Exhibit 99.1
News Release | ||||||
![]() | First Midwest Bancorp, Inc. |
First Midwest Bancorp, Inc. One Pierce Place, Suite 1500 Itasca, Illinois 60143 (630) 875-7450 | ||||
FOR IMMEDIATE RELEASE | CONTACT: | Paul F. Clemens | ||||
Chief Financial Officer | ||||||
(630) 875-7347 | ||||||
TRADED: | NASDAQ Global Select Market | www.firstmidwest.com | ||||
SYMBOL: | FMBI |
FIRST MIDWEST BANCORP, INC. ANNOUNCES 2011
FIRST QUARTER RESULTS
Improved Earnings and Credit Metrics—Strong Capital and Liquidity
Operating Performance
• | Net income applicable to common shares of $7.5 million, or $0.10 per share, for first quarter 2011 compared to $5.4 million, or $0.08 per share, for first quarter 2010. |
• | Net interest margin of 4.15% for first quarter 2011, up 13 basis points from 4.02% for fourth quarter 2010. |
• | Commercial and industrial loan growth of 1.9%, or 7.6% annualized, for first quarter 2011. |
• | Average core transactional deposits of $4.5 billion for first quarter 2011 up $611.1 million, or 15.6%, from first quarter 2010. |
Credit and Capital
• | Non-performing assets reduced $29.7 million, or 11.0%, from December 31, 2010 and $52.0 million, or 17.8% from March 31, 2010. |
• | Allowance for credit losses to non-performing loans increased to 76% at March 31, 2011 compared to 67% at December 31, 2010 and 65% at March 31, 2010. |
• | Tier 1 common capital to risk-weighted assets of 9.88% as of March 31, 2011, up 16 basis points from 9.72% as of December 31, 2010. |
• | Tangible common equity to tangible assets of 8.26% as of March 31, 2011, up 27 basis points from 7.99% as of December 31, 2010. |
ITASCA, IL, April 27, 2011 – Today First Midwest Bancorp, Inc. (the “Company” or “First Midwest”)(NASDAQ NGS: FMBI), the holding company of First Midwest Bank, reported results of operations and financial condition for first quarter 2011. Net income for the quarter was $10.2 million, before adjustments for preferred dividends and non-vested restricted shares, with net income of $7.5 million, or $0.10 per share, applicable to common shareholders after such adjustments. This compares to net income of $8.1 million and net income applicable to common shareholders of $5.4 million, or $0.08 per share, for first quarter 2010.
SUMMARY UPDATE
“Operating performance for the quarter was encouraging and reflected the continued execution of our business priorities,” said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. “The quarter reflected notable improvement in overall earnings, credit, and capital metrics, as well as lower loan loss provisioning. Our core earnings continue to remain solid, reflecting the seasonality typically experienced in the first quarter, as well as improvement in margins, increased trust and investment advisory fees, and a pickup in our commercial loan activity.”
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Mr. Scudder further commented, “Economic conditions remain challenging but appear to be slowly improving, with the pace of improvement closely tied to housing market recovery and employment. We remain focused on the proactive remediation of problem assets, continued investment in and expansion of our core business, and the prudent management of our capital. Our solid market presence and client-centered sales approach, enabled by our strong liquidity and capital position, leave us well positioned to benefit as the markets continue to recover, operating conditions stabilize, and demand for credit grows.”
In closing, Mr. Scudder said, “We were very proud to receive the recent news that First Midwest Bank ranked highest in the Midwest for Customer Satisfaction in the J.D. Power and Associates 2011 Retail Banking Satisfaction StudySM. Such recognition is testament not only to the relationship we strive to maintain with all of our clients but also the exceptional employees of First Midwest.”
