CHICAGO, Jan. 22, 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 fourth quarter and full year of 2018. Net income for the fourth quarter of 2018 was $41.4 million, or $0.39 per share, compared to $53.4 million, or $0.52 per share, for the third quarter of 2018, and $2.3 million, or $0.02 per share, for the fourth quarter of 2017. For the full year of 2018, the Company reported net income of $157.9 million, or $1.52 per share, compared to $98.4 million, or $0.96 per share, for the year ended December 31, 2017.
Reported results for the fourth quarter and the full year of 2018 were impacted by acquisition and integration related expenses and implementation costs related to the Company's Delivering Excellence initiative ("Delivering Excellence"). In addition, the third quarter and full year of 2018 were impacted by certain income tax benefits resulting from federal income tax reform legislation ("tax reform"). Reported results for the fourth quarter and full year of 2017 were impacted by various actions taken by the Company in light of tax reform. In addition, the full year of 2017 was 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(1) was $0.48 for the fourth quarter of 2018 compared to $0.46 for the third quarter of 2018 and $0.34 for the fourth quarter of 2017. EPS, adjusted(1) was $1.67 and $1.35 for the full years ended December 31, 2018 and 2017, respectively.
FOURTH QUARTER AND FULL YEAR HIGHLIGHTS
- Generated EPS of $0.39 for the fourth quarter of 2018 and $1.52 for the full year 2018, up from $0.02 and $0.96 from the same periods in 2017, respectively.
- Increased EPS, adjusted(1) by 41% and 24% from the fourth quarter and full year of 2017, respectively.
- Produced returns on average tangible common equity, adjusted(1) of 16.4% for the fourth quarter of 2018 and 15.1% for the full year 2018, up 407 and 207 basis points, respectively, versus a year ago.
- Expanded net interest income and margin to $517 million and 3.90%, respectively, for the full year 2018, up 9% and 3 basis points from the full year 2017.
- Improved operating efficiency, lowering the efficiency ratio(1) to 55% and 58% for the fourth quarter and full year of 2018 compared to 61% and 60% for the same periods in 2017.
- Grew loans to over $11 billion, up 14%, annualized, from September 30, 2018 and 10% from December 31, 2017.
- Reduced non-performing assets to $80 million, down 2% from September 30, 2018 and 14% from December 31, 2017.
- Increased total average deposits to $12 billion, up 4% from the third quarter of 2018 and 7% from the fourth quarter of 2017.
- Generated common equity Tier 1 capital of 10.20%, up 27 basis points from September 30, 2018 and 52 basis points from December 31, 2017.
- Completed or announced the following acquisitions:
- Completed Northern States Financial Corporation on October 12, 2018, adding $579 million of assets and $463 million of deposits, of which 75% were core deposits.
- Completed Northern Oak Wealth Management, Inc. on January 16, 2019, adding approximately $800 million of trust assets under management.
- Announced the pending Bridgeview Bancorp, Inc. acquisition with approximately $1.2 billion of assets, $1.1 billion of deposits, and $800 million of loans.
"2018 was a very successful year for First Midwest," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "We grew loans and deposits and added clients across our business while continuing to focus on operating efficiency. The success of these efforts, combined with the benefits of higher interest rates and lower taxes, significantly improved our performance for the quarter and full year. Importantly, we also continued to build for our future, executing throughout the year on our strategic priorities, including targeted acquisitions and our "Delivering Excellence" and technology initiatives."
Mr. Scudder concluded, "As we enter the new year, we are ready to build on 2018’s momentum. Continuation of our "Delivering Excellence" initiative will further enhance an already superior client experience as well as strengthen operational performance and scalability. Pending as well as recently completed acquisitions will further set us apart as a market leader in metro Chicago, positioning us for further market expansion and increasing our flexibility as we continue to invest in our businesses, communities and colleagues. All of these actions are taken with an unwavering focus on helping our clients achieve financial success and growing long-term value for our shareholders."
DELIVERING EXCELLENCE INITIATIVE
During 2018, the Company initiated certain actions in connection with its Delivering Excellence initiative. This initiative further demonstrates the Company's ongoing commitment to providing service excellence to its clients, as well as maximizing both the efficiency and scalability of its operating platform. Components of Delivering Excellence include improved delivery of services to clients through streamlined processes, the consolidation or closing of 19 locations, organizational realignments, and several revenue growth opportunities. The implementation of this initiative resulted in pre-tax implementation costs of $20 million for the year ended December 31, 2018, associated with property valuation adjustments on locations identified for closure, employee severance, and general restructuring and advisory services.
ACQUISITIONS
Completed
Northern States Financial Corporation
On October 12, 2018, the Company completed its acquisition of Northern States Financial Corporation ("Northern States"), the holding company for NorStates Bank, based in Waukegan, Illinois. At closing, the Company acquired $579 million of total assets, $463 million of deposits, and $285 million of loans. The merger consideration totaled $83 million and consisted of 3.3 million shares of Company common stock. All Northern States operating systems were converted during the fourth quarter of 2018.
Northern Oak Wealth Management, Inc.
On January 16, 2019, the Company completed its acquisition of Northern Oak Wealth Management, Inc. ("Northern Oak"), a registered investment adviser based in Milwaukee, Wisconsin with approximately $800 million of trust assets under management.
Pending
Bridgeview Bancorp, Inc.
On December 6, 2018, the Company entered into a merger agreement to acquire Bridgeview Bancorp, Inc. ("Bridgeview"), the holding company for Bridgeview Bank Group. With the acquisition the Company would acquire 13 banking offices located across greater Chicagoland and several suburbs. As of September 30, 2018, Bridgeview had approximately $1.2 billion of assets, $1.1 billion of deposits, and $800 million of loans, excluding Bridgeview's mortgage division, which the Company is not acquiring. The merger agreement provides for a fixed exchange ratio of 0.2767 shares of Company common stock, plus $1.79 in cash, for each share of Bridgeview common stock, subject to certain adjustments. As of the date of announcement, the overall transaction was valued at approximately $145 million. The acquisition is subject to customary regulatory approvals, the approval of Bridgeview’s stockholders, and the completion of various closing conditions, and is anticipated to close in the second quarter of 2019.
