Loading, Please Wait...

CST: 19/10/2019 06:53:24   

First Midwest Bancorp, Inc. Announces 2019 Second Quarter Results

87 Days ago

CHICAGO, July 23, 2019 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest"), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the second quarter of 2019. Net income for the second quarter of 2019 was $47.0 million, or $0.43 per share, compared to $46.1 million, or $0.43 per share, for the first quarter of 2019, and $29.6 million, or $0.29 per share, for the second quarter of 2018.

Reported results for all periods were impacted by implementation costs related to the Company's Delivering Excellence initiative(1) ("Delivering Excellence"). In addition, the second and first quarters of 2019 were impacted by acquisition and integration related expenses. For additional detail on these adjustments, see the "Non-GAAP Financial Information" section presented later in this release.

Earnings per share ("EPS"), adjusted(2) was $0.50 for the second quarter of 2019, compared to $0.46 for the first quarter of 2019 and $0.40 for the second quarter of 2018.

SELECT SECOND QUARTER HIGHLIGHTS

  • Generated EPS of $0.43, consistent with the first quarter of 2019 and up from $0.29 for the second quarter of 2018.
    -- Increased EPS, adjusted(2) to $0.50, up 9% and 25% from the first quarter of 2019 and second quarter of 2018, respectively.
    -- Produced returns on average tangible common equity, adjusted(2) of 16.0% for the second quarter of 2019, up 64 basis points and 114 basis points from the first quarter of 2019 and second quarter of 2018, respectively.
  • Grew loans to $13 billion, up 8% from March 31, 2019 and 15% from June 30, 2018.
  • Increased total average deposits to $13 billion, up 6% and 14% from the first quarter of 2019 and second quarter of 2018, respectively.
  • Expanded net interest income to $150 million, up 8% from the first quarter of 2019 and 18% from the second quarter of 2018.
  • Increased noninterest income to $39 million, up 10% from the first quarter of 2019 and 4% from the second quarter of 2018.
  • Controlled noninterest expense; reported an efficiency ratio(2) of 55%, down from 56% and 60% in the first quarter of 2019 and second quarter of 2018, respectively.
  • Completed the acquisition of Bridgeview Bancorp, Inc. on May 9, 2019, adding approximately $1.2 billion of assets, $700 million of loans, and $1.0 billion of deposits, net of fair value adjustments.
  • Repurchased approximately 1 million shares of our common stock at a cost of $21 million.

"It was a strong quarter, reflecting successful execution on a number of business fronts," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "We closed the quarter with $17.5 billion of total assets, up 10% and 18% from the last quarter and a year ago and aided by our mid-May acquisition of Bridgeview Bank. Operating performance was again solid, benefiting from asset growth, improved fee income and continued operating efficiency."

Mr. Scudder concluded, "First Midwest remains well-positioned as we navigate an evolving landscape. Recent acquisitions have greatly expanded our distribution and top 10 market share in metro Chicago. Combined with an engaged team, ongoing investment in our business and our strong capital foundation, we continue to pursue opportunities for growth, revenue diversification and market expansion. As always, we do so with an unwavering commitment to the financial success of our clients and drive to provide our shareholders with superior, long-term returns."

ACQUISITION

Bridgeview Bancorp, Inc.

On May 9, 2019, the Company completed its acquisition of Bridgeview Bancorp, Inc. ("Bridgeview"), the holding company for Bridgeview Bank Group. At closing, the Company acquired 13 banking offices located across greater Chicagoland, and added approximately $1.2 billion of assets, $1.0 billion of deposits, and $700 million of loans, net of fair value adjustments. The merger consideration totaled $135.4 million and consisted of 4.7 million shares of Company stock and $37.1 million of cash. All Bridgeview operating systems were converted to our operating platform during the second quarter of 2019.

STOCK REPURCHASES

During the first quarter of 2019, the Company announced a new stock repurchase program that authorizes the Company to repurchase up to $180 million of its common stock. Stock repurchases under this program may be made from time to time on the open market or in privately negotiated transactions, at the discretion of the Company. The Company repurchased approximately 1.0 million shares of its common stock at a total cost of $21.2 million during the second quarter of 2019.

(1) The Company initiated certain actions in connection with its Delivering Excellence initiative in the second quarter of 2018, demonstrating the Company's ongoing commitment to provide service excellence to its clients and maximizing both the efficiency and scalability of its operating platform.
(2) These metrics are non-GAAP financial measures. For details on the calculation of these metrics, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)

  Quarters Ended
  June 30, 2019     March 31, 2019     June 30, 2018
  Average Balance   Interest   Yield/
Rate
(%)
    Average
Balance
  Interest   Yield/
Rate
(%)
    Average
Balance
  Interest   Yield/
Rate
(%)
Assets                                      
Other interest-earning assets $ 210,322     $ 1,240     2.36       $ 125,615     $ 728     2.35       $ 147,996     $ 519     1.41  
Securities(1) 2,631,437     18,423     2.80       2,371,692     16,387     2.76       2,165,091     13,322     2.46  
Federal Home Loan Bank ("FHLB") and
  Federal Reserve Bank ("FRB") stock
87,815     757     3.45       79,821     952     4.77       80,038     864     4.32  
Loans(1) 12,022,470     158,442     5.29       11,458,233     145,531     5.15       10,788,285     128,422     4.77  
Total interest-earning assets(1) 14,952,044     178,862     4.80       14,035,361     163,598     4.72       13,181,410     143,127     4.35  
Cash and due from banks 215,464               202,101               197,025          
Allowance for loan losses (108,698 )             (107,520 )             (99,469 )        
Other assets 1,681,240               1,537,897               1,326,749          
Total assets $ 16,740,050               $ 15,667,839               $ 14,605,715          
Liabilities and Stockholders' Equity                                      
Savings deposits $ 2,079,852     346     0.07       $ 2,037,831     346     0.07       $ 2,060,066     373     0.07  
NOW accounts 2,261,103     2,776     0.49       2,083,366     2,162     0.42       2,065,530     1,472     0.29  
Money market deposits 1,907,766     3,041     0.64       1,809,234     2,349     0.53       1,759,313     1,073     0.24  
Time deposits 2,849,930     13,153     1.85       2,647,316     11,745     1.80       1,871,666     5,114     1.10  
Borrowed funds 1,025,351     4,459     1.74       877,995     3,551     1.64       913,902     3,513     1.54  
Senior and subordinated debt 220,756     3,595     6.53       203,899     3,313     6.59       195,385     3,140     6.45  
Total interest-bearing liabilities 10,344,758     27,370     1.06       9,659,641     23,466     0.99       8,865,862     14,685     0.66  
Demand deposits 3,835,567               3,587,480               3,621,645          
Total funding sources 14,180,325         0.77       13,247,121         0.72       12,487,507         0.47  
Other liabilities 318,156               282,437               227,481          
Stockholders' equity - common 2,241,569               2,138,281               1,890,727          
Total liabilities and
  stockholders' equity
$ 16,740,050               $ 15,667,839               $ 14,605,715          
Tax-equivalent net interest
  income/margin(1)
    151,492     4.06           140,132     4.04           128,442     3.91  
Tax-equivalent adjustment     (1,180 )             (1,108 )             (1,039 )    
Net interest income (GAAP)(1)     $ 150,312               $ 139,024               $ 127,403      
Impact of acquired loan accretion(1)     $ 10,308     0.28           $ 6,369     0.18           $ 4,445     0.14  
Tax-equivalent net interest income/
  margin, adjusted(1)
    $ 141,184     3.78           $ 133,763     3.86           $ 123,997     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 21%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

