.6 million at September 30, 2014. This acquisition adjustment represents the difference between the contractual loan balances and the carrying value of these loans.
   
 
 
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
    Quarters Ended     Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2015     2015     2015     2014     2014     2015     2014  
Earnings Per Share                                          
Net income   $ 23,284     $ 22,574     $ 19,882     $ 14,593     $ 18,549     $ 65,740     $ 54,713  
Net income applicable to non- vested restricted shares     (226 )     (249 )     (228 )     (139 )     (242 )     (703 )     (697 )
  Net income applicable to common shares     23,058       22,325       19,654       14,454       18,307       65,037       54,016  
Tax-equivalent acquisition and integration related expenses     --       --       --       5,576       2,249       --       2,747  
  Net income applicable to common shares, excluding acquisition and integration related expenses   $ 23,058     $ 22,325     $ 19,654     $ 20,030     $ 20,556     $ 65,037     $ 56,763  
Weighted-average common shares outstanding:                                                        
  Weighted-average common shares outstanding (basic)     77,106       77,089       76,918       75,119       74,341       77,038       74,270  
  Dilutive effect of common stock equivalents     13       12       12       12       11       13       12  
    Weighted-average diluted common shares outstanding     77,119       77,101       76,930       75,131       74,352       77,051       74,282  
Basic EPS   $ 0.30     $ 0.29     $ 0.26     $ 0.19     $ 0.25     $ 0.84     $ 0.73  
Diluted EPS   $ 0.30     $ 0.29     $ 0.26     $ 0.19     $ 0.25     $ 0.84     $ 0.73  
Diluted EPS, excluding acquisition and integration related expenses   $ 0.30     $ 0.29     $ 0.26     $ 0.27     $ 0.28     $ 0.84     $ 0.76  
Anti-dilutive shares not included in the computation of diluted EPS     751       768       948       1,146       1,155       822       1,215  
Efficiency Ratio Calculation                                                        
Noninterest expense   $ 74,365     $ 73,451     $ 72,657     $ 84,828     $ 70,313     $ 220,473     $ 198,998  
Less:                                                        
  Net OREO expense     (1,290 )     (1,861 )     (1,204 )     (2,544 )     (1,406 )     (4,355 )     (4,531 )
  Acquisition and integration related expenses     --       --       --       (9,294 )     (3,748 )     --       (4,578 )
    Total   $ 73,075     $ 71,590     $ 71,453     $ 72,990     $ 65,159     $ 216,118     $ 189,889  
Tax-equivalent net interest income (1)   $ 80,511     $ 81,595     $ 79,665     $ 78,742     $ 73,970     $ 241,771     $ 209,847  
Fee-based revenues     33,118       31,573       28,641       29,364       29,660       93,332       81,717  
Add:                                                        
  Other income, excluding BOLI income     446       446       1,065       924       156       1,957       1,748  
  Tax-adjusted BOLI (BOLI/.6)     1,543       2,423       1,472       1,405       1,278       5,438       3,383  
    Total   $ 115,618     $ 116,037     $ 110,843     $ 110,435     $ 105,064     $ 342,498     $ 296,695  
Efficiency ratio     63.20 %     61.70 %     64.46 %     66.09 %     62.02 %     63.10 %     64.00 %
Tax Equivalent Net Interest Income                                                        
Net interest income   $ 77,902     $ 78,902     $ 76,782     $ 75,819     $ 71,031     $ 233,586     $ 201,033  
Tax-equivalent adjustment     2,609       2,693       2,883       2,923       2,939       8,185       8,814  
  Tax-equivalent net interest income (1)   $ 80,511     $ 81,595     $ 79,665     $ 78,742     $ 73,970     $ 241,771     $ 209,847  
 
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.
 
 
 
