SOURCE: First Midwest Bancorp, Inc.

First Midwest Bancorp, Inc.

July 19, 2016 18:00 ET

First Midwest Bancorp, Inc. Announces 2016 Second Quarter Results

ITASCA, IL--(Marketwired - Jul 19, 2016) - 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 second quarter of 2016. Net income for the second quarter of 2016 was $25.3 million, or $0.31 per share. This compares to $18.0 million, or $0.23 per share, for the first quarter of 2016, and $22.6 million, or $0.29 per share, for the second quarter of 2015. Performance for the second and first quarters of 2016 were impacted by acquisition and integration related pre-tax expenses of $618,000 and $5.0 million, respectively. Excluding these expenses, earnings per share was $0.32 for the second quarter of 2016 compared to $0.27 for the first quarter of 2016.

SELECT SECOND QUARTER HIGHLIGHTS

  • Increased earnings per share to $0.32, up 19% from the first quarter of 2016 and 10% from second quarter of 2015, excluding acquisition and integration related expenses.

  • Grew fee-based revenues to $36 million, an increase of 7% from the first quarter of 2016 and 14% from the second quarter of 2015.

  • Improved efficiency ratio to 61%, compared to 65% for the first quarter of 2016 and 62% for the second quarter of 2015.

  • Expanded total loans to $8.0 billion, up 8% annualized from March 31, 2016 and 17% from June 30, 2015.

  • Reported non-performing assets to total loans plus OREO of 0.93%, down 17 basis points from June 30, 2015 and consistent with March 31, 2016.

  • Grew average core deposits to $7.7 billion, up 9% from the first quarter of 2016 and 13% from the second quarter of 2015.

  • Announced the pending acquisition of Standard Bancshares, Inc. on June 28, 2016, with $2.5 billion in assets, $2.2 billion in deposits, and $1.8 billion in loans.

"It was an active second quarter, reflecting continued, successful execution on a number of business fronts," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Core earnings per share improved by 19% to $0.32 as compared to first quarter 2016, benefiting from the full quarter impact of our acquisition of The National Bank and Trust Company of Sycamore as well as organic earning asset and revenue growth and controlled operating expenses. Our loan growth was both strong and balanced, growing by 8% annualized versus the end of last quarter and 17% as contrasted to a year ago."

Mr. Scudder continued, "Against a backdrop of market volatility and uncertainty, we remain centered on those actions which enhance the value of our franchise and inure to the long term benefit of our shareholders. Our pending acquisition of Standard Bank and Trust Company further positions us as a premier market leader in metro Chicago and reinforces our commitment to relationship based business banking. At the same time, we continue to strengthen our lines of business and work to efficiently grow and diversify our revenues. Combined with our strong capital foundation, these efforts add to our underlying business momentum and position us well for future performance and growth."

ACQUISITIONS

Pending Acquisition

Standard Bancshares, Inc.

On June 28, 2016, the Company entered into a definitive agreement to acquire Standard Bancshares, Inc. ("Standard"), the holding company for Standard Bank and Trust Company. With the acquisition, the Company would acquire 35 banking offices in the southwest Chicago suburbs and adjacent markets in northwest Indiana. Standard has total assets of approximately $2.5 billion with $2.2 billion in deposits, of which over 90% are core deposits, and $1.8 billion in loans, of which 80% are commercial-related. If the merger is completed, the merger consideration to Standard shareholders will be Company common stock, with an overall transaction value of approximately $365 million as of the date of announcement. The acquisition is expected to close in late 2016 or early 2017, subject to customary regulatory approvals and closing conditions, as well as Company and Standard shareholder approval.

Completed Acquisitions

NI Bancshares Corporation

On March 8, 2016, the Company completed its acquisition of NI Bancshares Corporation ("NI Bancshares"), the holding company for The National Bank & Trust Company of Sycamore. With the acquisition, the Company obtained ten banking offices in northern Illinois, and added approximately $400 million in loans and $600 million in deposits. In addition, the Company acquired over $700 million in trust assets under management, which increased the Company's trust assets under management by approximately 10%. The merger consideration totaled $70.1 million and consisted of $54.9 million in Company common stock and $15.2 million in cash.

Peoples Bancorp, Inc.

On December 3, 2015, the Company completed its acquisition of Peoples Bancorp, Inc. ("Peoples") and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights. With the acquisition, the Company acquired two banking offices in Arlington Heights, Illinois, and approximately $92 million in deposits and $54 million in loans. The merger consideration totaled $16.8 million and was paid in cash.

 
OPERATING PERFORMANCE
 
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
 
    Quarters Ended
    June 30, 2016   March 31, 2016   June 30, 2015
    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   $ 300,945   $ 426   0.57   $ 241,645   $ 342   0.57   $ 669,556     $ 516     0.31
Securities (1)     1,721,781     10,636   2.47     1,495,462     9,998   2.67     1,177,516       9,792     3.33
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock     42,561     200   1.88     39,773     159   1.60     38,748       368     3.80
Loans (1)(2)     7,883,806     87,481   4.46     7,346,035     79,356   4.34     6,815,781       76,573     4.51
  Total interest-earning assets (1)     9,949,093     98,743   3.99     9,122,915     89,855   3.96     8,701,601       87,249     4.02
Cash and due from banks     154,693               133,268               133,180              
Allowance for loan and covered loan losses     (80,561 )             (75,654 )             (73,865 )            
Other assets     945,291               876,316               881,613              
    Total assets   $ 10,968,516             $ 10,056,845             $ 9,642,529              
Liabilities and Stockholders' Equity:                                                    
Interest-bearing core deposits (3)   $ 4,941,779     991   0.08   $ 4,607,738     948   0.08   $ 4,407,168       896     0.08
Time deposits     1,277,694     1,491   0.47     1,183,463     1,437   0.49     1,216,371       1,506     0.50
Borrowed funds     461,363     1,499   1.31     303,232     1,316   1.75     140,002       118     0.34
Senior and subordinated debt     162,836     2,588   6.39     201,253     3,133   6.26     200,999       3,134     6.25
  Total interest-bearing liabilities     6,843,672     6,569   0.39     6,295,686     6,834   0.44     5,964,540       5,654     0.38
Demand deposits (3)     2,771,813               2,463,017               2,437,742              
  Total funding sources     9,615,485               8,758,703               8,402,282              
Other liabilities     117,534               119,554               116,717              
Stockholders' equity - common     1,235,497               1,178,588               1,123,530              
    Total liabilities and stockholders' equity   $ 10,968,516             $ 10,056,845             $ 9,642,529              
Tax-equivalent net interest income/margin (1)           92,174   3.72           83,021   3.66             81,595     3.76
Tax-equivalent adjustment           (2,193 )             (2,307 )               (2,693 )    
    Net interest income (GAAP)         $ 89,981             $ 80,714               $ 78,902      
                                                         
(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%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. See the accompanying Non-GAAP Financial Information discussion and the Non-GAAP Reconciliations for details on the calculation of tax-equivalent net interest income.
(2)   Includes loans acquired through Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements ("covered loans"), which totaled $27.2 million, $28.4 million, and $57.9 million at June 30, 2016, March 31, 2016, and June 30, 2015, respectively.
(3)   See the Deposit Composition table for further average balance detail by category.
     

