| News Release | ||||
 | First Midwest Bancorp, Inc. | First Midwest Bancorp, Inc. One Pierce Place, Suite 1500 Itasca, Illinois 60143-9768 (630) 875-7450 www.firstmidwest.com | ||
| FOR IMMEDIATE RELEASE | ||||
CONTACT: | Paul F. Clemens (Investors) EVP and Chief Financial Officer (630) 875-7347 paul.clemens@firstmidwest.com | James M. Roolf (Media) SVP and Corporate Relations Officer (630) 875-7533 jim.roolf@firstmidwest.com | ||
| TRADED: | NASDAQ Global Select Market | |||
| SYMBOL: | FMBI | |||
FIRST MIDWEST BANCORP, INC. ANNOUNCES
2014 FIRST QUARTER RESULTS
EPS Up 20% - Improved Asset Quality -
Strong Loan Growth - Lower Noninterest Expense
ITASCA, IL, April 22, 2014 - Today, First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ NGS: FMBI), the holding company of First Midwest Bank (the "Bank"), reported results of operations and financial condition for the first quarter of 2014. Net income applicable to common shares for the first quarter of 2014 was $17.4 million, or $0.24 per share. This compares to $14.4 million, or $0.20 per share, for the first quarter of 2013 and $18.9 million, or $0.26 per share, for the fourth quarter of 2013.
"Performance for the quarter was solid, reflecting continued progress on a number of our strategic priorities," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Results for the first quarter of 2014 were 20% improved over this same time last year, largely on the strength of diversified business growth, continued improvement in our credit profile, and lower operating overhead. Prior quarter comparisons reflected strong growth in our commercial lending and wealth management businesses, as well as stable net interest margins. However, the positive impact of these benefits was lessened in part by the operating impact of unusually harsh weather conditions in the Midwest."
Mr. Scudder continued, "We continue to deliver on our priorities of growing and diversifying our revenues while maintaining a disciplined risk profile. Loans grew 10% from the prior year quarter reflecting continued commercial sales. Over the same period, wealth management revenues improved 11%, with trust assets under management now standing at over $7 billion."
Mr. Scudder concluded, "Looking ahead, our expectations for continuing economic recovery and the strength of our core deposit funding, asset sensitivity, and capital foundation leave us well positioned to grow and return value to our shareholders."
1
SELECT HIGHLIGHTS
Generating Business Momentum
| • | Grew total loans, excluding covered loans, by 10% from March 31, 2013 and 8% annualized from December 31, 2013. |
| • | Increased earnings per share by 20% compared to the first quarter of 2013. |
| • | Grew wealth management fees by 11% from March 31, 2013 and achieved 12.4% growth in assets under management to over $7 billion. |
| • | Maintained noninterest income at $27 million, consistent with the first and fourth quarters of 2013. |
| • | Maintained net interest margin of 3.61%, consistent with the fourth quarter of 2013. |
| • | Decreased noninterest expense by 2% compared to the first and fourth quarters of 2013, despite comparatively higher weather related occupancy costs of $705,000 and $1.2 million, respectively. |
Improving Credit and Strengthening Capital
| • | Decreased non-performing assets by 27% compared to March 31, 2013 and 12% compared to December 31, 2013. |
| • | Reduced performing potential problem loans by 21% compared to March 31, 2013. |
| • | Recorded annualized net loan charge-offs to average loans, excluding covered loans, of 0.48%, consistent with the full year of 2013. |
| • | Grew Tier 1 common capital to risk-weighted assets to 10.39% as of March 31, 2014, a 77 basis point improvement from March 31, 2013. |
2
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
| Quarters Ended | |||||||||||||||||||||||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | |||||||||||||||||||||||||||||||
| Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||
| Other interest-earning assets | $ | 537,137 | $ | 382 | 0.29 | $ | 610,792 | $ | 448 | 0.29 | $ | 584,170 | $ | 434 | 0.30 | ||||||||||||||||||
