SOURCE: First Midwest Bancorp, Inc.

July 27, 2005 06:55 ET

First Midwest Reports Strong Second Quarter Results

ITASCA, IL -- (MARKET WIRE) -- July 27, 2005 -- (NASDAQ: FMBI)

2nd Quarter 2005 Highlights:

--  EPS of $0.58 Reflects 9.4% Increase Over 2nd Quarter 2004
--  Annualized Commercial Loan Growth Up 19.6% vs. 1st Quarter 2005
--  ROE of 19.9%; ROA 1.52%
--  Record Low Nonperforming Asset Levels
--  Efficiency Ratio Improved to 48.7%
    
First Midwest Bancorp, Inc. ("First Midwest") (NASDAQ: FMBI), the premier relationship-based banking franchise in the growing Chicagoland banking market, today reported that its net income for second quarter ended June 30, 2005 increased by 9.4% on a per diluted share basis to $26.5 million, or $0.58 per diluted share, from 2004's second quarter of $24.7 million, or $0.53 per diluted share. Solid second quarter 2005 performance resulted in an annualized return on average assets of 1.52%, as compared to 1.44% for second quarter 2004, and an annualized return on average equity of 19.9%, as compared to 19.2% for second quarter 2004.

For the first six months of 2005, net income increased 7.7% on a per diluted share basis to $51.7 million, or $1.12 per diluted share, as compared to the same period in 2004 of $48.7 million, or $1.04 per diluted share.

"I am extremely pleased with the results and operating performance during 2005's first half," said First Midwest President and Chief Executive Officer John O'Meara. "Corporate loan growth continues to show strong momentum, with middle market, agricultural and small business lending performance exceeding our expectations. Credit costs remain low, asset quality is at historically high levels and our fee-based revenues continue to improve. We have also succeeded in maintaining balanced margin performance as interest rates have evolved. We believe the momentum that we described in our last earnings call is manifesting itself in second quarter results. We remain very optimistic for the balance of the year in light of the trends which we are experiencing."

Earnings Guidance Reaffirmed

First Midwest expects its earnings to continue to benefit from the combination of continued low credit costs, improved fee revenues and controlled expenses. First Midwest's net interest margin should fluctuate within a narrow band through the remainder of 2005 as earning asset growth, liability mix, interest rate changes and competitive pricing pressures all work together to influence performance. First Midwest reaffirms its 2005 earnings guidance of $2.26 to $2.36 per diluted share. Results within this range are largely dependent upon net interest margin performance.

Improved Net Interest Margin

First Midwest's net interest income was $59.4 million for second quarter 2005, up 6.0% from $56.0 million for 2004's second quarter. Net interest margin for second quarter 2005 was 3.93%, up from 3.87% for first quarter 2005 and 3.81% for second quarter 2004. This result reflects the positive impact of comparatively higher short-term interest rates on loan yields and the lagging effects on repricing deposit costs, both of which were offset, in part, by the impact of a flattening yield curve on longer-term asset yields. Given the expectation for continued, measured Federal Reserve tightening and a relatively flat yield curve, quarterly margins for the second half of 2005 are anticipated to vary within the range of 3.85% to 3.90%.

Increases in Loan Growth and Funding

Total loans of $4.2 billion as of June 30, 2005 increased 1.7% from March 31, 2005, or 6.8% annualized, a result of strong growth in commercial, agricultural and real estate commercial lending. Commercial loan growth accelerated from first quarter 2005, as evidenced by a 4.9% increase, or 19.6% annualized, in commercial loans outstanding as of June 30, 2005. First Midwest remains optimistic on continued commercial, agricultural and commercial real estate loan growth for the remainder of 2005.

Total loans of $4.2 billion at June 30, 2005 were 1.2% higher than at June 30, 2004. Increases in commercial, agricultural and real estate commercial loans were partly offset by First Midwest's decisions in 2004 to cease indirect consumer lending activities and to securitize a portion of its real estate 1-4 family loan portfolio. Excluding both indirect consumer and real estate 1-4 family loan categories from both periods, total loans as of June 30, 2005 were 6.1% higher than at June 30, 2004.

