SOURCE: First Midwest Bancorp, Inc.

October 26, 2005 06:55 ET

First Midwest Third Quarter 2005 Results Reflect Continued Momentum

ITASCA, IL -- (MARKET WIRE) -- October 26, 2005 --


    3rd QUARTER 2005 HIGHLIGHTS:
    
--  EPS Up 9.3% From 3Q04
    
--  Noninterest Income Up 8.3% vs. 3Q04
    
--  ROE of 19.8%; ROA of 1.51%
    
--  Net Charge-Offs Linked Quarter Down 34%
    
--  Efficiency Ratio of 49.39%
    
First Midwest Bancorp, Inc. ("First Midwest") (NASDAQ: FMBI) today reported net income for the quarter ended September 30, 2005 of $27.0 million, or $0.59 per diluted share. This represents an increase of 9.3% on a per diluted share basis as compared to 2004's third quarter earnings of $25.2 million, or $0.54 per diluted share. First Midwest's annualized return on average assets was 1.51% for third quarter 2005, as compared to 1.45% for third quarter 2004. Its annualized return on average equity was 19.8% for third quarter 2005, as compared to 19.0% for third quarter 2004.

For the first nine months of 2005, First Midwest's net income increased 8.2% on a per diluted share basis to $1.71 per diluted share, or $78.7 million, as compared to $1.58 per diluted share, or $73.9 million for the same period in 2004.

"First Midwest's performance reflects the benefits of our continued sales momentum, solid credit quality and strong growth in fee-based business lines," said John M. O'Meara, President and Chief Executive Officer of First Midwest. "Our continued focus on expanding our core client relationships drives these benefits and creates long-term competitive advantages. This focus is particularly important as the banking industry looks to weather shorter-term margin pressures resulting from the sustained flat yield curve and adjusting consumer preferences for core deposit maturities."

Earnings Guidance

Confirming previous guidance, First Midwest expects full year 2005 earnings to be in the range of $2.28 to $2.32 per share.

Net Interest Margin

First Midwest's net interest income grew by 4.3% to $60.0 million in third quarter 2005 as compared to $57.5 million in 2004's third quarter.

Net interest margin for third quarter 2005 was 3.88%, down from 3.90% for third quarter 2004 and 3.93% for second quarter 2005. The decrease from second quarter 2005 to third quarter 2005 reflects the combined impact of the flat interest rate curve on asset yields and growth in higher costing certificates of deposit. This impact on net interest margin was partially offset by a $1.2 million contribution to net interest income resulting from the transfer of a nonperforming real estate construction credit to accruing status late in second quarter 2005.

Loan and Deposit Growth

Total loans as of September 30, 2005 were $4.3 billion, an increase of $64.1 million, or 1.5%, from June 30, 2005. Third quarter loan growth reflected increases of 4.4% in commercial real estate loans and 6.9% in real estate construction loans. Excluding discontinued indirect consumer loans, total loan growth for this period was 2.4%, or 9.6% annualized.

Total average deposits for third quarter 2005 were $5.2 billion, an increase of 5.0% as compared to third quarter 2004, largely as the result of an increase of 5.1% in demand deposits and an increase of 19.1% in time deposits. In comparison to third quarter 2004, average demand deposits reflect comparatively higher levels of public and commercial deposits. Average time deposits for third quarter 2005 in comparison to third quarter 2004 reflect the combined impact of targeted sales promotion as well as higher levels of brokered deposits. The increase in time deposit balances was partially offset by decreases in savings, NOW and money market balances as consumer preferences changed in response to the higher level of interest rates and time deposit promotion.

Noninterest Income and Expense

Noninterest income in third quarter 2005 grew to $20.4 million, an 8.3% increase from third quarter 2004, despite a reduction of security gains in the current quarter. Increases during third quarter 2005 in trust and investment management fees of 12.9%, in card-based fees of 12.0%, and in other service charges, commissions and fees of 23.8% combined to increase noninterest income by 11.2%, exclusive of security gains.

First Midwest's total noninterest expense for third quarter 2005 increased $1.7 million to $42.1 million, an increase of 4.3% from third quarter 2004. This increase largely reflects higher salaries and employee benefits, merchant card expense, and equipment expense, partially offset by comparatively lower incentive-related compensation costs.

First Midwest's efficiency ratio was 49.4% for third quarter 2005, as compared to 49.6% for third quarter 2004 and 48.7% for second quarter 2005.