| Trading securities | 17,470 | 28 | 0.64 | 16,569 | 72 | 1.74 | 14,357 | 36 | 1.00 | ||||||||||||||||||||||||
Investment securities (1) | 1,167,803 | 10,403 | 3.56 | 1,211,868 | 10,582 | 3.49 | 1,175,063 | 9,940 | 3.38 | ||||||||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 35,161 | 335 | 3.81 | 35,161 | 332 | 3.78 | 47,232 | 339 | 2.87 | ||||||||||||||||||||||||
Loans (1)(2) | 5,722,457 | 61,518 | 4.36 | 5,675,293 | 63,728 | 4.45 | 5,372,034 | 63,450 | 4.79 | ||||||||||||||||||||||||
Total interest-earning assets (1) | 7,480,028 | 72,666 | 3.93 | 7,549,683 | 75,162 | 3.95 | 7,192,856 | 74,199 | 4.18 | ||||||||||||||||||||||||
| Cash and due from banks | 111,500 | 123,128 | 110,073 | ||||||||||||||||||||||||||||||
Allowance for loan and covered loan losses | (86,726 | ) | (91,860 | ) | (99,086 | ) | |||||||||||||||||||||||||||
| Other assets | 777,685 | 793,359 | 867,458 | ||||||||||||||||||||||||||||||
| Total assets | $ | 8,282,487 | $ | 8,374,310 | $ | 8,071,301 | |||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||
| Interest-bearing transaction deposits | $ | 3,652,938 | 792 | 0.09 | $ | 3,678,591 | 788 | 0.08 | $ | 3,503,930 | 892 | 0.10 | |||||||||||||||||||||
| Time deposits | 1,196,449 | 1,805 | 0.61 | 1,234,517 | 1,953 | 0.63 | 1,374,529 | 2,428 | 0.72 | ||||||||||||||||||||||||
| Borrowed funds | 222,491 | 383 | 0.70 | 213,761 | 390 | 0.72 | 199,891 | 442 | 0.90 | ||||||||||||||||||||||||
| Senior and subordinated debt | 190,949 | 3,015 | 6.40 | 207,162 | 3,301 | 6.32 | 214,796 | 3,435 | 6.49 | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,262,827 | 5,995 | 0.46 | 5,334,031 | 6,432 | 0.48 | 5,293,146 | 7,197 | 0.55 | ||||||||||||||||||||||||
| Demand deposits | 1,928,289 | 1,956,570 | 1,740,825 | ||||||||||||||||||||||||||||||
| Total funding sources | 7,191,116 | 7,290,601 | 7,033,971 | ||||||||||||||||||||||||||||||
| Other liabilities | 75,969 | 87,250 | 89,270 | ||||||||||||||||||||||||||||||
| Stockholders’ equity - common | 1,015,402 | 996,459 | 948,060 | ||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 8,282,487 | $ | 8,374,310 | $ | 8,071,301 | |||||||||||||||||||||||||||
Net interest income/margin (1) | $ | 66,671 | 3.61 | $ | 68,730 | 3.62 | $ | 67,002 | 3.77 | ||||||||||||||||||||||||
(1) Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This non-GAAP financial measure assists management in comparing revenue from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income.
(2) This item includes covered interest-earning assets consisting of loans acquired through the Company’s Federal Deposit Insurance Corporation (“FDIC”)-assisted transactions subject to loss sharing agreements and the related FDIC indemnification asset.
For the first quarter of 2014, average interest-earning assets decreased $69.7 million from the fourth quarter of 2013 driven by a decline in other interest-earning assets and investment securities, which was partially offset by growth in the loan portfolio. Compared to the first quarter of 2013, average interest-earning assets rose $287.2 million primarily from loan growth.
The decrease in total interest-bearing liabilities of $71.2 million from the fourth quarter of 2013 resulted from lower levels of time deposits and senior and subordinated debt, in addition to seasonal declines in interest-bearing transaction deposits. Compared to the first quarter of 2013, the reduction in time deposits and senior and subordinated debt more than offset the rise in interest-bearing transaction deposits.
Tax-equivalent net interest margin for the current quarter was 3.61%, remaining stable compared to the fourth quarter of 2013 and decreasing 16 basis points from the first quarter of 2013. Compared to both prior periods, the decline in the yield on loans reflects the continued shift in the loan mix to floating rate loans as well as the decline in higher yielding covered interest earning assets. The $2.1 million decline in net interest income from the linked quarter resulted from two fewer days in the quarter and the shift in the loan mix, which was mitigated by loan growth and an improved funding mix.