Average deposits for second quarter 2005 totaled $5.1 billion, an increase of 3.8% as compared to first quarter 2005 reflecting growth in time deposits as well as seasonal growth in transactional deposits. In comparison to second quarter 2004, average deposits increased 3.7%, as demand deposits grew 4.3% and time deposits grew 14.8%.

Noninterest Income and Expense

First Midwest's total noninterest income for second quarter 2005 was $19.7 million, up 3.0% from $19.1 million in second quarter 2004. Excluding $2.7 million in security gains and $1.4 million in debt extinguishment losses from second quarter 2004 performance, noninterest income increased 10.3% in second quarter 2005. This improvement reflects stronger performance in virtually all revenue categories.

Total noninterest expense for second quarter 2005 was $41.2 million, up from $40.0 million in second quarter 2004. This quarter's performance reflects comparatively higher salaries, employee benefits, professional services and occupancy expenses, partly offset by lower technology-related and other costs. First Midwest's efficiency ratio was 48.7% for second quarter 2005, improved from 49.9% for second quarter 2004.

Credit Quality at Record Levels

First Midwest's overall credit quality continued to improve during second quarter 2005, with nonperforming assets as of June 30, 2005 decreasing by 27.2% to $14.3 million from $19.7 million at March 31, 2005. Net charge-offs for second quarter 2005 improved to 0.17% of average loans, a 52.8% reduction from 0.36% for first quarter 2005. As of June 30, 2005, nonperforming assets, including foreclosed real estate, represented an historical low of 0.34% of loans. As of June 30, 2005, the reserve for loan losses stood at 1.33% of total loans as compared to 1.35% as of March 31, 2005 and represented 493% of nonperforming loans.

Loans past due 90 days and still accruing totaled $7.5 million as of June 30, 2005, up from $4.6 million as of March 31, 2005. This linked quarter decline in nonperforming assets together with the increase in loans past due 90 days and still accruing reflected the transfer to accruing status of a $3.6 million nonperforming real estate construction credit acquired from CoVest Banc in 2003. This credit was returned to accruing status as First Midwest expects its remediation efforts to result in recoveries in excess of book balance over the next three quarters.

Solid Capital Management

As of June 30, 2005, First Midwest's Total Risk Based Capital ratio was 11.4%, compared to 11.5% as of June 30, 2004. The Tier 1 Risk Based Capital ratio was 10.3%, compared to 10.4%, as of June 30, 2004. First Midwest's Tier 1 Leverage Ratio of 8.1% as of June 30, 2005 improved from 8.0% as of June 30, 2004.

During the second quarter of 2005, First Midwest declared a dividend of $0.25 per share, up 13.6% from 2004's second quarter dividend of $0.22 per share. During the first six months of 2005, First Midwest also repurchased 723,220 shares of its common stock at an average price of approximately $34.53 per share funded by cash on hand. During second quarter 2005, First Midwest extended its stock repurchase authorization to include an additional 2.5 million shares. As a result, approximately 2.2 million shares remained under First Midwest's existing repurchase authorization as of June 30, 2005.

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 67 offices located in 49 communities, primarily in northeastern Illinois. First Midwest is the 2004 recipient of the Illinois Bank Community Service Award and was honored by Chicago magazine in its October 2004 issue as one of the 25 best places to work in Chicago, the only bank to be so honored.

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 2004 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 (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 July 27, 2005

Operating Highlights             Quarters Ended       Six Months Ended
Unaudited                          June 30,               June 30,
(Amounts in thousands except
 per share data)                2005       2004        2005       2004
                            ----------  ----------  ----------  ----------
Net income                  $   26,510  $   24,712  $   51,717  $   48,744
Diluted earnings per share  $     0.58  $     0.53  $     1.12  $     1.04
Return on average equity         19.85%      19.17%      19.50%      18.56%
Return on average assets          1.52%       1.44%       1.51%       1.43%
Net interest margin               3.93%       3.81%       3.90%       3.89%
Efficiency ratio                 48.75%      49.89%      49.30%      50.21%