For the second quarter of 2016, total average interest-earning assets rose $826.2 million from the first quarter of 2016 and $1.2 billion from the second quarter of 2015. The increase from both prior periods was driven primarily by $528.8 million of interest-earning assets acquired in the NI Bancshares transaction late in the first quarter of 2016, as well as leveraging growth in deposits and FHLB advances. Compared to the second quarter of 2015, the rise in average interest-earning assets was also impacted by $96.2 million of interest-earning assets acquired in the Peoples transaction late in the fourth quarter of 2015.

Average funding sources increased by $856.8 million from the first quarter of 2016 and $1.2 billion from the second quarter of 2015. Compared to both prior periods, the increase resulted primarily from deposits acquired in the NI Bancshares transaction and the full quarter impact of the addition of $262.5 million of FHLB advances during the first quarter of 2016. In addition, deposits acquired in the Peoples transaction contributed to the increase in average funding sources compared to the second quarter of 2015.

Tax-equivalent net interest margin for the current quarter was 3.72%, increasing 6 basis points from the first quarter of 2016 and decreasing 4 basis points from the second quarter of 2015. The increase in tax-equivalent net interest margin from the first quarter of 2016 was due primarily to higher accretion on acquired loans and lower funding costs resulting from the maturity of $38.5 million of subordinated notes early in the second quarter of 2016, partially offset by the addition of lower yielding securities. Compared to the second quarter of 2015, the decrease in tax-equivalent net interest margin was due primarily to the addition of FHLB advances and lower covered loan income, partially offset by the maturity of subordinated notes.

Net interest income increased by 11.5% and 14.0% from the first quarter of 2016 and second quarter of 2015, respectively, due primarily to the increase in average loans of 7.3% and 15.7% from the same periods.

Acquired loan accretion contributed $3.9 million, $1.4 million, and $3.6 million to net interest income for the second quarter of 2016, the first quarter of 2016, and the second quarter of 2015, respectively.

   
Fee-based Revenues and Total Noninterest Income Analysis  
(Dollar amounts in thousands)  
   
    Quarters Ended   June 30, 2016
Percent Change from
 
    June 30,
2016
  March 31,
2016
  June 30,
2015
  March 31,
2016
    June 30,
2015
 
Service charges on deposit accounts   $ 10,169   $ 9,473   $ 9,886   7.3     2.9  
Wealth management fees     8,642     7,559     7,433   14.3     16.3  
Card-based fees     7,592     6,718     6,953   13.0     9.2  
Merchant servicing fees     3,170     3,028     2,938   4.7     7.9  
Mortgage banking income     1,863     1,368     1,439   36.2     29.5  
Other service charges, commissions, and fees     4,498     5,448     2,924   (17.4 )   53.8  
  Total fee-based revenues     35,934     33,594     31,573   7.0     13.8  
Other income     1,865     1,445     1,900   29.1     (1.8 )
Net securities gains     23     887     515   (97.4 )   (95.5 )
    Total noninterest income   $ 37,822   $ 35,926   $ 33,988   5.3     11.3  
                               

Total fee-based revenues of $35.9 million grew $2.3 million, or 7.0%, compared to the first quarter of 2016, with services provided to customers acquired in the NI Bancshares transaction contributing to the majority of the increase. In addition, the increase in card-based fees from the first quarter of 2016 reflected seasonally higher transaction volumes and mortgage banking income rose as a result of $52.1 million in sales of 1-4 family mortgage loans in the secondary market during the second quarter of 2016, compared to $38.7 million in the first quarter of 2016. These increases were partially offset by lower sales of capital market products to commercial clients within other service charges, commissions, and fees.

Compared to the second quarter of 2015, total fee-based revenues grew $4.4 million, or 13.8%, with approximately half due to services provided to customers acquired in the NI Bancshares and Peoples transactions. In addition, card-based fees increased as a result of higher transaction volumes and other service charges, commissions, and fees grew due to sales of capital market products to commercial clients and gains realized on the sale of equipment financing contracts originated by First Midwest Equipment Finance.

Total noninterest income of $37.8 million grew 5.3% and 11.3% from the first quarter of 2016 and the second quarter of 2015, respectively.

   
Noninterest Expense Analysis  
(Dollar amounts in thousands)  
   
    Quarters Ended     June 30, 2016
Percent Change from
 
    June 30,
2016
    March 31,
2016
    June 30,
2015
    March 31,
2016
    June 30,
2015
 
Salaries and employee benefits:                                    
  Salaries and wages   $ 37,916     $ 36,296     $ 33,096     4.5     14.6  
  Retirement and other employee benefits     8,351       8,298       7,198     0.6     16.0  
    Total salaries and employee benefits     46,267       44,594       40,294     3.8     14.8  
Net occupancy and equipment expense     9,928       9,697       9,622     2.4     3.2  
Professional services     5,292       5,920       5,322     (10.6 )   (0.6 )
Technology and related costs     3,669       3,701       3,527     (0.9 )   4.0  
Merchant card expense     2,724       2,598       2,472     4.8     10.2  
Advertising and promotions     1,927       1,589       2,344     21.3     (17.8 )
Cardholder expenses     1,512       1,359       1,292     11.3     17.0  
Net other real estate owned ("OREO") expense     1,122       664       1,861     69.0     (39.7 )
Other expenses     8,295       7,447       6,717     11.4     23.5  
    Total noninterest expense excluding acquisition and integration related expenses (1)     80,736       77,569       73,451     4.1     9.9  
Acquisition and integration related expenses     618       5,020       --     (87.7 )   N/M  
      Total noninterest expense   $ 81,354     $ 82,589     $ 73,451     (1.5 )   10.8  
Efficiency ratio (2)     61 %     65 %     62 %            
                                     
N/M - Not meaningful.
 
(1)   See the Non-GAAP Financial Information discussion for detail.
(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 pre-tax expenses of $618,000 and $5.0 million are excluded from the efficiency ratio for the second and first quarters of 2016, respectively. See the accompanying Non-GAAP Financial Information discussion and Non-GAAP Reconciliations for details on the calculation of the efficiency ratio.
     