3
Noninterest Income Analysis
(Dollar amounts in thousands)
| Quarters Ended | March 31, 2014 Percent Change From | |||||||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | December 31, 2013 | March 31, 2013 | ||||||||||||||
| Service charges on deposit accounts | $ | 8,020 | $ | 9,259 | $ | 8,677 | (13.4 | ) | (7.6 | ) | ||||||||
| Wealth management fees | 6,457 | 6,202 | 5,839 | 4.1 | 10.6 | |||||||||||||
| Card-based fees | 5,335 | 5,517 | 5,076 | (3.3 | ) | 5.1 | ||||||||||||
| Mortgage banking income | 1,115 | 1,055 | 1,966 | 5.7 | (43.3 | ) | ||||||||||||
| Merchant servicing fees | 2,709 | 2,585 | 2,554 | 4.8 | 6.1 | |||||||||||||
| Other service charges, commissions, and fees | 1,413 | 2,094 | 1,646 | (32.5 | ) | (14.2 | ) | |||||||||||
| Total fee-based revenues | 25,049 | 26,712 | 25,758 | (6.2 | ) | (2.8 | ) | |||||||||||
| Net securities gains | 1,073 | 147 | — | N/M | N/M | |||||||||||||
| Other income | 937 | 897 | 781 | 4.5 | 20.0 | |||||||||||||
Net trading gains (1) | 191 | 1,057 | 1,036 | (81.9 | ) | (81.6 | ) | |||||||||||
| Loss on early extinguishment of debt | — | (1,034 | ) | — | N/M | N/M | ||||||||||||
| Total noninterest income | $ | 27,250 | $ | 27,779 | $ | 27,575 | (1.9 | ) | (1.2 | ) | ||||||||
N/M - Not meaningful.
(1) Net trading gains result from changes in the fair value of diversified investment securities held in a grantor trust under deferred compensation agreements and are substantially offset by nonqualified plan expense for each period presented.
Total noninterest income of $27.3 million was consistent with the fourth quarter and first quarter of 2013. For the linked quarters, growth in wealth management fees, mortgage banking income, and merchant servicing fees mitigated decreases in service charges on deposit accounts and fee income generated by sales of capital market products to commercial clients. New customer relationships drove the increase in wealth management fees as trust assets under management increased 5.7% to $7.1 billion compared to the fourth quarter of 2013. Seasonally lower volumes of non-sufficient funds ("NSF") transactions contributed to the decrease in service charges on deposit accounts. Additionally, the Company recorded a pre-tax securities gain of $1.1 million from the sale of a portion of its hedge fund investment.
Compared to the first quarter of 2013, growth in wealth management fees, card-based fees, merchant servicing fees, and net securities gains substantially offset decreases in NSF transactions, mortgage banking income, and fees from sales of capital market products. Wealth management fees grew due to a 12.4% increase in assets under management compared to the first quarter of 2013. During the first quarter of 2013, we sold $54.0 million of 1-4 family mortgage loans in the secondary market compared to $50.8 million in loans sold in the first quarter of 2014. Decreases in market pricing contributed to the decline in mortgage banking income compared to the first quarter of 2013.
4
Noninterest Expense Analysis
(Dollar amounts in thousands)
| Quarters Ended | March 31, 2014 Percent Change From | |||||||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | December 31, 2013 | March 31, 2013 | ||||||||||||||
| Salaries and employee benefits: | ||||||||||||||||||
| Salaries and wages | $ | 27,197 | $ | 27,286 | $ | 27,839 | (0.3 | ) | (2.3 | ) | ||||||||
Nonqualified plan expense (1) | 186 | 1,305 | 1,124 | (85.7 | ) | (83.5 | ) | |||||||||||
| Retirement and other employee benefits | 6,108 | 6,399 | 7,606 | (4.5 | ) | (19.7 | ) | |||||||||||
| Total salaries and employee benefits | 33,491 | 34,990 | 36,569 | (4.3 | ) | (8.4 | ) | |||||||||||
| Net occupancy and equipment expense | 9,391 | 7,910 | 8,147 | 18.7 | 15.3 | |||||||||||||
| Professional services | 5,389 | 5,592 | 5,218 | (3.6 | ) | 3.3 | ||||||||||||
| Technology and related costs | 3,074 | 2,984 | 2,483 | 3.0 | 23.8 | |||||||||||||
| Net OREO expense | 1,556 | 2,815 | 1,799 | (44.7 | ) | (13.5 | ) | |||||||||||
| Advertising and promotions | 1,613 | 2,144 | 1,410 | (24.8 | ) | 14.4 | ||||||||||||
| Merchant card expense | 2,213 | 2,076 | 2,044 | 6.6 | 8.3 | |||||||||||||
| Cardholder expenses | 1,014 | 1,019 | 929 | (0.5 | ) | 9.1 | ||||||||||||
| Other expenses | 5,927 | 5,264 | 6,215 | 12.6 | (4.6 | ) | ||||||||||||
| Total noninterest expense | $ | 63,668 | $ | 64,794 | $ | 64,814 | (1.7 | ) | (1.8 | ) | ||||||||
(1) Nonqualified plan expense results from changes in the Company’s obligation to participants under deferred compensation agreements and is substantially offset by earnings on related assets included in noninterest income.
