-- Record Net Income of $117.2 million, Up 15.7% vs. 2005 -- ROAA of 1.42% and ROAE of 16.9% for Full Year 2006 -- EPS of $0.63 for 4Q06, Up 28.6% vs. 4Q05 -- Loan Growth of 16.3% vs. 4Q05 -- Net Interest Margin of 3.57% for 4Q06 vs. 3.69% for 3Q06 -- Nonperforming Assets Decreased 12.1% vs. 3Q06First Midwest Bancorp, Inc. ("First Midwest") (
-- Net realized securities gains of $3.4 million, or $0.04 per diluted
share for fourth quarter 2006 as compared to net realized securities losses
of $6.2 million, or $0.08 per diluted share, for fourth quarter 2005.
-- A $1.1 million increase in loan loss provisioning as compared to
fourth quarter 2005, or $0.01 per diluted share, due in part to a $1.3
million charge related to a single, purchased commercial lease.
-- The recognition of stock option expense of $650 thousand, or $0.01 per
diluted share, in fourth quarter 2006 pursuant to the adoption of SFAS No.
123R, "Share-Based Payment," on January 1, 2006.
-- The absence of employee severance costs in fourth quarter 2006 as
compared to $679,000, or $0.01 per diluted share, in fourth quarter 2005.
Performance for full year 2006 reflects the following counter balancing
events:
-- Net realized securities gains of $4.3 million, or $0.06 per diluted
share in 2006 as compared to net realized securities losses of $3.3
million, or $0.04 per diluted share, in 2005.
-- The negative impact of integration and related costs totaling $3.0
million, or $0.04 per diluted share, recorded in the second quarter of 2006
specific to the Bank Calumet acquisition.
-- Stock option expense of $2.8 million, or $0.04 per diluted share, in
2006 recognized pursuant to the adoption of FAS 123R on January 1, 2006.
Fourth quarter 2006 performance resulted in an annualized return on average
assets of 1.47%, as compared to 1.25% for fourth quarter 2005, and an
annualized return on average equity of 16.4%, as compared to 16.6% for
fourth quarter 2005.
"Our performance in 2006 reflects the cross-currents outlined above. All
of this activity was accomplished in perhaps the most challenging interest
rate environment on record," said First Midwest President and Chief
Executive Officer John O'Meara.
"The successful acquisition and integration of Bank Calumet significantly
increased our total assets and importantly expanded our suburban Chicago
distribution network by over 40%. In addition to the benefits of Bank
Calumet, our sales platform continues to perform at a high level, producing
year over year growth in corporate lending, trust and asset management, and
fee-based revenues. At the same time our planned reduction in the relative
size of our securities portfolio is on track."
Earnings Guidance
O'Meara concluded, "The headwinds of the current interest rate and
competitive environment continues to hamper earnings expansion in 2007 for
both ourselves and the industry at large, primarily through margin
compaction. In such an environment, the strength of our above-peer
profitability, balance sheet, sales platform, and credit culture affords
First Midwest opportunities to successfully weather this environment, while
remaining focused on the long-term success of the Company. In 2007 solid
corporate loan growth, low credit costs, increased fee-based revenues,
diligent expense management, and the prudent administration of our
securities portfolio are expected to continue to mitigate margin pressures.
We currently expect full year diluted earnings per share to be in the range
of $ 2.41 to $2.51."
Net Interest Margin
First Midwest's net interest income was $62.8 million for fourth quarter
2006, up 5.8% from $59.3 million for fourth quarter 2005. This increase
was driven by a $1.0 billion increase in average interest-earning assets as
compared to fourth quarter 2005, which was primarily due to the acquisition
of Bank Calumet on March 31, 2006. Net interest margin for fourth quarter
2006 was 3.57%, down 12 basis points from third quarter 2006, reflecting
the combined impact of the inverted interest rate yield curve on
interest-earning asset yields and increased deposit and borrowing costs.
Securities Portfolio Activity
Total securities as of December 31, 2006 were $2.5 billion, down from $2.7
billion as of September 30, 2006, as proceeds received from mortgage-backed
securities cash flows and the sale of municipal securities were not fully
reinvested given the narrow spread between asset yields and funding costs
available in the marketplace. In addition, fourth quarter 2006 market
conditions afforded the opportunity to sell approximately $50 million of
tax exempt municipal securities yielding, on a tax-equivalent basis, 7.43%,
and realize a gain of $3.3 million. As of December 31, 2006, total
municipal securities were $1.1 billion and reflected an unrealized $4.4
million in appreciation affording further balance sheet flexibility in
2007.
