First Midwest Bancorp
Annual Stockholders Meeting
May 19, 2010
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Michael L. Scudder
President and CEO
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Items Of Business
I. Election of Directors
II. Appointment of Independent Auditors
III. Approval of Amendments to and the Restatement and
Renewal of the Stock and Incentive Plan
Renewal of the Stock and Incentive Plan
IV. Advisory Vote on Executive Compensation
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Matters Of Record
March 26, 2010 Record Date
Certified List of Stockholders
No Stockholder Nominations or Proposals Filed
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Continuing Directors
Serving Until 2011
Serving Until 2011
Thomas M. Garvin
Retired President and CEO
G.G. Products Company
(Food Business Acquirer)
Director Since: 1998
Committee(s): Compensation and
Nominating and
Corporate Governance
Nominating and
Corporate Governance
John E. Rooney
President and CEO
U.S. Cellular Corporation
(Cellular Communications Provider)
Director Since: 2005
Committee(s): Audit
Ellen A. Rudnick
Executive Director
Michael Polsky Center for Entrepreneurship
University of Chicago Booth School of Business
(Graduate School of Business)
Director Since: 2005
Committee(s): Advisory, Audit and
Nominating and
Corporate Governance
Nominating and
Corporate Governance
John F. Chlebowski, Jr.
Retired President and CEO
Lakeshore Operating Partners, LLC
(Bulk Liquid Distribution Firm)
Director Since: 2007
Committee(s): Advisory and Audit
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Continuing Directors
Serving Until 2012
Serving Until 2012
Bruce S. Chelberg
Retired Chairman and CEO
Whitman Corporation
(Diversified Multinational Holding Company)
Director Since: 1989
Committee(s): Advisory, Audit and
Nominating and
Corporate Governance
Nominating and
Corporate Governance
Joseph W. England
Retired Senior Vice President
Deere & Company
(Mobile Power Equipment Manufacturer)
Director Since: 1986
Committee(s): Advisory and Audit
Robert P. O’Meara
Chairman of the Board
First Midwest Bancorp, Inc.
Director Since: 1982
Committee(s): Advisory
Barbara A. Boigegrain
General Secretary and CEO
General Board of Pension and Health Benefits
Of The United Methodist Church
(Pension, Health and Welfare Benefit Trustee
and Administrator)
Director Since: 2008
Committee(s): Audit and Compensation
Thomas J. Schwartz
President and CEO
First Midwest Bank
Director Since: 2008
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Vote For Director Nominees
To Serve Until 2013
To Serve Until 2013
Patrick J. McDonnell
President and CEO
The McDonnell Company LLC
(Business Consulting Company)
Director Since: 2002
Committee(s): Audit and Nominating and
Corporate Governance
Corporate Governance
Michael L. Scudder
President and CEO
First Midwest Bancorp, Inc.
Director Since: 2008
Committee(s): Advisory
Brother James Gaffney, FSC
President
Lewis University
(Independent Private Institution of Higher Education)
Director Since: 1998
Committee(s): Advisory, Compensation,
and Nominating and
Corporate Governance
and Nominating and
Corporate Governance
John L. Sterling
President and Owner
Sterling Lumber Company
(Lumber Distributor)
Director Since: 1998
Committee(s): Compensation
J. Stephen Vanderwoude
Retired Chairman and CEO
Madison River Communications
(Operator of Rural Telephone Companies)
Director Since: 1991
Committee(s): Advisory, Compensation,
and Nominating and
Corporate Governance
and Nominating and
Corporate Governance
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Omnibus Stock and Incentive Plan
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Forward Looking Statements
This presentation may contain, and during this presentation our management may
make statements that may constitute “forward-looking statements” within the
meaning of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are not historical facts but instead represent
only our beliefs regarding future events, many of which, by their nature, are
inherently uncertain and outside our control. Forward-looking statements include,
among other things, statements regarding our financial performance, business
prospects, future growth and operating strategies, objectives and results. Actual
results, performance or developments could differ materially from those expressed
or implied by these forward-looking statements. Important factors that could cause
actual results to differ from those in the forward-looking statements include, among
others, those discussed in our Annual Report on Form 10-K and other reports filed
with the Securities and Exchange Commission, copies of which will be made
available upon request. With the exception of fiscal year end information previously
included in our Annual Report on Form 10-K, the information contained herein is
unaudited. Except as required by law, we undertake no duty to update the contents
of this presentation after the date of this presentation.