Net interest income for the second quarter of 2019 was up 8.1% and 18.0% compared to the first quarter of 2019 and second quarter of 2018, respectively. The rise in net interest income from both prior periods resulted primarily from the acquisition of interest-earning assets from the Bridgeview transaction in the second quarter of 2019, higher acquired loan accretion, security purchases, and loan growth, partially offset by higher cost of funds. In addition, net interest income for the second quarter of 2019 benefited from an increase in the number of days in the quarter compared to the first quarter of 2019. Compared to the second quarter of 2018, the rise in net interest income was also impacted by the acquisition of interest-earning assets from the Northern States Financial Corporation ("Northern States") transaction in the fourth quarter of 2018 and higher interest rates.

Acquired loan accretion contributed $10.3 million, $6.4 million, and $4.4 million to net interest income for the second quarter of 2019, the first quarter of 2019, and the second quarter of 2018, respectively.

Tax-equivalent net interest margin for the current quarter was 4.06%, increasing 2 basis points from the first quarter of 2019 and 15 basis points from the second quarter of 2018. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 3.78%, down 8 basis points from the first quarter of 2019 and up one basis point from the second quarter of 2018. The decrease in tax-equivalent net interest margin, adjusted compared to the first quarter of 2019 was impacted by compression related to the mix of interest-earning assets acquired in the Bridgeview transaction, actions taken to reduce rate sensitivity, and higher cost of funds. These items were more than offset by higher interest rates compared to the second quarter of 2018.

For the second quarter of 2019, total average interest-earning assets rose by $916.7 million and $1.8 billion from the first quarter of 2019 and second quarter of 2018, respectively. The increase compared to both prior periods resulted primarily from the Bridgeview transaction in the second quarter of 2019, security purchases, and loan growth. In addition, the rise in average interest-earning assets compared to the second quarter of 2018 was impacted by the Northern States transaction.

Total average funding sources for the second quarter of 2019 increased by $933.2 million and $1.7 billion from the first quarter of 2019 and second quarter of 2018, respectively. The increase compared to both prior periods resulted primarily from the Bridgeview transaction in the second quarter of 2019 and organic growth. In addition, the rise in average funding sources compared to the second quarter of 2018 was impacted by the Northern States transaction.

Noninterest Income Analysis
(Dollar amounts in thousands)

    Quarters Ended   June 30, 2019
Percent Change From
    June 30,
2019
  March 31,
 2019
  June 30,
2018
  March 31,
 2019
  June 30,
2018
Service charges on deposit accounts    $ 12,196     $ 11,540     $ 12,058     5.7     1.1  
Wealth management fees   12,190     11,600     10,981     5.1     11.0  
Card-based fees, net    4,549     4,378     4,394     3.9     3.5  
Capital market products income    2,154     1,279     2,819     68.4     (23.6 )
Mortgage banking income    1,901     1,004     1,736     89.3     9.5  
Merchant servicing fees, net    371     337     383     10.1     (3.1 )
Other service charges, commissions, and fees    2,412     2,274     2,455     6.1     (1.8 )
Total fee-based revenues    35,773     32,412     34,826     10.4     2.7  
Other income    2,753     2,494     2,121     10.4     29.8  
Total noninterest income    $ 38,526     $ 34,906     $ 36,947     10.4     4.3  

Total noninterest income of $38.5 million was up 10.4% and 4.3% from the first quarter of 2019 and second quarter of 2018, respectively. The increase in service charges on deposit accounts and net card-based fees compared to the first quarter of 2019 was due to seasonally higher volumes and services provided to customers acquired in the Bridgeview transaction. The increase in wealth management fees from the first quarter of 2019 resulted primarily from the positive impact of market rates. Compared to the second quarter of 2018, the increase in wealth management fees was driven primarily by customers acquired in the Northern Oak Wealth Management, Inc. ("Northern Oak") transaction completed during the first quarter of 2019.

Capital market products income fluctuates from quarter to quarter based on the size and frequency of sales to corporate clients.

Mortgage banking income for the second quarter of 2019 resulted from sales of $93.5 million of 1-4 family mortgage loans in the secondary market, compared to $57.5 million in the first quarter of 2019 and $64.3 million in the second quarter of 2018. Mortgage banking income is also impacted by fluctuations in the fair value of mortgage servicing rights, which resulted in a decrease to mortgage banking income of $600,000 compared to the second quarter of 2018.

Other income was elevated compared to the second quarter of 2018 due primarily to higher fair value adjustments on equity securities and benefit settlements on bank-owned life insurance.

Noninterest Expense Analysis
(Dollar amounts in thousands)

    Quarters Ended   June 30, 2019
Percent Change From
    June 30,
2019
  March 31,
 2019
  June 30,
2018
  March 31,
 2019
  June 30,
2018
Salaries and employee benefits:                    
Salaries and wages    $ 47,776     $ 46,135     $ 46,256     3.6     3.3  
Retirement and other employee benefits    10,916     11,238     11,676     (2.9 )   (6.5 )
Total salaries and employee benefits    58,692     57,373     57,932     2.3     1.3  
Net occupancy and equipment expense   13,671     14,770     13,651     (7.4 )   0.1  
Professional services    10,467     7,788     8,298     34.4     26.1  
Technology and related costs    4,908     4,596     4,837     6.8     1.5  
Advertising and promotions    3,167     2,372     2,061     33.5     53.7  
Net other real estate owned ("OREO") expense   294     681     (256 )   (56.8 )   (214.8 )
Other expenses    12,987     10,581     11,878     22.7     9.3  
Acquisition and integration related expenses    9,514     3,691         157.8     100.0  
Delivering Excellence implementation costs    442     258     15,015     71.3     (97.1 )
  Total noninterest expense   $ 114,142     $ 102,110     $ 113,416     11.8     0.6  
Acquisition and integration related expenses   (9,514 )   (3,691 )       157.8     (100.0 )
Delivering Excellence implementation costs    (442 )   (258 )   (15,015 )   71.3     (97.1 )
Total noninterest expense, adjusted(1)    $ 104,186     $ 98,161     $ 98,401     6.1     5.9  

(1) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

Total noninterest expense increased 11.8% from the first quarter of 2019 and was consistent with the second quarter of 2018. Noninterest expense for all periods presented was impacted by costs related to implementation of the Delivering Excellence initiative. In addition, the second and first quarters of 2019 were impacted by acquisition and integration related expenses. Excluding these items, noninterest expense for the second quarter of 2019 was $104.2 million, up 6.1% and 5.9% from the first quarter of 2019 and second quarter of 2018, respectively.