Increases in Loan Growth and Funding
Total loans grew to $5.0 billion as of December 31, 2006, an increase of
16.3% from December 31, 2005. This growth was due primarily to the
addition of $676.4 million of loans acquired as part of the acquisition of
Bank Calumet. Total loans as of December 31, 2006 declined $60.6 million,
or 1.2%, as compared to September 30, 2006, reflecting lower consumer and
corporate loan balances. Consumer loans declined $29.0 million on a linked
quarter basis, primarily due to continued run off of the Company's indirect
auto portfolio. Corporate loans declined $31.6 million, due to lower
commercial and commercial real estate balances. While corporate sales
activity was brisk throughout the quarter, large payoffs resulting from
completed interim financing projects dampened outstandings.
Average deposits for fourth quarter 2006 totaled $6.2 billion, an increase
of 20.0%, as compared to fourth quarter 2005, primarily as a result of
deposits obtained through the acquisition of Bank Calumet. As compared to
third quarter 2006, average deposits for fourth quarter 2006 declined $52.7
million, as growth in time deposit and savings account levels were offset
by lower NOW and money market account balances, resulting primarily from
seasonal declines in public fund deposits.
Noninterest Income and Expense
First Midwest's total noninterest income for fourth quarter 2006 was $29.7
million as compared to $14.4 million for fourth quarter 2005. Noninterest
income for fourth quarter 2006 included $3.4 million in securities gains,
and fourth quarter 2005 included $6.2 million in securities losses. The
remaining components of noninterest income totaled $26.3 million for fourth
quarter 2006, an increase of 27.8% as compared to fourth quarter 2005,
reflecting higher fee-based revenues and revenue from corporate owned life
insurance. In fourth quarter 2006, fee-based revenues totaled $23.3
million, an increase of $4.9 million or 26.4%, as compared to fourth
quarter 2005, with approximately $3.4 million of this increase attributable
to the acquisition of Bank Calumet, and the remainder reflecting higher
service charges on deposit accounts and card-based revenues.
Total noninterest expense for fourth quarter 2006 was $47.8 million, up
from $42.6 million in fourth quarter 2005. The majority of this increase
is attributable to higher salaries, employee benefits, professional
services, and occupancy expenses resulting from the acquisition of Bank
Calumet.
First Midwest's efficiency ratio was 49.6% for fourth quarter 2006, as
compared to 49.8% for fourth quarter 2005.
Stable Credit Quality
First Midwest's overall credit quality remained solid during fourth quarter
2006, with nonperforming assets as of December 31, 2006 totaling $18.9
million, down 12.1% as compared to $21.5 million at September 30, 2006. As
of December 31, 2006, nonperforming assets, including foreclosed real
estate, represented 0.38% of total loans plus foreclosed real estate, as
compared to 0.35% as of December 31, 2005 and 0.42% as of September 30,
2006.
Net charge-offs for fourth quarter 2006 totaled $3.9 million and included a
$1.3 million charge related to a single, purchased commercial lease. Net
charge offs represented 0.30% of average loans for fourth quarter 2006, as
compared to 0.25% for fourth quarter 2005 and 0.21% for third quarter 2006.
Provisioning for loan losses for fourth quarter 2006 fully covered net
charge-offs. As of December 31, 2006, the reserve for loan losses stood at
1.25% of total loans, as compared to 1.31% as of December 31, 2005 and
1.23% as of September 30, 2006 and represented 384.8% of nonperforming
loans.
Solid Capital Management
As of December 31, 2006, First Midwest's Total Risk Based Capital ratio was
12.2%, compared to 11.8% as of December 31, 2005. The Tier 1 Risk Based
Capital ratio was 9.6% as compared to 10.7% as of December 31, 2005. First
Midwest's Tier 1 Leverage Ratio was 7.3% as compared to 8.2% as of December
31, 2005.
First Midwest's tangible capital ratio, which represents the ratio of
stockholders' equity to total assets excluding intangible assets, stood at
5.62%, down from 6.30% as of December 31, 2005. The acquisition of Bank
Calumet on March 31, 2006 reduced the tangible capital ratio by 55 basis
points as a result of the net impact of the additional goodwill and other
intangible assets acquired and common shares issued. In addition, a
negative $8.6 million adjustment to equity decreased the tangible capital
ratio by 10 basis points. This adjustment resulted from the adoption of
SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other
Postretirement Plans," effective December 31, 2006.