OPERATING PERFORMANCE
Performance Highlights
(Dollar amounts in thousands, except per share data)
Quarters Ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Operating Performance | ||||||||||||
Net income (loss) | $ | 10,218 | $ | (28,159 | ) | $ | 8,081 | |||||
Net income (loss) applicable to common shares | 7,497 | (30,327 | ) | 5,428 | ||||||||
Diluted earnings (loss) per common share | $ | 0.10 | $ | (0.41 | ) | $ | 0.08 | |||||
Return on average common equity | 3.27 | % | (12.49 | %) | 2.38 | % | ||||||
Return on average assets | 0.51 | % | (1.34 | %) | 0.43 | % | ||||||
Pre-tax, pre-provision core operating earnings | $ | 31,427 | 34,998 | 31,737 | ||||||||
Net interest margin | 4.15 | % | 4.02 | % | 4.28 | % | ||||||
Efficiency ratio | 62.40 | % | 59.08 | % | 58.41 | % | ||||||
Credit, Capital, and Other | ||||||||||||
Loans, including covered loans | $ | 5,447,900 | $ | 5,475,200 | $ | 5,340,243 | ||||||
Average core transactional deposits(1) | $ | 4,527,937 | $ | 4,590,489 | $ | 3,916,804 | ||||||
Non-performing assets(2) | $ | 239,777 | $ | 269,466 | $ | 291,801 | ||||||
Tier 1 common capital to risk-weighted assets | 9.88 | % | 9.72 | % | 10.81 | % | ||||||
Tangible common equity to tangible assets | 8.26 | % | 7.99 | % | 9.17 | % |
(1) | Includes average demand deposits and average interest-bearing transactional deposits. |
(2) | Excluding covered loans and covered other real estate owned, which were acquired through transactions with the Federal Deposit Insurance Corporation (“FDIC”) and are subject to loss sharing agreements with the FDIC whereby the Company is indemnified against the majority of any losses incurred related to these assets. |
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Pre-Tax, Pre-Provision Core Operating Earnings(1)
(Dollar amounts in thousands)
Quarters Ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Income (loss) before income tax | $ | 10,248 | $ | (53,225 | ) | $ | 8,436 | |||||
Provision for loan losses | 19,492 | 73,897 | 18,350 | |||||||||
Pre-tax, pre-provision earnings | 29,740 | 20,672 | 26,786 | |||||||||
Non-Operating Items | ||||||||||||
Securities gains, net | 540 | 1,662 | 3,057 | |||||||||
Losses on sales and write-downs of other real estate owned (“OREO”) | (2,227 | ) | (15,412 | ) | (7,879 | ) | ||||||
Integration costs associated with Federal Deposit Insurance Corporation (“FDIC”)-assisted acquisitions | — | (576 | ) | (129 | ) | |||||||
Total non-operating items | (1,687 | ) | (14,326 | ) | (4,951 | ) | ||||||
Pre-tax, pre-provision core operating earnings(1) | $ | 31,427 | $ | 34,998 | $ | 31,737 | ||||||
(1) | The Company’s accounting and reporting policies conform to U.S. generally accepted accounting principles (“GAAP”) and general practice within the banking industry. As a supplement to GAAP, the Company has provided this non-GAAP performance result. The Company believes that this non-GAAP financial measure is useful because it allows investors to assess the Company’s operating performance. Although this non-GAAP financial measure is intended to enhance investors’ understanding of the Company’s business and performance, this non-GAAP financial measure should not be considered an alternative to GAAP. |
The decline in core operating earnings from fourth quarter 2010 resulted from lower net interest income, primarily due to lower average interest-earning assets, and seasonal changes in noninterest income and expense. First quarter 2011 was relatively unchanged compared to first quarter 2010, as higher net interest income offset higher noninterest expense, excluding losses recognized on OREO. Further discussion of noninterest income and expense is presented in later sections.
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Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
Quarters Ended | ||||||||||||||||||||||||||||||||||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||
Average Balance | Interest | Yield/ Rate (%) | Average Balance | Interest | Yield/ Rate (%) | Average Balance | Interest | Yield/ Rate (%) | ||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold and other short-term investments investments | $ | 483,252 | $ | 322 | 0.27 | $ | 609,391 | $ | 485 | 0.32 | $ | 55,275 | 57 | 0.42 | ||||||||||||||||||||||||||||||
Investment securities(1) | 1,166,991 | 13,048 | 4.47 | 1,139,127 | 13,568 | 4.76 | 1,298,832 | 17,879 | 5.51 | |||||||||||||||||||||||||||||||||||
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank stock | 61,338 | 357 | 2.33 | 61,703 | 347 | 2.25 | 58,495 | 328 | 2.24 | |||||||||||||||||||||||||||||||||||
Loans, excluding covered loans(1) | 5,075,840 | 63,301 | 5.06 | 5,155,416 | 64,387 | 4.95 | 5,197,499 | 64,805 | 5.06 | |||||||||||||||||||||||||||||||||||
Covered interest-earning assets(2) | 444,242 | 7,822 | 7.14 | 480,612 | 7,431 | 6.13 | 208,663 | 2,962 | 5.76 | |||||||||||||||||||||||||||||||||||
Total loans | 5,520,082 | 71,123 | 5.23 | 5,636,028 | 71,818 | 5.06 | 5,406,162 | 67,767 | 5.08 | |||||||||||||||||||||||||||||||||||
Total interest-earning assets (1) | 7,231,663 | 84,850 | 4.75 | 7,446,249 | 86,218 | 4.60 | 6,818,764 | 86,031 | 5.10 | |||||||||||||||||||||||||||||||||||
Cash and due from banks | 121,494 | 128,919 | 112,437 | |||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | (148,051 | ) | (157,145 | ) | (152,487 | ) | ||||||||||||||||||||||||||||||||||||||
Other assets | 889,845 | 896,611 | 887,067 | |||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 8,094,951 | $ | 8,314,634 | $ | 7,665,781 | ||||||||||||||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | ||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing transaction deposits | $ | 3,185,924 | 1,656 | 0.21 | $ | 3,242,301 | 1,930 | 0.23 | $ | 2,792,484 | 2,911 | 0.42 | ||||||||||||||||||||||||||||||||