Balance Sheet Highlights
Unaudited

(Amounts in thousands
 except per share data)                               Jun. 30,    Jun. 30,
                                                        2005        2004
                            ----------  ----------  ----------  ----------
Total assets                                        $7,073,141  $6,834,285
Total loans                                          4,223,168   4,173,229
Total deposits                                       5,088,429   4,892,602
Stockholders' equity                                   537,084     506,901
Book value per share                                $    11.83  $    10.87
Period end shares outstanding                           45,399      46,632

Stock Performance Data           Quarters Ended        Six Months Ended
Unaudited                            June 30,               June 30,
                                2005       2004        2005       2004
                            ----------  ----------  ----------  ----------
Market Price:
  Quarter End               $    35.08  $    35.21  $    35.08  $    35.21
  High                      $    36.45  $    36.03  $    36.75  $    36.03
  Low                       $    31.25  $    32.33  $    31.25  $    31.13

Quarter end price to
 book value                        3.0x        3.2x        3.0x        3.2x
Quarter end price to
 consensus estimated
 2005 earnings                    15.3x        N/A        15.3x        N/A
Dividends declared
 per share                  $     0.25  $     0.22  $     0.49  $     0.44
                            ----------  ----------  ----------  ----------

First Midwest Bancorp, Inc.              Press Release Dated July 27, 2005

Condensed Consolidated
 Statements of Condition
Unaudited (1)                                              June 30,

(Amounts in thousands)                                 2005       2004

Assets
Cash and due from banks                              $ 138,719   $ 160,501
Funds sold and other
 short-term investments                                  7,248       9,375
Securities available
 for sale                                            2,264,616   2,062,707
Securities held to maturity,
 at amortized cost                                      67,503      61,679
Loans                                                4,223,168   4,173,229
Reserve for loan losses                                (56,262)    (56,686)
                                                    ----------  ----------

  Net loans                                          4,166,906   4,116,543
                                                    ----------  ----------
Premises, furniture and
 equipment                                              92,002      91,477
Investment in corporate owned
 life insurance                                        153,777     148,932
Goodwill and other intangible
 assets                                                 95,647      97,658
Accrued interest receivable
 and other assets                                       86,723      85,413
                                                    ----------  ----------

  Total assets                                      $7,073,141  $6,834,285
                                                    ----------  ----------
Liabilities and Stockholders'
 Equity
Deposits                                            $5,088,429  $4,892,602
Borrowed funds                                       1,249,814   1,250,753
Subordinated debt - trust
 preferred securities                                  132,707     127,547
Accrued interest payable
 and other liabilities                                  65,107      56,482
                                                    ----------  ----------

  Total liabilities                                  6,536,057   6,327,384
                                                    ----------  ----------
Common stock                                               569         569
Additional paid-in capital                              61,477      66,760
Retained earnings                                      736,779     678,342
Accumulated other comprehensive
 income (loss)                                           9,344     (10,543)
Treasury stock, at cost                               (271,085)   (228,227)
                                                    ----------  ----------
Total stockholders' equity                             537,084     506,901
                                                    ----------  ----------

Total liabilities and
 stockholders' equity                               $7,073,141  $6,834,285
                                                    ----------  ----------

(1) While unaudited, the Condensed Consolidated Statements of Condition
have been prepared in accordance with U.S. generally accepted accounting
principles and, as of June 30, 2004, are derived from quarterly financial
statements on which Ernst & Young LLP, First Midwest's independent external
auditor, has rendered a Quarterly Review Report; Ernst & Young is
currently in the process of completing their Quarterly Review Report for
the quarter ended June 30, 2005.