Operating costs associated with the Bridgeview transaction contributed to noninterest expense for the second quarter of 2019. In addition, operating costs associated with the Northern Oak and Northern States transactions contributed to the increase in noninterest expense compared to the second quarter of 2018. These costs primarily occurred in salaries and employee benefits, net occupancy and equipment expense, professional services, and other expenses.

Compared to the second quarter of 2018, the increase in salaries and employee benefits was also impacted by merit increases, which was more than offset by the ongoing benefits of the Delivering Excellence initiative and lower pension expense. Net occupancy and equipment expense was elevated in the first quarter of 2019 due to higher costs related to winter weather conditions. The increase in professional services from both prior periods was driven mainly by the timing of certain other professional fees associated with organizational growth and higher loan remediation costs and legal fees. Compared to both prior periods, the rise in advertising and promotions expense resulted from higher costs related to marketing campaigns. Net OREO expense for the second quarter of 2018 was impacted by higher levels of operating income. The rise in other expenses compared to the first quarter of 2019 was due to property valuation adjustments and other miscellaneous expenses.

Acquisition and integration related expenses for the second quarter of 2019 resulted primarily from the acquisition of Bridgeview. For the first quarter of 2019, acquisition and integration related expenses resulted from the acquisition of Northern States, Northern Oak, and Bridgeview.

Delivering Excellence implementation costs for all periods presented resulted from certain actions initiated by the Company in connection with its Delivering Excellence initiative and include property valuation adjustments on locations identified for closure, employee severance, and general restructuring and advisory services.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

    As of       June 30, 2019
Percent Change From
    June 30, 2019   March 31, 2019   June 30, 2018   March 31, 2019   June 30, 2018
Commercial and industrial   $ 4,524,401     $ 4,183,262     $ 3,844,067     8.2     17.7  
Agricultural   430,589     438,461     433,175     (1.8 )   (0.6 )
Commercial real estate:                    
Office, retail, and industrial   1,936,577     1,806,892     1,834,918     7.2     5.5  
Multi-family   787,155     752,943     703,091     4.5     12.0  
Construction   654,607     683,475     633,601     (4.2 )   3.3  
Other commercial real estate   1,447,673     1,309,878     1,337,396     10.5     8.2  
Total commercial real estate   4,826,012     4,553,188     4,509,006     6.0     7.0  
Total corporate loans   9,781,002     9,174,911     8,786,248     6.6     11.3  
Home equity   874,686     862,068     847,903     1.5     3.2  
1-4 family mortgages   1,391,814     1,086,264     880,181     28.1     58.1  
Installment   472,102     445,760     377,233     5.9     25.1  
Total consumer loans   2,738,602     2,394,092     2,105,317     14.4     30.1  
Total loans   $ 12,519,604     $ 11,569,003     $ 10,891,565     8.2     14.9  

Loan growth in all categories was positively impacted by the Bridgeview acquisition in the second quarter of 2019, which totaled $692.6 million as of June 30, 2019. Excluding these loans, total loans grew 8.9% annualized from March 31, 2019 and 8.6% from June 30, 2018. In addition, compared to both prior periods, growth in commercial and industrial loans, primarily within our sector-based lending and middle market business units, contributed to the rise in total corporate loans. Commercial real estate loans compared to both prior periods were also impacted by the decision of certain customers to opportunistically sell their commercial business or investment real estate properties, as well as refinancing with non-bank lenders and real estate investors, which more than offset originations. The increase in loans compared to June 30, 2018 also benefitted from the Northern States transaction during the fourth quarter of 2018.

Growth in consumer loans compared to both prior periods resulted primarily from purchases of 1-4 family mortgages and organic growth. Compared to June 30, 2018, growth in consumer loans also benefited from the purchase of installment loans.

Asset Quality
(Dollar amounts in thousands)

    As of   June 30, 2019
Percent Change From
    June 30,
2019
  March 31,
 2019
  June 30,
2018
  March 31,
 2019
  June 30,
2018
Asset quality                    
Non-accrual loans   $ 63,477     $ 70,205     $ 53,475     (9.6 )   18.7  
90 days or more past due loans, still accruing
  interest(1)
  2,615     8,446     7,954     (69.0 )   (67.1 )
Total non-performing loans   66,092     78,651     61,429     (16.0 )   7.6  
Accruing troubled debt restructurings
  ("TDRs")
  1,441     1,844     1,760     (21.9 )   (18.1 )
Foreclosed assets(2)   28,488     10,818     12,892     163.3     121.0  
Total non-performing assets   $ 96,021     $ 91,313     $ 76,081     5.2     26.2  
30-89 days past due loans(1)   $ 34,460     $ 45,764     $ 39,171          
Non-accrual loans to total loans   0.51 %   0.61 %   0.49 %        
Non-performing loans to total loans   0.53 %   0.68 %   0.56 %        
Non-performing assets to total loans plus
  foreclosed assets
  0.77 %   0.79 %   0.70 %        
Allowance for credit losses                    
Allowance for credit losses   $ 106,929     $ 104,779     $ 97,691          
Allowance for credit losses to total loans(3)   0.85 %   0.91 %   0.90 %        
Allowance for credit losses to loans, excluding
  acquired loans
  0.98 %   1.00 %   1.00 %        
Allowance for credit losses to non-accrual
  loans
  168.45 %   149.25 %   182.69 %        

(1) Purchased credit impaired loans with an accretable yield are considered current and are not included in past due loan totals.
(2) Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
(3) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses on acquired loans is established as necessary to reflect credit deterioration.

Total non-performing assets represented 0.77% of total loans and foreclosed assets at June 30, 2019 compared to 0.79% and 0.70% at March 31, 2019 and June 30, 2018, respectively, reflective of normal fluctuations that can occur on a quarterly basis. The decrease in non-accrual loans from March 31, 2019 was driven primarily by the transfer of one corporate loan relationship to foreclosed assets during the second quarter of 2019, for which the Company has remediation plans in place. In addition, included in foreclosed assets as of June 30, 2019 was $6.2 million of OREO acquired in the Bridgeview transaction.

The allowance for credit losses to total loans was 0.85% at June 30, 2019, down from 0.91% at March 31, 2019 and 0.90% at June 30, 2018 driven primarily by loans acquired in the Bridgeview transaction, for which no allowance for credit losses was established at the time of acquisition.

Charge-Off Data
(Dollar amounts in thousands)

    Quarters Ended
    June 30,
2019
  % of
Total
  March 31,
 2019
  % of
Total
  June 30,
2018
  % of
Total
Net loan charge-offs(1)                        
Commercial and industrial    $ 4,600     49.3     $ 5,061     55.7     $ 7,081     72.4  
Agricultural    658     7.0     89     1.0     828     8.5  
Office, retail, and industrial    1,454     15.6     618     6.8     279     2.9  
Multi-family           339     3.7     4      
Construction    (10 )   (0.1 )           (8 )   (0.1 )
Other commercial real estate    284     3.0     189     2.1     (358 )   (3.7 )
Consumer    2,355     25.2     2,788     30.7     1,951     20.0  
Total net loan charge-offs    $ 9,341     100.0     $ 9,084     100.0     $ 9,777     100.0  
Total recoveries included above    $ 2,083         $ 1,693         $ 1,532      
Net loan charge-offs to average loans(1)(2)                        
Quarter-to-date    0.31 %       0.32 %       0.36 %    
Year-to-date    0.32 %       0.32 %       0.49 %    

(1) Amounts represent charge-offs, net of recoveries.
(2) Annualized based on the actual number of days for each period presented.