make statements that may constitute “forward-looking statements” within the
meaning of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are not historical facts but instead represent
only our beliefs regarding future events, many of which, by their nature, are
inherently uncertain and outside our control. Forward-looking statements include,
among other things, statements regarding our financial performance, business
prospects, future growth and operating strategies, objectives and results. Actual
results, performance or developments could differ materially from those expressed
or implied by these forward-looking statements. Important factors that could cause
actual results to differ from those in the forward-looking statements include, among
others, those discussed in our Annual Report on Form 10-K and other reports filed
with the Securities and Exchange Commission, copies of which will be made
available upon request. With the exception of fiscal year end information previously
included in our Annual Report on Form 10-K, the information contained herein is
unaudited. Except as required by law, we undertake no duty to update the contents
of this presentation after the date of this presentation.
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Non-GAAP Disclaimer
This presentation contains GAAP financial measures and, where management
believes it to be helpful in understanding the Company’s results of operations or
financial position, non-GAAP financial measures. Where non-GAAP financial
measures are used, the most directly comparable GAAP financial measure, as well
as the reconciliation to the most directly comparable GAAP financial measure can
be found in the Company’s current quarter earnings release or Quarterly Report on
Form 10-Q which can be found on the Company’s website at
www.firstmidwest.com/secfilings. Non-GAAP financial measures in this presentation
include pre-tax, pre-provision core operating earnings and pre-tax, pre-provision
return on risk weighted average assets. Both of these measures are useful in
understanding the performance and trends of the Company’s core franchise over
time without respect to investment securities gains/losses, taxes, provisions
expense and OREO losses, each of which can significantly vary from quarter to
quarter, and therefore may distort the Company’s underlying performance.
believes it to be helpful in understanding the Company’s results of operations or
financial position, non-GAAP financial measures. Where non-GAAP financial
measures are used, the most directly comparable GAAP financial measure, as well
as the reconciliation to the most directly comparable GAAP financial measure can
be found in the Company’s current quarter earnings release or Quarterly Report on
Form 10-Q which can be found on the Company’s website at
www.firstmidwest.com/secfilings. Non-GAAP financial measures in this presentation
include pre-tax, pre-provision core operating earnings and pre-tax, pre-provision
return on risk weighted average assets. Both of these measures are useful in
understanding the performance and trends of the Company’s core franchise over
time without respect to investment securities gains/losses, taxes, provisions
expense and OREO losses, each of which can significantly vary from quarter to
quarter, and therefore may distort the Company’s underlying performance.
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Presentation Index
Who We Are
The Operating Environment
Our Performance
Our 2010 Priorities
Closing
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Who We Are
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A Premier Community Bank
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A Premier Bank | Premier Bank For Commercial | Premier Bank For Retail |
$7.6 Billion Assets $5.9 Billion Deposits $5.3 Billion Loans $3.9 Billion Trust/Investment AUM/C 90% Suburban Chicago | 7 Business Lines 25,000 Commercial Relationships 1,600 Trust Relationships 200 Relationship Managers Tenured Sales Force And Market Presence | 225,000 Retail Relationships 1,000 Bankers 96 Offices 8th Largest Distribution Network Suburban MSA* 9th In Suburban MSA Market Share* |
*SNL Market Share data 5/11/10. Suburban defined as Chicago MSA minus City of Chicago
Who We Are
90%
Suburban
Chicago
Suburban
Chicago
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The Operating Environment