The efficiency ratio improved to 61% in the second quarter of 2016 compared to 65% for the first quarter of 2016 and 62% for the second quarter of 2015. Excluding acquisition and integration related expenses, total noninterest expense increased by 4.1% from the first quarter of 2016 and 9.9% compared to the second quarter of 2015, with the operations associated with the NI Bancshares and Peoples transactions contributing to substantially all of the linked quarter increase and approximately two-thirds of the increase from second quarter of 2015. These costs primarily occurred within salaries and employee benefits expense, net occupancy and equipment expense, technology and related costs, cardholder expenses, and other expense.

The decrease in professional services from the first quarter of 2016 resulted primarily from a reduction in covered loan remediation expenses.

   
LOAN PORTFOLIO AND ASSET QUALITY  
   
Loan Portfolio Composition  
(Dollar amounts in thousands)  
   
    As of   June 30, 2016
Percent Change From
 
    June 30, 2016   March 31, 2016   June 30, 2015   March 31, 2016     June 30, 2015  
Commercial and industrial   $ 2,699,742   $ 2,634,391   $ 2,366,056   2.5     14.1  
Agricultural     401,858     422,231     377,410   (4.8 )   6.5  
Commercial real estate:                              
  Office, retail, and industrial     1,529,675     1,566,395     1,432,502   (2.3 )   6.8  
  Multi-family     587,104     562,065     557,947   4.5     5.2  
  Construction     371,016     260,743     190,970   42.3     94.3  
  Other commercial real estate     1,000,655     1,060,302     871,119   (5.6 )   14.9  
    Total commercial real estate     3,488,450     3,449,505     3,052,538   1.1     14.3  
    Total corporate loans     6,590,050     6,506,127     5,796,004   1.3     13.7  
Home equity     722,881     683,171     599,320   5.8     20.6  
1-4 family mortgages     415,581     390,887     283,562   6.3     46.6  
Installment     223,845     213,979     113,382   4.6     97.4  
    Total consumer loans     1,362,307     1,288,037     996,264   5.8     36.7  
Covered loans     27,180     28,391     57,917   (4.3 )   (53.1 )
    Total loans   $ 7,979,537   $ 7,822,555   $ 6,850,185   2.0     16.5  
                               

Total loans grew by 8.0% on an annualized basis from March 31, 2016 and 11.2% from June 30, 2015, excluding loans acquired in the NI Bancshares transaction of $363.2 million. Compared to both prior periods presented, growth in commercial and industrial loans reflects the continued expansion into select sector-based lending areas such as structured finance, asset-based lending, and equipment financing. The rise in construction loans compared to both prior periods presented was driven mainly by select commercial projects for which permanent financing is expected upon their completion. Consumer loans grew compared to both prior periods presented due to the continued expansion of mortgage and installment loans, as well as the addition of shorter-duration, floating rate home equity loans.

   
Asset Quality  
(Dollar amounts in thousands)  
   
    As of     June 30, 2016
Percent Change from
 
    June 30,
2016
    March 31,
2016
    June 30,
2015
    March 31,
2016
    June 30,
2015
 
Asset quality, excluding covered loans and covered OREO                                    
Non-accrual loans   $ 36,859     $ 31,383     $ 45,009     17.4     (18.1 )
90 days or more past due loans, still accruing interest     5,406       5,483       2,744     (1.4 )   97.0  
  Total non-performing loans     42,265       36,866       47,753     14.6     (11.5 )
Accruing troubled debt restructurings ("TDRs")     2,491       2,702       3,067     (7.8 )   (18.8 )
OREO     29,452       29,238       24,471     0.7     20.4  
  Total non-performing assets   $ 74,208     $ 68,806     $ 75,291     7.9     (1.4 )
30-89 days past due loans   $ 22,770     $ 29,826     $ 28,625              
Non-accrual loans to total loans     0.46 %     0.40 %     0.66 %            
Non-performing loans to total loans     0.53 %     0.47 %     0.70 %            
Non-performing assets to total loans plus OREO     0.93 %     0.88 %     1.10 %            
Allowance for Credit Losses                                    
Allowance for loan losses   $ 80,105     $ 77,150     $ 71,463              
Reserve for unfunded commitments     1,400       1,225       1,816              
    Total allowance for credit losses   $ 81,505     $ 78,375     $ 73,279              
Allowance for credit losses to total loans (1)     1.02 %     1.00 %     1.07 %            
Allowance for credit losses to loans, excluding acquired loans     1.11 %     1.11 %     1.16 %            
Allowance for credit losses to non-accrual loans, excluding covered loans     217.34 %     244.74 %     152.01 %            
                                     
(1)   This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses on acquired loans is established as necessary to reflect credit deterioration.
     

Total non-performing assets represented 0.93% of total loans and OREO at June 30, 2016, compared to 0.88% at March 31, 2016 and down from 1.10% at June 30, 2015.

   
Charge-Off Data  
(Dollar amounts in thousands)  
   
    Quarters Ended  
    June 30,
2016
    % of
Total
    March 31,
2016
    % of
Total
  June 30,
2015
    % of
Total
 
Net loan charge-offs (1):                                        
    Commercial and industrial   $ 1,450     28.3     $ 1,396     34.3   $ 3,273     59.2  
    Agricultural     --     --       --     --     --     --  
    Office, retail, and industrial     1,633     31.8       421     10.3     1,862     33.7  
    Multi-family     83     1.6       179     4.4     466     8.4  
    Construction     (12 )   (0.2 )     111     2.7     (188 )   (3.4 )
    Other commercial real estate     810     15.8       1,294     31.8     (603 )   (10.9 )
    Consumer     1,164     22.7       672     16.5     432     7.8  
    Covered     2     --       --     --     285     5.2  
      Total net loan charge-offs   $ 5,130     100.0     $ 4,073     100.0   $ 5,527     100.0  
                                         
Net loan charge-offs to average loans, annualized:                                        
  Quarter-to-date     0.26 %           0.22 %         0.33 %      
  Year-to-date     0.24 %           0.22 %         0.41 %      
                                         
(1)   Amounts represent charge-offs, net of recoveries.
     