(1) 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 | ||||||||||||||||||||||||||||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||
| Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | Average Balance | Interest Earned/ Paid | Yield/ Rate (%) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||
| Other interest-earning assets | $ | 145,436 | $ | 476 | 1.30 | $ | 162,646 | $ | 631 | 1.54 | $ | 203,459 | $ | 721 | 1.41 | |||||||||||||||||||
| Securities(1) | 2,359,083 | 15,907 | 2.70 | 2,245,784 | 14,533 | 2.59 | 1,890,020 | 10,977 | 2.32 | |||||||||||||||||||||||||
| Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock | 85,427 | 709 | 3.32 | 83,273 | 734 | 3.53 | 63,520 | 506 | 3.19 | |||||||||||||||||||||||||
| Loans(1) | 11,408,062 | 143,561 | 4.99 | 10,980,916 | 134,768 | 4.87 | 10,384,074 | 119,204 | 4.55 | |||||||||||||||||||||||||
| Total interest-earning assets(1) | 13,998,008 | 160,653 | 4.56 | 13,472,619 | 150,666 | 4.44 | 12,541,073 | 131,408 | 4.16 | |||||||||||||||||||||||||
| Cash and due from banks | 211,312 | 196,382 | 188,683 | |||||||||||||||||||||||||||||||
| Allowance for loan losses | (104,681 | ) | (100,717 | ) | (99,590 | ) | ||||||||||||||||||||||||||||
| Other assets | 1,398,760 | 1,326,386 | 1,488,459 | |||||||||||||||||||||||||||||||
| Total assets | $ | 15,503,399 | $ | 14,894,670 | $ | 14,118,625 | ||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||||||||||||||||||||||
| Savings deposits | $ | 2,044,312 | 358 | 0.07 | $ | 2,003,928 | 364 | 0.07 | $ | 2,017,489 | 382 | 0.08 | ||||||||||||||||||||||
| NOW accounts | 2,128,722 | 1,895 | 0.35 | 2,164,018 | 2,151 | 0.39 | 1,992,150 | 690 | 0.14 | |||||||||||||||||||||||||
| Money market deposits | 1,831,311 | 1,990 | 0.43 | 1,772,821 | 1,522 | 0.34 | 1,938,195 | 772 | 0.16 | |||||||||||||||||||||||||
| Time deposits | 2,311,453 | 8,894 | 1.53 | 1,993,361 | 6,389 | 1.27 | 1,619,758 | 3,033 | 0.74 | |||||||||||||||||||||||||
| Borrowed funds | 1,031,249 | 4,469 | 1.72 | 980,421 | 3,927 | 1.59 | 554,634 | 2,263 | 1.62 | |||||||||||||||||||||||||
| Senior and subordinated debt | 204,030 | 3,292 | 6.40 | 195,526 | 3,152 | 6.40 | 195,102 | 3,114 | 6.33 | |||||||||||||||||||||||||
| Total interest-bearing liabilities | 9,551,077 | 20,898 | 0.87 | 9,110,075 | 17,505 | 0.76 | 8,317,328 | 10,254 | 0.49 | |||||||||||||||||||||||||
| Demand deposits | 3,685,806 | 3,624,520 | 3,611,811 | |||||||||||||||||||||||||||||||
| Total funding sources | 13,236,883 | 0.63 | 12,734,595 | 0.55 | 11,929,139 | 0.34 | ||||||||||||||||||||||||||||
| Other liabilities | 251,299 | 250,745 | 309,221 | |||||||||||||||||||||||||||||||
| Stockholders' equity - common | 2,015,217 | 1,909,330 | 1,880,265 | |||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 15,503,399 | $ | 14,894,670 | $ | 14,118,625 | ||||||||||||||||||||||||||||
| Tax-equivalent net interest income/margin(1) | 139,755 | 3.96 | 133,161 | 3.92 | 121,154 | 3.84 | ||||||||||||||||||||||||||||
| Tax-equivalent adjustment | (1,126 | ) | (1,134 | ) | (1,823 | ) | ||||||||||||||||||||||||||||
| Net interest income (GAAP)(1) | $ | 138,629 | $ | 132,027 | $ | 119,331 | ||||||||||||||||||||||||||||
| Impact of acquired loan accretion(1) | $ | 5,426 | 0.15 | $ | 4,565 | 0.13 | $ | 6,240 | 0.20 | |||||||||||||||||||||||||
| Tax-equivalent net interest income/margin, adjusted(1) | $ | 134,329 | 3.81 | $ | 128,596 | 3.79 | $ | 114,914 | 3.64 | |||||||||||||||||||||||||
(1) Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming the applicable federal income tax rate for each period presented. As a result, interest income and yields on tax-exempt securities and loans subsequent to December 31, 2017 are presented using the current federal income tax rate of 21% and prior periods are presented using the federal income tax rate applicable at that time of 35%. 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 fourth quarter of 2018 increased by 5.0% from the third quarter of 2018 and 16.2% compared to the fourth quarter of 2017. The rise in net interest income compared to both prior periods resulted primarily from the acquisition of interest-earning assets from the Northern States transaction early in the fourth quarter of 2018, higher interest rates, and growth in loans and securities, partially offset by higher cost of funds.
Acquired loan accretion contributed $5.4 million, $4.6 million, and $6.2 million to net interest income for the fourth quarter of 2018, the third quarter of 2018, and the fourth quarter of 2017, respectively.
Tax-equivalent net interest margin for the current quarter was 3.96%, increasing by 4 basis points from the third quarter of 2018 and 12 basis points from the fourth quarter of 2017. Compared to both prior periods presented, the benefit of higher interest rates more than offset the rise in funding costs. In addition, compared to the fourth quarter of 2017, tax-equivalent net interest margin was negatively impacted by a 5 basis point decrease in acquired loan accretion and a 3 basis point reduction in the tax-equivalent adjustment as a result of lower federal income tax rates.
For the fourth quarter of 2018, total average interest-earning assets rose by $525.4 million from the third quarter of 2018 and $1.5 billion from the fourth quarter of 2017. The increase compared to both prior periods resulted primarily from interest-earning assets acquired in the Northern States transaction, organic loan growth, and security purchases.
Total average funding sources for the fourth quarter of 2018 increased by $502.3 million from the third quarter of 2018 and $1.3 billion from the fourth quarter of 2017. The increase compared to both prior periods resulted from funding sources acquired in the Northern States transaction, time deposits, and FHLB advances.
Noninterest Income Analysis
(Dollar amounts in thousands)
| Quarters Ended | December 31, 2018 Percent Change From | |||||||||||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | ||||||||||||||
| Service charges on deposit accounts | $ | 12,627 | $ | 12,378 | $ | 12,289 | 2.0 | 2.8 | ||||||||||
| Wealth management fees | 10,951 | 10,622 | 10,967 | 3.1 | (0.1 | ) | ||||||||||||
| Card-based fees, net(1): | ||||||||||||||||||
| Card-based fees | 6,615 | 5,975 | 6,052 | 10.7 | 9.3 | |||||||||||||
| Cardholder expenses | (2,041 | ) | (1,852 | ) | — | 10.2 | N/M | |||||||||||
| Card-based fees, net | 4,574 | 4,123 | 6,052 | 10.9 | (24.4 | ) | ||||||||||||
| Capital market products income | 1,408 | 1,936 | 1,986 | (27.3 | ) | (29.1 | ) | |||||||||||
| Mortgage banking income | 1,304 | 1,657 | 2,352 | (21.3 | ) | (44.6 | ) | |||||||||||
| Merchant servicing fees, net(1): | ||||||||||||||||||
| Merchant servicing fees | 2,566 | 2,702 | 1,771 | (5.0 | ) | 44.9 | ||||||||||||
| Merchant card expenses | (2,201 | ) | (2,315 | ) | — | (4.9 | ) | N/M | ||||||||||
| Merchant servicing fees, net | 365 | 387 | 1,771 | (5.7 | ) | (79.4 | ) | |||||||||||
| Other service charges, commissions, and fees | 2,353 | 2,399 | 2,369 | (1.9 | ) | (0.7 | ) | |||||||||||
| Total fee-based revenues | 33,582 | 33,502 | 37,786 | 0.2 | (11.1 | ) | ||||||||||||
| Other income | 2,880 | 2,164 | 2,476 | 33.1 | 16.3 | |||||||||||||
| Net securities losses | — | — | (5,357 | ) | — | (100.0 | ) | |||||||||||
| Total noninterest income(1) | $ | 36,462 | $ | 35,666 | $ | 34,905 | 2.2 | 4.5 | ||||||||||
| Accounting reclassification(1) | $ | — | $ | — | $ | (3,338 | ) | — | (100.0 | ) | ||||||||
| Net securities losses | — | — | 5,357 | — | (100.0 | ) | ||||||||||||
| Total noninterest income, adjusted(2) | $ | 36,462 | $ | 35,666 | $ | 36,924 | 2.2 | (1.3 | ) | |||||||||
N/M – Not meaningful.
(1) As a result of accounting guidance adopted in the first quarter of 2018 (the "accounting reclassification"), certain noninterest income line items and the related noninterest expense line items that are presented on a gross basis for the prior year period are presented on a net basis in noninterest income for the current year periods. For further discussion of this guidance, see Note 2 of "Notes to the Consolidated Financial Statements" in Item 8 in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
(2) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
Total noninterest income of $36.5 million for the fourth quarter of 2018 was up by 2.2% and 4.5% from the third quarter of 2018 and the fourth quarter of 2017, respectively. In the first quarter of 2018, the Company adopted accounting guidance which impacted how cardholder and merchant card expenses are presented within noninterest income on a prospective basis. As a result, these expenses are presented on a net basis against the related noninterest income for the third and fourth quarters of 2018 versus a gross basis within noninterest expense for the fourth quarter of 2017. Excluding the accounting reclassification and net securities losses, noninterest income decreased modestly from the fourth quarter of 2017.
Compared to both prior periods, the increase in service charges on deposit accounts and net card-based fees was driven primarily by services provided to customers acquired in the Northern States transaction. In addition, net card-based fees benefited from higher transaction volumes compared to both prior periods. The rise in wealth management fees compared to the third quarter of 2018 resulted from continued sales of fiduciary and investment advisory services to new and existing customers, which was partially offset by the lower market environment.