In 2006, First Midwest elected to suspend its stock repurchase program, as
it rebuilds tangible capital following the acquisition of Bank Calumet.
With 2.1 million shares remaining under its existing authorization, First
Midwest may reinstate its repurchase program in 2007, with the pace and
timing of repurchase activity, if any, dependent upon market conditions and
other factors.
About First Midwest
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 102 offices located in 63 communities,
primarily in metropolitan Chicago. First Midwest was the only bank named
by Chicago magazine as one of the 25 best places to work in Chicago.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Act of 1995: Statements
in this news release that are forward-looking statements are subject to
various risks and uncertainties concerning specific factors described in
First Midwest Bancorp's 2005 Form 10-K and other filings with the U.S.
Securities and Exchange Commission. Such information contained herein
represents management's best judgment as of the date hereof based on
information currently available. First Midwest does not intend to update
this information and disclaims any legal obligation to the contrary.
Historical information is not necessarily indicative of future performance.
Accompanying Financial Statements and Tables
Accompanying this press release is the following unaudited financial
information:
-- Operating Highlights, Balance Sheet Highlights and Stock Performance
Data (1 page)
-- Condensed Consolidated Statements of Condition (1 page)
-- Condensed Consolidated Statements of Income (1 page)
-- Selected Quarterly Data and Asset Quality Data (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 (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 January 24, 2007
Operating Highlights
Unaudited Quarters Ended Years Ended
------------------------------- --------------------
(Amounts in
thousands except Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
per share data) 2006 2006 2005 2006 2005
--------- --------- --------- --------- ---------
Net income $ 31,528 $ 31,215 $ 22,630 $ 117,246 $ 101,377
Diluted earnings per
share $ 0.63 $ 0.62 $ 0.49 $ 2.37 $ 2.21
Return on average
equity 16.40% 17.09% 16.58% 16.87% 18.83%
Return on average
assets 1.47% 1.44% 1.25% 1.42% 1.44%
Net interest margin 3.57% 3.69% 3.79% 3.67% 3.87%
Efficiency ratio 49.55% 49.06% 49.76% 50.53% 49.44%
Balance Sheet Highlights
Unaudited Quarters Ended
--------------------------------------
(Amounts in thousands except per Dec. 31, Sept. 30, Dec. 31,
share data) 2006 2006 2005
------------ ------------ ------------
Total assets $ 8,441,526 $ 8,596,864 $ 7,210,151
Total loans 5,008,944 5,069,554 4,306,191
Total deposits 6,167,216 6,229,390 5,147,832
Stockholders’ equity 751,014 745,869 544,068
Book value per share $ 15.01 $ 14.92 $ 11.99
Period end shares outstanding 50,025 50,001 45,387
Stock Performance Data
Unaudited Quarters Ended
----------------------------------
Dec. 31, Sept. 30, Dec. 31,
2006 2006 2005
---------- ---------- ----------
Market Price:
Quarter End $ 38.68 $ 37.89 $ 35.06
High $ 39.52 $ 38.89 $ 39.25
Low $ 36.62 $ 34.42 $ 34.66
Quarter end price to book value 2.6x 2.5x 2.9x
Quarter end price to 2006 earnings 16.3x 15.5x N/A
Dividends declared per share $ 0.295 $ 0.275 $ 0.275
First Midwest Bancorp, Inc. Press Release Dated January 24, 2007
Condensed Consolidated Statements of Condition
December 31,
--------------------------
(Amounts in thousands) 2006 2005
------------ ------------
Unaudited (1) Audited
Assets
Cash and due from banks $ 209,825 $ 157,070
Funds sold and other short-term investments 9,841 5,908
Securities available for sale 2,442,674 2,286,630
Securities held to maturity, at amortized cost 91,380 56,772
Loans 5,008,944 4,306,191
Reserve for loan losses (62,370) (56,393)
------------ ------------
Net loans 4,946,574 4,249,798
------------ ------------
Premises, furniture, and equipment 126,677 95,345
Investment in corporate owned life insurance 196,598 156,441
Goodwill and other intangible assets 292,658 95,997
Accrued interest receivable and other assets 125,299 106,190
------------ ------------
Total assets $ 8,441,526 $ 7,210,151
------------ ------------
Liabilities and Stockholders' Equity
Deposits $ 6,167,216 $ 5,147,832
Borrowed funds 1,182,268 1,294,532
Long-term debt 228,674 130,092
Accrued interest payable and other liabilities 112,354 93,627
------------ ------------
Total liabilities 7,690,512 6,666,083
------------ ------------
Common stock 613 569
Additional paid-in capital 205,044 60,760
Retained earnings 823,787 762,575
Accumulated other comprehensive loss (15,288) (8,284)
Treasury stock, at cost (263,142) (271,552)
------------ ------------
Total stockholders' equity 751,014 544,068
------------ ------------
Total liabilities and stockholders' equity $ 8,441,526 $ 7,210,151
------------ ------------
(1) While unaudited, the 2006 Condensed Consolidated Statement of Condition
has been prepared in accordance with U.S. generally accepted accounting
principles and is derived from the 2006 financial statements upon which
Ernst & Young LLP, First Midwest's independent external auditor, will
issue an audit opinion upon completion of their audit procedures.