DEPOSIT PORTFOLIO
 
Deposit Composition
(Dollar amounts in thousands)
 
    Average for Quarters Ended   June 30, 2016
Percent Change from
    June 30,
2016
  March 31,
2016
  June 30,
2015
  March 31,
2016
  June 30,
2015
Demand deposits   $ 2,771,813   $ 2,463,017   $ 2,437,742   12.5   13.7
Savings deposits     1,655,566     1,575,174     1,470,441   5.1   12.6
NOW accounts     1,615,677     1,448,666     1,379,508   11.5   17.1
Money market accounts     1,670,536     1,583,898     1,557,219   5.5   7.3
  Core deposits     7,713,592     7,070,755     6,844,910   9.1   12.7
Time deposits and other     1,277,694     1,183,463     1,216,371   8.0   5.0
    Total deposits   $ 8,991,286   $ 8,254,218   $ 8,061,281   8.9   11.5
                           

Average core deposits of $7.7 billion for the second quarter of 2016 increased by 9.1% and 12.7% compared to the first quarter of 2016 and the second quarter of 2015, respectively. The rise in average core deposits compared to both prior periods reflects the full quarter impact of the $443.1 million in core deposits assumed in the NI Bancshares transaction, which was completed late in the first quarter of 2016, and organic growth. Additionally, the rise in average core deposits from the first quarter of 2016 was impacted by the seasonal increase in average municipal deposits of nearly $180.0 million.

   
CAPITAL MANAGEMENT  
   
Capital Ratios  
   
    As of  
    June 30,
2016
    March 31,
2016
    December 31,
2015
    June 30,
2015
 
Company regulatory capital ratios:                        
  Total capital to risk-weighted assets   10.68 %   10.64 %   11.15 %   11.37 %
  Tier 1 capital to risk-weighted assets   9.83 %   9.81 %   10.28 %   10.49 %
  Common equity Tier 1 ("CET1") to risk-weighted assets   9.32 %   9.30 %   9.73 %   9.93 %
  Tier 1 capital to average assets   8.94 %   9.56 %   9.40 %   9.34 %
Company tangible common equity ratios (1)(2):                        
  Tangible common equity to tangible assets   8.29 %   8.25 %   8.59 %   8.32 %
  Tangible common equity, excluding other comprehensive loss, to tangible assets   8.37 %   8.39 %   8.89 %   8.54 %
  Tangible common equity to risk-weighted assets   9.14 %   9.04 %   9.29 %   9.55 %
                         
(1)   These ratios are not subject to formal Federal Reserve regulatory guidance.
(2)   Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. See the accompanying Non-GAAP Reconciliations for details of the calculation of these ratios.
     

Overall, the Company's regulatory capital ratios were consistent compared to March 31, 2016 as a result of an increase in retained earnings, offset by the impact of loan growth on risk-weighted assets. The reduction in Tier 1 capital to average assets from March 31, 2016 resulted from the full quarter impact of assets acquired in the NI Bancshares transaction.

The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the second quarter of 2016, which is consistent with the quarterly dividend paid to shareholders in the first quarter of 2016 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, July 20, 2016 at 11:00 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 ID 10088402 beginning one hour after completion of the live call until 9:00 A.M. (ET) on July 28, 2016. 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," "continue," "look forward," or "assume" 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 Standard, 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, 2015, 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 practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which management believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include earnings per share and total non-interest expense, excluding certain significant transactions, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, the efficiency ratio, tangible common equity to tangible assets, tangible common equity, excluding accumulated other comprehensive loss, to tangible assets, tangible common equity to risk-weighted assets, return on average tangible common equity, and return on average tangible common equity, excluding certain significant transactions.

Earnings per share, excluding certain significant transactions, and the efficiency ratio exclude acquisition and integration related expenses and property valuation adjustments. Management believes excluding these transactions from earnings per share and the efficiency ratio are useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion facilitates better comparability between periods.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it enhances comparability for peer comparison purposes.

In management's view, tangible common equity 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 peers.

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.

Additional Information for Stockholders

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and Standard, First Midwest will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of First Midwest and Standard, which also will constitute a prospectus of First Midwest, that First Midwest and Standard will send to their respective shareholders. Investors and shareholders are advised to read the joint proxy statement/prospectus when it becomes available because it will contain important information about First Midwest, Standard and the proposed transaction. When filed, this document and other documents relating to the merger filed by First Midwest can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest's website at www.firstmidwest.com under the tab "Investor Relations" and then under "SEC Filings." Alternatively, these documents, when available, can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 or by calling (630) 875-7463, or from Standard upon written request to Standard Bancshares, Inc., Attn: Lawrence P. Kelley, President and Chief Executive Officer, 7800 West 95th Street, Hickory Hills, Illinois 60457 or by calling (708) 499-2000.

Participants in the Proposed Standard Transaction

First Midwest, Standard and certain of their respective directors and executive officers may be deemed under the rules of the SEC to be participants in the solicitation of proxies from the respective shareholders of First Midwest and Standard in connection with the proposed Standard transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the joint proxy statement/prospectus regarding the proposed Standard transaction when it becomes available. Additional information about First Midwest and its directors and officers may be found in the definitive proxy statement of First Midwest relating to its 2016 Annual Meeting of Stockholders filed with the SEC on April 14, 2016 and First Midwest's annual report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 23, 2016. The definitive proxy statement and annual report can be obtained free of charge from the SEC's website at www.sec.gov.

About the Company

First Midwest is a relationship-based financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, retail, wealth management, trust, and private banking products and services through over 110 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's website is www.firstmidwest.com.

Accompanying Unaudited Selected Financial Information    

First Midwest Bancorp, Inc.  
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
 