Time deposits | 1,937,890 | 6,015 | 1.26 | 2,069,389 | 5,977 | 1.15 | 1,956,745 | 7,634 | 1.58 | |||||||||||||||||||||||||||||||||||
Borrowed funds | 285,847 | 680 | 0.96 | 281,050 | 711 | 1.00 | 477,323 | 1,010 | 0.86 | |||||||||||||||||||||||||||||||||||
Subordinated debt | 137,745 | 2,286 | 6.73 | 137,743 | 2,279 | 6.56 | 137,736 | 2,286 | 6.73 | |||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 5,547,406 | 10,637 | 0.78 | 5,730,483 | 10,897 | 0.75 | 5,364,288 | 13,841 | 1.05 | |||||||||||||||||||||||||||||||||||
Demand deposits | 1,342,013 | 1,348,188 | 1,124,320 | |||||||||||||||||||||||||||||||||||||||||
Total funding sources | 6,889,419 | 7,078,671 | 6,488,608 | |||||||||||||||||||||||||||||||||||||||||
Other liabilities | 83,217 | 79,700 | 57,307 | |||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity - common | 929,315 | 963,263 | 926,866 | |||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity - preferred | 193,000 | 193,000 | 193,000 | |||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 8,094,951 | $ | 8,314,634 | $ | 7,665,781 | ||||||||||||||||||||||||||||||||||||||
Net interest income/margin(1) | $ | 74,213 | 4.15 | $ | 75,321 | 4.02 | $ | 72,190 | 4.28 | |||||||||||||||||||||||||||||||||||
(1) | Interest income and yields are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. |
(2) | Covered interest-earning assets consist of loans acquired through the Company’s FDIC-assisted transactions and the related FDIC indemnification asset. |
Average interest-earning assets for first quarter 2011 decreased $214.6 million, or 2.9%, from fourth quarter 2010. The quarter-over-quarter decrease in average interest-earning assets was driven by remediation of non-performing loans and a reduction in average short-term investments.
Average interest-earning assets for first quarter 2011 rose $412.9 million, or 6.1%, from first quarter 2010. This increase was due primarily to the addition of covered interest-earning assets and the investment of deposits acquired in the Company’s FDIC-assisted transactions, partially offset by remediation of non-performing loans.
Average funding sources for first quarter 2011 declined $189.3 million, or 2.7%, from fourth quarter 2010. The reduction in core transactional deposits from fourth quarter 2010 to first quarter 2011 resulted from seasonal declines in public funds balances.
Average funding sources increased $400.8 million, or 6.2%, from first quarter 2010 to first quarter 2011. The growth during this period resulted from a $217.7 million, or 19.4%, rise in average demand deposits and a $393.4 million, or 14.1%, increase in average interest-bearing transactional deposits (collectively core transactional deposits). The addition of core transactional deposits reflected ongoing sales efforts, customers’ liquidity preferences in today’s low interest rate environment, and the acquisition of deposits through the Company’s FDIC-assisted transactions. This increase was partially offset by a decline in more expensive short-term borrowings.
Interest earned on covered loans is generally recognized through the accretion of the discount taken on expected future cash flows. The Company realized actual cash flows in excess of estimates on certain loans of $954,000 for first quarter 2011 and
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$629,000 in fourth quarter 2010. This additional income is included in interest on covered interest-earning assets in the table above and increased net interest margin by 5 basis points for first quarter 2011 and 3 basis points for fourth quarter 2010.
Noninterest Income Analysis
(Dollar amounts in thousands)
Quarters Ended | March 31, 2011 Percent Change From | |||||||||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | December 31, 2010 | March 31, 2010 | ||||||||||||||||
Service charges on deposit accounts | $ | 8,144 | $ | 9,202 | $ | 8,381 | (11.5 | ) | (2.8 | ) | ||||||||||
Trust and investment advisory fees | 4,116 | 4,040 | 3,593 | 1.9 | 14.6 | |||||||||||||||
Other service charges, commissions, and fees | 4,914 | 4,506 | 4,172 | 9.1 | 17.8 | |||||||||||||||
Card-based fees | 4,529 | 4,640 | 3,893 | (2.4 | ) | 16.3 | ||||||||||||||
Total fee-based revenues | 21,703 | 22,388 | 20,039 | (3.1 | ) | 8.3 | ||||||||||||||
Bank owned life insurance income | 252 | 696 | 248 | (63.8 | ) | 1.6 | ||||||||||||||
Other income | 978 | 451 | 516 | 116.9 | 89.5 | |||||||||||||||
Total operating revenues | 22,933 | 23,535 | 20,803 | (2.6 | ) | 10.2 | ||||||||||||||
Trading gains, net | 744 | 970 | 461 | (23.3 | ) | 61.4 | ||||||||||||||
Gains on securities sales, net | 540 | 1,718 | 5,820 | (68.6 | ) | (90.7 | ) | |||||||||||||
Securities impairment losses | — | (56 | ) | (2,763 | ) | (100.0 | ) | (100.0 | ) | |||||||||||
Total noninterest income | $ | 24,217 | $ | 26,167 | $ | 24,321 | (7.5 | ) | (0.4 | ) | ||||||||||
Fee-based revenues for first quarter 2011 declined 3.1% from fourth quarter 2010 and rose 8.3% compared to first quarter 2010. The reduction from fourth quarter 2010 to first quarter 2011 was attributed to an 11.5% decline in service charges on deposits partially offset by a 9.1% increase in other service charges, commissions, and fees (primarily merchant fee income). The decline in service charges from fourth quarter 2010 was due primarily to lower overdraft occurrences by customers as well as normal seasonality.