Total noninterest expense for the first quarter of 2014 decreased nearly 2% compared to the fourth and first quarters of 2013.
The decrease in retirement and other employee benefits expense compared to both prior periods presented was primarily the result of changes to the Company's defined benefit pension plan instituted in the second quarter of 2013, partially offset by an increase in other employee benefit accruals.
Net occupancy and equipment expense rose compared to both prior periods presented due primarily to higher utilities and snow removal costs during the first quarter of 2014.
The decline in net OREO expense from both prior periods was driven by net gains on sales of OREO properties in the first quarter of 2014 compared to net losses on sales. Higher levels of OREO valuation adjustments recorded in the first quarter of 2014 partially offset the positive variance compared to the first quarter of 2013.
Advertising and promotions expense was elevated in the fourth quarter of 2013 due to the timing of certain advertising costs. The rise in advertising and promotions expense in the first quarter of 2014 compared to the first quarter of 2013 reflects our "Bank with Momentum" branding campaign that was launched in the second quarter of 2013.
A $770,000 reduction in the reserve for unfunded commitments in the fourth quarter of 2013 resulted in lower other expenses compared to the first quarter of 2014.
5
LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
| As Of | March 31, 2014 Percent Change From | |||||||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | December 31, 2013 | March 31, 2013 | ||||||||||||||
| Corporate | ||||||||||||||||||
| Commercial and industrial | $ | 1,917,396 | $ | 1,830,638 | $ | 1,659,872 | 4.7 | 15.5 | ||||||||||
| Agricultural | 321,343 | 321,702 | 274,991 | (0.1 | ) | 16.9 | ||||||||||||
| Commercial real estate: | ||||||||||||||||||
| Office | 454,962 | 459,202 | 465,279 | (0.9 | ) | (2.2 | ) | |||||||||||
| Retail | 389,010 | 392,576 | 385,413 | (0.9 | ) | 0.9 | ||||||||||||
| Industrial | 504,122 | 501,907 | 493,564 | 0.4 | 2.1 | |||||||||||||
| Multi-family | 337,332 | 332,873 | 298,117 | 1.3 | 13.2 | |||||||||||||
| Construction | 181,012 | 186,197 | 176,242 | (2.8 | ) | 2.7 | ||||||||||||
| Other commercial real estate | 822,934 | 807,071 | 743,076 | 2.0 | 10.7 | |||||||||||||
| Total commercial real estate | 2,689,372 | 2,679,826 | 2,561,691 | 0.4 | 5.0 | |||||||||||||
| Total corporate loans | 4,928,111 | 4,832,166 | 4,496,554 | 2.0 | 9.6 | |||||||||||||
| Consumer | ||||||||||||||||||
| Home equity | 475,103 | 427,020 | 379,352 | 11.3 | 25.2 | |||||||||||||
| 1-4 family mortgages | 240,561 | 275,992 | 263,286 | (12.8 | ) | (8.6 | ) | |||||||||||
| Installment | 49,315 | 44,827 | 36,079 | 10.0 | 36.7 | |||||||||||||
| Total consumer loans | 764,979 | 747,839 | 678,717 | 2.3 | 12.7 | |||||||||||||
| Total loans, excluding covered loans | 5,693,090 | 5,580,005 | 5,175,271 | 2.0 | 10.0 | |||||||||||||
| Covered loans | 122,387 | 134,355 | 186,687 | (8.9 | ) | (34.4 | ) | |||||||||||
| Total loans | $ | 5,815,477 | $ | 5,714,360 | $ | 5,361,958 | 1.8 | 8.5 | ||||||||||
Total loans, excluding covered loans, of $5.7 billion rose by $113.1 million, or 8.1% on an annualized basis, from December 31, 2013 driven by strong growth in the commercial and industrial, other commercial real estate, and home equity portfolios, which more than offset the decline in the 1-4 family mortgages portfolio. In response to market conditions, the Company purchased $48.7 million of high-quality, shorter duration, floating rate home equity loans and sold $35.4 million of longer-term, fixed rate 1-4 family mortgages in the first quarter of 2014.