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The Environment: What We Expected
Significant Economic Challenges
Credit Quality Under Strain
Elevated Regulatory Activity
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All Creating Operating Headwinds
Employment | Single Family Starts | Housing Prices | Industrial Production | |
12/2007 | 0.6% | (41.1%) | (4.5%) | 1.53% |
12/2008 | (2.1%) | (62.8%) | (14.3%) | (5.84%) |
3/2009 | (3.3%) | (63.6%) | (18.6%) | (11.53%) |
6/2009 | (4.5%) | (60.0%) | (16.73%) | (13.38%) |
9/2009 | (4.9%) | (50.4%) | (10.6%) | (10.8%) |
12/2009 | (4.4%) | (21.6%) | (7.2%) | (6.4%) |
2/2010 | (4.5%) | 15.16% | (3.0%) | (1.1%) |
23
Source: Moody’s economy.com, adversity index
Period Of Economic Challenge
(Chicago MSA)
(Chicago MSA)
Falling Through 2009, Hopeful Signs Of Recovery
05 19 10 8 42
Chicago Metro
Unemployment Remains at
10.9%
10.9%
Unemployment Still High
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Source: Tracey Cross and Associates
Down 85% From Peak
Falling Production Housing Sales
Illiquidity and Lower Valuations Impacted
Credit Performance
Units
Emerging Trends
Positive Signs, But Risk Remains
Positive
Improved Consumer Spending
Stabilizing Housing/Employment
Increased Business Spending
Banking Sector Trends
Negative
Construction Remains Weak,
Stress Moving To Other Areas
Stress Moving To Other Areas
Foreclosure Activity High
Unemployment Still Elevated
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Regulatory Activity
Unprecedented Support
Highly Politicized
Potential For Significant Reform and Change
Regulatory Oversight and Roles (Consumer Protection, FDIC
vs. FRB)
vs. FRB)
Capital Levels (Basel III)
Financial Markets (Derivatives)
75 Major Regulatory Notifications Of Rule Changes
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Our Performance
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We Executed Our 2009 Plan
Proactively Remediated Credit
Prudently Managed Capital
Leveraged Performance To Address Headwinds
Strengthened Core Business
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2009 Performance
Influenced By Historic Severity Of Environment
Weakening Credit Conditions
Illiquid And Falling Real Estate Markets
Warranted Difficult But “Right” Long Term Decisions
Increased Reserves, Strengthened Capital
Aligned Problem Asset Carrying Values
Allocated Resources To Remediation
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2009 Performance
Net Loss Of $ 25.8 Million
Largely Driven By Addressing Asset Quality
Non Performing Assets Of $336 million
Net Charge Offs Of $165 million
Foreclosed Real Estate Losses Of $19 million
Loan Loss Reserves Increased $50 million To 2.78% of Loans
Lessened By Solid Operating Performance
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PTPP Financial Performance(1)
($ in mm’s) | 2009 | 2008 | Change |
PTPP Core Operating Earnings(1) | $131.4 | $153.8 | -15% |
PTPP Return to RWA Average Assets | 2.10% | 2.33% | -10% |
Net Interest Margin | 3.72% | 3.61% | +3% |
Average Earning Assets | $7,282 | $7,440 | -2% |
Loans | $5,203 | $5,360 | -3% |
Average Transactional Deposits | $3,734 | $3,559 | +5% |
Tier 1 Common to RWA | 7.56% | 6.79% | +11% |
PTPP Core Operating Earnings represents income excluding taxes, provision for loan losses, securities gains or losses, the one-time special FDIC assessment in 2008, and losses
realized on other real estate owned.
realized on other real estate owned.
Please refer to the company’s website for a reconcilement to the most directly comparable GAAP financial measure
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Solid PTPP Earnings, Deposit Growth,
Continued Lending And Stronger Capital
1Q10 Financial Performance
($ in mm’s) | 1Q10 | 1Q09 | Change |
Net Income | $8.1 | $5.7 | +41% |
PTPP Core Operating Earnings(1) | $31.6 | $36.7 | -14% |
Net Interest Margin | 4.28% | 3.67% | +61% |
Loan Loss Provision | $18.4 | $48.4 | -62% |
Loans | $5,196 | $5,387 | -4% |
Average Transactional Deposits | $3,917 | $3,439 | +14% |
Tier 1 Common to RWA | 10.81% | 7.04% | +54% |
Continued Core Performance
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PTPP Core Operating Earnings represents income excluding taxes, provision for loan losses, securities gains or losses, and losses realized on other real estate owned.