Mortgage banking income for the fourth quarter of 2018 resulted from sales of $51.4 million of 1-4 family mortgage loans in the secondary market, compared to $61.3 million in the third quarter of 2018 and $66.5 million in the fourth quarter of 2017. In addition, mortgage banking income for the fourth quarter of 2018 decreased due to changes in the fair value of mortgage servicing rights, which fluctuate from quarter to quarter. Noninterest income for the fourth quarter of 2018 was impacted by lower capital market products income, which fluctuates from quarter to quarter based on the size and frequency of sales to corporate clients. Other income compared to both prior periods was elevated primarily due to higher fair value adjustments on equity securities and other miscellaneous items.
Net securities losses of $5.4 million were recognized during the fourth quarter of 2017 in connection with certain actions taken in light of tax reform.
Noninterest Expense Analysis
(Dollar amounts in thousands)
| Quarters Ended | December 31, 2018 Percent Change From | |||||||||||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | ||||||||||||||
| Salaries and employee benefits: | ||||||||||||||||||
| Salaries and wages | $ | 45,011 | $ | 44,067 | $ | 48,204 | 2.1 | (6.6 | ) | |||||||||
| Retirement and other employee benefits | 10,378 | 10,093 | 10,204 | 2.8 | 1.7 | |||||||||||||
| Total salaries and employee benefits | 55,389 | 54,160 | 58,408 | 2.3 | (5.2 | ) | ||||||||||||
| Net occupancy and equipment expense | 12,827 | 13,183 | 12,826 | (2.7 | ) | — | ||||||||||||
| Professional services | 8,859 | 7,944 | 7,616 | 11.5 | 16.3 | |||||||||||||
| Technology and related costs | 4,849 | 4,763 | 4,645 | 1.8 | 4.4 | |||||||||||||
| Advertising and promotions | 2,011 | 3,526 | 4,083 | (43.0 | ) | (50.7 | ) | |||||||||||
| Net other real estate owned ("OREO") expense | 763 | (413 | ) | 695 | (284.7 | ) | 9.8 | |||||||||||
| Other expenses | 13,418 | 11,015 | 10,715 | 21.8 | 25.2 | |||||||||||||
| Acquisition and integration related expenses | 9,553 | 60 | — | N/M | 100.0 | |||||||||||||
| Delivering Excellence implementation costs | 3,159 | 2,239 | — | 41.1 | 100.0 | |||||||||||||
| Cardholder expenses(1) | — | — | 1,915 | — | (100.0 | ) | ||||||||||||
| Merchant card expense(1) | — | — | 1,423 | — | (100.0 | ) | ||||||||||||
| Total noninterest expense | $ | 110,828 | $ | 96,477 | $ | 102,326 | 14.9 | 8.3 | ||||||||||
| Acquisition and integration related expenses | (9,553 | ) | (60 | ) | — | N/M | (100.0 | ) | ||||||||||
| Delivering Excellence implementation costs | (3,159 | ) | (2,239 | ) | — | 41.1 | (100.0 | ) | ||||||||||
| Accounting reclassification(1) | — | — | (3,338 | ) | — | (100.0 | ) | |||||||||||
| Special bonus and charitable contribution | — | — | (3,515 | ) | — | (100.0 | ) | |||||||||||
| Total noninterest expense, adjusted(2) | $ | 98,116 | $ | 94,178 | $ | 95,473 | 4.2 | 2.8 | ||||||||||
N/M – Not meaningful.
(1) As a result of the accounting reclassification, certain noninterest income line items and the related noninterest expense line items that are presented on a gross basis for the prior year period are presented on a net basis in noninterest income for the current year periods. For further discussion of this guidance, see Note 2 of "Notes to the Consolidated Financial Statements" in Item 8 in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
(2) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
Total noninterest expense for the fourth quarter of 2018 increased by 14.9% and 8.3% compared to the third quarter of 2018 and the fourth quarter of 2017, respectively. During the fourth and third quarters of 2018, noninterest expense was impacted by acquisition and integration related expenses and costs related to the implementation of the Delivering Excellence initiative. In the first quarter of 2018, the Company adopted accounting guidance which impacted how cardholder and merchant card expenses are presented within noninterest income on a prospective basis. As a result, these expenses are presented on a net basis against the related noninterest income for the fourth and third quarters of 2018 versus a gross basis within noninterest expense for the prior period. In addition, the fourth quarter of 2017 was impacted by certain actions responsive to tax reform including a special bonus and charitable contribution. Excluding these items, noninterest expense for the fourth quarter of 2018 was $98.1 million, up by 4.2% and 2.8% from the third quarter of 2018 and fourth quarter of 2017, respectively.
Operating costs associated with the Northern States acquisition contributed approximately $2.1 million to noninterest expense for the fourth quarter of 2018. These costs primarily occurred within salaries and employee benefits as well as net occupancy and equipment expense, technology and related costs, professional services, and other expenses.
The decrease in salaries and employee benefits compared to the fourth quarter of 2017 was driven primarily by the ongoing benefits of the Delivering Excellence initiative. Professional services increased compared to both prior periods as a result of higher loan remediation costs. Advertising and promotions expense for both prior periods reflect higher charitable contributions to the First Midwest Charitable Foundation. The third quarter of 2018 was also elevated due to the launch of a new marketing campaign. Compared to both prior periods, other expenses increased due primarily to property valuation adjustments, the reserve for unfunded commitments, and other miscellaneous expenses.
The increase in net OREO expenses compared to the third quarter of 2018 was due mainly to higher valuation adjustments and operating expenses.
Acquisition and integration related expenses for the fourth and third quarters of 2018 resulted from the acquisition of Northern States, which was completed during the fourth quarter of 2018.
INCOME TAXES
The Company's effective tax rate for the fourth quarter of 2018 was 24.0%, compared to 11.0% for the third quarter of 2018 and 94.7% for the fourth quarter of 2017. The third quarter of 2018 was impacted by $7.8 million of income tax benefits resulting from tax reform. The Company's effective tax rate for the fourth quarter of 2017 was impacted by the downward revaluation of deferred tax assets ("DTAs") by $26.6 million due to tax reform. Excluding these items, the Company's effective tax rate for the third quarter of 2018 was 24.0%, consistent with the fourth quarter of 2018 and down from 34.1% for the fourth quarter of 2017. The decrease in the effective tax rate from the fourth quarter of 2017 was driven by the reduction in the federal income tax rate from 35% to 21%, which became effective in the first quarter of 2018 as a result of tax reform.
LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
| As of | December 31, 2018 Percent Change From | |||||||||||||||||||||||||
| December 31, 2018 | ||||||||||||||||||||||||||
| Legacy | Acquired (1) | Total | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||
| Commercial and industrial | $ | 4,091,101 | $ | 29,192 | $ | 4,120,293 | $ | 3,994,142 | $ | 3,529,914 | 3.2 | 16.7 | ||||||||||||||
| Agricultural | 430,928 | — | 430,928 | 432,220 | 430,886 | (0.3 | ) | — | ||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||
| Office, retail, and industrial | 1,752,169 | 68,748 | 1,820,917 | 1,782,757 | 1,979,820 | 2.1 | (8.0 | ) | ||||||||||||||||||
| Multi-family | 688,921 | 75,264 | 764,185 | 698,611 | 675,463 | 9.4 | 13.1 | |||||||||||||||||||
| Construction | 614,688 | 34,649 | 649,337 | 632,779 | 539,820 | 2.6 | 20.3 | |||||||||||||||||||
| Other commercial real estate | 1,314,924 | 46,886 | 1,361,810 | 1,348,831 | 1,358,515 | 1.0 | 0.2 | |||||||||||||||||||
| Total commercial real estate | 4,370,702 | 225,547 | 4,596,249 | 4,462,978 | 4,553,618 | 3.0 | 0.9 | |||||||||||||||||||
| Total corporate loans | 8,892,731 | 254,739 | 9,147,470 | 8,889,340 | 8,514,418 | 2.9 | 7.4 | |||||||||||||||||||
| Home equity | 846,201 | 5,406 | 851,607 | 853,887 | 827,055 | (0.3 | ) | 3.0 | ||||||||||||||||||
| 1-4 family mortgages | 1,007,432 | 9,749 | 1,017,181 | 888,797 | 774,357 | 14.4 | 31.4 | |||||||||||||||||||
| Installment | 429,167 | 1,358 | 430,525 | 418,524 | 321,982 | 2.9 | 33.7 | |||||||||||||||||||
| Total consumer loans | 2,282,800 | 16,513 | 2,299,313 | 2,161,208 | 1,923,394 | 6.4 | 19.5 | |||||||||||||||||||
| Total loans | $ | 11,175,531 | $ | 271,252 | $ | 11,446,783 | $ | 11,050,548 | $ | 10,437,812 | 3.6 | 9.7 | ||||||||||||||
(1) Amount represents loans acquired in the Northern States transaction, which was completed in the fourth quarter of 2018.