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
    As of or for the  
    Quarters Ended     Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2015     2015     2015     2014     2014     2015     2014  
Risk-Based Capital Data                                          
Common stock   $ 882     $ 882     $ 882     $ 882     $ 858     $ 882     $ 858  
Additional paid-in capital     445,037       443,558       441,689       449,798       408,789       445,037       408,789  
Retained earnings     944,209       927,939       912,387       899,516       891,129       944,209       891,129  
Treasury stock, at cost     (226,641 )     (226,190 )     (226,203 )     (233,566 )     (232,248 )     (226,641 )     (232,248 )
Goodwill and other intangible assets     (318,854 )     (319,243 )     (319,635 )     (334,199 )     (318,511 )     (318,854 )     (318,511 )
Disallowed deferred tax assets (CET1) (2)     (2,889 )     (3,046 )     (3,354 )     (30,638 )     (33,473 )     (2,889 )     (33,473 )
  Common equity Tier 1 capital     841,744       823,900       805,766       751,793       716,544       841,744       716,544  
Trust preferred securities     50,690       50,690       50,690       50,690       36,690       50,690       36,690  
Disallowed deferred tax assets (other) (2)     (4,334 )     (4,568 )     (5,030 )     N/A       N/A       (4,334 )     N/A  
  Tier 1 capital     888,100       870,022       851,426       802,483       753,234       888,100       753,234  
Tier 2 capital     73,725       73,279       72,806       82,209       82,421       73,725       82,421  
  Total capital   $ 961,825     $ 943,301     $ 924,232     $ 884,692     $ 835,655     $ 961,825     $ 835,655  
Risk-weighted assets   $ 8,414,729     $ 8,296,679     $ 8,229,627     $ 7,876,754     $ 7,640,487     $ 8,414,729     $ 7,640,487  
Adjusted average assets   $ 9,559,796     $ 9,318,347     $ 9,134,320     $ 8,884,045     $ 8,433,363     $ 9,559,796     $ 8,433,363  
Total capital to risk-weighted assets     11.43 %     11.37 %     11.23 %     11.23 %     10.94 %     11.43 %     10.94 %
Tier 1 capital to risk-weighted assets     10.55 %     10.49 %     10.35 %     10.19 %     9.86 %     10.55 %     9.86 %
Tier 1 common capital to risk- weighted assets (CET1)     10.00 %     9.93 %     9.79 %     N/A       N/A       10.00 %     N/A  
Tier 1 leverage to average assets     9.29 %     9.34 %     9.32 %     9.03 %     8.93 %     9.29 %     8.93 %
Tangible Common Equity                                                        
Stockholders' equity   $ 1,147,669     $ 1,124,957     $ 1,115,950     $ 1,100,775     $ 1,049,676     $ 1,147,669     $ 1,049,676  
Less: goodwill and other intangible assets     (331,250 )     (332,223 )     (333,202 )     (334,199 )     (318,511 )     (331,250 )     (318,511 )
  Tangible common equity     816,419       792,734       782,748       766,576       731,165       816,419       731,165  
Less: AOCI     15,818       21,232       12,805       15,855       18,852       15,818       18,852  
  Tangible common equity, excluding AOCI   $ 832,237     $ 813,966     $ 795,553     $ 782,431     $ 750,017     $ 832,237     $ 750,017  
Total assets   $ 9,935,046     $ 9,863,027     $ 9,498,596     $ 9,445,139     $ 9,096,351     $ 9,935,046     $ 9,096,351  
Less: goodwill and other intangible assets     (331,250 )     (332,223 )     (333,202 )     (334,199 )     (318,511 )     (331,250 )     (318,511 )
  Tangible assets   $ 9,603,796     $ 9,530,804     $ 9,165,394     $ 9,110,940     $ 8,777,840     $ 9,603,796     $ 8,777,840  
Tangible common equity to tangible assets     8.50 %     8.32 %     8.54 %     8.41 %     8.33 %     8.50 %     8.33 %
Tangible common equity, excluding AOCI, to tangible assets     8.67 %     8.54 %     8.68 %     8.59 %     8.54 %     8.67 %     8.54 %
Tangible common equity to risk- weighted assets     9.70 %     9.55 %     9.51 %     9.73 %     9.57 %     9.70 %     9.57 %
 
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.
 
 
 
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
 
    As of or for the  
    Quarters Ended     Nine Months Ended  
    September 30,     June 30,     March 31,     December 31,     September 30,     September 30,     September 30,  
    2015     2015     2015     2014     2014     2015     2014  
Return on Average Common and Tangible Common Equity                                          
Net income applicable to common shares   $ 23,058     $ 22,325     $ 19,654     $ 14,454     $ 18,307     $ 65,037     $ 54,016  
Intangibles amortization     973       978       998       842       643       2,949       2,047  
Tax-equivalent adjustment of intangibles amortization     (389 )     (391 )     (399 )     (337 )     (257 )     (1,180 )     (819 )
  Net income applicable to common shares, excluding intangibles amortization     23,642       22,912       20,253       14,959       18,693       66,806       55,244  
Acquisition and integration related expenses     --       --       --       9,294       3,748       --       4,578  
Tax-equivalent adjustment of acquisition and integration related expenses     --       --       --       (3,718 )     (1,499 )     --       (1,831 )
  Net income applicable to common shares, excluding intangibles amortization and acquisition and integration related expenses   $ 23,642     $ 22,912     $ 20,253     $ 20,535     $ 20,942     $ 66,806     $ 57,991  
Average stockholders' equity   $ 1,134,967     $ 1,123,530     $ 1,114,762     $ 1,072,682     $ 1,050,881     $ 1,124,493     $ 1,033,754  
Less: average intangible assets     (331,720 )     (332,694 )     (333,684 )     (320,533 )     (288,975 )     (332,692 )     (280,115 )
  Average tangible common equity   $ 803,247     $ 790,836     $ 781,078     $ 752,149     $ 761,906     $ 791,801     $ 753,639  
Return on average common equity (3)     8.06 %     7.97 %     7.15 %     5.35 %     6.91 %     7.73 %     6.99 %
Return on average tangible common equity (3)     11.68 %     11.62 %     10.52 %     7.89 %     9.73 %     11.28 %     9.80 %
Return on average tangible common equity, excluding acquisition and integration related expenses (3)     11.68 %     11.62 %     10.52 %     10.83 %     10.90 %     11.28 %     10.29 %
                                                         
Footnotes to Non-GAAP Reconciliations 
   
(1) Tax equivalent basis reflects federal and state tax benefits.
(2) 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 subsequent to December 31, 2014 are computed using the new rules and prior periods presented are reported using the regulatory guidance applicable at that time.
(3) Annualized based on the actual number of days for each period presented.
   

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