EXHIBIT 13
FOR IMMEDIATE RELEASE
CONTACT: James M. Roolf
630/875-7452
TRADED: Nasdaq
SYMBOL: FMBI
FIRST MIDWEST BANCORP REPORTS INCREASED FOURTH
QUARTER AND FULL YEAR 1998 OPERATING EARNINGS
ITASCA, IL., JANUARY 21, 1999 - First Midwest Bancorp, Inc. (Nasdaq: FMBI) today
reported net income for the quarter ended December 31, 1998 increased to a
record $17.3 million, or $0.59 per diluted share, as compared to 1997's fourth
quarter net income before special charge of $16.4 million, or $0.55 per diluted
share, representing an increase on a per diluted share basis of 7.3%. This
equates to returns on average equity and average assets for the quarter just
ended of 15.18% and 1.32%, respectively. (Fourth quarter 1998's net income is
compared with fourth quarter 1997's net income before special charge as a
special charge in connection with the acquisition of Sparbank, Incorporated was
recorded in the fourth quarter of 1997. See footnote (1) on page 5.)
Full year 1998 net income before special charge increased to a record $67.2
million, or $2.26 per diluted share, as compared to 1997's same income of $61.7
million, or $2.06 per diluted share, representing an increase on a per diluted
share basis of 9.7%. For the year, returns on average equity and average assets
were 14.48% and 1.32%, respectively. (1998's net income on a before special
charge basis is compared with 1997's performance on the same basis as a special
charge in connection with the acquisition of Heritage Financial Services, Inc.
was recorded in the third quarter of 1998.
See footnote (1) on page 5.)
The improved operating performance of the fourth quarter and full year 1998 is
attributable to a combination of increases achieved in all categories of
noninterest income and tightly controlled noninterest expenses. Across the
board increases in service charges and fees coupled with surging mortgage
banking revenues (from 1998 originations of $550 million that were almost 2-1/2
times those of 1997) and new life insurance income combined to increase total
noninterest income for the quarter and full year by some 20% and 17%,
respectively. On the expense side, factoring out the Heritage and Sparbank
acquisition charges, operating expenses were virtually flat for both the quarter
and full year. This was accomplished while the cost savings related to the
Heritage acquisition were, as projected, only approximately 40% realized as of
year end 1998. Further, this occurred even as distribution channels were
expanded during 1998 with the opening of four new branches, twelve new ATM's and
a significant expansion early in the year of the telemarketing department.
The fourth quarter saw a continuation of interest margin compression and the
related decline in net interest income experienced earlier in the year.
Contributing to this circumstance were a number of factors including lower
average loan outstandings, higher than average more expensive governmental
deposits and the cost of investments in corporate owned life insurance (the
income on which is reported as a component of noninterest income). Of these the
most significant was lower average loan outstandings which were relatable to (i)
the securitizations during 1998 of $245 million ($70 million in the first
quarter and $175 million in the fourth quarter) of fixed rate mortgages acquired
as a part of the Heritage and Sparbank portfolios, (ii) lower levels of non
mortgage loan originations as a result of a more stringent underwriting and
administration standards adopted during the year, (iii) the out placement from
various portfolios of approximately $50 million in loans that no longer met
heightened credit standards, and (iv) pricing and underwriting competitive
circumstances.
2
Improvement in both components of interest margin have been aggressively
addressed. The fourth quarter saw the implementation of selected (including some
governmental) deposit repricing with comprehensive repricing to occur in early
1999. On the asset side, a number of expanded loan generation sources have been
identified that are expected to enhance asset yields.
While higher than a year ago, year end nonperforming assets stood at their
lowest level of the year reflective of significant improvement in the fourth
quarter. The level of nonperformers is related in part to the implementation of
the more stringent credit standards described above as well as a comprehensive
review and re-rating as appropriate of the acquired portfolios. Focusing on the
largest component, a very manageable ten commercial loan relationships account
for approximately 50% of nonaccruing loans. Nonperforming assets are believed to
be properly identified, adequately reserved and well managed.