Compared to March 31, 2013, total loans, excluding covered loans, increased by 10.0%, or $517.8 million, from growth across the majority of the loan categories.
Overall, the loan portfolio continues to benefit from well-balanced growth reflecting credits of varying size, distributed across our market footprint. The Company experienced strong growth in the commercial and industrial and agricultural loan categories, reflecting the impact of greater resource investments and expansion into certain sector-based lending areas, such as agri-business, asset-based lending, and healthcare.
6
Asset Quality
(Dollar amounts in thousands)
| As Of | March 31, 2014 Percent Change From | |||||||||||||||||
March 31, 2014 | December 31, 2013 | March 31, 2013 | December 31, 2013 | March 31, 2013 | ||||||||||||||
Asset quality, excluding covered loans and covered OREO | ||||||||||||||||||
| Non-accrual loans | $ | 64,217 | $ | 59,798 | $ | 95,397 | 7.4 | (32.7 | ) | |||||||||
| 90 days or more past due loans | 4,973 | 3,708 | 5,552 | 34.1 | (10.4 | ) | ||||||||||||
| Total non-performing loans | 69,190 | 63,506 | 100,949 | 9.0 | (31.5 | ) | ||||||||||||
Accruing troubled debt restructurings (“TDRs”) | 6,301 | 23,770 | 2,587 | (73.5 | ) | N/M | ||||||||||||
| OREO | 30,026 | 32,473 | 39,994 | (7.5 | ) | (24.9 | ) | |||||||||||
| Total non-performing assets | $ | 105,517 | $ | 119,749 | $ | 143,530 | (11.9 | ) | (26.5 | ) | ||||||||
| 30-89 days past due loans | $ | 12,861 | $ | 20,742 | $ | 22,222 | (38.0 | ) | (42.1 | ) | ||||||||
| Performing potential problem loans: | ||||||||||||||||||
| Special mention | $ | 84,908 | $ | 77,564 | $ | 121,041 | 9.5 | (29.9 | ) | |||||||||
| Substandard | 75,096 | 78,390 | 81,624 | (4.2 | ) | (8.0 | ) | |||||||||||
Total performing potential problem loans (1) | $ | 160,004 | $ | 155,954 | $ | 202,665 | 2.6 | (21.1 | ) | |||||||||
| Non-accrual loans to total loans | 1.13 | % | 1.07 | % | 1.84 | % | ||||||||||||
| Non-performing loans to total loans | 1.22 | % | 1.14 | % | 1.95 | % | ||||||||||||
| Non-performing assets to loans plus OREO | 1.84 | % | 2.13 | % | 2.75 | % | ||||||||||||
Performing potential problem loans to total loans (1) | 2.81 | % | 2.79 | % | 3.92 | % | ||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||
| Allowance for loan losses | $ | 69,203 | $ | 72,946 | $ | 85,364 | (5.1 | ) | (18.9 | ) | ||||||||
| Allowance for covered loan losses | 11,429 | 12,559 | 12,227 | (9.0 | ) | (6.5 | ) | |||||||||||
Total allowance for loan and covered loan losses | 80,632 | 85,505 | 97,591 | (5.7 | ) | (17.4 | ) | |||||||||||
| Reserve for unfunded commitments | 1,616 | 1,616 | 2,866 | — | (43.6 | ) | ||||||||||||
| Total allowance for credit losses | $ | 82,248 | $ | 87,121 | $ | 100,457 | (5.6 | ) | (18.1 | ) | ||||||||
Allowance for credit losses to loans, including covered loans | 1.41 | % | 1.52 | % | 1.87 | % | ||||||||||||
| Allowance for credit losses to loans, excluding covered loans | 1.24 | % | 1.34 | % | 1.70 | % | ||||||||||||
Allowance for credit losses to non-accrual loans, excluding covered loans | 110.28 | % | 124.69 | % | 92.49 | % | ||||||||||||
N/M - Not meaningful.
(1) Total performing potential problem loans excludes accruing TDRs of $2.4 million as of March 31, 2014, $2.8 million as of December 31, 2013, and $1.3 million as of March 31, 2013.