For first quarter 2011 compared to first quarter 2010, there were increases in all categories of operating revenues except for service charges on deposits.
An increase in trust assets under management drove the increase in trust and investment advisory fees from first quarter 2010 to first quarter 2011. During this period, trust assets under management increased 14.7% from $4.0 billion to $4.6 billion. Approximately $500 million of this increase was derived equally from sales efforts and improving market values with the remaining $100 million increase resulting from the addition of managed assets acquired in an FDIC-assisted transaction.
Increased merchant fees led the increase in other service charges, commissions, and fees for both prior periods presented. The year-over-year increase in merchant fees was due primarily to a 25% volume increase resulting from customers acquired in an FDIC-assisted transaction. The increase in card-based fees from first quarter 2010 to first quarter 2011 was attributed to both volume and transaction rates.
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Noninterest Expense Analysis
(Dollar amounts in thousands)
Quarters Ended | March 31, 2011 Percent Change From | |||||||||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | December 31, 2010 | March 31, 2010 | ||||||||||||||||
Salaries and employee benefits | $ | 32,523 | $ | 31,028 | $ | 26,884 | 4.8 | 21.0 | ||||||||||||
OREO expense, net: | ||||||||||||||||||||
Write-downs of OREO | 1,112 | 11,957 | 2,338 | (90.7 | ) | (52.4 | ) | |||||||||||||
Losses on the sales of OREO, net | 1,115 | 3,455 | 5,541 | (67.7 | ) | (79.9 | ) | |||||||||||||
OREO operating expense, net | 1,704 | 2,408 | 2,908 | (29.2 | ) | (41.4 | ) | |||||||||||||
Total OREO expense | 3,931 | 17,820 | 10,787 | (77.9 | ) | (63.6 | ) | |||||||||||||
Loan remediation costs | 2,848 | 2,330 | 3,224 | 22.2 | (11.7 | ) | ||||||||||||||
Other professional services | 2,271 | 2,194 | 3,316 | 3.5 | (31.5 | ) | ||||||||||||||
Total professional services | 5,119 | 4,524 | 6,540 | 13.2 | (21.7 | ) | ||||||||||||||
FDIC premiums | 2,725 | 2,967 | 2,532 | (8.2 | ) | 7.6 | ||||||||||||||
Net occupancy and equipment expense | 9,103 | 7,916 | 8,168 | 15.0 | 11.4 | |||||||||||||||
Technology and related costs | 2,623 | 3,209 | 2,483 | (18.3 | ) | 5.6 | ||||||||||||||
Advertising and promotions | 1,079 | 1,637 | 1,059 | (34.1 | ) | 1.9 | ||||||||||||||
Other expenses | 8,020 | 7,973 | 7,020 | 0.6 | 14.2 | |||||||||||||||
Total noninterest expense | $ | 65,123 | $ | 77,074 | $ | 65,473 | (15.5 | ) | (0.5 | ) | ||||||||||
Total noninterest expense, excluding losses recognized on OREO | $ | 62,896 | $ | 61,662 | $ | 59,594 | 2.0 | 5.5 |
Total noninterest expense for first quarter 2011 decreased 15.5% from fourth quarter 2010 and was relatively flat from first quarter 2010. The majority of the increase in salaries and employee benefits from fourth quarter 2010 resulted from annual merit increases and increased benefit costs. The increase from first quarter 2010 to first quarter 2011 was impacted by the timing of certain benefit accruals, as well as annual merit increases and an increase in overall staffing levels, including additional staff employed through the Company’s FDIC-assisted transactions.
OREO expenses were elevated in 2010 due to higher levels of write-downs and losses on sales of OREO and related operating expenses.
An increase in the rates charged for property taxes as well as property taxes associated with branches acquired through the Company’s FDIC-assisted transactions resulted in an increase in net occupancy and equipment expense from both prior periods. In addition, in fourth quarter 2010, the Company received a refund for prior years’ property taxes based on an appeal of assessed property values.
Income Taxes
Income tax expense decreased from first quarter 2010 to first quarter 2011. Effective January 1, 2011, the Illinois corporate income tax rate increased from 7.3% to 9.5%. As a result of this rate change, the Company recorded a $1.6 million state tax benefit related to the write-up of state deferred tax assets. This benefit was offset, in part, by a $108,000 increase in first quarter 2011 income tax expense related to the rate increase. The rate increase is expected to result in an approximately 1% increase to the Company’s effective income tax rate in 2011.