First Midwest Bancorp, Inc. Press Release Dated January 24, 2007
Condensed Consolidated Statements of Income
Quarters Ended Years Ended
December 31, December 31,
(Amounts in thousands ------------------------ -------------------------
except per share data) 2006 2005 2006 2005
----------- ----------- ----------- -----------
Unaudited(1) Unaudited(1) Unaudited(2) Audited
Interest Income
Loans $ 94,183 $ 73,503 $ 352,939 $ 266,925
Securities 31,076 26,412 122,909 99,404
Other 138 115 561 371
----------- ----------- ----------- -----------
Total interest
income 125,397 100,030 476,409 366,700
----------- ----------- ----------- -----------
Interest Expense
Deposits 42,769 26,174 148,118 86,675
Borrowed funds 16,105 12,363 62,974 35,834
Long-term debt 3,760 2,144 13,458 8,341
----------- ----------- ----------- -----------
Total interest
expense 62,634 40,681 224,550 130,850
----------- ----------- ----------- -----------
Net interest income 62,763 59,349 251,859 235,850
Provision for loan
losses 3,865 2,780 10,229 8,930
----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses 58,898 56,569 241,630 226,920
----------- ----------- ----------- -----------
Noninterest Income
Service charges on
deposit accounts 10,594 8,308 40,036 30,199
Trust and investment
management fees 3,666 3,059 14,269 12,593
Other service charges,
commissions, and fees 5,362 4,479 20,135 17,572
Card-based fees 3,712 2,615 13,777 10,207
----------- ----------- ----------- -----------
Subtotal, fee-based
revenues 23,334 18,461 88,217 70,571
----------- ----------- ----------- -----------
Corporate owned life
insurance income 1,966 1,437 7,616 5,163
Security gains, net 3,371 (6,152) 4,269 (3,315)
Other 982 664 3,181 2,193
----------- ----------- ----------- -----------
Total noninterest
income 29,653 14,410 103,283 74,612
----------- ----------- ----------- -----------
Noninterest Expense
Salaries and employee
benefits 26,507 23,991 106,201 95,179
Net occupancy expense 5,007 4,340 20,153 16,618
Equipment expense 2,740 2,117 10,227 8,555
Technology and related
costs 1,532 1,513 6,584 5,677
Other 12,009 10,617 49,450 39,674
----------- ----------- ----------- -----------
Total noninterest
expense 47,795 42,578 192,615 165,703
----------- ----------- ----------- -----------
Income before taxes 40,756 28,401 152,298 135,829
Income tax expense 9,228 5,771 35,052 34,452
----------- ----------- ----------- -----------
Net Income $ 31,528 $ 22,630 $ 117,246 $ 101,377
----------- ----------- ----------- -----------
Diluted Earnings
Per Share $ 0.63 $ 0.49 $ 2.37 $ 2.21
----------- ----------- ----------- -----------
Dividends Declared
Per Share $ 0.295 $ 0.275 $ 1.120 $ 1.015
----------- ----------- ----------- -----------
Weighted Average
Diluted Shares
Outstanding 50,392 45,753 49,469 45,893
----------- ----------- ----------- -----------
(1) While unaudited, the Condensed Consolidated Statements of Income for
the quarters ended December 31, 2006 and 2005 have been prepared in
accordance with U.S. generally accepted accounting principles and are
derived from quarterly financial statements.