       
    As of  
    June 30,   March 31,   December 31,   September 30,   June 30,  
    2016   2016   2015   2015   2015  
Period-End Balance Sheet                                
Assets                                
Cash and due from banks   $ 149,957   $ 135,049   $ 114,587   $ 125,279   $ 135,546  
Interest-bearing deposits in other banks     105,432     171,312     266,615     822,264     811,287  
Trading securities, at fair value     17,693     17,408     16,894     17,038     18,172  
Securities available-for-sale, at fair value     1,773,759     1,625,579     1,306,636     1,151,418     1,142,407  
Securities held-to-maturity, at amortized cost     20,672     21,051     23,152     23,723     24,292  
FHLB and FRB stock     44,506     40,916     39,306     38,748     38,748  
Loans:                                
  Commercial and industrial     2,699,742     2,634,391     2,524,726     2,392,860     2,366,056  
  Agricultural     401,858     422,231     387,440     393,732     377,410  
  Commercial real estate:                                
    Office, retail, and industrial     1,529,675     1,566,395     1,395,454     1,414,077     1,432,502  
    Multi-family     587,104     562,065     528,324     539,308     557,947  
    Construction     371,016     260,743     216,882     192,086     190,970  
    Other commercial real estate     1,000,655     1,060,302     931,190     869,748     871,119  
  Home equity     722,881     683,171     653,468     647,223     599,320  
  1-4 family mortgages     415,581     390,887     355,854     294,261     283,562  
  Installment     223,845     213,979     137,602     131,185     113,382  
  Covered loans     27,180     28,391     30,775     51,219     57,917  
    Total loans     7,979,537     7,822,555     7,161,715     6,925,699     6,850,185  
Allowance for loan losses     (80,105 )   (77,150 )   (73,630 )   (72,500 )   (71,463 )
  Net loans     7,899,432     7,745,405     7,088,085     6,853,199     6,778,722  
OREO     29,990     29,649     27,782     32,035     28,230  
Premises, furniture, and equipment, net     140,554     141,323     122,278     127,443     128,621  
Investment in BOLI     218,133     218,873     209,601     208,666     207,814  
Goodwill and other intangible assets     369,962     369,979     339,277     331,250     332,223  
Accrued interest receivable and other assets     225,720     212,378     178,463     203,983     216,965  
  Total assets   $ 10,995,810   $ 10,728,922   $ 9,732,676   $ 9,935,046   $ 9,863,027  
Liabilities and Stockholders' Equity                                
Noninterest-bearing deposits   $ 2,683,495   $ 2,627,530   $ 2,414,454   $ 2,671,793   $ 2,508,316  
Interest-bearing deposits     6,287,821     6,153,288     5,683,284     5,624,657     5,704,355  
  Total deposits     8,971,316     8,780,818     8,097,738     8,296,450     8,212,671  
Borrowed funds     449,744     387,411     165,096     169,943     189,036  
Senior and subordinated debt     162,876     201,293     201,208     201,123     201,039  
Accrued interest payable and other liabilities     160,985     134,835     122,366     119,861     135,324  
Stockholders' equity     1,250,889     1,224,565     1,146,268     1,147,669     1,124,957  
  Total liabilities and stockholders' equity   $ 10,995,810   $ 10,728,922   $ 9,732,676   $ 9,935,046   $ 9,863,027  
Stockholders' equity, excluding accumulated other comprehensive income ("AOCI")   $ 1,259,692   $ 1,239,606   $ 1,174,657   $ 1,163,487   $ 1,146,189  
Stockholders' equity, common     1,250,889     1,224,565     1,146,268     1,147,669     1,124,957  
                                 
                                 
First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
    Quarters Ended   Six Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,   June 30,   June 30,
    2016   2016   2015   2015   2015   2016   2015
Income Statement                                          
Interest income   $ 96,550   $ 87,548   $ 84,667   $ 84,292   $ 84,556   $ 184,098   $ 167,025
Interest expense     6,569     6,834     6,655     6,390     5,654     13,403     11,341
  Net interest income     89,981     80,714     78,012     77,902     78,902     170,695     155,684
Provision for loan losses     8,085     7,593     4,500     4,100     6,000     15,678     12,552
    Net interest income after provision for loan losses     81,896     73,121     73,512     73,802     72,902     155,017     143,132
Noninterest Income                                          
    Service charges on deposit accounts     10,169     9,473     10,303     10,519     9,886     19,642     19,157
    Wealth management fees     8,642     7,559     7,493     7,222     7,433     16,201     14,447
    Card-based fees     7,592     6,718     6,761     6,868     6,953     14,310     13,355
    Merchant servicing fees     3,170     3,028     2,929     3,207     2,938     6,198     5,603
    Mortgage banking income     1,863     1,368     1,777     1,402     1,439     3,231     2,562
    Other service charges, commissions, and fees     4,498     5,448     4,664     3,900     2,924     9,946     5,090
      Total fee-based revenues     35,934     33,594     33,927     33,118     31,573     69,528     60,214
    Other income     1,865     1,445     1,729     1,372     1,900     3,310     3,848
    Net securities gains     23     887     822     524     515     910     1,027
      Total noninterest income     37,822     35,926     36,478     35,014     33,988     73,748     65,089
Noninterest Expense                                          
  Salaries and employee benefits:                                          
    Salaries and wages     37,916     36,296     34,295     33,554     33,096     74,212     65,890
    Retirement and other employee benefits     8,351     8,298     8,925     7,807     7,198     16,649     15,120
      Total salaries and employee benefits     46,267     44,594     43,220     41,361     40,294     90,861     81,010
    Net occupancy and equipment expense     9,928     9,697     9,256     9,406     9,622     19,625     20,058
    Professional services     5,292     5,920     6,117     6,172     5,322     11,212     10,431
    Technology and related costs     3,669     3,701     3,694     3,673     3,527     7,370     7,214
    Merchant card expense     2,724     2,598     2,495     2,722     2,472     5,322     4,669
    Advertising and promotions     1,927     1,589     2,211     1,828     2,344     3,516     3,567
    Cardholder expenses     1,512     1,359     1,329     1,354     1,292     2,871     2,560
    Net OREO expense     1,122     664     926     1,290     1,861     1,786     3,065
    Other expenses     8,295     7,447     7,525     6,559     6,717     15,742     13,534
    Acquisition and integration related expenses     618     5,020     1,389     --     --     5,638     --
    Property valuation adjustments     --     --     8,581     --     --     --     --
      Total noninterest expense     81,354     82,589     86,743     74,365     73,451     163,943     146,108
    Income before income tax expense     38,364     26,458     23,247     34,451     33,439     64,822     62,113
    Income tax expense     13,097     8,496     6,923     11,167     10,865     21,593     19,657
      Net income   $ 25,267   $ 17,962   $ 16,324   $ 23,284   $ 22,574   $ 43,229   $ 42,456
Net income applicable to common shares   $ 24,977   $ 17,750   $ 16,145   $ 23,058   $ 22,325   $ 42,727   $ 41,979
Net income applicable to common shares, excluding certain significant transactions (1)   $ 25,348   $ 20,762   $ 22,127   $ 23,058   $ 22,325   $ 46,110   $ 41,979
Footnotes to Condensed Consolidated Statements of Income
(1)   Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives.
     