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LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
As Of | March 31, 2011 Percent Change From | |||||||||||||||||||||||
March 31, 2011 | % of Total | December 31, 2010 | March 31, 2010 | December 31, 2010 | March 31, 2010 | |||||||||||||||||||
Corporate: | ||||||||||||||||||||||||
Commercial and industrial | $ | 1,493,465 | 29.2 | % | $ | 1,465,903 | $ | 1,454,714 | 1.9 | 2.7 | ||||||||||||||
Agricultural and farmland | 234,898 | 4.6 | % | 227,756 | 200,527 | 3.1 | 17.1 | |||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Office | 412,256 | 8.1 | % | 396,836 | 396,749 | 3.9 | 3.9 | |||||||||||||||||
Retail | 320,313 | 6.3 | % | 328,751 | 346,218 | (2.6 | ) | (7.5 | ) | |||||||||||||||
Industrial | 473,311 | 9.3 | % | 478,026 | 496,616 | (1.0 | ) | (4.7 | ) | |||||||||||||||
Multi-family | 344,645 | 6.8 | % | 349,862 | 348,178 | (1.5 | ) | (1.0 | ) | |||||||||||||||
Residential construction | 151,887 | 3.0 | % | 174,690 | 276,322 | (13.1 | ) | (45.0 | ) | |||||||||||||||
Commercial construction | 153,392 | 3.0 | % | 164,472 | 233,662 | (6.7 | ) | (34.4 | ) | |||||||||||||||
Other commercial real estate | 850,334 | 16.7 | % | 856,357 | 790,502 | (0.7 | ) | 7.6 | ||||||||||||||||
Total commercial real estate | 2,706,138 | 53.2 | % | 2,748,994 | 2,888,247 | (1.6 | ) | (6.3 | ) | |||||||||||||||
Total corporate loans | 4,434,501 | 87.0 | % | 4,442,653 | 4,543,488 | (0.2 | ) | (2.4 | ) | |||||||||||||||
Consumer: | ||||||||||||||||||||||||
Home equity | 434, 138 | 8.5 | % | 445,243 | 464,655 | (2.5 | ) | (6.6 | ) | |||||||||||||||
Real estate 1-4 family | 178,538 | 3.5 | % | 160,890 | 139,840 | 11.0 | 27.7 | |||||||||||||||||
Other consumer | 48,366 | 1.0 | % | 51,774 | 47,891 | (6.6 | ) | 1.0 | ||||||||||||||||
Total consumer loans | 661,042 | 13.0 | % | 657,907 | 652,386 | (0.5 | ) | 1.3 | ||||||||||||||||
Total loans, excluding covered loans | 5,095,543 | 100.0 | % | 5,100,560 | 5,195,874 | (0.1 | ) | (1.9 | ) | |||||||||||||||
Covered loans | 352,357 | 374,640 | 144,369 | (5.9 | ) | 144.1 | ||||||||||||||||||
Total loans | $ | 5,447,900 | $ | 5,475,200 | $ | 5,340,243 | (0.5 | ) | 2.0 | |||||||||||||||
Total loans of $5.4 billion as of March 31, 2011 remained relatively unchanged from December 31, 2010. A decline in the construction loan portfolios from December 31, 2010 was substantially offset by annualized growth of 7.6% in commercial and industrial loans.
Total loans increased $107.7 million, or 2.0%, from March 31, 2010 to March 31, 2011. The growth was driven by the addition of covered loans acquired through the Company’s FDIC-assisted transactions, which more than offset declines in the construction loan portfolios.
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Asset Quality
(Dollar amounts in thousands)
As Of | ||||||||||||
2011 | 2010 | |||||||||||
March 31 | December 31 | March 31 | ||||||||||
Non-performing assets, excluding covered loans and covered OREO | ||||||||||||
Non-accrual loans | $ | 186,563 | $ | 211,782 | $ | 216,073 | ||||||
90 days or more past due loans | 5,231 | 4,244 | 7,995 | |||||||||
Total non-performing loans | 191,794 | 216,026 | 224,068 | |||||||||
Restructured loans (still accruing interest) | 14,120 | 22,371 | 5,168 | |||||||||
Other real estate owned | 33,863 | 31,069 | 62,565 | |||||||||
Total non-performing assets | $ | 239,777 | $ | 269,466 | $ | 291,801 | ||||||
30-89 days past due loans | $ | 28,927 | $ | 23,646 | $ | 28,018 | ||||||
Non-accrual loans to total loans | 3.66 | % | 4.15 | % | 4.16 | % | ||||||
Non-performing loans to total loans | 3.76 | % | 4.24 | % | 4.31 | % | ||||||
Non-performing assets to loans plus OREO | 4.67 | % | 5.25 | % | 5.55 | % | ||||||
Allowance for credit losses to loans | 2.85 | % | 2.84 | % | 2.79 | % | ||||||
Allowance for credit losses to non-accrual loans | 78 | % | 69 | % | 67 | % | ||||||
Allowance for credit losses to non-performing loans | 76 | % | 67 | % | 65 | % | ||||||
Covered loans and covered OREO(1) | ||||||||||||
Non-accrual loans | $ | — | $ | — | $ | — | ||||||
90 days or more past due loans(2) | 91,165 | �� | 86,910 | 52,464 | ||||||||