Non-accrual loans, excluding covered loans, increased $4.4 million, or 7.4%, from December 31, 2013. This increase was largely driven by a single corporate loan relationship for which a specific reserve was established. Non-performing assets, excluding covered loans, decreased by $14.2 million, or 11.9%, from December 31, 2013, which resulted primarily from lower levels of accruing TDRs and OREO. Two accruing TDRs totaling $18.8 million were returned to performing status in the first quarter of 2014 due to sustained payment performance in accordance with their modified terms, which represent market rates at the time of restructuring.
Performing potential problem loans remained stable compared to the fourth quarter of 2013 and are at pre-recession levels.
Loans 30-89 days past due were $12.9 million at March 31, 2014, decreasing 38.0% from December 31, 2013.
7
Charge-Off Data
(Dollar amounts in thousands)
| Quarters Ended | |||||||||||||||||||
| March 31, 2014 | % of Total | December 31, 2013 | % of Total | March 31, 2013 | % of Total | ||||||||||||||
Net loan charge-offs (1): | |||||||||||||||||||
| Commercial and industrial | $ | 1,367 | 20.5 | $ | 2,528 | 50.0 | $ | 996 | 14.6 | ||||||||||
| Agricultural | 153 | 2.3 | (58 | ) | (1.1 | ) | 90 | 1.3 | |||||||||||
| Office, retail, and industrial | 1,025 | 15.4 | 882 | 17.4 | 1,260 | 18.5 | |||||||||||||
| Multi-family | 89 | 1.3 | (10 | ) | (0.2 | ) | 160 | 2.3 | |||||||||||
| Construction | 503 | 7.6 | (934 | ) | (18.5 | ) | 563 | 8.3 | |||||||||||
| Other commercial real estate | 1,627 | 24.5 | 776 | 15.4 | 1,505 | 22.0 | |||||||||||||
| Consumer | 1,890 | 28.4 | 1,868 | 37.0 | 2,257 | 33.0 | |||||||||||||
Net loan charge-offs, excluding covered loans | 6,654 | 100.0 | 5,052 | 100.0 | 6,831 | 100.0 | |||||||||||||
Net covered loan charge-offs (1) | (340 | ) | 271 | 698 | |||||||||||||||
| Total net loan charge-offs | $ | 6,314 | $ | 5,323 | $ | 7,529 | |||||||||||||
Net loan charge-offs to average loans, excluding covered loans, annualized: | |||||||||||||||||||
| Quarter-to-date | 0.48 | % | 0.36 | % | 0.54 | % | |||||||||||||
| Year-to-date | 0.48 | % | 0.48 | % | 0.54 | % | |||||||||||||
(1) Amounts represent charge-offs, net of recoveries.
Year-to-date, annualized net loan charge-offs to average loans, excluding covered loans, remained consistent at 0.48% compared to the full year of 2013 and decreased 11% compared to the first quarter of 2013.
8
CAPITAL MANAGEMENT
Capital Ratios
(Dollar amounts in thousands)
March 31, 2014 | December 31, 2013 | March 31, 2013 | Regulatory Minimum For “Well- Capitalized” | Excess Over Required Minimums at March 31, 2014 | |||||||||||||||
| Regulatory capital ratios: | |||||||||||||||||||
Total capital to risk-weighted assets | 12.20 | % | 12.39 | % | 12.05 | % | 10.00 | % | 22 | % | $ | 153,885 | |||||||
Tier 1 capital to risk-weighted assets | 10.92 | % | 10.91 | % | 10.55 | % | 6.00 | % | 82 | % | $ | 343,176 | |||||||
| Tier 1 leverage to average assets | 9.53 | % | 9.18 | % | 8.75 | % | 5.00 | % | 91 | % | $ | 362,356 | |||||||
Tier 1 common capital to risk-weighted assets (1) | 10.39 | % | 10.37 | % | 9.62 | % | N/A | N/A | N/A | ||||||||||
Tangible common equity ratios (2): | |||||||||||||||||||
Tangible common equity to tangible assets | 9.25 | % | 9.09 | % | 8.66 | % | N/A | N/A | N/A | ||||||||||
Tangible common equity, excluding other comprehensive loss, to tangible assets | 9.49 | % | 9.43 | % | 8.88 | % | N/A | N/A | N/A | ||||||||||
Tangible common equity to risk-weighted assets | 10.67 | % | 10.67 | % | 10.52 | % | N/A | N/A | N/A | ||||||||||
Non-performing assets to tangible common equity and allowance for credit losses | 12.76 | % | 14.74 | % | 18.55 | % | N/A | N/A | N/A | ||||||||||
N/A - Ratio is not subject to formal Federal Reserve regulatory guidance.