 
First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
    As of or for the  
    Quarters Ended     Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
    2016     2016     2015     2015     2015     2016     2015  
Earnings Per Share                                                        
Basic earnings per common share ("EPS") (1)   $ 0.31     $ 0.23     $ 0.21     $ 0.30     $ 0.29     $ 0.54     $ 0.55  
Diluted EPS (1)   $ 0.31     $ 0.23     $ 0.21     $ 0.30     $ 0.29     $ 0.54     $ 0.55  
Diluted EPS, excluding certain significant transactions (1) (6)   $ 0.32     $ 0.27     $ 0.29     $ 0.30     $ 0.29     $ 0.58     $ 0.55  
Common Stock and Related Per Common Share Data                          
Book value   $ 15.38     $ 15.06     $ 14.70     $ 14.72     $ 14.43     $ 15.38     $ 14.43  
Tangible book value   $ 10.83     $ 10.51     $ 10.35     $ 10.47     $ 10.17     $ 10.83     $ 10.17  
Dividends declared per share   $ 0.09     $ 0.09     $ 0.09     $ 0.09     $ 0.09     $ 0.18     $ 0.18  
Closing price at period end   $ 17.56     $ 18.02     $ 18.43     $ 17.54     $ 18.97     $ 17.56     $ 18.97  
Closing price to book value     1.1       1.2       1.3       1.2       1.3       1.1       1.3  
Period end shares outstanding     81,312       81,298       77,952       77,942       77,961       81,312       77,961  
Period end treasury shares     9,965       9,976       10,276       10,286       10,267       9,965       10,267  
Common dividends   $ 7,240     $ 7,228     $ 7,017     $ 7,014     $ 7,022     $ 14,468     $ 14,033  
Key Ratios/Data                                                        
Return on average common equity (1) (2)     8.13 %     6.06 %     5.55 %     8.06 %     7.97 %     7.12 %     7.56 %
Return on average tangible common equity (1) (2)     11.94 %     8.87 %     8.06 %     11.68 %     11.62 %     10.44 %     11.07 %
Return on average tangible common equity, excluding certain significant transactions (1) (2) (6)     12.11 %     10.32 %     10.94 %     11.68 %     11.62 %     11.24 %     11.07 %
Return on average assets (2)     0.93 %     0.72 %     0.66 %     0.94 %     0.94 %     0.83 %     0.90 %
Loans to deposits     88.94 %     89.09 %     88.44 %     83.48 %     83.41 %     88.94 %     83.41 %
Efficiency ratio (1)     60.98 %     64.82 %     64.95 %     63.20 %     61.70 %     62.81 %     63.05 %
Net interest margin (3)     3.72 %     3.66 %     3.59 %     3.58 %     3.76 %     3.69 %     3.77 %
Yield on average interest-earning assets (3)     3.99 %     3.96 %     3.89 %     3.86 %     4.02 %     3.97 %     4.04 %
Cost of funds     0.39 %     0.44 %     0.44 %     0.42 %     0.38 %     0.41 %     0.39 %
Net noninterest expense to average assets     1.61 %     1.90 %     2.08 %     1.60 %     1.66 %     1.75 %     1.73 %
Effective income tax rate     34.14 %     32.11 %     29.78 %     32.41 %     32.50 %     33.31 %     31.65 %
Capital Ratios                                                        
Total capital to risk-weighted assets (1)     10.68 %     10.64 %     11.15 %     11.43 %     11.37 %     10.68 %     11.37 %
Tier 1 capital to risk-weighted assets (1)     9.83 %     9.81 %     10.28 %     10.55 %     10.49 %     9.83 %     10.49 %
CET1 to risk-weighted assets (1)     9.32 %     9.30 %     9.73 %     10.00 %     9.93 %     9.32 %     9.93 %
Tier 1 capital to average assets (1)     8.94 %     9.56 %     9.40 %     9.29 %     9.34 %     8.94 %     9.34 %
Tangible common equity to tangible assets (1)     8.29 %     8.25 %     8.59 %     8.50 %     8.32 %     8.29 %     8.32 %
Tangible common equity, excluding AOCI, to tangible assets (1)     8.37 %     8.39 %     8.89 %     8.67 %     8.54 %     8.37 %     8.54 %
Tangible common equity to risk-weighted assets (1)     9.14 %     9.04 %     9.29 %     9.70 %     9.55 %     9.14 %     9.55 %
Note: Selected Financial Information footnotes are located at the end of this section.
 
First Midwest Bancorp, Inc. 
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
    As of or for the  
    Quarters Ended     Six Months Ended  
    June 30,     March 31,   December 31,     September 30,     June 30,     June 30,   June 30,  
    2016     2016   2015     2015     2015     2016   2015  
Asset Quality Performance Data                                  
Non-performing assets(4)                                                    
Commercial and industrial   $ 6,303     $ 5,364   $ 5,587     $ 6,438     $ 11,100     $ 6,303   $ 11,100  
Agricultural     475       295     355       112       317       475     317  
Commercial real estate:                                                    
  Office, retail, and industrial     16,815       10,910     6,875       6,961       12,599       16,815     12,599  
  Multi-family     321       410     796       1,046       1,287       321     1,287  
  Construction     360       778     905       3,332       4,940       360     4,940  
  Other commercial real estate     4,797       5,555     5,611       5,898       5,513       4,797     5,513  
Consumer     7,788       8,071     8,746       8,521       9,253       7,788     9,253  
  Total non-accrual loans     36,859       31,383     28,875       32,308       45,009       36,859     45,009  
90 days or more past due loans, still accruing interest     5,406       5,483     2,883       4,559       2,744       5,406     2,744  
  Total non-performing loans     42,265       36,866     31,758       36,867       47,753       42,265     47,753  
Accruing TDRs     2,491       2,702     2,743       2,771       3,067       2,491     3,067  
OREO     29,452       29,238     27,349       31,129       24,471       29,452     24,471  
Total non-performing assets   $ 74,208     $ 68,806   $ 61,850     $ 70,767     $ 75,291     $ 74,208   $ 75,291  
30-89 days past due loans (4)   $ 22,770     $ 29,826   $ 16,329     $ 28,629     $ 28,625     $ 22,770   $ 28,625  
Allowance for credit losses                                                    
Allowance for loan losses   $ 78,711     $ 75,582   $ 71,992     $ 68,384     $ 66,602     $ 78,711   $ 66,602  
Allowance for covered loan losses     1,394       1,568     1,638       4,116       4,861       1,394     4,861  
Reserve for unfunded commitments     1,400       1,225     1,225       1,225       1,816       1,400     1,816  
  Total allowance for credit losses   $ 81,505     $ 78,375   $ 74,855     $ 73,725     $ 73,279     $ 81,505   $ 73,279  
Provision for loan losses   $ 8,085     $ 7,593   $ 4,500     $ 4,100     $ 6,000     $ 15,678   $ 12,552  
Net charge-offs by category                                                    
Commercial and industrial   $ 1,450     $ 1,396   $ 1,781     $ 1,601     $ 3,273     $ 2,846   $ 9,930  
Agricultural     --       --     --       --       --       --     --  
Commercial real estate:                                                    
  Office, retail, and industrial     1,633       421     267       457       1,862       2,054     1,696  
  Multi-family     83       179     (27 )     67       466       262     490  
  Construction     (12 )     111     105       (114 )     (188 )     99     (205 )
  Other commercial real estate     810       1,294     110       92       (603 )     2,104     448  
Consumer     1,164       672     1,134       959       432       1,836     911  
Covered loans     2       --     --       1       285       2     513  
    Total net charge-offs   $ 5,130     $ 4,073   $ 3,370     $ 3,063     $ 5,527     $ 9,203   $ 13,783  
Total recoveries included above   $ 1,003     $ 1,116   $ 1,031     $ 1,294     $ 2,579     $ 2,119   $ 4,376  
Note: Selected Financial Information footnotes are located at the end of this section.
 