Total non-performing loans | 91,165 | 86,910 | 52,464 | |||||||||
Restructured loans (still accruing interest) | — | — | — | |||||||||
Other real estate owned | 28,871 | 29,698 | 8,649 | |||||||||
Total non-performing assets | $ | 120,036 | $ | 116,608 | $ | 61,113 | ||||||
30-89 days past due loans | $ | 10,399 | $ | 18,445 | $ | 10,175 | ||||||
Non-performing assets, including covered loans and covered OREO | ||||||||||||
Non-accrual loans | $ | 186,563 | $ | 211,782 | $ | 216,073 | ||||||
90 days or more past due loans | 96,396 | 91,154 | 60,459 | |||||||||
Total non-performing loans | 282,959 | 302,936 | 276,532 | |||||||||
Restructured loans (still accruing interest) | 14,120 | 22,371 | 5,168 | |||||||||
Other real estate owned | 62,734 | 60,767 | 71,214 | |||||||||
Total non-performing assets | $ | 359,813 | $ | 386,074 | $ | 352,914 | ||||||
30-89 days past due loans | $ | 39,326 | $ | 42,091 | $ | 38,193 | ||||||
Non-accrual loans to total loans | 3.42 | % | 3.87 | % | 4.05 | % | ||||||
Non-performing loans to total loans | 5.19 | % | 5.53 | % | 5.18 | % | ||||||
Non-performing assets to loans plus OREO | 6.53 | % | 6.97 | % | 6.52 | % | ||||||
Allowance for credit losses to loans | 2.66 | % | 2.65 | % | 2.71 | % | ||||||
Allowance for credit losses to non-accrual loans | 78 | % | 69 | % | 67 | % | ||||||
Allowance for credit losses to non-performing loans | 51 | % | 48 | % | 52 | % |
(1) | Covered loans and covered OREO were acquired through transactions with the FDIC and are subject to loss sharing agreements with the FDIC whereby the Company is indemnified against the majority of any losses incurred related to these assets. |
(2) | These loans are past due based on contractual terms, but are performing according to the Company’s current expectations of cash flows. |
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Non-performing assets, excluding covered loans and covered OREO, were $239.8 million at March 31, 2011, decreasing $29.7 million, or 11.0%, from December 31, 2010 and $52.0 million, or 17.8%, from March 31, 2010. The reductions were substantially due to remediation activities, dispositions, and charge-offs partially offset by loans downgraded to non-accrual status. During the quarter, the Company either sold or transferred to held-for-sale $19.5 million in non-performing assets and returned $9.6 million of restructured loans to performing status as a result of satisfactory payment performance after the modification of the loans.
Charge-off Data
(Dollar amounts in thousands)
Quarters Ended | ||||||||||||||||||||
March 11, 2011 | % of Loan Category | % of Total | December 31, 2010 | March 31, 2010 | ||||||||||||||||
Net loans charged-off: | ||||||||||||||||||||
Commercial and industrial | $ | 3,128 | 0.21 | 16.9 | $ | 10,198 | $ | 4,463 | ||||||||||||
Agricultural and farmland | 9 | — | — | 125 | 141 | |||||||||||||||
Office, retail, and industrial | 1,183 | 0.10 | 6.4 | 2,888 | 1,644 | |||||||||||||||
Multi-family | 549 | 0.16 | 3.0 | 1,206 | 512 | |||||||||||||||
Residential construction | 5,418 | 3.57 | 29.4 | 35,935 | 4,452 | |||||||||||||||
Commercial construction | 261 | 0.17 | 1.4 | 7,743 | 270 | |||||||||||||||
Other commercial real estate | 5,358 | 0.63 | 29.0 | 12,202 | 4,449 | |||||||||||||||
Consumer | 2,563 | 0.39 | 13.9 | 2,612 | 2,403 | |||||||||||||||
Total net loans charged-off, excluding covered loans | 18,469 | 0.36 | 100.0 | 72,909 | 18,334 | |||||||||||||||
Net charge-offs on covered loans | 1,092 | 935 | — | |||||||||||||||||
Total net charge-offs | $ | 19,561 | $ | 73,844 | $ | 18,334 | ||||||||||||||
Net loan charge-offs to average loans, excluding covered loans, annualized: | ||||||||||||||||||||
Quarter-to-date | 1.48 | % | 5.61 | % | 1.43 | % | ||||||||||||||
Year-to-date | 1.48 | % | 2.80 | % | 1.43 | % |
Net charge-offs for first quarter 2011 were down $54.3 million, or 73.5%, from fourth quarter 2010 and up $1.2 million, or 6.7%, from first quarter 2010. The quarter-over-quarter variance was driven by the additional charge-offs related to the change in disposition strategy implemented in fourth quarter 2010 with respect to certain construction related loans and OREO properties.