Total loans of $11.4 billion grew by 14.3%, annualized, from September 30, 2018 and 9.7% from December 31, 2017. Excluding loans acquired in the Northern States transaction of $271.3 million, total loans grew by 4.5%, annualized, from September 30, 2018 and 7.1% from December 31, 2017. Compared to both prior periods, growth in commercial and industrial loans was driven primarily by strong production in our sector-based lending. The rise in construction loans compared to December 31, 2017 was due largely to line draws on existing credits. The overall decline in office, retail, and industrial and other commercial real estate loans compared to both prior periods resulted primarily from the decision of certain customers to opportunistically sell their commercial business and investment real estate properties, as well as expected payoffs.
Growth in consumer loans compared to both prior periods benefited from organic production as well as the impact of purchases of 1-4 family mortgages. Compared to December 31, 2017, growth in consumer loans also benefited from the purchase of shorter-duration home equity and installment loans.
Asset Quality
(Dollar amounts in thousands)
| As of | December 31, 2018 Percent Change From | |||||||||||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | ||||||||||||||
| Asset quality | ||||||||||||||||||
| Non-accrual loans | $ | 56,935 | $ | 64,766 | $ | 66,924 | (12.1 | ) | (14.9 | ) | ||||||||
| 90 days or more past due loans, still accruing interest(1) | 8,282 | 2,949 | 3,555 | 180.8 | 133.0 | |||||||||||||
| Total non-performing loans | 65,217 | 67,715 | 70,479 | (3.7 | ) | (7.5 | ) | |||||||||||
| Accruing troubled debt restructurings ("TDRs") | 1,866 | 1,741 | 1,796 | 7.2 | 3.9 | |||||||||||||
| OREO | 12,821 | 12,244 | 20,851 | 4.7 | (38.5 | ) | ||||||||||||
| Total non-performing assets | $ | 79,904 | $ | 81,700 | $ | 93,126 | (2.2 | ) | (14.2 | ) | ||||||||
| 30-89 days past due loans(1) | $ | 37,524 | $ | 46,257 | $ | 39,725 | ||||||||||||
| Non-accrual loans to total loans | 0.50 | % | 0.59 | % | 0.64 | % | ||||||||||||
| Non-performing loans to total loans | 0.57 | % | 0.61 | % | 0.68 | % | ||||||||||||
| Non-performing assets to total loans plus OREO | 0.70 | % | 0.74 | % | 0.89 | % | ||||||||||||
| Total allowance for credit losses | $ | 103,419 | $ | 100,925 | $ | 96,729 | ||||||||||||
| Allowance for credit losses to total loans(2) | 0.90 | % | 0.91 | % | 0.93 | % | ||||||||||||
| Allowance for credit losses to loans, excluding acquired loans | 1.01 | % | 1.01 | % | 1.07 | % | ||||||||||||
| Allowance for credit losses to non-accrual loans | 181.64 | % | 155.83 | % | 144.54 | % | ||||||||||||
(1) Purchased credit impaired loans with an accretable yield are considered current and are not included in past due loan totals.
(2) 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 0.70% of total loans plus OREO at December 31, 2018 compared to 0.74% and 0.89% at September 30, 2018 and December 31, 2017, respectively. The decline in OREO compared to December 31, 2017 resulted from sales of OREO properties.
The allowance for credit losses to total loans was 0.90% at December 31, 2018, consistent with September 30, 2018 and down from 0.93% at December 31, 2017.
Charge-Off Data
(Dollar amounts in thousands)
| Quarters Ended | |||||||||||||||||||||
| December 31, 2018 | % of Total | September 30, 2018 | % of Total | December 31, 2017 | % of Total | ||||||||||||||||
| Net loan charge-offs(1) | |||||||||||||||||||||
| Commercial and industrial | $ | 5,558 | 73.9 | $ | 5,230 | 65.2 | $ | 5,635 | 79.3 | ||||||||||||
| Agricultural | 71 | 0.9 | 631 | 7.9 | (102 | ) | (1.4 | ) | |||||||||||||
| Office, retail, and industrial | 713 | 9.5 | 596 | 7.4 | (78 | ) | (1.1 | ) | |||||||||||||
| Multi-family | (3 | ) | — | 1 | — | (3 | ) | — | |||||||||||||
| Construction | (99 | ) | (1.3 | ) | (4 | ) | — | (12 | ) | (0.2 | ) | ||||||||||
| Other commercial real estate | (817 | ) | (10.9 | ) | 23 | 0.3 | (5 | ) | (0.1 | ) | |||||||||||
| Consumer | 2,094 | 27.9 | 1,537 | 19.2 | 1,674 | 23.5 | |||||||||||||||
| Total net loan charge-offs | $ | 7,517 | 100.0 | $ | 8,014 | 100.0 | $ | 7,109 | 100.0 | ||||||||||||
| Total recoveries included above | $ | 2,810 | $ | 1,250 | $ | 2,011 | |||||||||||||||
| Net loan charge-offs to average loans(1)(2) | |||||||||||||||||||||
| Quarter-to-date | 0.26 | % | 0.29 | % | 0.27 | % | |||||||||||||||
| Year-to-date | 0.38 | % | 0.42 | % | 0.21 | % | |||||||||||||||
(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 0.26% for the fourth quarter of 2018, down from 0.29% for the third quarter of 2018 and 0.27% for the fourth quarter of 2017.
DEPOSIT PORTFOLIO
Deposit Composition
(Dollar amounts in thousands)
| Average for Quarters Ended | December 31, 2018 Percent Change From | |||||||||||||||||||||||||
| December 31, 2018 | ||||||||||||||||||||||||||
| Legacy | Acquired(1) | Total | September 30, 2018 | December 31, 2017 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||
| Demand deposits | $ | 3,607,573 | $ | 78,233 | $ | 3,685,806 | $ | 3,624,520 | $ | 3,611,811 | 1.7 | 2.0 | ||||||||||||||
| Savings deposits | 1,969,197 | 75,115 | 2,044,312 | 2,003,928 | 2,017,489 | 2.0 | 1.3 | |||||||||||||||||||
| NOW accounts | 2,029,784 | 98,938 | 2,128,722 | 2,164,018 | 1,992,150 | (1.6 | ) | 6.9 | ||||||||||||||||||
| Money market accounts | 1,774,939 | 56,372 | 1,831,311 | 1,772,821 | 1,938,195 | 3.3 | (5.5 | ) | ||||||||||||||||||
| Core deposits | 9,381,493 | 308,658 | 9,690,151 | 9,565,287 | 9,559,645 | 1.3 | 1.4 | |||||||||||||||||||
| Time deposits | 2,216,839 | 94,614 | 2,311,453 | 1,993,361 | 1,619,758 | 16.0 | 42.7 | |||||||||||||||||||
| Total deposits | $ | 11,598,332 | $ | 403,272 | $ | 12,001,604 | $ | 11,558,648 | $ | 11,179,403 | 3.8 | 7.4 | ||||||||||||||
(1) Amount represents deposits assumed in the Northern States transaction, which was completed in the fourth quarter of 2018.
Total average deposits were $12.0 billion for the fourth quarter of 2018, up 3.8% from the third quarter of 2018 and 7.4% from the fourth quarter of 2017. Excluding the impact of average deposits acquired in the Northern States transaction, total average deposits were consistent with the third quarter of 2018 and up 3.7% from the fourth quarter of 2017. The increase from the fourth quarter of 2017 resulted from the continued success of time deposit marketing initiatives.
