ITASCA, IL--(Marketwired - Oct 20, 2015) - First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (
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 (%) |
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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 |
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September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
June 30, 2015 |
September 30, 2014 |
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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 |
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September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
June 30, 2015 |
September 30, 2014 |
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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 |
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September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
June 30, 2015 (1) |
September 30, 2014 |
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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 |
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September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
June 30, 2015 |
September 30, 2014 |
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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 |
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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 |
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September 30, 2015 |
June 30, 2015 |
September 30, 2014 |
June 30, 2015 |
September 30, 2014 |
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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. |
Contact Information:
Contact Information
Investors:
Paul F. Clemens
EVP and Chief Financial Officer
(630) 875-7347
paul.clemens@firstmidwest.com
Media:
James M. Roolf
SVP and Corporate Relations Officer
(630) 875-7533
jim.roolf@firstmidwest.com