Credit Quality

First Midwest's overall credit quality remained close to the historically low levels realized as of June 30, 2005. Nonperforming assets as of September 30, 2005 increased by 4.1% to $14.9 million from $14.3 million at June 30, 2005. Net charge-offs for third quarter 2005 totaled $1.2 million, down 33.8% from second quarter 2005 and represented 0.11% of average loans, a reduction from 0.17% for second quarter 2005. As of September 30, 2005, nonperforming assets, including foreclosed real estate remained relatively flat at 0.35% of loans plus foreclosed real estate, following its historical low of 0.34% of loans plus foreclosed real estate as of June 30, 2005. As of September 30, 2005, the reserve for loan losses stood at 1.31% of total loans as compared to 1.33% as of June 30, 2005 and represented 461% of nonperforming loans.

Loans past due 90 days and still accruing totaled $10.4 million as of September 30, 2005, up from $7.5 million as of June 30, 2005.

Capital Management

As of September 30, 2005, First Midwest's Total Risk Based Capital ratio was 11.5%, compared to 11.7% as of September 30, 2004. The Tier 1 Risk Based Capital ratio was 10.4%, compared to 10.6% as of September 30, 2004. First Midwest's Tier 1 Leverage Ratio was 8.2% as of September 30, 2005 compared to 8.1% as of September 30, 2004. These ratios all exceeded the regulatory minimum levels to be considered a "well capitalized institution."

During the third quarter of 2005, First Midwest paid dividends of $0.25 per share, up 13.6% from 2004's third quarter dividend of $0.22 per share. In addition, during the third quarter of 2005, First Midwest repurchased 133,731 shares of its common stock at an average price of $37.41 per share. For the first nine months of 2005, First Midwest repurchased 856,951 shares of its common stock. As of September 30, 2005, approximately 2.1 million shares remained under First Midwest's existing repurchase authorization.

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 69 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 October 26, 2005

Operating Highlights                 Quarters Ended     Nine Months Ended
Unaudited                             September 30,        September 30,
(Amounts in thousands except         2005      2004       2005      2004
 per share data)                   ----------------     -----------------



Net income                         $27,030  $25,172     $78,747   $73,916
Diluted earnings per share         $  0.59  $  0.54     $  1.71   $  1.58
Return on average equity             19.76%   19.03%      19.59%    18.72%
Return on average assets              1.51%    1.45%       1.51%     1.44%
Net interest margin                   3.88%    3.90%       3.89%     3.89%
Efficiency ratio                     49.39%   49.60%      49.33%    50.00%


Balance Sheet Highlights
Unaudited

(Amounts in thousands except                      Sept. 30,     Sept. 30,
 per share data)                                    2005          2004
                                                 ----------    ----------

Total assets                                     $7,201,261    $6,931,563
Total loans                                       4,287,266     4,204,026
Total deposits                                    5,225,847     4,955,322
Stockholders' equity                                536,181       535,855
Book value per share                             $    11.81    $    11.56
Period end shares outstanding                        45,385        46,370


Stock Performance Data               Quarters Ended     Nine Months Ended
Unaudited                             September 30,       September 30,
                                     2005       2004      2005      2004
                                   -----------------    -----------------

Market Price:
 Quarter End                       $ 37.24  $  34.56    $ 37.24   $ 34.56
 High                              $ 39.18  $  35.62    $ 39.18   $ 36.03
 Low                               $ 34.14  $  32.25    $ 31.25   $ 31.13

Quarter end price to book value        3.2x      3.0x       3.2x      3.0x
Quarter end price to consensus
 estimated 2005 earnings              16.1x      N/A       16.1x      N/A
Dividends declared per share       $  0.25  $   0.22    $  0.74   $  0.66

First Midwest Bancorp, Inc.        Press Release Dated October 26, 2005

Condensed Consolidated Statements of Condition
Unaudited (1)                                      September 30,
(Amounts in thousands)                         2005             2004
                                          -------------    ------------


Assets
Cash and due from banks                   $   170,473      $   183,472
Funds sold and other short-term
 investments                                    8,109            8,613
Securities available for sale               2,299,250        2,115,492
Securities held to maturity, at
 amortized cost                                49,118           54,743
Loans                                       4,287,266        4,204,026
Reserve for loan losses                       (56,283)         (56,707)
                                          -----------      -----------
  Net loans                                 4,230,983        4,147,319
                                          -----------      -----------