CAPITAL MANAGEMENT
Capital Ratios
| As of | |||||||||
| December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||
| Company regulatory capital ratios: | |||||||||
| Total capital to risk-weighted assets | 12.62 | % | 12.32 | % | 12.15 | % | |||
| Tier 1 capital to risk-weighted assets | 10.20 | % | 10.34 | % | 10.10 | % | |||
| Common equity Tier 1 ("CET1") to risk-weighted assets | 10.20 | % | 9.93 | % | 9.68 | % | |||
| Tier 1 capital to average assets | 8.90 | % | 9.10 | % | 8.99 | % | |||
| Company tangible common equity ratios(1)(2): | |||||||||
| Tangible common equity to tangible assets | 8.59 | % | 8.21 | % | 8.33 | % | |||
| Tangible common equity, excluding accumulated other comprehensive income ("AOCI"), to tangible assets | 8.95 | % | 8.74 | % | 8.58 | % | |||
| Tangible common equity to risk-weighted assets | 9.81 | % | 9.33 | % | 9.31 | % | |||
(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.
Compared to both prior periods, total capital and CET1 to risk-weighted assets were up as a result of strong earnings, partially offset by the Northern States acquisition and the impact of loan growth and securities purchases on risk-weighted assets. Overall, both Tier 1 capital ratios decreased compared to prior periods, which was driven primarily by the phase out of Tier 1 treatment of the Company's trust-preferred securities due to asset growth.
The Board of Directors approved a quarterly cash dividend of $0.12 per common share during the fourth quarter of 2018, which is a 9% increase from the third quarter of 2018. This dividend represents the 144th 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, January 23, 2019 at 11:00 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. 10127613 beginning one hour after completion of the live call until 9:00 A.M. (ET) on February 6, 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 are made only as of the date of this press release, and First Midwest undertakes no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.
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 actions, goals, and expectations, as well as 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 First Midwest's proposed acquisition of Bridgeview, 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. For a discussion of these risks, uncertainties and assumptions, you should refer to 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, 2017, as well as First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). However, these risks and uncertainties are not exhaustive. Other sections of such 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 income, 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 (fourth and third quarters of 2018 and full years 2018 and 2017), Delivering Excellence implementation costs (fourth, third, and second quarters of 2018 and full year 2018), certain income tax benefits resulting from tax reform (third quarter and full year 2018), the revaluations of DTAs (fourth quarter and full year 2017), certain actions resulting in securities losses and gains (fourth quarter and full year 2017), and a special bonus to colleagues and charitable contributions to the First Midwest Charitable Foundation (fourth quarter and full year 2017). 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 income, adjusted, which excludes the accounting reclassification and net securities losses, and noninterest expense, adjusted, which excludes the accounting reclassification, Delivering Excellence implementation costs, and acquisition and integration related expenses. In addition, the Company presents the effective income tax rate, adjusted, which excludes certain income tax benefits resulting from tax reform and the revaluations of DTAs. Management believes that excluding these items from noninterest income, 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 subsequent to December 31, 2017 are presented using the current federal income tax rate of 21% and prior periods are computed using the federal income tax rate applicable at that time of 35%. 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.
Additional Information
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and Bridgeview, First Midwest will file a registration statement on Form S-4 with the SEC. The registration statement will include a proxy statement of Bridgeview, which also will constitute a prospectus of First Midwest, that will be sent to Bridgeview stockholders. Investors and stockholders are advised to read the registration statement and proxy statement/prospectus when it becomes available because it will contain important information about First Midwest, Bridgeview and the proposed transaction. When filed, this document and other documents relating to the transaction filed by First Midwest can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest’s website at www.firstmidwest.com under the tab “Investor Relations” and then under “SEC Filings.” Alternatively, these documents can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, 8750 West Bryn Mawr Avenue, Suite 1300, Chicago, Illinois 60631 or by calling (708) 831-7483, or from Bridgeview upon written request to Bridgeview Bancorp, Inc., Attn: William Conaghan, President and Chief Executive Officer, 4753 North Broadway, Chicago, Illinois 60640 or by calling (773) 989-5728.
Participants in this Transaction
First Midwest, Bridgeview and certain of their respective directors and executive officers may be deemed under the rules of the SEC to be participants in the solicitation of proxies from Bridgeview stockholders in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available. Additional information about First Midwest and its directors and certain of its officers may be found in First Midwest’s definitive proxy statement relating to its 2018 Annual Meeting of Stockholders filed with the SEC on April 11, 2018 and First Midwest’s annual report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 28, 2018. The definitive proxy statement and annual report can be obtained free of charge from the SEC’s website at www.sec.gov.
About the Company
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 over $15 billion in assets and approximately $11 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, 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 | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||||
| Period-End Balance Sheet | |||||||||||||||||||
| Assets | |||||||||||||||||||
| Cash and due from banks | $ | 211,189 | $ | 185,239 | $ | 181,482 | $ | 150,138 | $ | 192,800 | |||||||||
| Interest-bearing deposits in other banks | 78,069 | 111,360 | 192,785 | 84,898 | 153,770 | ||||||||||||||
| Trading securities, at fair value(1) | — | — | — | — | 20,447 | ||||||||||||||
| Equity securities, at fair value(1) | 30,806 | 29,046 | 28,441 | 28,513 | — | ||||||||||||||
| Securities available-for-sale, at fair value(1) | 2,272,009 | 2,179,410 | 2,142,865 | 2,040,950 | 1,884,209 | ||||||||||||||
| Securities held-to-maturity, at amortized cost | 10,176 | 12,673 | 13,042 | 13,400 | 13,760 | ||||||||||||||
| FHLB and FRB stock | 80,302 | 87,728 | 82,778 | 80,508 | 69,708 | ||||||||||||||
| Loans: | |||||||||||||||||||
| Commercial and industrial | 4,120,293 | 3,994,142 | 3,844,067 | 3,659,066 | 3,529,914 | ||||||||||||||
| Agricultural | 430,928 | 432,220 | 433,175 | 435,734 | 430,886 | ||||||||||||||
| Commercial real estate: | |||||||||||||||||||
| Office, retail, and industrial | 1,820,917 | 1,782,757 | 1,834,918 | 1,931,202 | 1,979,820 | ||||||||||||||
| Multi-family | 764,185 | 698,611 | 703,091 | 695,830 | 675,463 | ||||||||||||||
| Construction | 649,337 | 632,779 | 633,601 | 585,766 | 539,820 | ||||||||||||||
| Other commercial real estate | 1,361,810 | 1,348,831 | 1,337,396 | 1,363,238 | 1,358,515 | ||||||||||||||
| Home equity | 851,607 | 853,887 | 847,903 | 881,534 | 827,055 | ||||||||||||||
| 1-4 family mortgages | 1,017,181 | 888,797 | 880,181 | 798,902 | 774,357 | ||||||||||||||
| Installment | 430,525 | 418,524 | 377,233 | 325,502 | 321,982 | ||||||||||||||
| Total loans | 11,446,783 | 11,050,548 | 10,891,565 | 10,676,774 | 10,437,812 | ||||||||||||||
| Allowance for loan losses | (102,219 | ) | (99,925 | ) | (96,691 | ) | (94,854 | ) | (95,729 | ) | |||||||||
| Net loans | 11,344,564 | 10,950,623 | 10,794,874 | 10,581,920 | 10,342,083 | ||||||||||||||
| OREO | 12,821 | 12,244 | 12,892 | 17,472 | 20,851 | ||||||||||||||
| Premises, furniture, and equipment, net | 132,502 | 126,389 | 127,024 | 126,348 | 123,316 | ||||||||||||||
| Investment in bank-owned life insurance ("BOLI") | 296,733 | 284,074 | 282,664 | 281,285 | 279,900 | ||||||||||||||
| Goodwill and other intangible assets | 790,744 | 751,248 | 753,020 | 754,814 | 754,757 | ||||||||||||||
| Accrued interest receivable and other assets | 245,734 | 231,465 | 206,209 | 219,725 | 221,451 | ||||||||||||||
| Total assets | $ | 15,505,649 | $ | 14,961,499 | $ | 14,818,076 | $ | 14,379,971 | $ | 14,077,052 | |||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||||
| Noninterest-bearing deposits | $ | 3,642,989 | $ | 3,618,384 | $ | 3,667,847 | $ | 3,527,081 | $ | 3,576,190 | |||||||||
| Interest-bearing deposits | 8,441,123 | 7,908,730 | 7,824,416 | 7,618,941 | 7,477,135 | ||||||||||||||
| Total deposits | 12,084,112 | 11,527,114 | 11,492,263 | 11,146,022 | 11,053,325 | ||||||||||||||
| Borrowed funds | 906,079 | 1,073,546 | 981,044 | 950,688 | 714,884 | ||||||||||||||
| Senior and subordinated debt | 203,808 | 195,595 | 195,453 | 195,312 | 195,170 | ||||||||||||||
| Accrued interest payable and other liabilities | 256,652 | 247,569 | 265,753 | 218,662 | 248,799 | ||||||||||||||
| Stockholders' equity | 2,054,998 | 1,917,675 | 1,883,563 | 1,869,287 | 1,864,874 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 15,505,649 | $ | 14,961,499 | $ | 14,818,076 | $ | 14,379,971 | $ | 14,077,052 | |||||||||
| Stockholders' equity, excluding AOCI | $ | 2,107,510 | $ | 1,992,808 | $ | 1,947,963 | $ | 1,926,818 | $ | 1,897,910 | |||||||||
| Stockholders' equity, common | 2,054,998 | 1,917,675 | 1,883,563 | 1,869,287 | 1,864,874 | ||||||||||||||
Footnote to Consolidated Statements of Financial Condition
(1) As a result of accounting guidance adopted in the first quarter of 2018, equity securities are no longer presented within trading securities or securities available-for-sale and are now presented as equity securities in the Consolidated Statements of Financial Condition for periods subsequent to December 31, 2017.
