SOURCE: First Midwest Bancorp, Inc.

July 16, 2008 06:55 ET

First Midwest Bancorp, Inc. Announces: Strong Operating Performance Driven by Record Sales; Rigorous Pursuit of Credit Remediation Priorities in Tandem With the Execution of Long Term Capital Management Plan

ITASCA, IL--(Marketwire - July 16, 2008) - First Midwest Bancorp, Inc. (NASDAQ: FMBI)

2nd Quarter Highlights:

-- Fully diluted earnings per share for second quarter 2008 were $0.56
   versus $0.52 for first quarter 2008. Return on average assets of 1.33%
   versus 1.25% and return on average equity of 14.57% versus 13.75% were
   achieved for the same periods.

-- Loan growth in targeted commercial and industrial, agricultural, and
   commercial real estate categories was 14% annualized for second quarter
   2008 versus first quarter 2008.

-- Nonperforming assets plus 90 day past due loans increased from first
   quarter 2008 levels by $10.7 million and stand at 1.35% of loans at
   quarter end. In the first half of 2008, $4.3 million was added to the
   reserve for loan losses above and beyond charge offs in anticipation of
   future developments. Numerous administrative enhancements to the credit
   remediation process embracing oversight, staffing, and reporting were
   put in place.

-- Long term capital management plans embraced: scheduled payment of
   regular quarterly dividends, continued deferral of share repurchases,
   maintenance of "well capitalized" regulatory capital levels, disciplined
   balance sheet planning.

Financial Performance

First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank, today reported results of operations and financial condition for second quarter 2008. Fully diluted earnings per share were $0.56 compared with $0.52 for first quarter 2008, a 7.7% increase. Excluding offsetting noncore transactions, the comparison was $0.51 for second quarter 2008 versus $0.41 for first quarter 2008, a 24.4% increase. The noncore items consisted of the write off of approximately $6.0 million in remaining book value of certain asset backed securities, which was offset by a $1.4 million gain on the sale of a security previously written off and the reversal of tax reserves of $4.9 million due to favorable second quarter events affecting certain tax positions. Return on average assets was 1.33% for second quarter 2008 versus 1.25% for first quarter 2008 while the return on average equity was 14.57% versus 13.75% for the same periods. Net interest margin expanded in the second quarter to 3.58% from 3.53% for first quarter 2008 as a result of higher loan balances and opportunistic funding strategies. Margins should stabilize in this area as volumes of higher priced loans are offset by lagged higher repricing on twelve to eighteen month retail deposits. Efficiency ratios should track to recent trends which saw this measure at 51.67% for second quarter 2008.

Sales Performance

Loans outstanding increased at a rate which had not been reached for more than seven years. Virtually every category of business lending was up on a linked quarter annualized basis: commercial and industrial 14.9%, agriculture 13.6%, and commercial real estate 14.0%. Retail lending growth, though modest, also contributed to the overall annualized increase of 10.8%. Depository activity was mixed but with the seasonal influx in public deposits averaged 14.9% growth quarter over quarter. Assets under trust department management grew by 9.1% in the face of the broader equity markets retreating twenty percent during the first two quarters.

Capital Management

All regulatory mandated ratios for characterization as "well capitalized" were achieved as of June 30, 2008:

                                            Minimum "Well-
                              6/30/08    Capitalized" Level
                             --------    ------------------
Tier 1 Risk Based               9.42%           6.00%

Total Risk Based               12.03%          10.00%

Tier 1 Leverage                 7.56%           5.00%

Tangible equity to tangible assets ratio (exclusive of other comprehensive income) stood at 5.90% as of June 30, 2008 and is on pace to exceed 6.00% by December 31, 2008.

The Company's dividend policy remained on track paying $0.31 per share on July 15, 2008 and represented the 102nd consecutive quarterly dividend since the founding of the Company in 1983. Contrariwise, the Company's share repurchase program, which has operated episodically in recent years, is anticipated to be informally suspended throughout the balance of 2008. Leverage within the balance sheet is carefully managed through the operations of our Asset Liability Committee.