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CAPITAL MANAGEMENT
Capital Ratios
(Dollar amounts in thousands)
Regulatory Minimum For “Well- Capitalized” | Excess Over Required Minimums at March 31, 2011 | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2011 | 2010 | 2010 | ||||||||||||||||||||||
Regulatory capital ratios: | ||||||||||||||||||||||||
Total capital to risk-weighted assets | 16.36 | % | 17.23 | % | 16.18 | % | 10.00 | % | 64 | % | $ | 400,070 | ||||||||||||
Tier 1 capital to risk-weighted assets | 14.29 | % | 15.17 | % | 14.11 | % | 6.00 | % | 138 | % | $ | 521,783 | ||||||||||||
Tier 1 leverage to average assets | 11.53 | % | 13.06 | % | 11.16 | % | 5.00 | % | 131 | % | $ | 509,471 | ||||||||||||
Regulatory capital ratios, excluding preferred stock (1): | ||||||||||||||||||||||||
Total capital to risk-weighted assets | 13.29 | % | 14.20 | % | 13.12 | % | 10.00 | % | 33 | % | $ | 207,070 | ||||||||||||
Tier 1 capital to risk-weighted assets | 11.22 | % | 12.14 | % | 11.06 | % | 6.00 | % | 87 | % | $ | 328,783 | ||||||||||||
Tier 1 leverage to average assets | 9.06 | % | 10.45 | % | 8.74 | % | 5.00 | % | 81 | % | $ | 316,471 | ||||||||||||
Tier 1 common capital to risk-weighted assets(2) (3) | 9.88 | % | 10.81 | % | 9.72 | % | N/A | (3) | N/A | (3) | N/A | (3) | ||||||||||||
Tangible common equity ratios: | ||||||||||||||||||||||||
Tangible common equity to tangible assets | 8.26 | % | 9.17 | % | 7.99 | % | N/A | (3) | N/A | (3) | N/A | (3) | ||||||||||||
Tangible common equity, excluding other comprehensive loss, to tangible assets | 8.58 | % | 9.42 | % | 8.34 | % | N/A | (3) | N/A | (3) | N/A | (3) | ||||||||||||
Tangible common equity to risk-weighted assets | 10.18 | % | 10.52 | % | 9.93 | % | N/A | (3) | N/A | (3) | N/A | (3) |
(1) | These ratios exclude the impact of $193.0 million in preferred shares issued to the U.S. Department of the Treasury in December 2008 as part of its Capital Purchase Plan. |
(2) | Excludes the impact of preferred shares and trust-preferred securities. |
(3) | Ratio is not subject to formal Federal Reserve regulatory guidance. |
All regulatory mandated ratios for characterization as “well-capitalized” were exceeded as of March 31, 2011.
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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 some 100 offices located primarily in metropolitan Chicago. First Midwest was recently recognized by the Chicago Tribune as one of the top 20 best places to work in Chicago among large employers. First Midwest Bank received the highest numerical score among retail banks in the Midwest region in the proprietary J.D. Power and Associates 2011 Retail Banking Satisfaction Study (SM). The study was based on 51,620 total responses measuring 27 providers in the Midwest region (IA, IL, KS, MO, MN, and WI) and measures opinions of consumers with their primary banking provider. These proprietary study results are based on experiences and perceptions of consumers surveyed in January 2011. Your experiences may vary. Visit jdpower.com.
Safe Harbor Statement
This press release contains “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 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, 2010 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. Except as required by law, the Company undertakes no duty to update the contents of 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 27, 2011 at 10:00 A.M. (EDT). Members of the public who would like to listen to the conference call should dial (877) 317-6789 (U.S. domestic) or (412) 317-6789 (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. 450019 beginning one hour after completion of the live call until 9:00 A.M. (EDT) on May 5, 2011. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, atinvestor.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 |
• | Non-performing Assets and Past Due Loans |
Press Release and Additional Information Available on Website
This press release, the accompanying financial statements and tables, and certain additional unauditedSelected Financial Information are available through the “Investor Relations” section of First Midwest’s website atwww.firstmidwest.com.
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Condensed Consolidated Statements of Financial Condition
Unaudited
(Amounts in thousands)
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 104,982 | $ | 102,495 | $ | 97,251 | ||||||
Interest-bearing deposits in other banks | 421,478 | 483,281 | 2,928 | |||||||||
Federal funds sold and other short-term investments | — | — | 26,735 | |||||||||
Trading account securities, at fair value | 16,227 | 15,282 | 14,114 | |||||||||
Securities available-for-sale, at fair value | 1,057,758 | 1,057,802 | 1,152,039 | |||||||||
Securities held-to-maturity, at amortized cost | 81,218 | 81,320 | 90,449 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 61,338 | 61,338 | 59,428 | |||||||||
Loans held-for-sale | 3,800 | 236 | — | |||||||||