| First Midwest Bancorp, Inc. | ||||||||||||||||||||||||||||
| Condensed Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands) | ||||||||||||||||||||||||||||
| Quarters Ended | Years Ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||
| Interest income | $ | 159,527 | $ | 149,532 | $ | 142,088 | $ | 131,345 | $ | 129,585 | $ | 582,492 | $ | 509,716 | ||||||||||||||
| Interest expense | 20,898 | 17,505 | 14,685 | 12,782 | 10,254 | 65,870 | 37,712 | |||||||||||||||||||||
| Net interest income | 138,629 | 132,027 | 127,403 | 118,563 | 119,331 | 516,622 | 472,004 | |||||||||||||||||||||
| Provision for loan losses | 9,811 | 11,248 | 11,614 | 15,181 | 8,024 | 47,854 | 31,290 | |||||||||||||||||||||
| Net interest income after provision for loan losses | 128,818 | 120,779 | 115,789 | 103,382 | 111,307 | 468,768 | 440,714 | |||||||||||||||||||||
| Noninterest Income | ||||||||||||||||||||||||||||
| Service charges on deposit accounts | 12,627 | 12,378 | 12,058 | 11,652 | 12,289 | 48,715 | 48,368 | |||||||||||||||||||||
| Wealth management fees | 10,951 | 10,622 | 10,981 | 10,958 | 10,967 | 43,512 | 41,321 | |||||||||||||||||||||
| Card-based fees, net(1): | ||||||||||||||||||||||||||||
| Card-based fees | 6,615 | 5,975 | 6,270 | 5,692 | 6,052 | 24,552 | 28,992 | |||||||||||||||||||||
| Cardholder expenses | (2,041 | ) | (1,852 | ) | (1,876 | ) | (1,759 | ) | — | (7,528 | ) | — | ||||||||||||||||
| Card-based fees, net | 4,574 | 4,123 | 4,394 | 3,933 | 6,052 | 17,024 | 28,992 | |||||||||||||||||||||
| Capital market products income | 1,408 | 1,936 | 2,819 | 1,558 | 1,986 | 7,721 | 8,171 | |||||||||||||||||||||
| Mortgage banking income | 1,304 | 1,657 | 1,736 | 2,397 | 2,352 | 7,094 | 8,131 | |||||||||||||||||||||
| Merchant servicing fees, net(1): | ||||||||||||||||||||||||||||
| Merchant servicing fees | 2,566 | 2,702 | 2,553 | 2,237 | 1,771 | 10,058 | 10,340 | |||||||||||||||||||||
| Merchant card expenses | (2,201 | ) | (2,315 | ) | (2,170 | ) | (1,907 | ) | — | (8,593 | ) | — | ||||||||||||||||
| Merchant servicing fees, net | 365 | 387 | 383 | 330 | 1,771 | 1,465 | 10,340 | |||||||||||||||||||||
| Other service charges, commissions, and fees | 2,353 | 2,399 | 2,455 | 2,218 | 2,369 | 9,425 | 9,843 | |||||||||||||||||||||
| Total fee-based revenues | 33,582 | 33,502 | 34,826 | 33,046 | 37,786 | 134,956 | 155,166 | |||||||||||||||||||||
| Other income | 2,880 | 2,164 | 2,121 | 2,471 | 2,476 | 9,636 | 9,859 | |||||||||||||||||||||
| Net securities losses | — | — | — | — | (5,357 | ) | — | (1,876 | ) | |||||||||||||||||||
| Total noninterest income | 36,462 | 35,666 | 36,947 | 35,517 | 34,905 | 144,592 | 163,149 | |||||||||||||||||||||
| Noninterest Expense | ||||||||||||||||||||||||||||
| Salaries and employee benefits: | ||||||||||||||||||||||||||||
| Salaries and wages | 45,011 | 44,067 | 46,256 | 45,830 | 48,204 | 181,164 | 182,507 | |||||||||||||||||||||
| Retirement and other employee benefits | 10,378 | 10,093 | 11,676 | 10,957 | 10,204 | 43,104 | 41,886 | |||||||||||||||||||||
| Total salaries and employee benefits | 55,389 | 54,160 | 57,932 | 56,787 | 58,408 | 224,268 | 224,393 | |||||||||||||||||||||
| Net occupancy and equipment expense | 12,827 | 13,183 | 13,651 | 13,773 | 12,826 | 53,434 | 49,751 | |||||||||||||||||||||
| Professional services | 8,859 | 7,944 | 8,298 | 7,580 | 7,616 | 32,681 | 33,689 | |||||||||||||||||||||
| Technology and related costs | 4,849 | 4,763 | 4,837 | 4,771 | 4,645 | 19,220 | 18,068 | |||||||||||||||||||||
| Advertising and promotions | 2,011 | 3,526 | 2,061 | 1,650 | 4,083 | 9,248 | 8,694 | |||||||||||||||||||||
| Net OREO expense | 763 | (413 | ) | (256 | ) | 1,068 | 695 | 1,162 | 4,683 | |||||||||||||||||||
| Merchant card expense(1) | — | — | — | — | 1,423 | — | 8,377 | |||||||||||||||||||||
| Cardholder expenses(1) | — | — | — | — | 1,915 | — | 7,323 | |||||||||||||||||||||
| Other expenses | 13,418 | 11,015 | 11,878 | 9,953 | 10,715 | 46,264 | 40,808 | |||||||||||||||||||||
| Delivering Excellence implementation costs | 3,159 | 2,239 | 15,015 | — | — | 20,413 | — | |||||||||||||||||||||
| Acquisition and integration related expenses | 9,553 | 60 | — | — | — | 9,613 | 20,123 | |||||||||||||||||||||
| Total noninterest expense | 110,828 | 96,477 | 113,416 | 95,582 | 102,326 | 416,303 | 415,909 | |||||||||||||||||||||
| Income before income tax expense | 54,452 | 59,968 | 39,320 | 43,317 | 43,886 | 197,057 | 187,954 | |||||||||||||||||||||
| Income tax expense | 13,044 | 6,616 | 9,720 | 9,807 | 41,539 | 39,187 | 89,567 | |||||||||||||||||||||
| Net income | $ | 41,408 | $ | 53,352 | $ | 29,600 | $ | 33,510 | $ | 2,347 | $ | 157,870 | $ | 98,387 | ||||||||||||||
| Net income applicable to common shares | $ | 41,088 | $ | 52,911 | $ | 29,360 | $ | 33,199 | $ | 2,341 | $ | 156,558 | $ | 97,471 | ||||||||||||||
| Net income applicable to common shares, adjusted(2) | $ | 50,622 | $ | 46,837 | $ | 40,621 | $ | 33,199 | $ | 34,131 | $ | 171,279 | $ | 136,599 | ||||||||||||||
Footnotes to Condensed Consolidated Statements of Income
(1) As a result of accounting guidance adopted in 2018, certain noninterest income line items and related noninterest expense line items that are presented on a gross basis for periods prior to December 31, 2017 are now presented on a net basis in noninterest income for periods subsequent to December 31, 2017.