First Midwest Bancorp, Inc.              Press Release Dated July 27, 2005

Condensed Consolidated
Statements of Income             Quarters Ended       Six Months Ended
Unaudited (1)                        June 30,              June 30,
(Amounts in thousands
 except per share data)          2005       2004       2005       2004
                              ---------  ---------  ---------  ---------

Interest Income
Loans                         $  64,325  $  54,503  $ 123,940  $ 109,148
Securities                       24,844     21,844     48,328     44,488
Other                                89        198        145        298
                              ---------  ---------  ---------  ---------

  Total interest income          89,258     76,545    172,413    153,934
                              ---------  ---------  ---------  ---------

Interest Expense
Deposits                         20,204     13,556     37,364     27,225
Borrowed funds                    7,599      4,949     14,422      9,766
Subordinated debt - trust
 preferred securities             2,044      1,992      4,107      4,006
                              ---------  ---------  ---------  ---------

  Total interest expense         29,847     20,497     55,893     40,997
                              ---------  ---------  ---------  ---------

  Net interest income            59,411     56,048    116,520    112,937
Provision for Loan Losses         1,800      2,405      4,950      4,333
                              ---------  ---------  ---------  ---------

  Net interest income after
   provision for loan losses     57,611     53,643    111,570    108,604
                              ---------  ---------  ---------  ---------

Noninterest Income
Service charges on deposit
 accounts                         7,446      7,041     14,139     13,282
Trust and investment
 management fees                  3,150      3,038      6,279      6,000
Other service charges,
 commissions, and fees            4,402      3,834      8,212      7,466
Card-based fees                   2,620      2,349      4,967      4,495
Corporate owned life
 insurance income                 1,223      1,244      2,418      2,511
Security (losses) gains, net        (16)     2,663      2,545      4,602
(Losses) on early
 extinguishments of debt              -     (1,413)         -     (2,653)
Other                               848        351      1,259        789
                              ---------  ---------  ---------  ---------

  Total noninterest income       19,673     19,107     39,819     36,492
                              ---------  ---------  ---------  ---------

Noninterest Expense
Salaries and employee
 benefits                        24,059     21,755     46,912     43,871
Net occupancy expense             4,027      3,772      8,288      7,875
Equipment expenses                2,073      2,258      4,168      4,500
Technology and related
 costs                            1,396      2,007      2,777      4,042
Other                             9,690     10,185     18,872     19,894
                              ---------  ---------  ---------  ---------

  Total noninterest expense      41,245     39,977     81,017     80,182
                              ---------  ---------  ---------  ---------

Income before taxes              36,039     32,773     70,372     64,914
Income tax expense                9,529      8,061     18,655     16,170
                              ---------  ---------  ---------  ---------

  Net Income                  $  26,510  $  24,712  $  51,717  $  48,744
                              ---------  ---------  ---------  ---------

  Diluted Earnings Per Share  $    0.58  $    0.53  $    1.12  $    1.04
                              ---------  ---------  ---------  ---------

  Dividends Declared
   Per Share                  $    0.25  $    0.22  $    0.49  $    0.44
                              ---------  ---------  ---------  ---------

  Weighted Average Diluted
   Shares Outstanding            45,900     46,976     46,031     46,964
                              ---------  ---------  ---------  ---------


(1) While unaudited, the Condensed Consolidated Statements of Income have
    been prepared in accordance with U.S. generally accepted accounting
    principles and, for the quarter and six months ended June 30, 2004,
    are derived from quarterly financial statements on which Ernst &
    Young LLP, First Midwest's independent external auditor, has rendered
    a Quarterly Review Report; Ernst & Young is currently in the process
    of completing their Quarterly Review Report for the quarter and six
    months ended June 30, 2005.

First Midwest Bancorp, Inc.              Press Release Dated July 27, 2005

Selected Quarterly Data
Unaudited                   Year to Date

(Amounts in thousands
 except per share data)   6/30/05   6/30/04
                         --------  --------

Net interest income      $116,520  $112,937
Provision for loan
 losses                     4,950     4,333
Noninterest income         39,819    36,492
Noninterest expense        81,017    80,182
Net income                 51,717    48,744
Diluted earnings
 per share               $   1.12  $   1.04
Return on average
 equity                     19.50%    18.56%
Return on average
 assets                      1.51%     1.43%
Net interest margin          3.90%     3.89%
Efficiency ratio            49.30%    50.21%
                         --------  --------

Period end shares
 outstanding               45,399    46,632
Book value per share     $  11.83  $  10.87
Dividends declared
 per share               $   0.49  $   0.44
                         --------  --------

Asset Quality
Unaudited                   Year to Date

(Amounts in thousands)    6/30/05   6/30/04
                         --------  --------