Credit Remediation

As anticipated, nonperforming assets plus 90 day past due loans aggregated $70.0 million at June 30, 2008, compared with $59.3 million at March 31, 2008. Such increase is related primarily to loans to home builders and developers, substantially all of whom are in the greater Chicagoland area. In response to this trend, the Company has enhanced its credit remediation staff and accelerated executive management review. The evolution of the trend in these loans from performing to nonperforming and, in some instances, to other real estate owned is evident in the new reporting metrics set forth on page 10 (attached) as are charge offs by subcategory of credit. The subcategory of loans as a percentage of total loans is set forth on new page 9 (attached).

Analysis of the potential exposure of the Company's loan portfolios to loss indicates provisioning at the level of the most recent quarters should be sufficient to absorb these losses. The Company is aggressively engaged with each of its builder/developer clients to define the best approach to realize maximum value. Exposures are primarily in projects that are well known to management because of their nearly 100% concentration in our Chicagoland markets. Loan to value guidelines for unimproved and developed land are 65% and 75% respectively which provide an initial cushion to future reappraisal of property values. Fortunately, the Company is only minimally exposed to the direct consumer part of this negative credit cycle because of its modest concentrations and conservative underwriting. Aggregate loan to value ratio in the Company's home equity portfolio ($460.6 million) is approximately 60%. At the same time, the Company's single-family mortgage portfolio ($213.3 million) is leveraged at approximately 50%.

About the Company

First Midwest is the premier relationship-based banking franchise in the growing Chicagoland banking market. As one of the Chicago metropolitan area's largest independent bank holding companies, First Midwest provides the full range of both business and retail banking and trust and investment management services through 101 offices located in 63 communities, primarily in metropolitan Chicago. First Midwest was recently recognized by the Alfred P. Sloan awards for Business Excellence in Workforce Flexibility in the greater Chicago Area.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that actual results and the Company's financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results, see "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management's best judgment as of the date hereof based on currently available information. Except as required by law, the Company undertakes no duty to update the contents of this press release after the date hereof.

Conference Call

A conference call to discuss the Company's results, outlook and related matters will be held on Wednesday, July 16th, at 10:00 am (ET). Members of the public who would like to listen to the conference call should dial 1-866-713-8310. (U.S. domestic) or 1-617-597-5308 (international) and enter passcode number 129-50-118. The number should be dialed at least 10 minutes prior to the start of the conference call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's web site, www.firstmidwest.com/aboutinvestor_overview.asp. There is no charge to access the call. For those unable to listen to the live broadcast, a replay will be available on the Company's web site or by dialing 1-888-286-8010 (U.S. domestic) or 1-617-801-6888 (international) passcode number 734-83-254, beginning approximately one hour after the event through 11:59 pm (ET) on July 23, 2008. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

Accompanying Financial Statements and Tables

Accompanying this press release is the following unaudited financial information:

--  Operating Highlights, Balance Sheet Highlights, Stock Performance
    Data, and Capital Ratios (1 page)
--  Condensed Consolidated Statements of Condition (1 page)
--  Condensed Consolidated Statements of Income (1 page)
--  Loan Portfolio Composition (1 page)
--  Asset Quality (1 page)
    

Press Release and Additional Information Available on Website

This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information (http://www.firstmidwest.com/aboutinvestor_selected.asp) (totaling 3 pages) are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com.

First Midwest Bancorp, Inc.               Press Release Dated July 16, 2008

Operating Highlights
Unaudited                                    Quarters Ended
                                 ---------------------------------------
(Dollar amounts in thousands       June 30,     March 31,      June 30,
 except per share data)              2008          2008          2007
                                 -----------   -----------   -----------
Net income                       $    26,997   $    25,038   $    29,311
Diluted earnings per share       $      0.56   $      0.52   $      0.59
Return on average equity               14.57%        13.75%        15.47%
Return on average assets                1.33%         1.25%         1.44%
Net interest margin                     3.58%         3.53%         3.61%
Efficiency ratio                       51.67%        54.02%        52.13%