Please refer to the company’s website for a reconcilement to the most directly comparable GAAP financial measure
05 19 10 8 42
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Source: FMBI based on internal data; peer data from SNL Financial
2009 Chicago Peers based on median of PVTB, OSBC, AMFI, MBHI, WTFC, MBFI, TAYC. (2) 2009 Metro Peers based on median of CBSH, FULT, CFR, SUSQ, VLY, FCF, WTNY, ONB,
AMFI, BOKF, WTFC, MBFI
AMFI, BOKF, WTFC, MBFI
Please refer to the company’s website for a reconcilement to the most directly comparable GAAP financial measure
History of Solid Core Operating
Performance
Performance
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2.09%
1.98%
1.98%
2.13%
1.51%
1.54%
0.75%
1.25%
1.75%
2.25%
2.75%
2006
2007
2008
1Q09
2Q09
3Q09
4Q09
1Q10
Pre-Tax, Pre-Provision Earnings / RWA
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By Addressing Capital And Credit,
Focus Turns To Our Strength: Our Core Business
Stock Price Up 72% Year Over Year
Stock Price Increase | ||
YTD | 1 Yr | |
First Midwest | 40% | 72% |
SNL Bank Index (1) | 22% | 24% |
NASDAQ Bank Index | 25% | 20% |
Source: SNL Financial and FactSet. Market Data as of 4/30/10
(1) All Banks $5-10 billion
Our Performance:
Navigating An Adverse Credit Cycle
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05 19 10 8 42
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~95% In Footprint
Diversified And Granular
Majority With Personal Guarantees
Stress Largely In Construction
C&I
32%
32%
Office, Retail &
Industrial 23%
Industrial 23%
Residential
Construction
& Land 6%
Construction
& Land 6%
Commercial
Construction &
Land 4%
Construction &
Land 4%
Multi-family
6%
6%
Other CRE
16%
16%
Commercial Loans = $4.5bn, 87%
Note: Loan data as of 31-Dec-09. Excludes $223mm of covered assets acquired in First DuPage FDIC-assisted transaction in 4Q09.
Our Loan Portfolio: $5.3 Billion
Reflects Our Markets And Communities
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Consumer
13%
Commercial
87%
05 19 10 8 42
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Asset Remediation
Field Remediation
FTEs: 27
Special Assets
FTEs: 12
Liquidation
FTEs: 10
Accounting / Control
FTEs: 9
58 FTE’s with Senior
Management Oversight
Management Oversight
Significant Focus Driving
Significant Focus Driving
Lower Delinquencies And Problem Assets
Lower Delinquencies And Problem Assets
Investment In Remediation
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05 19 10 8 42
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$153.2
$128.2
$64.2
$50.3
$42.0
$36.0
Delinquency Trends Improving
Remediation Efforts Have Resulted In
Much Greater Control Over Delinquencies
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(in mm’s)
05 19 10 8 42
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Non-Accrual Loans + 90 Days Past Due (in mm’s)
Note: Excludes $223mm of covered assets acquired in First DuPage FDIC-assisted transaction in quarter ended 31-Dec-09.
$164.7
$257.5
$263.3
$262.8
$248.3
$224.1
Stabilizing Problem Assets
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05 19 10 8 42
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Net Charge-Offs (in mm’s)
Note: Excludes $223mm of covered assets acquired in First DuPage FDIC-assisted transaction in quarter ended 31-Dec-09.
$82.5
$31.3
$24.7
$26.3
$18.3
$18.4
Improving Charge Off Levels
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Economic Conditions Still Challenging
Stress Away From Construction
Migrating To Liquidation
While Improved, Credit Challenges
Remain
Remain
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Reviewing Multiple Strategies
Levering Multiple Sources: Appraisers, Consultants,
Market Knowledge
Market Knowledge
Aligning Values
Progress Being Made
Market Liquidity Improving
1Q10 = $28mm in ORE and Problem Loan Sales
Migrating To Liquidation
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Economic Trade Off = Speed Of Disposition
Our Performance
Managing Capital
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05 19 10 8 42
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Source: FMBI based on internal data.
Note: Basis point impact shown on 4Q09 RWA. Impact of equity offering net of 5% underwriting discount.