(1) Excludes the impact of trust-preferred securities.
(2) Tangible common equity (“TCE”) represents common stockholders’ equity less goodwill and identifiable intangible assets. In management’s view, Tier 1 common capital and TCE measures are meaningful to the Company, as well as analysts and investors, in assessing the Company’s use of equity and in facilitating comparisons with competitors.
The slight decline in the total capital to risk-weighted assets ratio compared to December 31, 2013 was due to an increase in risk-weighted assets resulting from loan growth, which more than offset the increase in total capital from earnings for the first quarter of 2014 and the increase in allowable deferred tax assets. The tier 1 leverage to average assets ratio increased 35 basis points from December 31, 2013 driven by strong earnings, the increase in allowable deferred tax assets, and a reduction in average assets. The Company’s regulatory ratios exceeded all regulatory mandated ratios for characterization as “well-capitalized” as of March 31, 2014.
9
About the Company
First Midwest is the premier relationship-based financial institution in the dynamic Chicagoland banking market. As one of Illinois' largest independent bank holding companies, First Midwest provides a full range of business and retail banking and wealth management services through approximately 90 banking offices located in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. The Company website is www.firstmidwest.com.
Safe Harbor Statement
This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company’s beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that actual results and the Company’s financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company’s future results, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management’s best judgment as of the date hereof based on currently available information. The Company undertakes no duty to update any forward-looking statements contained in this press release after the date hereof.
Conference Call
A conference call to discuss the Company’s results, outlook, and related matters will be held on Wednesday, April 23, 2014 at 10:00 AM (ET). Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. domestic) or (412) 317-6016 (international) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company’s website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company’s website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international) conference I.D. 10043720 beginning one hour after completion of the live call until 9:00 A.M. (ET) on April 30, 2014. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.
| Accompanying Financial Statements and Tables |
| Accompanying this press release is the following unaudited financial information: |
·Condensed Consolidated Statements of Financial Condition ·Condensed Consolidated Statements of Income |
Press Release and Additional Information Available on Website
This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information are available through the “Investor Relations” section of First Midwest’s website at www.firstmidwest.com/investorrelations.
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Condensed Consolidated Statements of Financial Condition
Unaudited
(Amounts in thousands)
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 198,544 | $ | 110,417 | $ | 95,983 | ||||||
| Interest-bearing deposits in other banks | 393,768 | 476,824 | 457,333 | |||||||||
| Trading securities, at fair value | 17,774 | 17,317 | 15,544 | |||||||||
| Securities available-for-sale, at fair value | 1,080,750 | 1,112,725 | 1,246,679 | |||||||||
| Securities held-to-maturity, at amortized cost | 43,251 | 44,322 | 31,443 | |||||||||
| Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 35,161 | 35,161 | 47,232 | |||||||||
| Loans, excluding covered loans | 5,693,090 | 5,580,005 | 5,175,271 | |||||||||
| Covered loans | 122,387 | 134,355 | 186,687 | |||||||||
| Allowance for loan and covered loan losses | (80,632 | ) | (85,505 | ) | (97,591 | ) | ||||||
| Net loans | 5,734,845 | 5,628,855 | 5,264,367 | |||||||||
| OREO, excluding covered OREO | 30,026 | 32,473 | 39,994 | |||||||||
| Covered OREO | 7,355 | 8,863 | 14,774 | |||||||||