   
First Midwest Bancorp, Inc.  
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
 
                               
    As of or for the  
    Quarters Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,  
    2016     2016     2015     2015     2015  
Asset Quality ratios(4)                              
Non-accrual loans to total loans   0.46 %   0.40 %   0.40 %   0.47 %   0.66 %
Non-performing loans to total loans   0.53 %   0.47 %   0.45 %   0.54 %   0.70 %
Non-performing assets to total loans plus OREO   0.93 %   0.88 %   0.86 %   1.02 %   1.10 %
Non-performing assets to tangible common equity plus allowance for credit losses   7.72 %   7.39 %   7.03 %   7.99 %   8.74 %
Non-accrual loans to total assets   0.34 %   0.29 %   0.30 %   0.33 %   0.46 %
Allowance for credit losses and net charge-off ratios                              
Allowance for credit losses to total loans (5)   1.02 %   1.00 %   1.05 %   1.06 %   1.07 %
Allowance for credit losses to loans, excluding acquired loans.   1.11 %   1.11 %   1.11 %   1.14 %   1.16 %
Allowance for credit losses to non-accrual loans (4)   217.34 %   244.74 %   253.57 %   215.45 %   152.01 %
Allowance for credit losses to non-performing loans (4)   189.54 %   208.34 %   230.55 %   188.81 %   143.27 %
Net charge-offs to average loans (2)   0.26 %   0.22 %   0.19 %   0.18 %   0.33 %
Footnotes to Selected Financial Information
  (1)   See the Non-GAAP Reconciliations section for detailed calculation.
  (2)   Annualized based on the actual number of days for each period presented.
  (3)   Presented on a tax equivalent basis, which reflects federal and state tax benefits.
  (4)   Excludes covered loans and covered OREO.
  (5)   This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established on acquired loans as necessary to reflect credit deterioration.
  (6)   Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives.
       
 
First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
    Quarters Ended     Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
    2016     2016     2015     2015     2015     2016     2015  
Earnings Per Share                                                        
Net income   $ 25,267     $ 17,962     $ 16,324     $ 23,284     $ 22,574     $ 43,229     $ 42,456  
Net income applicable to non-vested restricted shares     (290 )     (212 )     (179 )     (226 )     (249 )     (502 )     (477 )
  Net income applicable to common shares     24,977       17,750       16,145       23,058       22,325       42,727       41,979  
Acquisition and integration related expenses     618       5,020       1,389       --       --       5,638       --  
Tax-equivalent adjustment of acquisition and integration related expenses (2)     (247 )     (2,008 )     (556 )     --       --       (2,255 )     --  
Property valuation adjustments.     --       --       8,581       --       --       --       --  
Tax-equivalent adjustment of property valuation adjustments (2)     --       --       (3,432 )     --       --       --       --  
  Net income applicable to common shares, excluding certain significant transactions (1)   $ 25,348     $ 20,762     $ 22,127     $ 23,058     $ 22,325     $ 46,110     $ 41,979  
Weighted-average common shares outstanding:                                                        
  Weighted-average common shares outstanding (basic)     80,383       77,980       77,121       77,106       77,089       79,182       77,004  
  Dilutive effect of common stock equivalents     13       12       13       13       12       12       12  
    Weighted-average diluted common shares outstanding     80,396       77,992       77,134       77,119       77,101       79,194       77,016  
Basic EPS   $ 0.31     $ 0.23     $ 0.21     $ 0.30     $ 0.29     $ 0.54     $ 0.55  
Diluted EPS   $ 0.31     $ 0.23     $ 0.21     $ 0.30     $ 0.29     $ 0.54     $ 0.55  
Diluted EPS, excluding certain significant transactions (1)   $ 0.32     $ 0.27     $ 0.29     $ 0.30     $ 0.29     $ 0.58     $ 0.55  
Anti-dilutive shares not included in the computation of diluted EPS     469       608       735       751       768       539       857  
Tax Equivalent Net Interest Income                                                        
Net interest income   $ 89,981     $ 80,714     $ 78,012     $ 77,902     $ 78,902     $ 170,695     $ 155,684  
Tax-equivalent adjustment     2,193       2,307       2,494       2,609       2,693       4,500       5,576  
  Tax-equivalent net interest income (2)   $ 92,174     $ 83,021     $ 80,506     $ 80,511     $ 81,595     $ 175,195     $ 161,260  
Efficiency Ratio Calculation                                                        
Noninterest expense   $ 81,354     $ 82,589     $ 86,743     $ 74,365     $ 73,451     $ 163,943     $ 146,108  
Less:                     --                                  
  Net OREO expense     (1,122 )     (664 )     (926 )     (1,290 )     (1,861 )     (1,786 )     (3,065 )
  Acquisition and integration related expenses     (618 )     (5,020 )     (1,389 )     --       --       (5,638 )     --  
  Property valuation adjustments     --       --       (8,581 )     --       --       --       --  
    Total   $ 79,614     $ 76,905     $ 75,847     $ 73,075     $ 71,590     $ 156,519     $ 143,043  
Tax-equivalent net interest income (2)   $ 92,174     $ 83,021     $ 80,506     $ 80,511     $ 81,595     $ 175,195     $ 161,260  
Fee-based revenues     35,934       33,594       33,927       33,118       31,573       69,528       60,214  
Add:                                                        
  Other income, excluding BOLI income     984       579       807       446       446       1,563       1,511  
  BOLI     881       866       922       926       1,454       1,747       2,337  
  Tax-equivalent adjustment of BOLI     587       577       615       617       969       1,165       1,558  
    Total   $ 130,560     $ 118,637     $ 116,777     $ 115,618     $ 116,037     $ 249,198     $ 226,880  
Efficiency ratio     60.98 %     64.82 %     64.95 %     63.20 %     61.70 %     62.81 %     63.05 %
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.
 