Balance Sheet Highlights
Unaudited                                         As Of
                                 ---------------------------------------
(Dollar amounts in thousands       June 30,     March 31,      June 30,
 except per share data)              2008          2008          2007
                                 -----------   -----------   -----------
Total assets                     $ 8,311,025   $ 8,315,368   $ 8,055,358
Total loans                        5,182,355     5,045,765     4,909,858
Total deposits                     5,785,163     5,721,562     5,814,744
Stockholders' equity                 724,034       737,927       741,060
Book value per share             $     14.90   $     15.20   $     14.97
Period end shares outstanding         48,584        48,561        49,494

Stock Performance Data
Unaudited                                    Quarters Ended
                                 ---------------------------------------
(Dollar amounts in thousands       June 30,     March 31,      June 30,
 except per share data)              2008          2008          2007
                                 -----------   -----------   -----------
Market Price:
   Quarter End                   $     18.65   $     27.77   $     35.51
   High                          $     29.36   $     31.98   $     38.17
   Low                           $     18.65   $     24.38   $     34.82
Quarter end price to book value          1.3 x         1.8 x         2.4 x
Quarter end price to consensus
 estimated 2008 earnings                 9.3 x         N/A           N/A
Dividends declared per share     $     0.310   $     0.310   $     0.295
Common dividends paid            $    15,084   $    15,079   $    14,622

Capital Ratios
Unaudited                                         As Of
                                 ---------------------------------------
                                   June 30,     March 31,      June 30,
                                     2008          2008          2007
                                 -----------   -----------   -----------
Regulatory capital ratios:
   Total capital to risk-weighted
    assets                             12.03%        11.78%        12.49%
   Tier 1 capital to risk-weighted
    assets                              9.42%         9.19%         9.87%
   Tier 1 leverage to average
    assets                              7.56%         7.51%         7.75%

Tangible equity ratios:
   Tangible equity to tangible
    assets                              5.45%         5.62%         5.80%
   Tangible equity, excluding
    other comprehensive loss, to
    tangible assets                     5.90%         5.73%         6.26%
   Tangible equity to risk-
    weighted assets                     6.88%         7.08%         7.28%





First Midwest Bancorp, Inc.               Press Release Dated July 16, 2008

Condensed Consolidated Statements of Condition
Unaudited                                                 June 30,
                                                  ------------------------
(Amounts in thousands)                                2008         2007
                                                  -----------  -----------
Assets
Cash and due from banks                           $   174,122  $   156,305
Funds sold and other short-term investments               692        8,996
Trading account securities                             17,368       17,403
Securities available-for-sale                       2,106,461    2,128,683
Securities held to maturity, at amortized cost         94,580      104,152
Federal Home Loan Bank and Federal Reserve Bank
 stock, at cost                                        54,767       54,767
Loans                                               5,182,355    4,909,858
Reserve for loan losses                               (66,104)     (62,391)
                                                  -----------  -----------
   Net loans                                        5,116,251    4,847,467
                                                  -----------  -----------
Premises, furniture, and equipment                    121,215      128,448
Investment in corporate owned life insurance          206,132      199,396
Goodwill and other intangible assets                  286,737      290,447
Accrued interest receivable and other assets          132,700      119,294
                                                  -----------  -----------
   Total assets                                   $ 8,311,025  $ 8,055,358
                                                  -----------  -----------
Liabilities and Stockholders' Equity
Deposits                                          $ 5,785,163  $ 5,814,744
Borrowed funds                                      1,489,908    1,172,190
Subordinated debt                                     232,476      226,118
Accrued interest payable and other liabilities         79,444      101,246
                                                  -----------  -----------
   Total liabilities                                7,586,991    7,314,298
                                                  -----------  -----------
Common stock                                              613          613
Additional paid-in capital                            206,113      205,836
Retained earnings                                     866,844      852,598
Accumulated other comprehensive (loss)                (35,949)     (35,148)
Treasury stock, at cost                              (313,587)    (282,839)
                                                  -----------  -----------
   Total stockholders' equity                         724,034      741,060
                                                  -----------  -----------
   Total liabilities and stockholders' equity     $ 8,311,025  $ 8,055,358
                                                  -----------  -----------