| FDIC indemnification asset | 15,537 | 16,585 | 28,958 | |||||||||
| Premises, furniture, and equipment | 119,219 | 120,204 | 118,617 | |||||||||
| Investment in BOLI | 193,673 | 193,167 | 206,706 | |||||||||
| Goodwill and other intangible assets | 275,605 | 276,366 | 280,240 | |||||||||
| Accrued interest receivable and other assets | 183,011 | 180,128 | 207,949 | |||||||||
| Total assets | $ | 8,328,519 | $ | 8,253,407 | $ | 8,055,819 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Noninterest-bearing deposits | $ | 1,961,371 | $ | 1,911,602 | $ | 1,738,110 | ||||||
| Interest-bearing deposits | 4,855,386 | 4,854,499 | 4,862,685 | |||||||||
| Total deposits | 6,816,757 | 6,766,101 | 6,600,795 | |||||||||
| Borrowed funds | 223,699 | 224,342 | 208,854 | |||||||||
| Senior and subordinated debt | 190,964 | 190,932 | 214,811 | |||||||||
| Accrued interest payable and other liabilities | 76,674 | 70,590 | 77,908 | |||||||||
| Total liabilities | 7,308,094 | 7,251,965 | 7,102,368 | |||||||||
| Common stock | 858 | 858 | 858 | |||||||||
| Additional paid-in capital | 406,009 | 414,293 | 409,077 | |||||||||
| Retained earnings | 866,132 | 853,740 | 800,343 | |||||||||
| Accumulated other comprehensive loss, net of tax | (19,772 | ) | (26,792 | ) | (16,889 | ) | ||||||
| Treasury stock, at cost | (232,802 | ) | (240,657 | ) | (239,938 | ) | ||||||
| Total stockholders’ equity | 1,020,425 | 1,001,442 | 953,451 | |||||||||
| Total liabilities and stockholders’ equity | $ | 8,328,519 | $ | 8,253,407 | $ | 8,055,819 | ||||||
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Condensed Consolidated Statements of Income
Unaudited
(Amounts in thousands, except per share data)
| Quarters Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| Interest Income | ||||||||||||
| Loans, excluding covered loans | $ | 59,002 | $ | 60,068 | $ | 59,431 | ||||||
| Covered loans | 1,938 | 3,062 | 3,449 | |||||||||
| Investment securities | 8,005 | 8,138 | 7,356 | |||||||||
| Other short-term investments | 745 | 852 | 809 | |||||||||
| Total interest income | 69,690 | 72,120 | 71,045 | |||||||||
| Interest Expense | ||||||||||||
| Deposits | 2,597 | 2,741 | 3,320 | |||||||||
| Borrowed funds | 383 | 390 | 442 | |||||||||
| Senior and subordinated debt | 3,015 | 3,301 | 3,435 | |||||||||
| Total interest expense | 5,995 | 6,432 | 7,197 | |||||||||
| Net interest income | 63,695 | 65,688 | 63,848 | |||||||||
| Provision for loan and covered loan losses | 1,441 | — | 5,674 | |||||||||
| Net interest income after provision for loan and covered loan losses | 62,254 | 65,688 | 58,174 | |||||||||
| Noninterest Income | ||||||||||||
| Service charges on deposit accounts | 8,020 | 9,259 | 8,677 | |||||||||
| Wealth management fees | 6,457 | 6,202 | 5,839 | |||||||||
| Card-based fees | 5,335 | 5,517 | 5,076 | |||||||||
| Mortgage banking income | 1,115 | 1,055 | 1,966 | |||||||||
| Other service charges, commissions, and fees | 4,122 | 4,679 | 4,200 | |||||||||
| Net securities gains | 1,073 | 147 | — | |||||||||
| Other income | 1,128 | 920 | 1,817 | |||||||||
| Total noninterest income | 27,250 | 27,779 | 27,575 | |||||||||
| Noninterest Expense | ||||||||||||
| Salaries and employee benefits | 33,491 | 34,990 | 36,569 | |||||||||
| Net occupancy and equipment expense | 9,391 | 7,910 | 8,147 | |||||||||
| Professional services | 5,389 | 5,592 | 5,218 | |||||||||
| Technology and related costs | 3,074 | 2,984 | 2,483 | |||||||||
| Net OREO expense | 1,556 | 2,815 | 1,799 | |||||||||
| Other expenses | 10,767 | 10,503 | 10,598 | |||||||||
| Total noninterest expense | 63,668 | 64,794 | 64,814 | |||||||||
| Income before income tax expense | 25,836 | 28,673 | 20,935 | |||||||||
| Income tax expense | 8,172 | 9,508 | 6,293 | |||||||||
| Net income | 17,664 | 19,165 | 14,642 | |||||||||
| Net income applicable to non-vested restricted shares | (225 | ) | (260 | ) | (212 | ) | ||||||
| Net income applicable to common shares | $ | 17,439 | $ | 18,905 | $ | 14,430 | ||||||
| Diluted earnings per common share | $ | 0.24 | $ | 0.26 | $ | 0.20 | ||||||
| Dividends declared per common share | $ | 0.07 | $ | 0.07 | $ | 0.01 | ||||||
| Weighted average diluted common shares outstanding | 74,159 | 74,042 | 73,874 | |||||||||
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