(2) While unaudited, the Condensed Consolidated Statement of Income for the
year ended December 31, 2006 has been prepared in accordance with U.S.
generally accepted accounting principles and is derived from the 2006
financial statements upon which Ernst & Young LLP, First Midwest’s
independent external auditor, will issue an audit opinion upon
completion of their audit procedures.
First Midwest Bancorp, Inc. Press Release Dated January 24, 2007
Selected Quarterly Data
Unaudited
(Amounts in Year to Date Quarters Ended
thousands except ----------------- ---------------------------------------
per share data) 12/31/06 12/31/05 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
-------- -------- ------- ------- ------- ------- -------
Net interest
income $251,859 $235,850 $62,763 $65,673 $65,958 $57,465 $59,349
Provision for
loan losses 10,229 8,930 3,865 2,715 2,059 1,590 2,780
Noninterest
income 103,283 74,612 29,653 26,991 25,267 21,372 14,410
Noninterest
expense 192,615 165,703 47,795 49,118 51,990 43,712 42,578
Net income 117,246 101,377 31,528 31,215 28,735 25,768 22,630
Diluted earnings
per share $ 2.37 $ 2.21 $ 0.63 $ 0.62 $ 0.57 $ 0.55 $ 0.49
Return on average
equity 16.87% 18.83% 16.40% 17.09% 16.50% 17.64% 16.58%
Return on average
assets 1.42% 1.44% 1.47% 1.44% 1.33% 1.44% 1.25%
Net interest
margin 3.67% 3.87% 3.57% 3.69% 3.70% 3.76% 3.79%
Efficiency ratio 50.53% 49.44% 49.55% 49.06% 52.12% 51.51% 49.76%
-------- -------- ------- ------- ------- ------- -------
Period end shares
outstanding 50,025 45,387 50,025 50,001 49,925 49,866 45,387
Book value per
share $ 15.01 $ 11.99 $ 15.01 $ 14.92 $ 13.92 $ 13.81 $ 11.99
Dividends
declared
per share $ 1.120 $ 1.015 $ 0.295 $ 0.275 $ 0.275 $ 0.275 $ 0.275
-------- -------- ------- ------- ------- ------- -------
Asset Quality Data
Unaudited Year to Date Quarters Ended
(Amounts in ----------------- ---------------------------------------
thousands) 12/31/06 12/31/05 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
-------- -------- ------- ------- ------- ------- -------
Nonaccrual loans $ 16,209 $ 11,990 $16,209 $17,459 $15,447 $17,178 $11,990
Foreclosed real
estate 2,727 2,878 2,727 4,088 4,195 4,033 2,878
Loans past due 90
days and still
accruing 12,810 8,958 12,810 11,296 14,185 10,693 8,958
-------- -------- ------- ------- ------- ------- -------
Nonperforming
loans to loans 0.32% 0.28% 0.32% 0.34% 0.31% 0.34% 0.28%
Nonperforming
assets to loans
plus foreclosed
real estate 0.38% 0.35% 0.38% 0.42% 0.39% 0.42% 0.35%
Nonperforming
assets plus
loans past due
90 days to loans
plus foreclosed
real estate 0.63% 0.55% 0.63% 0.65% 0.67% 0.63% 0.55%
Reserve for loan
losses to loans 1.25% 1.31% 1.25% 1.23% 1.24% 1.24% 1.31%
Reserve for loan
losses to
nonperforming
loans 385% 470% 385% 357% 404% 363% 470%
-------- -------- ------- ------- ------- ------- -------
Provision for
loan losses $ 10,229 $ 8,930 $ 3,865 $ 2,715 $ 2,059 $ 1,590 $ 2,780
Net loan
charge-offs 10,187 9,255 3,865 2,704 2,053 1,565 2,670
-------- -------- ------- ------- ------- ------- -------
Net loan
charge-offs to
average loans 0.21% 0.22% 0.30% 0.21% 0.16% 0.15% 0.25%
-------- -------- ------- ------- ------- ------- -------
Contact Information: CONTACT: Michael L. Scudder EVP, Chief Financial Officer (630) 875-7283 www.firstmidwest.com First Midwest Bancorp One Pierce Place, Suite 1500 Itasca, Illinois 60143-9768 (630) 875-7450