During the fourth quarter of 1998 First Midwest increased its quarterly dividend
to $0.24 per share representing the seventh such increase in the last six years.
The new rate is payable on January 25, 1999 to shareholders of record as of
December 25, 1998.
With assets of $5.2 billion, First Midwest is the largest independent and eighth
overall largest banking company in the highly attractive suburban Chicago
banking market. As the premier independent suburban Chicago banking company,
First Midwest provides commercial banking, trust, investment management,
mortgage and related financial services to a broad array of customers through 76
offices and 105 ATMs located in more than 40 communities of northern Illinois.
3
Forward Looking Statements
The preceding press release contains various "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represents
First Midwest's expectations and benefits concerning future events including,
but not limited to, the following: cost savings related to the integration of
the Heritage acquisition; the impact of future loan generation on asset yields
and net interest margin; and, Management's ability to identify, manage and
establish reserve for loan loss levels for nonperforming loans and assets.
First Midwest cautions that these statements are further qualified by important
factors that could cause actual results to differ materially from those set
forth in the forward looking statements due to the risks and uncertainties
affecting the realization of such statements. Certain of these risks and
uncertainties included in the forward looking statements include, without
limitations, the following: operational limitations and costs relating to
changing technologies and their affect on First Midwest's ability to sustain
efficient operations; significant fluctuations in interest rates, deterioration
in local economic conditions, price competition and their cumulative effect on
existing and future borrowers' credit needs and credit quality; and deviations
from the assumptions used to evaluate the appropriate level of the reserve for
loan losses.
Accordingly, results actually achieved may differ materially from expected
results in these statements. First Midwest does not undertake, and specifically
disclaims, any obligation to update any forward looking statements to reflect
events or circumstances occurring after the date of such statements.
4
First Midwest Bancorp, Inc.
Consolidated Financial Highlights
(unaudited)
($ in thousands, except per share data)
Quarters Ended Twelve Months Ended
December 31, December 31,
---------------------- ---------------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Operating Results
- -----------------
Net Income $17,323 $11,350 $54,704 $56,608
Net Income - Before Special Charges (1) 17,323 16,432 67,237 61,690
Per Common Share
- ----------------
Diluted Income Per Share $ 0.59 $ 0.38 $ 1.84 $ 1.89
Diluted Income Per Share - Before Special Charges (1) 0.59 0.55 2.26 2.06
Dividends Declared 0.240 0.225 0.915 0.825
- -----------------------------------------------------------------------------------------------------------------------------------
Performance Ratios
- ------------------
Return on Average Equity 15.18% 9.98% 11.78% 13.16%
Return on Average Equity - Before Special Charges 15.18% 14.44% 14.48% 14.34%
Return on Average Assets 1.32% 0.92% 1.07% 1.18%
Return on Average Assets - Before Special Charges 1.32% 1.33% 1.32% 1.29%
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Highlights
- ------------------------
Total Assets $5,192,887 $4,933,495
Loans 2,664,417 3,044,794
Deposits 4,050,451 3,935,607
Stockholders' Equity 452,898 459,719
- -----------------------------------------------------------------------------------------------------------------------------------
(1) In the fourth quarter of 1997 a special charge was recorded in the amount
$5,082 or $0.17 per share in connection with the acquisition of SparBank,
Incorporated. In third quarter of 1998 a special charge was recorded in the
amount of $12,533 or $0.42 per share in connection with the acquisition of
heritage Financial Services, In
===================================================================================================================================
Stock Performance and Dividend Information
(NASDAQ:FMBI)
1998
- -----------------------------------------------------------------------------------------------------------------------------------
Quarters Dividends
Ended High Low Close Declared
- -----------------------------------------------------------------------------------------------------------------------------------
March 31 $45.00 $38.00 $43.50 $0.225
June 30 52.00 42.50 44.00 0.225
September 30 48.00 34.13 39.56 0.225
December 31 41.63 35.00 38.06 0.240
- -----------------------------------------------------------------------------------------------------------------------------------