Premises, furniture and equipment              96,292           90,173
Investment in corporate owned life
 insurance                                    155,005          150,165
Goodwill and other intangible assets           95,114           97,125
Accrued interest receivable and other
 assets                                        96,917           84,461
                                          -----------      -----------

 Total assets                             $ 7,201,261      $ 6,931,563
                                          -----------      -----------


Liabilities and Stockholders' Equity
Deposits                                  $ 5,225,847      $ 4,955,322
Borrowed funds                              1,221,151        1,252,338
Junior subordinated debentures                130,421          129,250
Accrued interest payable and other
 liabilities                                   87,661           58,798
                                          -----------      -----------

 Total liabilities                          6,665,080        6,395,708
                                          -----------      -----------

Common stock                                      569              569
Additional paid-in capital                     60,749           66,454
Retained earnings                             752,446          693,297
Accumulated other comprehensive (loss)
 income                                        (5,944)          12,520
Treasury stock, at cost                      (271,639)        (236,985)
                                          -----------      -----------

 Total stockholders' equity                   536,181          535,855
                                          -----------      -----------

 Total liabilities and stockholders'
  equity                                  $ 7,201,261      $ 6,931,563
                                          -----------      -----------

(1) While unaudited, the Condensed Consolidated Statements of Condition
    have been prepared in accordance with U.S generally accepted accounting
    principles and, as of September 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 September 30, 2005.

First Midwest Bancorp, Inc.        Press Release Dated October 26, 2005

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

 Interest Income
 Loans                    $  69,482  $  56,918    $ 193,422  $ 166,066
 Securities                  24,664     22,542       72,992     67,030
 Other                          111        183          256        481
                          =========  =========    =========  =========
         Total interest
          income             94,257     79,643      266,670    233,577
                          =========  =========    =========  =========
 Interest Expense
 Deposits                    23,137     14,668       60,501     41,893
 Borrowed funds               9,049      5,434       23,471     15,200
 Junior subordinated
  debentures                  2,090      2,007        6,197      6,013
                          =========  =========    =========  =========
         Total interest
          expense            34,276     22,109       90,169     63,106
                          =========  =========    =========  =========
         Net interest
          income             59,981     57,534      176,501    170,471
 Provision for loan
  losses                      1,200      3,240        6,150      7,573
                          =========  =========    =========  =========
         Net interest
          income after
          provision for
          loan losses        58,781     54,294      170,351    162,898
                          =========  =========    =========  =========
 Noninterest Income
 Service charges on
  deposit accounts            7,752      7,873       21,891     21,155
 Trust and investment
  management fees             3,255      2,883        9,534      8,883
 Other service charges,
  commissions, and fees       4,881      3,942       13,093     11,408
 Card-based fees              2,625      2,344        7,592      6,839
 Corporate owned life
  insurance income            1,308      1,233        3,726      3,744
 Security gains, net            292        748        2,837      5,350
 (Losses) on early
  extinguishments of debt         -          -            -     (2,653)
 Other                          270       (210)       1,529        579
                          =========  =========    =========  =========
         Total noninterest
          income             20,383     18,813       60,202     55,305
                          =========  =========    =========  =========
 Noninterest Expense
 Salaries and employee
  benefits                   24,276     23,009       71,188     66,880
 Net occupancy expense        3,990      3,964       12,278     11,839
 Equipment expense            2,270      2,105        6,438      6,605
 Technology and related
  costs                       1,387      1,335        4,164      5,377
 Other                       10,185      9,946       29,057     29,840
                          =========  =========    =========  =========
         Total noninterest
          expense            42,108     40,359      123,125    120,541

 Income before taxes         37,056     32,748      107,428     97,662
 Income tax expense          10,026      7,576       28,681     23,746
                          =========  =========    =========  =========
         Net Income       $  27,030  $  25,172    $  78,747  $  73,916
                          =========  =========    =========  =========
         Diluted Earnings
          Per Share       $    0.59  $    0.54    $    1.71  $    1.58
                          =========  =========    =========  =========
         Dividends
          Declared
          Per Share       $    0.25  $    0.22    $    0.74  $    0.66
                          =========  =========    =========  =========
         Weighted Average
          Diluted Shares
          Outstanding        45,761     46,851       45,940     46,926
                          =========  =========    =========  =========

(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 nine months ended
     September 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 nine months ended September 30, 2005.