Net loan charge-offs to average loans, annualized were 0.31%, compared to 0.32% for the first quarter of 2019 and 0.36% for the second quarter of 2018.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

    Average for the Quarters Ended   June 30, 2019  Percent Change From
    June 30,
2019
  March 31,
 2019
  June 30,
2018
  March 31,
 2019
  June 30,
2018
Demand deposits   $ 3,835,567     $ 3,587,480     $ 3,621,645     6.9     5.9  
Savings deposits   2,079,852     2,037,831     2,060,066     2.1     1.0  
NOW accounts    2,261,103     2,083,366     2,065,530     8.5     9.5  
Money market accounts    1,907,766     1,809,234     1,759,313     5.4     8.4  
Core deposits    10,084,288     9,517,911     9,506,554     6.0     6.1  
Time deposits   2,849,930     2,647,316     1,871,666     7.7     52.3  
Total deposits    $ 12,934,218     $ 12,165,227     $ 11,378,220     6.3     13.7  

Total average deposits were $12.9 billion for the second quarter of 2019, up 6.3% and 13.7% from the first quarter of 2019 and second quarter of 2018, respectively. The increase in total average deposits compared to both prior periods was driven by $566.6 million of total average deposits assumed in the Bridgeview transaction and organic growth. Compared to the first quarter of 2019, the rise in total average deposits was also impacted by the normal seasonal increase in municipal deposits. In addition, growth in total average deposits compared to the second quarter of 2018 was impacted by deposits assumed in the Northern States transaction and various time deposit marketing initiatives.

CAPITAL MANAGEMENT

Capital Ratios

    As of
    June 30,
2019
  March 31,
 2019
  December 31,
 2018
  June 30,
2018
Company regulatory capital ratios:                
Total capital to risk-weighted assets    12.57 %   12.91 %   12.62 %   12.07 %
Tier 1 capital to risk-weighted assets    10.11 %   10.52 %   10.20 %   10.09 %
Common equity Tier 1 ("CET1") to risk-weighted assets    10.11 %   10.52 %   10.20 %   9.68 %
Tier 1 capital to average assets    8.96 %   9.28 %   8.90 %   8.95 %
Company tangible common equity ratios(1)(2):            
Tangible common equity to tangible assets    8.57 %   9.00 %   8.59 %   8.04 %
Tangible common equity, excluding accumulated other comprehensive
  income ("AOCI"), to tangible assets 
  8.59 %   9.21 %   8.95 %   8.50 %
Tangible common equity to risk-weighted assets    10.11 %   10.29 %   9.81 %   9.16 %

(1) These ratios are not subject to formal Federal Reserve regulatory guidance.
(2) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. For details of the calculation of these ratios, see the sections titled, "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

Capital ratios were consistent compared to December 31, 2018 as strong earnings and deferred gains recognized due to the adoption of lease accounting guidance at the beginning of 2019 were offset by the Bridgeview and Northern Oak acquisitions, the impact of loan growth and securities purchases on risk-weighted assets, and stock repurchases. In addition, capital ratios compared to June 30, 2018 were impacted by the phase-out of Tier 1 treatment of the Company's trust-preferred securities and the Northern States transaction in the fourth quarter of 2018.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the second quarter of 2019, which is an increase of 17% from the first quarter of 2019 and 27% from the second quarter of 2018. This dividend represents the 146th consecutive cash dividend paid by the Company since its inception in 1983.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, July 24, 2019 at 11 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (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. 10133117 beginning one hour after completion of the live call until 9:00 A.M. (ET) on August 7, 2019. 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.

Press Release, Presentation Materials, and Additional Information Available on Website

This press release, the presentation materials to be discussed during the conference call, and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.

Forward-Looking Statements

This press release, as well as any oral statements made by or on behalf of First Midwest, may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "outlook," "predict," "project," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts or guarantees of future performance but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. First Midwest cautions you not to place undue reliance on these statements. Forward-looking statements speak only as of the date made, and First Midwest undertakes no obligation to update any forward-looking statements.

Forward-looking statements may be deemed to include, among other things, statements relating to First Midwest's future financial performance, including the related outlook for 2019, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, including the impact of certain actions and initiatives, First Midwest's Delivering Excellence initiative, including costs and benefits associated therewith and the timing thereof, anticipated trends in First Midwest's business, regulatory developments, the impact of federal income tax reform legislation, acquisition transactions, including estimated synergies, cost savings and financial benefits of completed transactions, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions, including those discussed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in First Midwest's Annual Report on Form 10-K for the year ended December 31, 2018, and in First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). These risks and uncertainties are not exhaustive, and other sections of these reports describe additional factors that could adversely impact First Midwest's business and financial performance.

Non-GAAP Financial Information

The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include EPS, adjusted, the efficiency ratio, return on average assets, adjusted, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, adjusted, noninterest expense, adjusted, effective income tax rate, adjusted, tangible common equity to tangible assets, tangible common equity, excluding AOCI, to tangible assets, tangible common equity to risk-weighted assets, return on average common equity, adjusted, return on average tangible common equity, and return on average tangible common equity, adjusted.

The Company presents EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity, all adjusted for certain significant transactions. These transactions include acquisition and integration related expenses associated with completed and pending acquisitions (third and fourth quarters of 2018 and first and second quarters of 2019), Delivering Excellence implementation costs (all periods), and certain income tax benefits resulting from tax reform (third quarter of 2018). Management believes excluding these transactions from EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these transactions from these metrics may enhance comparability for peer comparison purposes.

The Company presents noninterest expense, adjusted, which excludes acquisition and integration related expenses and Delivering Excellence implementation costs. In addition, the Company presents the effective income tax rate, adjusted, which excludes certain income tax benefits aligned with tax reform. Management believes that excluding these items from noninterest expense and the effective income tax rate may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. In addition, management believes that presenting tax-equivalent net interest margin, adjusted, may enhance comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate based on the size of each acquisition, as well as from period to period.

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

About First Midwest

First Midwest (NASDAQ: FMBI) is a relationship-focused financial institution and one of the largest independent publicly traded bank holding companies based on assets headquartered in Chicago and the Midwest, with approximately $17.5 billion of assets and $12 billion in trust assets under management. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, treasury management, equipment leasing, consumer, wealth management, trust and private banking products and services through locations in metropolitan Chicago, northwest Indiana, southeast Wisconsin, central and western Illinois, and eastern Iowa. Visit First Midwest at www.firstmidwest.com.