Loans, excluding covered loans | 5,095,543 | 5,100,560 | 5,195,874 | |||||||||
Covered loans | 352,357 | 374,640 | 144,369 | |||||||||
Allowance for loan losses | (142,503 | ) | (142,572 | ) | (144,824 | ) | ||||||
Net loans | 5,305,397 | 5,332,628 | 5,195,419 | |||||||||
Other real estate owned (“OREO”), excluding covered OREO | 33,863 | 31,069 | 62,565 | |||||||||
Covered OREO | 28,871 | 29,698 | 8,649 | |||||||||
Federal Deposit Insurance Corporation (“FDIC”) indemnification asset | 78,468 | 88,981 | 54,591 | |||||||||
Premises, furniture, and equipment | 138,119 | 140,907 | 128,180 | |||||||||
Investment in bank owned life insurance | 197,889 | 197,644 | 198,201 | |||||||||
Goodwill and other intangible assets | 290,135 | 291,383 | 280,477 | |||||||||
Accrued interest receivable and other assets | 225,445 | 232,909 | 221,881 | |||||||||
Total assets | $ | 8,044,988 | $ | 8,146,973 | $ | 7,592,907 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Deposits | ||||||||||||
Transactional deposits | $ | 4,545,670 | $ | 4,519,492 | $ | 3,948,025 | ||||||
Time deposits | 1,874,224 | 1,991,984 | 1,916,079 | |||||||||
Total deposits | 6,419,894 | 6,511,476 | 5,864,104 | |||||||||
Borrowed funds | 273,342 | 303,974 | 387,163 | |||||||||
Subordinated debt | 137,746 | 137,744 | 137,737 | |||||||||
Accrued interest payable and other liabilities | 90,130 | 81,734 | 60,135 | |||||||||
Total liabilities | 6,921,112 | 7,034,928 | 6,449,139 | |||||||||
Preferred stock | 191,050 | 190,882 | 190,392 | |||||||||
Common stock | 858 | 858 | 858 | |||||||||
Additional paid-in capital | 422,405 | 437,550 | 434,704 | |||||||||
Retained earnings | 794,569 | 787,678 | 815,395 | |||||||||
Accumulated other comprehensive loss, net of tax | (24,373 | ) | (27,739 | ) | (18,878 | ) | ||||||
Treasury stock, at cost | (260,633 | ) | (277,184 | ) | (278,703 | ) | ||||||
Total stockholders’ equity | 1,123,876 | 1,112,045 | 1,143,768 | |||||||||
Total liabilities and stockholders’ equity | $ | 8,044,988 | $ | 8,146,973 | $ | 7,592,907 | ||||||
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Condensed Consolidated Statements of Income
Unaudited
(Amounts in thousands, except per share data)
Quarters Ended | ||||||||||||
March 31, 2011 | December 31, 2010 | March 31, 2010 | ||||||||||
Interest Income | ||||||||||||
Loans | $ | 62,917 | $ | 63,983 | $ | 64,480 | ||||||
Investment securities | 9,865 | 10,230 | 13,952 | |||||||||
Covered loans | 7,822 | 7,431 | 2,962 | |||||||||
Federal funds sold and other short–term investments | 679 | 832 | 385 | |||||||||
Total interest income | 81,283 | 82,476 | 81,779 | |||||||||
Interest Expense | ||||||||||||
Deposits | 7,671 | 7,907 | 10,545 | |||||||||
Borrowed funds | 680 | 711 | 1,010 | |||||||||
Subordinated debt | 2,286 | 2,279 | 2,286 | |||||||||
Total interest expense | 10,637 | 10,897 | 13,841 | |||||||||
Net interest income | 70,646 | 71,579 | 67,938 | |||||||||
Provision for loan losses | 19,492 | 73,897 | 18,350 | |||||||||
Net interest income (loss) after provision for loan losses | 51,154 | (2,318 | ) | 49,588 | ||||||||
Noninterest Income | ||||||||||||
Service charges on deposit accounts | 8,144 | 9,202 | 8,381 | |||||||||
Trust and investment management fees | 4,116 | 4,040 | 3,593 | |||||||||
Other service charges, commissions, and fees | 4,914 | 4,506 | 4,172 | |||||||||
Card-based fees | 4,529 | 4,640 | 3,893 | |||||||||
Total fee-based revenues | 21,703 | 22,388 | 20,039 | |||||||||
Bank owned life insurance income | 252 | 696 | 248 | |||||||||
Securities gains, net | 540 | 1,662 | 3,057 | |||||||||
Other | 1,722 | 1,421 | 977 | |||||||||
Total noninterest income | 24,217 | 26,167 | 24,321 | |||||||||
Noninterest Expense | ||||||||||||
Salaries and employee benefits | 32,523 | 31,028 | 26,884 | |||||||||
OREO expense, net | 3,931 | 17,820 | 10,787 | |||||||||
FDIC premiums | 2,725 | 2,967 | 2,532 | |||||||||
Net occupancy and equipment expense | 9,103 | 7,916 | 8,168 | |||||||||
Technology and related costs | 2,623 | 3,209 | 2,483 | |||||||||
Professional fees | 5,119 | 4,524 | 6,540 | |||||||||
Other | 9,099 | 9,610 | 8,079 | |||||||||
Total noninterest expense | 65,123 | 77,074 | 65,473 | |||||||||
Income (loss) before income tax | 10,248 | (53,225 | ) | 8,436 | ||||||||
Income tax expense (benefit) | 30 | (25,066 | ) | 355 | ||||||||
Net income (loss) | 10,218 | (28,159 | ) | 8,081 | ||||||||
Preferred dividends | (2,581 | ) | (2,579 | ) | (2,572 | ) | ||||||
Net (income) loss applicable to non-vested restricted shares | (140 | ) | 411 | (81 | ) | |||||||
Net income (loss) applicable to common shares | $ | 7,497 | $ | (30,327 | ) | $ | 5,428 | |||||
Diluted earnings (loss) per common share | $ | 0.10 | $ | (0.41 | ) | $ | 0.08 | |||||
Dividends declared per common share | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||
Weighted average diluted shares outstanding | 73,151 | 73,085 | 70,469 |
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