First Midwest Bancorp, Inc.               Press Release Dated July 16, 2008

Condensed Consolidated Statements of Income
Unaudited                                          Quarters Ended
                                           --------------------------------
(Amounts in thousands except per share     June 30,   March 31,  June 30,
 data)                                       2008       2008       2007
                                           ---------  ---------  ----------
Interest Income
Loans                                      $  74,819  $  81,334  $   92,273
Securities                                    26,391     27,120      28,169
Other                                            103         21         229
                                           ---------  ---------  ----------
   Total interest income                     101,313    108,475     120,671
                                           ---------  ---------  ----------
Interest Expense
Deposits                                      28,036     34,210      41,593
Borrowed funds                                 9,249     12,076      14,363
Subordinated debt                              3,702      3,689       3,751
   Total interest expense                     40,987     49,975      59,707
   Net interest income                        60,326     58,500      60,964
Provision for loan losses                      5,780      9,060       1,761
                                           ---------  ---------  ----------
   Net interest income after provision for
    loan losses                               54,546     49,440      59,203
                                           ---------  ---------  ----------
Noninterest Income
Service charges on deposit accounts           11,385     10,422      11,483
Trust and investment management fees           3,945      3,947       3,916
Other service charges, commissions, and fees   4,456      5,002       6,099
Card-based fees                                4,236      3,898       4,181
                                           ---------  ---------  ----------
   Subtotal, fee-based revenues               24,022     23,269      25,679
                                           ---------  ---------  ----------
Corporate owned life insurance income          2,145      2,462       1,982
Security (losses) gains, net                  (4,618)     4,968         961
Other                                            874       (680)      2,001
                                           ---------  ---------  ----------
   Total noninterest income                   22,423     30,019      30,623
                                           ---------  ---------  ----------
Noninterest Expense
Salaries and employee benefits                26,368     26,190      29,008
Net occupancy expense                          5,528      6,151       5,386
Equipment expense                              2,451      2,567       2,590
Technology and related costs                   1,820      1,771       1,849
Other                                         13,778     12,664      11,904
                                           ---------  ---------  ----------
   Total noninterest expense                  49,945     49,343      50,737
                                           ---------  ---------  ----------
Income before taxes                           27,024     30,116      39,089
Income tax expense                                27      5,078       9,778
                                           ---------  ---------  ----------
   Net Income                              $  26,997  $  25,038  $   29,311
                                           ---------  ---------  ----------
   Diluted Earnings Per Share              $    0.56  $    0.52  $     0.59
                                           ---------  ---------  ----------
   Dividends Declared Per Share            $   0.310  $   0.310  $    0.295
                                           ---------  ---------  ----------
   Weighted Average Diluted Shares
    Outstanding                               48,576     48,589      49,984
                                           ---------  ---------  ----------