First Midwest Bancorp, Inc.           Press Release Dated October 26, 2005

Selected Quarterly Data
Unaudited                         Year to Date

(Amounts in thousands except
 per share data)                9/30/05   9/30/04
                               --------  --------

Net interest income            $176,501  $170,471
Provision for loan losses         6,150     7,573
Noninterest income               60,202    55,305
Noninterest expense             123,125   120,541
Net income                       78,747    73,916
Diluted earnings per share     $   1.71  $   1.58
Return on average equity          19.59%    18.72%
Return on average assets           1.51%     1.44%
Net interest margin                3.89%     3.89%
Efficiency ratio                  49.33%    50.00%
                               --------  --------

Period end shares outstanding    45,385    46,370
Book value per share           $  11.81  $  11.56
Dividends declared per share   $   0.74  $   0.66
                               --------  --------

Asset Quality
Unaudited                         Year to Date

(Amounts in thousands)          9/30/05   9/30/04
                               --------  --------

Nonaccrual loans               $ 12,206  $ 22,267
Foreclosed real estate            2,711     4,528
Loans past due 90 days and
 still accruing                  10,386     3,108

Nonperforming loans to loans       0.28%     0.53%
Nonperforming assets to loans
 plus foreclosed real estate       0.35%     0.64%
Nonperforming assets plus
 loans past due 90 days to
 loans plus foreclosed real
 estate                            0.59%     0.71%
Reserve for loan losses
 to loans                          1.31%     1.35%
Reserve for loan losses
 to nonperforming loans             461%      255%
                               --------  --------

Provision for loan losses      $  6,150  $  7,573
Net loan charge-offs              6,585     7,270
                               --------  --------

Net loan charge-offs to
 average loans                     0.21%     0.23%
                               --------  --------

First Midwest Bancorp, Inc.           Press Release Dated October 26, 2005

Selected Quarterly Data
Unaudited                                    Quarters Ended

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

Net interest income            $59,981  $59,411  $57,109  $58,393  $57,534
Provision for loan losses        1,200    1,800    3,150    5,350    3,240
Noninterest income              20,383   19,673   20,146   24,076   18,813
Noninterest expense             42,108   41,245   39,772   42,797   40,359
Net income                      27,030   26,510   25,207   25,220   25,172
Diluted earnings per share     $  0.59  $  0.58  $  0.55  $  0.54  $  0.54
Return on average equity         19.76%   19.85%   19.14%   18.57%   19.03%
Return on average assets          1.51%    1.52%    1.49%    1.46%    1.45%
Net interest margin               3.88%    3.93%    3.87%    3.94%    3.90%
Efficiency ratio                 49.39%   48.75%   49.88%   50.43%   49.60%
                               -------  -------  -------  -------  -------

Period end shares outstanding   45,385   45,399   45,732   46,065   46,370
Book value per share           $ 11.81  $ 11.83  $ 11.35  $ 11.55  $ 11.56
Dividends declared per share   $  0.25  $  0.25  $  0.24  $  0.24  $  0.22
                               -------  -------  -------  -------  -------

Asset Quality
Unaudited                                    Quarters Ended

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

Nonaccrual loans               $12,206  $11,419  $16,407  $19,197  $22,267
Foreclosed real estate           2,711    2,905    3,270    3,736    4,528
Loans past due 90 days and
 still accruing                 10,386    7,463    4,625    2,658    3,108
                               -------  -------  -------  -------  -------

Nonperforming loans to loans      0.28%    0.27%    0.39%    0.46%    0.53%
Nonperforming assets to loans
 plus foreclosed real estate      0.35%    0.34%    0.47%    0.55%    0.64%
Nonperforming assets plus
 loans past due 90 days to
 loans plus foreclosed real
 estate                           0.59%    0.52%    0.58%    0.62%    0.71%
Reserve for loan losses
 to loans                         1.31%    1.33%    1.35%    1.37%    1.35%
Reserve for loan losses
 to nonperforming loans            461%     493%     343%     295%     255%
                               -------  -------  -------  -------  -------

Provision for loan losses      $ 1,200  $ 1,800  $ 3,150  $ 5,350  $ 3,240
Net loan charge-offs             1,179    1,782    3,624    5,339    3,219
                               -------  -------  -------  -------  -------

Net loan charge-offs to
 average loans                    0.11%    0.17%    0.36%    0.51%    0.30%
                               -------  -------  -------  -------  -------

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

Contact Information

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

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