CONTACTS

Investors
Patrick S. Barrett
EVP, Chief Financial Officer
(708) 831-7231
pat.barrett@firstmidwest.com
Media
Maurissa Kanter
SVP, Director of Corporate Communications
(708) 831-7345
maurissa.kanter@firstmidwest.com
 


Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
   
  As of
  June 30,   March 31,   December 31,   September 30,   June 30,
  2019   2019   2018   2018   2018
Period-End Balance Sheet                  
Assets                  
Cash and due from banks $ 199,684     $ 186,230     $ 211,189     $ 185,239     $ 181,482  
Interest-bearing deposits in other banks 126,966     76,529     78,069     111,360     192,785  
Equity securities, at fair value 40,690     33,304     30,806     29,046     28,441  
Securities available-for-sale, at fair value 2,793,316     2,350,195     2,272,009     2,179,410     2,142,865  
Securities held-to-maturity, at amortized cost  23,277     12,842     10,176     12,673     13,042  
FHLB and FRB stock  109,466     85,790     80,302     87,728     82,778  
Loans:                  
Commercial and industrial  4,524,401     4,183,262     4,120,293     3,994,142     3,844,067  
Agricultural  430,589     438,461     430,928     432,220     433,175  
Commercial real estate:                  
Office, retail, and industrial 1,936,577     1,806,892     1,820,917     1,782,757     1,834,918  
Multi-family 787,155     752,943     764,185     698,611     703,091  
Construction  654,607     683,475     649,337     632,779     633,601  
Other commercial real estate  1,447,673     1,309,878     1,361,810     1,348,831     1,337,396  
Home equity  874,686     862,068     851,607     853,887     847,903  
1-4 family mortgages  1,391,814     1,086,264     1,017,181     888,797     880,181  
Installment  472,102     445,760     430,525     418,524     377,233  
Total loans  12,519,604     11,569,003     11,446,783     11,050,548     10,891,565  
Allowance for loan losses (105,729 )   (103,579 )   (102,219 )   (99,925 )   (96,691 )
Net loans  12,413,875     11,465,424     11,344,564     10,950,623     10,794,874  
OREO  15,313     10,818     12,821     12,244     12,892  
Premises, furniture, and equipment, net 148,347     131,014     132,502     126,389     127,024  
Investment in bank-owned life insurance ("BOLI")  297,118     295,899     296,733     284,074     282,664  
Goodwill and other intangible assets 878,802     808,852     790,744     751,248     753,020  
Accrued interest receivable and other assets 415,379     360,872     245,734     231,465     206,209  
Total assets  $ 17,462,233     $ 15,817,769     $ 15,505,649     $ 14,961,499     $ 14,818,076  
Liabilities and Stockholders' Equity                  
Noninterest-bearing deposits $ 3,748,316     $ 3,588,943     $ 3,642,989     $ 3,618,384     $ 3,667,847  
Interest-bearing deposits 9,440,272     8,572,039     8,441,123     7,908,730     7,824,416  
Total deposits  13,188,588     12,160,982     12,084,112     11,527,114     11,492,263  
Borrowed funds 1,407,378     973,852     906,079     1,073,546     981,044  
Senior and subordinated debt  233,538     203,984     203,808     195,595     195,453  
Accrued interest payable and other liabilities  332,156     319,480     256,652     247,569     265,753  
Stockholders' equity  2,300,573     2,159,471     2,054,998     1,917,675     1,883,563  
Total liabilities and stockholders' equity  $ 17,462,233     $ 15,817,769     $ 15,505,649     $ 14,961,499     $ 14,818,076  
Stockholders' equity, excluding AOCI $ 2,303,383     $ 2,191,630     $ 2,107,510     $ 1,992,808     $ 1,947,963  
Stockholders' equity, common  2,300,573     2,159,471     2,054,998     1,917,675     1,883,563  


First Midwest Bancorp, Inc.          
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
         
                             
  Quarters Ended     Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,
  2019   2019   2018   2018   2018     2019   2018
Income Statement                            
Interest income $ 177,682     $ 162,490     $ 159,527     $ 149,532     $ 142,088       $ 340,172     $ 273,433  
Interest expense 27,370     23,466     20,898     17,505     14,685       50,836     27,467  
Net interest income 150,312     139,024     138,629     132,027     127,403       289,336     245,966  
Provision for loan losses 11,491     10,444     9,811     11,248     11,614       21,935     26,795  
Net interest income after
  provision for loan losses
138,821     128,580     128,818     120,779     115,789       267,401     219,171  
Noninterest Income                            
Service charges on deposit
  accounts
12,196     11,540     12,627     12,378     12,058       23,736     23,710  
Wealth management fees 12,190     11,600     10,951     10,622     10,981       23,790     21,939  
Card-based fees, net 4,549     4,378     4,574     4,123     4,394       8,927     8,327  
Capital market products
  income
2,154     1,279     1,408     1,936     2,819       3,433     4,377  
Mortgage banking income 1,901     1,004     1,304     1,657     1,736       2,905     4,133  
Merchant servicing fees, net 371     337     365     387     383       708     713  
Other service charges,
  commissions, and fees
2,412     2,274     2,353     2,399     2,455       4,686     4,673  
Total fee-based revenues 35,773     32,412     33,582     33,502     34,826       68,185     67,872  
Other income 2,753     2,494     2,880     2,164     2,121       5,247     4,592  
Total noninterest
  income
38,526     34,906     36,462     35,666     36,947       73,432     72,464  
Noninterest Expense                            
Salaries and employee benefits:                          
Salaries and wages 47,776     46,135     45,011     44,067     46,256       93,911     92,086  
Retirement and other
  employee benefits
10,916     11,238     10,378     10,093     11,676       22,154     22,633  
Total salaries and
  employee benefits
58,692     57,373     55,389     54,160     57,932       116,065     114,719  
Net occupancy and
  equipment expense
13,671     14,770     12,827     13,183     13,651       28,441     27,424  
Professional services 10,467     7,788     8,859     7,944     8,298       18,255     15,878  
Technology and related costs 4,908     4,596     4,849     4,763     4,837       9,504     9,608  
Advertising and promotions 3,167     2,372     2,011     3,526     2,061       5,539     3,711  
Net OREO expense 294     681     763     (413 )   (256 )     975     812  
Other expenses 12,987     10,581     13,418     11,015     11,878       23,568     21,831  
Acquisition and integration
  related expenses
9,514     3,691     9,553     60           13,205      
Delivering Excellence
  implementation costs
442     258     3,159     2,239     15,015       700     15,015  
Total noninterest expense 114,142     102,110     110,828     96,477     113,416       216,252     208,998  
Income before income tax
  expense
63,205     61,376     54,452     59,968     39,320       124,581     82,637  
Income tax expense 16,191     15,318     13,044     6,616     9,720       31,509     19,527  
Net income $ 47,014     $ 46,058     $ 41,408     $ 53,352     $ 29,600       $ 93,072     $ 63,110  
Net income applicable to
  common shares
$ 46,625     $ 45,655     $ 41,088     $ 52,911     $ 29,360       $ 92,280     $ 62,559  
Net income applicable to
  common shares, adjusted(1)
54,091     48,616     50,622     46,837     40,621       102,709     73,820  

Footnotes to Condensed Consolidated Statements of Income
(1) See the "Non-GAAP Reconciliations" section for the detailed calculation.