First Midwest Bancorp, Inc.               Press Release Dated July 16, 2008

                                                            6/30/08 %
Unaudited                        As Of                     Change From
                 --------------------------------------- ----------------
(Dollar amounts             % of
 in thousands)    6/30/08   total   3/31/08    6/30/07   3/31/08  6/30/07
                 ---------- -----  ---------- ---------- -------  -------
Loan Portfolio
 Composition
Loan portfolio
 composition:
 Commercial,
  industrial, and
  agricultural   $1,656,161  32.0% $1,597,279 $1,558,876    14.7%     6.2%
 Commercial real
  estate:
  Office, retail,
   and industrial 1,048,547  20.2%  1,020,403    905,483    11.0%    15.8%
  Residential
   land and
   development      418,455   8.1%    413,531    431,635     4.8%    (3.1%)
  Multifamily       195,815   3.8%    188,474    205,821    15.6%    (4.9%)
  Other commercial
   real estate    1,107,122  21.3%  1,054,143  1,011,265    20.1%     9.5%
                 ---------- -----  ---------- ---------- -------  -------
   Total commercial
    real estate
    (1)           2,769,939  53.4%  2,676,551  2,554,204    14.0%     8.4%
                 ---------- -----  ---------- ---------- -------  -------
 Consumer:
  Home equity       460,581   8.9%    459,068    467,471     1.3%    (1.5%)
  Real estate 1-4
   family           213,295   4.1%    224,895    206,506   (20.6%)    3.3%
  Other consumer     82,379   1.6%     87,972    122,801   (25.4%)  (32.9%)
                 ---------- -----  ---------- ---------- -------  -------
   Total consumer   756,255  14.6%    771,935    796,778    (8.1%)   (5.1%)
                 ---------- -----  ---------- ---------- -------  -------
  Total loans(2) $5,182,355 100.0% $5,045,765 $4,909,858    10.8%     5.5%
                 ---------- -----  ---------- ---------- -------  -------

Commercial Real
 Estate Detail
 Office, Retail,
 and Industrial
Loans by product
 type (2):
 Office          $  337,424  32.2% $  326,107 $  270,029    13.9%    25.0%
 Retail             281,942  26.9%    279,612    232,988     3.3%    21.0%
 Industrial         429,181  40.9%    414,684    402,466    14.0%     6.6%
                 ---------- -----  ---------- ---------- -------  -------
  Total office,
   retail, and
   industrial    $1,048,547 100.0% $1,020,403 $  905,483    11.0%    15.8%
                 ---------- -----  ---------- ---------- -------  -------
Residential Land
 and Development
Loans by product
 type:
 Structures      $  220,680  52.7% $  212,369 $  255,388    15.6%   (13.8%)
 Land               197,775  47.3%    201,162    176,247    (6.7%)   12.2%
                 ---------- -----  ---------- ---------- -------  -------
  Total residential
   land and
   development   $  418,455 100.0% $  413,531 $  431,635     4.8%    (3.1%)
                 ---------- -----  ---------- ---------- -------  -------
Other Commercial
 Real Estate
Loans by product
 type:
 Commercial land $  381,013  34.4% $  365,246 $  273,615    17.3%    39.3%
 1-5 family
  investors         165,445  14.9%    166,684    153,032    (3.0%)    8.1%
 Service stations
  and truck stops   120,670  10.9%    117,592     72,532    10.5%    66.4%
 Warehouses and
  storage            79,580   7.2%     71,421     54,385    45.7%    46.3%
 Hotels              67,574   6.1%     59,082     66,012    57.5%     2.4%
 Restaurants         47,313   4.3%     48,147     41,750    (6.9%)   13.3%
 Medical             43,347   3.9%     42,912     13,841     4.1%   213.2%
 Automobile
  dealers            37,562   3.4%     30,934     27,784    85.7%    35.2%
 Mobile home
  parks              25,217   2.3%     23,481     24,526    29.6%     2.8%
 Recreational        15,106   1.4%     16,243     17,791   (28.0%)  (15.1%)
 Religious           11,362   1.0%     11,291     11,296     2.5%     0.6%
 Other (3)          112,933  10.2%    101,110    254,701    46.8%   (55.7%)
                 ---------- -----  ---------- ---------- -------  -------
  Total other
   commercial
   real estate   $1,107,122 100.0% $1,054,143 $1,011,265    20.1%     9.5%
                 ---------- -----  ---------- ---------- -------  -------

(1) 24% of total commercial real estate loans are owner occupied as of
    June 30, 2008.

(2) Substantially all loans that are over $1 million are to customers
    within our market as of June 30, 2008.

(3) Certain loans presented here as of June 30, 2007 were subsequently
    redistributed to more appropriate categories.