¹ Annual amount of Tier 1 Common generated based on FMBI’s shares outstanding at the end of each quarter times $0.22 per share.
Steps To Strengthen Capital
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05 19 10 8 42
Solid Capital Foundation
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17.2%
15.2%
13.1%
10.8%
Well Capitalized
Peer Rank | Chicago (1) | 1/6 | 1/6 | 1/6 | 1/6 |
Metro (2) | 5/14 | 1/14 | 2/14 | 2/14 |
2010 Chicago Peers include OSBC, PVTB, MBHI, WTFC, MBFI, TAYC
Metro Peers Include CBSH, MBFI, FULT, CFR, SUSQ, VLY, WTNY, UMPQ, FCF, ONB, CATY, FMER, WTFC, PVTB
Established Market Confidence
Ensures Ability To Meet Our Client Needs
Pursue Remediation Responsibly
Position To Benefit From Market Opportunities
Pursue Repayment Of TARP, As Appropriate
Benefits
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05 19 10 8 42
Capital Considerations
Repayment Of TARP Capital
Received $193 million in December 2008
January 2010 Equity Offering/TARP: 107%
Accepted and Viewed As Insurance
Requires Regulatory Approval
Dividend Restoration
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Influenced By Profitability,
Capital Levels And Credit Improvement
Our Performance
Strengthening Core Business
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Strengthening Our Business
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Our People
Our Delivery
Our Markets
Our People And Our Service
Focus On Communication, Coaching and Accountability
Equates To Higher Engagement: 97%
Greater Client Outreach
16,000 Financial First Aid Kits
1,200 Client Relationship Plans
Increased Customer Satisfaction
Improved Retention: up 13%
Improved Needs Met: up 15%
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Sources: 97% understand our mission 2009 Kenexa Employee Survey and internal account analysis
Client Satisfaction
Nationally Recognized
Provider In Client
Satisfaction
Provider In Client
Satisfaction
Clients Recognize Us For:
Professionalism &
Friendliness
Friendliness
Locations
Products/Services
Our Delivery
Website Redesign
Commercial Account Opening
Upgrading ATM Network
Branch Network Refinement and Efficiency
Call Center Enhancements
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Investment In Our Internet Platform
A Key Element In Today’s Online Banking World
Upgrades Provide For:
Upgrades Provide For:
Easier Navigation
Streamlined Account Opening
Encouraging Results:
34% Increase In Web Usage
115% Increase In Applications
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Strengthening Our Business
Market Opportunities
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05 19 10 8 42
Market Disruption
Environment Creates Opportunities
Within Chicago Market
25 Failures Since Start Of 2009
35 Institutions ($24 Billion) With Texas Ratio > 100%
Well Positioned To Benefit
Strong Reputation: In Marketplace 70+ Years
Tenured Sales Force
Experienced Management
05 19 10 8 42
FDIC Opportunities
Selective Criteria
Insulate From Legacy Remediation
Strategically And Financially Accretive
Ability To Strengthen The Company
Leverages Our Skills
Local Market Knowledge
Integration Experience
Becoming More Competitive
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Acquisition | Date Acq. | Dep | % Core (1) | Lns | Loss Share | # Loc | Pre Tax Gain |
First DuPage | 4Q09 | $229 | 26% | $226 | 80/20 | 1 | $13 |
Peotone Bank And Trust | 2Q10 | $84 | 49% | $56 | 80/20 | 2 | $3 |
Total | $313 | $282 | 3 | $16 |
Acquisitions Made
(1) Defined as total deposits less time deposits
Added To Our Footprint,
Self Funding And Accretive
Our 2010 Priorities
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Shareholder
Value
Value
2010 Plan Priorities
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In Closing
2010: Year Of Opportunity And Challenge
Priorities Centered On The Long Term Interests Of
Our Stockholders
Our Stockholders
Well Positioned To Benefit From A Return To
Economic Stability and Market Focus On Earnings
Strength
Economic Stability and Market Focus On Earnings
Strength
Thank You
Stockholders
Clients
Directors
Officers
Staff
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In First Midwest Bancorp, Inc.
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Questions
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