(2) 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 | Years Ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| EPS | ||||||||||||||||||||||||||||
| Basic EPS | $ | 0.39 | $ | 0.52 | $ | 0.29 | $ | 0.33 | $ | 0.02 | $ | 1.52 | $ | 0.96 | ||||||||||||||
| Diluted EPS | $ | 0.39 | $ | 0.52 | $ | 0.29 | $ | 0.33 | $ | 0.02 | $ | 1.52 | $ | 0.96 | ||||||||||||||
| Diluted EPS, adjusted(1) | $ | 0.48 | $ | 0.46 | $ | 0.40 | $ | 0.33 | $ | 0.34 | $ | 1.67 | $ | 1.35 | ||||||||||||||
| Common Stock and Related Per Common Share Data | ||||||||||||||||||||||||||||
| Book value | $ | 19.32 | $ | 18.61 | $ | 18.28 | $ | 18.13 | $ | 18.16 | $ | 19.32 | $ | 18.16 | ||||||||||||||
| Tangible book value | $ | 11.88 | $ | 11.32 | $ | 10.97 | $ | 10.81 | $ | 10.81 | $ | 11.88 | $ | 10.81 | ||||||||||||||
| Dividends declared per share | $ | 0.12 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.10 | $ | 0.45 | $ | 0.39 | ||||||||||||||
| Closing price at period end | $ | 19.81 | $ | 26.59 | $ | 25.47 | $ | 24.59 | $ | 24.01 | $ | 19.81 | $ | 24.01 | ||||||||||||||
| Closing price to book value | 1.0 | 1.4 | 1.4 | 1.4 | 1.3 | 1.0 | 1.3 | |||||||||||||||||||||
| Period end shares outstanding | 106,375 | 103,058 | 103,059 | 103,092 | 102,717 | 106,375 | 102,717 | |||||||||||||||||||||
| Period end treasury shares | 9,297 | 9,301 | 9,297 | 9,261 | 9,634 | 9,297 | 9,634 | |||||||||||||||||||||
| Common dividends | $ | 12,774 | $ | 11,326 | $ | 11,333 | $ | 11,349 | $ | 10,278 | $ | 46,782 | $ | 40,071 | ||||||||||||||
| Key Ratios/Data | ||||||||||||||||||||||||||||
| Return on average common equity(2) | 8.09 | % | 10.99 | % | 6.23 | % | 7.19 | % | 0.49 | % | 8.14 | % | 5.32 | % | ||||||||||||||
| Return on average common equity, adjusted(1)(2) | 9.97 | % | 9.73 | % | 8.62 | % | 7.19 | % | 7.20 | % | 8.91 | % | 7.45 | % | ||||||||||||||
| Return on average tangible common equity(1)(2) | 13.42 | % | 18.60 | % | 10.83 | % | 12.50 | % | 1.20 | % | 13.87 | % | 9.44 | % | ||||||||||||||
| Return on average tangible common equity, adjusted(1)(2) | 16.42 | % | 16.51 | % | 14.81 | % | 12.50 | % | 12.35 | % | 15.13 | % | 13.06 | % | ||||||||||||||
| Return on average assets(2) | 1.06 | % | 1.42 | % | 0.81 | % | 0.96 | % | 0.07 | % | 1.07 | % | 0.70 | % | ||||||||||||||
| Return on average assets, adjusted(1)(2) | 1.30 | % | 1.26 | % | 1.12 | % | 0.96 | % | 0.96 | % | 1.17 | % | 0.98 | % | ||||||||||||||
| Loans to deposits | 94.73 | % | 95.87 | % | 94.77 | % | 95.79 | % | 94.43 | % | 94.73 | % | 94.43 | % | ||||||||||||||
| Efficiency ratio(1) | 55.25 | % | 56.03 | % | 59.65 | % | 60.96 | % | 60.78 | % | 57.87 | % | 60.09 | % | ||||||||||||||
| Efficiency ratio, prior presentation(1)(3) | N/A | N/A | N/A | N/A | 60.32 | % | N/A | 59.73 | % | |||||||||||||||||||
| Net interest margin(2)(4) | 3.96 | % | 3.92 | % | 3.91 | % | 3.80 | % | 3.84 | % | 3.90 | % | 3.87 | % | ||||||||||||||
| Yield on average interest-earning assets(2)(4) | 4.56 | % | 4.44 | % | 4.35 | % | 4.20 | % | 4.16 | % | 4.39 | % | 4.17 | % | ||||||||||||||
| Cost of funds(2)(5) | 0.63 | % | 0.55 | % | 0.47 | % | 0.43 | % | 0.34 | % | 0.52 | % | 0.32 | % | ||||||||||||||
| Net noninterest expense to average assets(2) | 1.90 | % | 1.62 | % | 2.10 | % | 1.72 | % | 1.74 | % | 1.84 | % | 1.79 | % | ||||||||||||||
| Effective income tax rate | 23.96 | % | 11.03 | % | 24.72 | % | 22.64 | % | 94.65 | % | 19.89 | % | 47.65 | % | ||||||||||||||
| Effective income tax rate, adjusted(1) | 23.96 | % | 24.04 | % | 24.72 | % | 22.64 | % | 34.14 | % | 23.84 | % | 35.04 | % | ||||||||||||||
| Capital Ratios | ||||||||||||||||||||||||||||
| Total capital to risk-weighted assets(1) | 12.62 | % | 12.32 | % | 12.07 | % | 12.07 | % | 12.15 | % | 12.62 | % | 12.15 | % | ||||||||||||||
| Tier 1 capital to risk-weighted assets(1) | 10.20 | % | 10.34 | % | 10.09 | % | 10.07 | % | 10.10 | % | 10.20 | % | 10.10 | % | ||||||||||||||
| CET1 to risk-weighted assets(1) | 10.20 | % | 9.93 | % | 9.68 | % | 9.65 | % | 9.68 | % | 10.20 | % | 9.68 | % | ||||||||||||||
| Tier 1 capital to average assets(1) | 8.90 | % | 9.10 | % | 8.95 | % | 9.07 | % | 8.99 | % | 8.90 | % | 8.99 | % | ||||||||||||||
| Tangible common equity to tangible assets(1) | 8.59 | % | 8.21 | % | 8.04 | % | 8.18 | % | 8.33 | % | 8.59 | % | 8.33 | % | ||||||||||||||
| Tangible common equity, excluding AOCI, to tangible assets(1) | 8.95 | % | 8.74 | % | 8.50 | % | 8.60 | % | 8.58 | % | 8.95 | % | 8.58 | % | ||||||||||||||
| Tangible common equity to risk-weighted assets(1) | 9.81 | % | 9.33 | % | 9.16 | % | 9.18 | % | 9.31 | % | 9.81 | % | 9.31 | % | ||||||||||||||
| 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 | Years Ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| Asset quality Performance Data | ||||||||||||||||||||||||||||
| Non-performing assets | ||||||||||||||||||||||||||||
| Commercial and industrial | $ | 33,507 | $ | 37,981 | $ | 22,672 | $ | 43,974 | $ | 40,580 | $ | 33,507 | $ | 40,580 | ||||||||||||||
| Agricultural | 1,564 | 2,104 | 2,992 | 4,086 | 219 | 1,564 | 219 | |||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||
| Office, retail, and industrial | 6,510 | 6,685 | 9,007 | 12,342 | 11,560 | 6,510 | 11,560 | |||||||||||||||||||||
| Multi-family | 3,107 | 3,184 | 3,551 | 144 | 377 | 3,107 | 377 | |||||||||||||||||||||
| Construction | 144 | 208 | 208 | 208 | 209 | 144 | 209 | |||||||||||||||||||||
| Other commercial real estate | 2,854 | 4,578 | 5,288 | 4,088 | 3,621 | 2,854 | 3,621 | |||||||||||||||||||||
| Consumer | 9,249 | 10,026 | 9,757 | 10,173 | 10,358 | 9,249 | 10,358 | |||||||||||||||||||||
| Total non-accrual loans | 56,935 | 64,766 | 53,475 | 75,015 | 66,924 | 56,935 | 66,924 | |||||||||||||||||||||
| 90 days or more past due loans, still accruing interest | 8,282 | 2,949 | 7,954 | 4,633 | 3,555 | 8,282 | 3,555 | |||||||||||||||||||||
| Total non-performing loans | 65,217 | 67,715 | 61,429 | 79,648 | 70,479 | 65,217 | 70,479 | |||||||||||||||||||||
| Accruing TDRs | 1,866 | 1,741 | 1,760 | 1,778 | 1,796 | 1,866 | 1,796 | |||||||||||||||||||||
| OREO | 12,821 | 12,244 | 12,892 | 17,472 | 20,851 | 12,821 | 20,851 | |||||||||||||||||||||