First Midwest Bancorp, Inc.              Press Release Dated July 16, 2008

Unaudited                                       As Of
                          ------------------------------------------------
(Dollar amounts in                    % of      % of
 thousands)               6/30/08   Category    Total   3/31/08   6/30/07
                          --------  --------  --------  --------  --------
Asset Quality
Nonaccrual loans:
  Commercial, industrial,
   and agricultural       $  5,222      0.32%      7.4% $  6,770  $  8,815
  Office, retail, and
   industrial                1,125      0.11%      1.6%      730         -
  Residential land and
   development              11,664      2.79%     16.7%    4,081       540
  Multifamily                3,016      1.54%      4.3%    1,361       294
  Other commercial real
   estate                      885      0.08%      2.9%      255     2,101
  Consumer                   3,324      0.44%      4.7%    3,876     3,177
                          --------            --------  --------  --------
    Total nonaccrual
     loans                  25,236                36.0%   17,073    14,927
Restructured loans             259                 0.4%      140         -
                          --------            --------  --------  --------
    Total nonperforming
     loans                  25,495                36.4%   17,213    14,927
Other real estate owned      7,042                10.1%    8,607     3,683
                          --------            --------  --------  --------
    Total nonperforming
     assets               $ 32,537                46.5% $ 25,820  $ 18,610
                          --------            --------  --------  --------
90 days past due loans
 (still accruing
 interest):
  Commercial, industrial,
   and agricultural       $  4,530      0.27%      6.5% $  3,926  $  2,458
  Office, retail, and
   industrial                2,855      0.27%      4.1%    2,182       907
  Residential land and
   development              17,181      4.11%     21.1%   17,438     5,006
  Multifamily                2,071      1.06%      2.9%    2,332     6,281
  Other commercial real
   estate                    2,925      0.26%      7.6%    2,451     1,457
  Consumer                   7,948      1.05%     11.3%    5,150     3,524
                          --------            --------  --------  --------
    Total 90 days past
     due loans              37,510                53.5%   33,479    19,633
                          --------            --------  --------  --------
    Total nonperforming
     assets plus 90 days
     past due loans       $ 70,047               100.0% $ 59,299  $ 38,243
                          --------  --------  --------  --------  --------

Asset Quality Ratios
Nonperforming loans to
 loans                        0.49%                         0.34%     0.30%
Nonperforming assets to
 loans plus foreclosed
 real estate                  0.63%                         0.51%     0.38%
Nonperforming assets plus
 loans past due 90 days
 to loans plus foreclosed
 real estate                  1.35%                         1.17%     0.78%
Reserve for loan losses   $ 66,104                      $ 64,780  $ 62,391
Reserve for loan losses
 to loans                     1.28%                         1.28%     1.27%
Reserve for loan losses
 to nonperforming loans        259%                          376%      418%
                          --------  --------  --------  --------  --------


                                            Quarters Ended
                          ------------------------------------------------
(Dollar amounts in                    % of      % of
 thousands)               6/30/08   Category    Total   3/31/08   6/30/07
                          --------  --------  --------  --------  --------
Charge-off Data
Net loans charged-off:
  Commercial, industrial,
   and agricultural       $  2,380      0.14%     53.4% $  3,188  $  1,252
  Office, retail, and
   industrial                   31      0.00%      0.7%        -         -
  Residential land and
   development                 138      0.03%      3.1%      559        18
  Multifamily                  830      0.42%     18.6%      842       119
  Other commercial real
   estate                      116      0.01%      2.6%      673       (78)
  Consumer                     961      0.13%     21.6%      818       459
                          --------            --------  --------  --------
    Total net loans
     charged-off          $  4,456               100.0% $  6,080  $  1,770
                          --------            --------  --------  --------
Quarter-to-date net loan
 charge-offs to average
 loans (annualized)           0.35%                         0.49%     0.14%
Year-to-date net loan
 charge-offs to average
 loans (annualized)           0.42%                         0.49%     0.19%
                          --------  --------  --------  --------  --------

Contact Information

  • CONTACT:
    Paul F. Clemens
    EVP, Chief Financial Officer
    (630) 875-7347
    www.firstmidwest.com

    First Midwest Bancorp, Inc.
    One Pierce Place, Suite 1500
    Itasca, Illinois 60143
    (630) 875-7450