First Midwest Bancorp, Inc.          
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
                             
  As of or for the
  Quarters Ended     Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,
  2019   2019   2018   2018   2018     2019   2018
EPS                            
Basic EPS $ 0.43     $ 0.43     $ 0.39     $ 0.52     $ 0.29       $ 0.86     $ 0.61  
Diluted EPS $ 0.43     $ 0.43     $ 0.39     $ 0.52     $ 0.29       $ 0.86     $ 0.61  
Diluted EPS, adjusted(1) $ 0.50     $ 0.46     $ 0.48     $ 0.46     $ 0.40       $ 0.96     $ 0.72  
Common Stock and Related Per Common Share Data          
Book value $ 20.80     $ 20.20     $ 19.32     $ 18.61     $ 18.28       $ 20.80     $ 18.28  
Tangible book value $ 12.86     $ 12.63     $ 11.88     $ 11.32     $ 10.97       $ 12.86     $ 10.97  
Dividends declared per share $ 0.14     $ 0.12     $ 0.12     $ 0.11     $ 0.11       $ 0.26     $ 0.22  
Closing price at period end $ 20.47     $ 20.46     $ 19.81     $ 26.59     $ 25.47       $ 20.47     $ 25.47  
Closing price to book value 1.0     1.0     1.0     1.4     1.4       1.0     1.4  
Period end shares outstanding 110,589     106,900     106,375     103,058     103,059       110,589     103,059  
Period end treasury shares 9,818     8,775     9,297     9,301     9,297       9,818     9,297  
Common dividends $ 15,503     $ 12,837     $ 12,774     $ 11,326     $ 11,333       $ 28,340     $ 22,682  
Dividend payout ratio 32.56 %   27.91 %   30.77 %   21.15 %   37.93 %     30.23 %   36.07 %
Dividend payout ratio, adjusted(1) 28.00 %   26.09 %   25.00 %   23.91 %   27.50 %     27.08 %   30.56 %
Key Ratios/Data                            
Return on average common
  equity(2)
8.34 %   8.66 %   8.09 %   10.99 %   6.23 %     8.50 %   6.70 %
Return on average common
  equity, adjusted(1)(2)
9.68 %   9.22 %   9.97 %   9.73 %   8.62 %     9.46 %   7.91 %
Return on average tangible
  common equity(2)
13.83 %   14.41 %   13.42 %   18.60 %   10.83 %     14.11 %   11.65 %
Return on average tangible
  common equity, adjusted(1)(2)
15.95 %   15.31 %   16.42 %   16.51 %   14.81 %     15.64 %   13.67 %
Return on average assets(2) 1.13 %   1.19 %   1.06 %   1.42 %   0.81 %     1.16 %   0.88 %
Return on average assets,
  adjusted(1)(2)
1.31 %   1.27 %   1.30 %   1.26 %   1.12 %     1.29 %   1.04 %
Loans to deposits 94.93 %   95.13 %   94.73 %   95.87 %   94.77 %     94.93 %   94.77 %
Efficiency ratio(1) 54.67 %   55.69 %   55.25 %   56.03 %   59.65 %     55.16 %   60.28 %
Net interest margin(2)(3) 4.06 %   4.04 %   3.96 %   3.92 %   3.91 %     4.05 %   3.85 %
Yield on average interest-earning
  assets(2)(3)
4.80 %   4.72 %   4.56 %   4.44 %   4.35 %     4.76 %   4.28 %
Cost of funds(2)(4) 0.77 %   0.72 %   0.63 %   0.55 %   0.47 %     0.75 %   0.45 %
Net noninterest expense to
  average assets(2)
1.81 %   1.74 %   1.90 %   1.62 %   2.10 %     1.78 %   1.91 %
Effective income tax rate 25.62 %   24.96 %   23.96 %   11.03 %   24.72 %     25.29 %   23.63 %
Effective income tax rate,
  adjusted(1)
25.62 %   24.96 %   23.96 %   24.04 %   24.72 %     25.29 %   23.63 %
Capital Ratios                            
Total capital to risk-weighted
  assets(1)
12.57 %   12.91 %   12.62 %   12.32 %   12.07 %     12.57 %   12.07 %
Tier 1 capital to risk-weighted
  assets(1)
10.11 %   10.52 %   10.20 %   10.34 %   10.09 %     10.11 %   10.09 %
CET1 to risk-weighted assets(1) 10.11 %   10.52 %   10.20 %   9.93 %   9.68 %     10.11 %   9.68 %
Tier 1 capital to average assets(1) 8.96 %   9.28 %   8.90 %   9.10 %   8.95 %     8.96 %   8.95 %
Tangible common equity to
  tangible assets(1)
8.57 %   9.00 %   8.59 %   8.21 %   8.04 %     8.57 %   8.04 %
Tangible common equity, excluding AOCI, to tangible
  assets(1)
8.59 %   9.21 %   8.95 %   8.74 %   8.50 %     8.59 %   8.50 %
Tangible common equity to risk
  -weighted assets(1)
10.11 %   10.29 %   9.81 %   9.33 %   9.16 %     10.11 %   9.16 %
Note: Selected Financial Information footnotes are located at the end of this section.          


First Midwest Bancorp, Inc.          
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
                             
  As of or for the
  Quarters Ended     Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,
  2019   2019   2018   2018   2018     2019   2018
Asset Quality Performance Data                          
Non-performing assets                            
Commercial and industrial $ 19,809     $ 34,694     $ 33,507     $ 37,981     $ 22,672       $ 19,809     $ 22,672  
Agricultural 6,712     2,359     1,564     2,104     2,992       6,712     2,992  
Commercial real estate:                            
Office, retail, and industrial 17,875     17,484     6,510     6,685     9,007       17,875     9,007  
Multi-family 5,322     2,959     3,107     3,184     3,551       5,322     3,551  
Construction 152         144     208     208       152     208  
Other commercial real estate 3,982     2,971     2,854     4,578     5,288       3,982     5,288  
Consumer 9,625     9,738     9,249     10,026     9,757       9,625     9,757  
Total non-accrual loans 63,477     70,205     56,935     64,766     53,475       63,477     53,475  
90 days or more past due loans,
  still accruing interest
2,615     8,446     8,282     2,949     7,954       2,615     7,954  
Total non-performing loans 66,092     78,651     65,217     67,715     61,429       66,092     61,429  
Accruing TDRs 1,441     1,844     1,866     1,741     1,760       1,441     1,760  
Foreclosed assets(5) 28,488     10,818     12,821     12,244     12,892       28,488     12,892  
Total non-performing assets $ 96,021     $ 91,313     $ 79,904     $ 81,700     $ 76,081       $ 96,021     $ 76,081  
30-89 days past due loans $ 34,460     $ 45,764     $ 37,524     $ 46,257     $ 39,171       $ 34,460     $ 39,171  
Allowance for credit losses                            
Allowance for loan losses $ 105,729     $ 103,579     $ 102,219     $ 99,925     $ 96,691       $ 105,729     $ 96,691  
Reserve for unfunded
  commitments
1,200     1,200     1,200     1,000     1,000       1,200     1,000  
Total allowance for credit
  losses
$ 106,929     $ 104,779     $ 103,419     $ 100,925     $ 97,691       $ 106,929     $ 97,691  
Provision for loan losses $ 11,491     $ 10,444     $ 9,811     $ 11,248     $ 11,614       $ 21,935     $ 26,795  
Net charge-offs by category                            
Commercial and industrial $ 4,600     $ 5,061     $ 5,558     $ 5,230     $ 7,081       $ 9,661     $ 20,230  
Agricultural 658     89     71     631     828       747     1,811  
Commercial real estate:                            
Office, retail, and industrial 1,454     618     713     596     279       2,072     643  
Multi-family     339     (3 )   1     4       339     4  
Construction (10 )       (99 )   (4 )   (8 )     (10 )   (21 )
Other commercial real estate 284     189     (817 )   23     (358 )     473     (328 )
Consumer 2,355     2,788     2,094     1,537     1,951       5,143     3,494  
Total net charge-offs $ 9,341     $ 9,084     $ 7,517     $ 8,014     $ 9,777       $ 18,425     $ 25,833  
Total recoveries included above $ 2,083     $ 1,693     $ 2,810     $ 1,250     $ 1,532       $ 3,776     $ 2,561  
Note: Selected Financial Information footnotes are located at the end of this section.          