Nonaccrual loans         $ 11,419  $ 24,621
Foreclosed real estate      2,905     4,602
Loans past due 90 days
 and still accruing         7,463     4,160
                         --------  --------

Nonperforming loans
 to loans                    0.27%     0.59%
Nonperforming assets to
 loans plus foreclosed
 real estate                 0.34%     0.70%
Nonperforming assets
 plus loans past due 90
 days to loans plus
 foreclosed real estate      0.52%     0.80%
Reserve for loan losses
 to loans                    1.33%     1.36%
Reserve for loan losses
 to nonperforming loans       493%      230%
                         --------  --------

Provision for loan
 losses                  $  4,950  $  4,333
Net loan charge-offs        5,406     4,051
                         --------  --------
Net loan charge-offs
 to average loans            0.26%     0.20%
                         --------  --------


Selected Quarterly Data
Unaudited                                  Quarters Ended

(Amounts in thousands
 except per share data)   6/30/05   3/31/05  12/31/04   9/30/04   6/30/04
                         --------  --------  --------  --------  --------

Net interest income      $ 59,411  $ 57,109  $ 58,393  $ 57,534  $ 56,048
Provision for loan
 losses                     1,800     3,150     5,350     3,240     2,405
Noninterest income         19,673    20,146    24,076    18,813    19,107
Noninterest expense        41,245    39,772    42,797    40,359    39,977
Net income                 26,510    25,207    25,220    25,172    24,712
Diluted earnings
 per share               $   0.58  $   0.55  $   0.54  $   0.54  $   0.53
Return on average
 equity                     19.85%    19.14%    18.57%    19.03%    19.17%
Return on average
 assets                      1.52%     1.49%     1.46%     1.45%     1.44%
Net interest margin          3.93%     3.87%     3.94%     3.90%     3.81%
Efficiency ratio            48.75%    49.88%    50.43%    49.60%    49.89%
                         --------  --------  --------  --------  --------

Period end shares
 outstanding               45,399    45,732    46,065    46,370    46,632
Book value per share     $  11.83  $  11.35  $  11.55  $  11.56  $  10.87
Dividends declared
 per share               $   0.25  $   0.24  $   0.24  $   0.22  $   0.22
                         --------  --------  --------  --------  --------

Asset Quality
Unaudited                                  Quarters Ended

(Amounts in thousands)    6/30/05   3/31/05  12/31/04   9/30/04   6/30/04
                         --------  --------  --------  --------  --------

Nonaccrual loans         $ 11,419  $ 16,407  $ 19,197  $ 22,267  $ 24,621
Foreclosed real estate      2,905     3,270     3,736     4,528     4,602
Loans past due 90 days
 and still accruing         7,463     4,625     2,658     3,108     4,160
                         --------  --------  --------  --------  --------

Nonperforming loans
 to loans                    0.27%     0.39%     0.46%     0.53%     0.59%
Nonperforming assets to
 loans plus foreclosed
 real estate                 0.34%     0.47%     0.55%     0.64%     0.70%
Nonperforming assets
 plus loans past due 90
 days to loans plus
 foreclosed real estate      0.52%     0.58%     0.62%     0.71%     0.80%
Reserve for loan
 losses to loans             1.33%     1.35%     1.37%     1.35%     1.36%
Reserve for loan losses
 to nonperforming loans       493%      343%      295%      255%      230%
                         --------  --------  --------  --------  --------
Provision for loan
 losses                  $  1,800  $  3,150  $  5,350  $  3,240  $  2,405
Net loan charge-offs        1,782     3,624     5,339     3,219     2,347
                         --------  --------  --------  --------  --------
Net loan charge-offs
 to average loans            0.17%     0.36%     0.51%     0.30%     0.23%
                         --------  --------  --------  --------  --------

Contact Information

  • Contacts:
    Steven H. Shapiro
    EVP, Corporate Secretary
    (630) 875-7345

    Michael L. Scudder
    EVP, Chief Financial Officer
    (630) 875-7283

    First Midwest Bancorp
    One Pierce Place, Suite 1500
    Itasca, Illinois 60143-9768
    (630) 875-7450