March 31, 2006
Mail Stop 4561
By U.S. Mail and facsimile to (630) 875-7395
Mr. Michael L. Scudder
Executive Vice President, Chief Financial Officer,
and Principal Accounting Officer
First Midwest Bancorp, Inc.
One Pierce Place, Suite 1500
Itasca, Illinois 60143-9768
Re: First Midwest Bancorp, Inc.
Form 10-K for Fiscal Year Ended December 31, 2005
Filed on March 2, 2006
File No. 0-10967
Dear Mr. Scudder:
We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments. If you disagree with a comment, we
will
consider your explanation as to why our comment is inapplicable.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
* * * * * * *
Form 10-K for the Fiscal Year Ended December 31, 2005
Consolidated Financial Statements
Note 3. Securities, page 60
1. We note your disclosure on page 62 that in December 2005, you
announced your intention to sell approximately $212 million of
underperforming collateralized mortgage obligations from your
available for sale portfolio. Please tell us whether the $6.4
million in realized losses recognized during December 2005
represents
all losses associated with the $212 million portfolio or whether
it
represents losses associated only with the 55% of the portfolio
which
was sold as of December 31, 2005.
2. As a related matter, if the $6.4 million of realized losses
represents only losses associated with the portion of the
underperforming collateralized mortgage obligation portfolio sold
as
of December 31, 2005, please tell how you determined that no
losses
should have been recognized on the remaining 45% of the portfolio
as
of the end of the fiscal year.
Note 4. Loans, page 63
3. We note your disclosure on page 63 that you securitized $74.2
million of real estate 1-4 family loans by converting the loans
into
mortgage-backed securities. Please provide us with the
disclosures
you intend to include in future filings, beginning with your Form
10-
Q for the quarterly period ended March 31, 2006, to provide the
information required by paragraph 17(e) of SFAS 140 or tell us why
you believe these disclosures are not applicable to you.
Note 11. Derivative Instruments and Hedging Activities, page 69
4. We note your disclosure on page 69 that you use interest rate
swaps to hedge the fair value of your fixed rate, junior
subordinated
debentures. Given the disclosures provided, we are unclear
whether
or not you use the shortcut method to assess the effectiveness of
these hedges. If you use the shortcut method, please tell us how
you
determined that you qualify under paragraph 68 of SFAS 133.
Please
also specifically address how you considered the interest rate
deferral options described in footnote two of the table on page 68
in
determining that use of the shortcut method was appropriate, if
true.
5. For each of your hedging relationships described on page 69
(except for those involving junior subordinated debentures),
please
tell us the following so that we may better understand your
accounting treatment:
* the specific terms of each hedged item, including any conversion
or
call features (for example, it is unclear what is meant by
"certain
indexed deposit and loan accounts");
* the specific terms of each hedging instrument;
* the specific hedged risk you identify in your hedge
documentation;
* the methods you use to assess hedge effectiveness and calculate
hedge ineffectiveness for each type of hedge; and
* how you qualify under paragraph 68 of SFAS 133 to use the
shortcut
method to assess hedge effectiveness, if applicable.
* * * * * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a detailed letter that keys your responses to our
comments and provides any requested supplemental information.
Please
understand that we may have additional comments after reviewing
your
responses to our comments.
We urge all persons who are responsible for the accuracy
and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from the company acknowledging
that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
You may contact Lisa Haynes, Staff Accountant at (202) 551-
3424
or me at (202) 551-3492 if you have questions.
Sincerely,
John P. Nolan
Accounting Branch Chief
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Mr. Michael L. Scudder
First Midwest Bancorp, Inc.
March 31, 2006
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