 
First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
    As of or for the  
    Quarters Ended     Six Months Ended  
    June 30,   March 31,   December 31,   September 30,   June 30,     June 30,     June 30,  
    2016   2016   2015   2015   2015     2016     2015  
Risk-Based Capital Data                                                
Common stock   $ 913   $ 913   $ 882   $ 882   $ 882     $ 913     $ 882  
Additional paid-in capital     495,159     493,153     446,672     445,037     443,558       495,159       443,558  
Retained earnings     982,277     964,250     953,516     944,209     927,939       982,277       927,939  
Treasury stock, at cost     (218,657 )   (218,710 )   (226,413 )   (226,641 )   (226,190 )     (218,657 )     (226,190 )
Goodwill and other intangible assets     (358,582 )   (357,895 )   (327,115 )   (318,854 )   (319,243 )     (358,582 )     (319,243 )
Disallowed deferred tax assets     (2,263 )   (2,956 )   (1,902 )   (2,889 )   (3,046 )     (2,263 )     (3,046 )
  CET1 capital     898,847     878,755     845,640     841,744     823,900       898,847       823,900  
Trust-preferred securities     50,690     50,690     50,690     50,690     50,690       50,690       50,690  
Other disallowed deferred tax assets     (1,508 )   (1,970 )   (2,868 )   (4,334 )   (4,568 )     (1,508 )     (4,568 )
  Tier 1 capital     948,029     927,475     893,462     888,100     870,022       948,029       870,022  
Tier 2 capital     81,505     78,375     74,855     73,725     73,279       81,505       73,279  
  Total capital   $ 1,029,534   $ 1,005,850   $ 968,317   $ 961,825   $ 943,301     $ 1,029,534     $ 943,301  
Risk-weighted assets   $ 9,641,953   $ 9,452,551   $ 8,687,864   $ 8,414,729   $ 8,296,679     $ 9,641,953     $ 8,296,679  
Adjusted average assets   $ 10,608,085   $ 9,700,671   $ 9,501,087   $ 9,559,796   $ 9,318,347     $ 10,608,085     $ 9,318,347  
Total capital to risk-weighted assets     10.68 %   10.64 %   11.15 %   11.43 %   11.37 %     10.68 %     11.37 %
Tier 1 capital to risk-weighted assets     9.83 %   9.81 %   10.28 %   10.55 %   10.49 %     9.83 %     10.49 %
CET1 to risk-weighted assets     9.32 %   9.30 %   9.73 %   10.00 %   9.93 %     9.32 %     9.93 %
Tier 1 capital to average assets     8.94 %   9.56 %   9.40 %   9.29 %   9.34 %     8.94 %     9.34 %
Tangible Common Equity                                                
Stockholders' equity   $ 1,250,889   $ 1,224,565   $ 1,146,268   $ 1,147,669   $ 1,124,957     $ 1,250,889     $ 1,124,957  
Less: goodwill and other intangible assets     (369,962 )   (369,979 )   (339,277 )   (331,250 )   (332,223 )     (369,962 )     (332,223 )
  Tangible common equity     880,927     854,586     806,991     816,419     792,734       880,927       792,734  
Less: AOCI     8,803     15,041     28,389     15,818     21,232       8,803       21,232  
  Tangible common equity, excluding AOCI   $ 889,730   $ 869,627   $ 835,380   $ 832,237   $ 813,966     $ 889,730     $ 813,966  
Total assets   $ 10,995,810   $ 10,728,922   $ 9,732,676   $ 9,935,046   $ 9,863,027     $ 10,995,810     $ 9,863,027  
Less: goodwill and other intangible assets     (369,962 )   (369,979 )   (339,277 )   (331,250 )   (332,223 )     (369,962 )     (332,223 )
  Tangible assets   $ 10,625,848   $ 10,358,943   $ 9,393,399   $ 9,603,796   $ 9,530,804     $ 10,625,848     $ 9,530,804  
Tangible common equity to tangible assets     8.29 %   8.25 %   8.59 %   8.50 %   8.32 %     8.29 %     8.32 %
Tangible common equity, excluding AOCI, to tangible assets     8.37 %   8.39 %   8.89 %   8.67 %   8.54 %     8.37 %     8.54 %
Tangible common equity to risk-weighted assets     9.14 %   9.04 %   9.29 %   9.70 %   9.55 %     9.14 %     9.55 %
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.
 
 
First Midwest Bancorp, Inc. 
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
    As of or for the  
    Quarters Ended     Six Months Ended  
    June 30,     March 31,     December 31,     September 30,     June 30,     June 30,     June 30,  
    2016     2016     2015     2015     2015     2016     2015  
Return on Average Common and Tangible Common Equity                                
Net income applicable to common shares   $ 24,977     $ 17,750     $ 16,145     $ 23,058     $ 22,325     $ 42,727     $ 41,979  
Intangibles amortization     1,245       985       971       973       978       2,230       1,976  
Tax-equivalent adjustment of intangibles amortization     (498 )     (394 )     (388 )     (389 )     (391 )     (892 )     (790 )
  Net income applicable to common shares, excluding intangibles amortization     25,724       18,341       16,728       23,642       22,912       44,065       43,165  
Acquisition and integration related expenses     618       5,020       1,389       --       --       5,638       --  
Tax-equivalent adjustment of acquisition and integration related expenses (2)     (247 )     (2,008 )     (556 )     --       --       (2,255 )     --  
Property valuation adjustments     --       --       8,581       --       --       --       --  
Tax-equivalent adjustment of property valuation adjustments (2)     --       --       (3,432 )     --       --       --       --  
  Net income applicable to common shares, excluding intangibles amortization and certain significant transactions (1)   $ 26,095     $ 21,353     $ 22,710     $ 23,642     $ 22,912     $ 47,448     $ 43,165  
Average stockholders' equity   $ 1,235,497     $ 1,178,588     $ 1,154,506     $ 1,134,967     $ 1,123,530       1,207,043     $ 1,119,170  
Less: average intangible assets     (369,177 )     (346,549 )     (331,013 )     (331,720 )     (332,694 )     (357,863 )     (333,186 )
  Average tangible common equity   $ 866,320     $ 832,039     $ 823,493     $ 803,247     $ 790,836     $ 849,180     $ 785,984  
Return on average common equity (3)     8.13 %     6.06 %     5.55 %     8.06 %     7.97 %     7.12 %     7.56 %
Return on average tangible common equity (3)     11.94 %     8.87 %     8.06 %     11.68 %     11.62 %     10.44 %     11.07 %
Return on average tangible common equity, excluding certain significant transactions (1) (3)     12.11 %     10.32 %     10.94 %     11.68 %     11.62 %     11.24 %     11.07 %
Footnotes to Non-GAAP Reconciliations
  (1)   Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions and property valuation adjustments related to strategic branch initiatives.
  (2)   Presented on a tax equivalent basis, which reflects federal and state tax benefits.
  (3)   Annualized based on the actual number of days for each period presented.
       

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