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
    As of or for the
    Quarters Ended
    June 30,   March 31,   December 31,   September 30,   June 30,
    2019   2019   2018   2018   2018
Asset quality ratios                    
Non-accrual loans to total loans   0.51 %   0.61 %   0.50 %   0.59 %   0.49 %
Non-performing loans to total loans   0.53 %   0.68 %   0.57 %   0.61 %   0.56 %
Non-performing assets to total loans plus foreclosed assets   0.77 %   0.79 %   0.70 %   0.74 %   0.70 %
Non-performing assets to tangible common equity plus allowance
  for credit losses
  6.28 %   6.27 %   5.84 %   6.45 %   6.19 %
Non-accrual loans to total assets   0.36 %   0.44 %   0.37 %   0.43 %   0.36 %
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans(6)    0.85 %   0.91 %   0.90 %   0.91 %   0.90 %
Allowance for credit losses to loans, excluding acquired loans   0.98 %   1.00 %   1.01 %   1.01 %   1.00 %
Allowance for credit losses to non-accrual loans   168.45 %   149.25 %   181.64 %   155.83 %   182.69 %
Allowance for credit losses to non-performing loans   161.79 %   133.22 %   158.58 %   149.04 %   159.03 %
Net charge-offs to average loans(2)    0.31 %   0.32 %   0.26 %   0.29 %   0.36 %

Footnotes to Selected Financial Information
(1)  See the "Non-GAAP Reconciliations" section for the detailed calculation.
(2)  Annualized based on the actual number of days for each period presented.
(3)  Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%.
(4)  Cost of funds expresses total interest expense as a percentage of total average funding sources.
(5)  Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
(6)  This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established on acquired loans as necessary to reflect credit deterioration.


First Midwest Bancorp, Inc. 
         
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
         
                             
  Quarters Ended     Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,
  2019   2019   2018   2018   2018     2019   2018
EPS                            
Net income $ 47,014     $ 46,058     $ 41,408     $ 53,352     $ 29,600       $ 93,072     $ 63,110  
Net income applicable to non
  -vested restricted shares 
(389 )   (403 )   (320 )   (441 )   (240 )     (792 )   (551 )
Net income applicable to
  common shares
46,625     45,655     41,088     52,911     29,360       92,280     62,559  
Adjustments to net income:                            
Acquisition and integration
  related expenses 
9,514     3,691     9,553     60           13,205      
Tax effect of acquisition and
  integration related expenses 
(2,379 )   (923 )   (2,388 )   (15 )         (3,301 )    
Delivering Excellence
  implementation costs 
442     258     3,159     2,239     15,015       700     15,015  
Tax effect of Delivering
  Excellence implementation
  costs 
(111 )   (65 )   (790 )   (560 )   (3,754 )     (175 )   (3,754 )
Income tax benefits             (7,798 )              
Total adjustments to net
  income, net of tax
7,466     2,961     9,534     (6,074 )   11,261       10,429     11,261  
Net income applicable to
  common shares,
  adjusted(1)
$ 54,091     $ 48,616     $ 50,622     $ 46,837     $ 40,621       $ 102,709     $ 73,820  
Weighted-average common shares outstanding:                          
Weighted-average common
  shares outstanding (basic) 
108,467     105,770     105,116     102,178     102,159       107,126     102,041  
Dilutive effect of common
  stock equivalents
                          8  
Weighted-average diluted
  common shares
  outstanding 
108,467     105,770     105,116     102,178     102,159       107,126     102,049  
Basic EPS $ 0.43     $ 0.43     $ 0.39     $ 0.52     $ 0.29       $ 0.86     $ 0.61  
Diluted EPS $ 0.43     $ 0.43     $ 0.39     $ 0.52     $ 0.29       $ 0.86     $ 0.61  
Diluted EPS, adjusted(1) $ 0.50     $ 0.46     $ 0.48     $ 0.46     $ 0.40       $ 0.96     $ 0.72  
Anti-dilutive shares not included
  in the computation of diluted
  EPS
                          54  
Dividend Payout Ratio                            
Dividends declared per share  $ 0.14     $ 0.12     $ 0.12     $ 0.11     $ 0.11       $ 0.26     $ 0.22  
Dividend payout ratio 32.56 %   27.91 %   30.77 %   21.15 %   37.93 %     30.23 %   36.07 %
Dividend payout ratio, adjusted(1) 28.00 %   26.09 %   25.00 %   23.91 %   27.50 %     27.08 %   30.56 %
Effective Tax Rate                            
Income before income tax
  expense 
$ 63,205     $ 61,376     $ 54,452     $ 59,968     $ 39,320       $ 124,581     $ 82,637  
Income tax expense  $ 16,191     $ 15,318     $ 13,044     $ 6,616     $ 9,720       $ 31,509     $ 19,527  
Income tax benefits              7,798                
Income tax expense, adjusted  $ 16,191     $ 15,318     $ 13,044     $ 14,414     $ 9,720       $ 31,509     $ 19,527  
Effective income tax rate 25.62 %   24.96 %   23.96 %   11.03 %   24.72 %     25.29 %   23.63 %
Effective income tax rate,
  adjusted 
25.62 %   24.96 %   23.96 %   24.04 %   24.72 %     25.29 %   23.63 %
                             
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.          


First Midwest Bancorp, Inc. 
         
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
         
                             
  As of or for the
  Quarters Ended     Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,     June 30,   June 30,
  2019   2019   2018   2018   2018     2019   2018
Return on Average Common and Tangible Common Equity                      
Net income applicable to
  common shares 
$ 46,625     $ 45,655     $ 41,088     $ 52,911     $ 29,360       $ 92,280     $ 62,559  
Intangibles amortization 2,624     2,363     2,077     1,772     1,794       4,987     3,596  
Tax effect of intangibles
  amortization
(656 )   (591 )   (519 )   (443 )   (449 )     (1,247 )   (957 )
Net income applicable to
  common shares, excluding
  intangibles amortization 
48,593     47,427     42,646     54,240     30,705       96,020     65,198  
Total adjustments to net income,
  net of tax(1) 
7,466     2,961     9,534     (6,074 )   11,261       10,429     11,261  
Net income applicable to
  common shares, adjusted(1)
$ 56,059     $ 50,388     $ 52,180     $ 48,166     $ 41,966       $ 106,449     $ 76,459  
Average stockholders' equity  $ 2,241,569     $ 2,138,281     $ 2,015,217     $ 1,909,330     $ 1,890,727       $ 2,190,210     $ 1,882,121  
Less: average intangible assets (832,263 )   (803,408 )   (754,495 )   (752,109 )   (753,887 )     (817,915 )   (753,879 )
Average tangible common
  equity 
$ 1,409,306     $ 1,334,873     $ 1,260,722     $ 1,157,221     $ 1,136,840       $ 1,372,295     $ 1,128,242  
Return on average common
  equity(2) 
8.34 %   8.66 %   8.09 %   10.99 %   6.23 %     8.50 %   6.70 %
Return on average common
  equity, adjusted(1)(2) 
9.68 %   9.22 %   9.97 %   9.73 %   8.62 %     9.46 %   7.91 %
Return on average tangible
  common equity(2)
13.83 %   14.41 %   13.42 %   18.60 %   10.83 %     14.11 %   11.65 %
Return on average tangible
  common equity, adjusted(1)(2)
15.95 %   15.31 %   16.42 %   16.51 %   14.81 %     15.64 %   13.67 %
Return on Average Assets                      
Net income $ 47,014     $ 46,058     $ 41,408     $ 53,352     $ 29,600       $ 93,072     $ 63,110  
Total adjustments to net income,
  net of tax(1) 
7,466     2,961     9,534     (6,074 )   11,261       10,429     11,261  
Net income, adjusted(1) $ 54,480     $ 49,019     $ 50,942     $ 47,278     $ 40,861       $ 103,501     $ 74,371  
Average assets  $ 16,740,050     $ 15,667,839     $ 15,503,399     $ 14,894,670     $ 14,605,715       $ 16,206,906     $ 14,397,540  
Return on average assets(2)  1.13 %   1.19 %   1.06 %   1.42 %   0.81 %     1.16 %   0.88 %
Return on average assets,
  adjusted(1)(2) 
1.31 %   1.27 %   1.30 %   1.26 %   1.12 %     1.29 %   1.04 %
Efficiency Ratio Calculation                          
Noninterest expense  $ 114,142     $ 102,110     $ 110,828     $ 96,477     $ 113,416       $ 216,252     $ 208,998  
Less:                            
Net OREO expense  (294 )   (681 )   (763 )   413     256       (975 )   (812 )
Acquisition and integration
  related expenses 
(9,514 )   (3,691 )   (9,553 )   (60 )         (13,205 )    
Delivering Excellence
  implementation costs
(442 )   (258 )   (3,159 )   (2,239 )   (15,015 )     (700 )   (15,015 )
Total  $ 103,892     $ 97,480     $ 97,353     $ 94,591     $ 98,657       $ 201,372     $ 193,171  
Tax-equivalent net interest
  income(3) 
$ 151,492     $ 140,132     $ 139,755     $ 133,161     $ 128,442       $ 291,624     $ 247,980  
Noninterest income  38,526     34,906     36,462     35,666     36,947       73,432     72,464  
Total  $ 190,018     $ 175,038     $ 176,217     $ 168,827     $ 165,389       $ 365,056     $ 320,444  
Efficiency ratio  54.67 %   55.69 %   55.25 %   56.03 %   59.65 %     55.16 %   60.28 %
                             
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.          


First Midwest Bancorp, Inc. 
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
                   
  As of or for the
  Quarters Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
  2019   2019   2018   2018   2018
Risk-Based Capital Data                  
Common stock $ 1,204     $ 1,157     $ 1,157     $ 1,124     $ 1,124  
Additional paid-in capital  1,205,396     1,103,991     1,114,580     1,028,635     1,025,703  
Retained earnings 1,304,756     1,273,245     1,192,767     1,164,133     1,122,107  
Treasury stock, at cost  (207,973 )   (186,763 )   (200,994 )   (201,084 )   (200,971 )
Goodwill and other intangible assets, net of deferred tax liabilities  (878,802 )   (808,852 )   (790,744 )   (751,248 )   (753,020 )
Disallowed DTAs (2,804 )   (809 )   (1,334 )       (389 )
CET1 capital  1,421,777     1,381,969     1,315,432     1,241,560     1,194,554  
Trust-preferred securities              50,690     50,690  
Other disallowed DTAs         (334 )       (97 )
Tier 1 capital  1,421,777     1,381,969     1,315,098     1,292,250     1,245,147  
Tier 2 capital  345,078     312,840     311,391     248,118     244,795  
Total capital  $ 1,766,855     $ 1,694,809     $ 1,626,489     $ 1,540,368     $ 1,489,942  
Risk-weighted assets $ 14,056,482     $ 13,131,237     $ 12,892,180     $ 12,500,342     $ 12,345,200  
Adjusted average assets $ 15,863,145     $ 14,891,534     $ 14,782,327     $ 14,202,776     $ 13,907,100  
Total capital to risk-weighted assets 12.57 %   12.91 %   12.62 %   12.32 %   12.07 %
Tier 1 capital to risk-weighted assets 10.11 %   10.52 %   10.20 %   10.34 %   10.09 %
CET1 to risk-weighted assets 10.11 %   10.52 %   10.20 %   9.93 %   9.68 %
Tier 1 capital to average assets 8.96 %   9.28 %   8.90 %   9.10 %   8.95 %
Tangible Common Equity                  
Stockholders' equity  $ 2,300,573     $ 2,159,471     $ 2,054,998     $ 1,917,675     $ 1,883,563  
Less: goodwill and other intangible assets (878,802 )   (808,852 )   (790,744 )   (751,248 )   (753,020 )
Tangible common equity  1,421,771     1,350,619     1,264,254     1,166,427     1,130,543  
Less: AOCI 2,810     32,159     52,512     75,133     64,400  
Tangible common equity, excluding AOCI  $ 1,424,581     $ 1,382,778     $ 1,316,766     $ 1,241,560     $ 1,194,943  
Total assets $ 17,462,233     $ 15,817,769     $ 15,505,649     $ 14,961,499     $ 14,818,076  
Less: goodwill and other intangible assets (878,802 )   (808,852 )   (790,744 )   (751,248 )   (753,020 )
Tangible assets  $ 16,583,431     $ 15,008,917     $ 14,714,905     $ 14,210,251     $ 14,065,056  
Tangible common equity to tangible assets 8.57 %   9.00 %   8.59 %   8.21 %   8.04 %
Tangible common equity, excluding AOCI, to tangible assets 8.59 %   9.21 %   8.95 %   8.74 %   8.50 %
Tangible common equity to risk-weighted assets 10.11 %   10.29 %   9.81 %   9.33 %   9.16 %
                   

Footnotes to Non-GAAP Reconciliations
(1)  Adjustments to net income for each period presented are detailed in the EPS non-GAAP reconciliation above. For additional discussion of adjustments, see the "Non-GAAP Financial Information" section.
(2)  Annualized based on the actual number of days for each period presented.
(3)  Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%

Is your business listed correctly on America’s largest city directory network of 1,000 portals?