| Total non-performing assets | $ | 79,904 | $ | 81,700 | $ | 76,081 | $ | 98,898 | $ | 93,126 | $ | 79,904 | $ | 93,126 | ||||||||||||||
| 30-89 days past due loans | $ | 37,524 | $ | 46,257 | $ | 39,171 | $ | 42,573 | $ | 39,725 | $ | 37,524 | $ | 39,725 | ||||||||||||||
| Allowance for credit losses | ||||||||||||||||||||||||||||
| Allowance for loan losses | $ | 102,219 | $ | 99,925 | $ | 96,691 | $ | 94,854 | $ | 95,729 | $ | 102,219 | $ | 95,729 | ||||||||||||||
| Reserve for unfunded commitments | 1,200 | 1,000 | 1,000 | 1,000 | 1,000 | 1,200 | 1,000 | |||||||||||||||||||||
| Total allowance for credit losses | $ | 103,419 | $ | 100,925 | $ | 97,691 | $ | 95,854 | $ | 96,729 | $ | 103,419 | $ | 96,729 | ||||||||||||||
| Provision for loan losses | $ | 9,811 | $ | 11,248 | $ | 11,614 | $ | 15,181 | $ | 8,024 | $ | 47,854 | $ | 31,290 | ||||||||||||||
| Net charge-offs by category | ||||||||||||||||||||||||||||
| Commercial and industrial | $ | 5,558 | $ | 5,230 | $ | 7,081 | $ | 13,149 | $ | 5,635 | $ | 31,018 | $ | 17,487 | ||||||||||||||
| Agricultural | 71 | 631 | 828 | 983 | (102 | ) | 2,513 | 1,248 | ||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||
| Office, retail, and industrial | 713 | 596 | 279 | 364 | (78 | ) | 1,952 | (2,745 | ) | |||||||||||||||||||
| Multi-family | (3 | ) | 1 | 4 | — | (3 | ) | 2 | (39 | ) | ||||||||||||||||||
| Construction | (99 | ) | (4 | ) | (8 | ) | (13 | ) | (12 | ) | (124 | ) | (232 | ) | ||||||||||||||
| Other commercial real estate | (817 | ) | 23 | (358 | ) | 30 | (5 | ) | (1,122 | ) | 511 | |||||||||||||||||
| Consumer | 2,094 | 1,537 | 1,951 | 1,543 | 1,674 | 7,125 | 5,414 | |||||||||||||||||||||
| Total net charge-offs | 7,517 | 8,014 | 9,777 | 16,056 | 7,109 | 41,364 | 21,644 | |||||||||||||||||||||
| Total recoveries included above | $ | 2,810 | $ | 1,250 | $ | 1,532 | $ | 1,029 | $ | 2,011 | $ | 6,621 | $ | 9,179 | ||||||||||||||
| 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 | |||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||
| Asset quality ratios | |||||||||||||||
| Non-accrual loans to total loans | 0.50 | % | 0.59 | % | 0.49 | % | 0.70 | % | 0.64 | % | |||||
| Non-performing loans to total loans | 0.57 | % | 0.61 | % | 0.56 | % | 0.75 | % | 0.68 | % | |||||
| Non-performing assets to total loans plus OREO | 0.70 | % | 0.74 | % | 0.70 | % | 0.92 | % | 0.89 | % | |||||
| Non-performing assets to tangible common equity plus allowance for credit losses | 5.84 | % | 6.45 | % | 6.19 | % | 8.17 | % | 7.72 | % | |||||
| Non-accrual loans to total assets | 0.37 | % | 0.43 | % | 0.36 | % | 0.52 | % | 0.48 | % | |||||
| Allowance for credit losses and net charge-off ratios | |||||||||||||||
| Allowance for credit losses to total loans(6) | 0.90 | % | 0.91 | % | 0.90 | % | 0.90 | % | 0.93 | % | |||||
| Allowance for credit losses to loans, excluding acquired loans | 1.01 | % | 1.01 | % | 1.00 | % | 1.01 | % | 1.07 | % | |||||
| Allowance for credit losses to non-accrual loans | 181.64 | % | 155.83 | % | 182.69 | % | 127.78 | % | 144.54 | % | |||||
| Allowance for credit losses to non-performing loans | 158.58 | % | 149.04 | % | 159.03 | % | 120.35 | % | 137.25 | % | |||||
| Net charge-offs to average loans(2) | 0.26 | % | 0.29 | % | 0.36 | % | 0.62 | % | 0.27 | % | |||||
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 as calculated prior to March 31, 2018, which included a tax-equivalent adjustment for BOLI. Management believes that removing this adjustment from the current calculation of this metric enhances comparability for peer comparison purposes.
(4) Presented on a tax-equivalent basis, assuming the applicable federal income tax rate for each period presented. As a result, interest income and yields on tax-exempt securities and loans subsequent to December 31, 2017 are presented using the current federal income tax rate of 21% and prior periods are computed using the federal income tax rate applicable at that time of 35%.
(5) Cost of funds expresses total interest expense as a percentage of total average funding sources.
(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 | Years Ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| EPS | ||||||||||||||||||||||||||||
| Net income | $ | 41,408 | $ | 53,352 | $ | 29,600 | $ | 33,510 | $ | 2,347 | $ | 157,870 | $ | 98,387 | ||||||||||||||
| Net income applicable to non-vested restricted shares | (320 | ) | (441 | ) | (240 | ) | (311 | ) | (6 | ) | (1,312 | ) | (916 | ) | ||||||||||||||
| Net income applicable to common shares | 41,088 | 52,911 | 29,360 | 33,199 | 2,341 | 156,558 | 97,471 | |||||||||||||||||||||
| Adjustments to net income: | ||||||||||||||||||||||||||||
| Delivering Excellence implementation costs | 3,159 | 2,239 | 15,015 | — | — | 20,413 | — | |||||||||||||||||||||
| Tax effect of Delivering Excellence implementation costs | (790 | ) | (560 | ) | (3,754 | ) | — | — | (5,104 | ) | — | |||||||||||||||||
| Acquisition and integration related expenses | 9,553 | 60 | — | — | — | 9,613 | 20,123 | |||||||||||||||||||||
| Tax effect of acquisition and integration related expenses | (2,388 | ) | (15 | ) | — | — | — | (2,403 | ) | (8,053 | ) | |||||||||||||||||
| Income tax benefits(1) | — | (7,798 | ) | — | — | — | (7,798 | ) | — | |||||||||||||||||||
| DTA revaluation | — | — | — | — | 26,555 | — | 23,709 | |||||||||||||||||||||
| Losses from securities portfolio repositioning | — | — | — | — | 5,357 | — | 2,160 | |||||||||||||||||||||
| Tax effect of losses from securities portfolio repositioning | — | — | — | — | (2,196 | ) | — | (885 | ) | |||||||||||||||||||
| Special bonus | — | — | — | — | 1,915 | — | 1,915 | |||||||||||||||||||||
| Tax effect of special bonus | — | — | — | — | (785 | ) | — | (785 | ) | |||||||||||||||||||
| Charitable contribution | — | — | — | — | 1,600 | — | 1,600 | |||||||||||||||||||||
| Tax effect of charitable contribution | — | — | — | — | (656 | ) | — | (656 | ) | |||||||||||||||||||
| Total adjustments to net income, net of tax | 9,534 | (6,074 | ) | 11,261 | — | 31,790 | 14,721 | 39,128 | ||||||||||||||||||||
| Net income applicable to common shares, adjusted(2) | $ | 50,622 | $ | 46,837 | $ | 40,621 | $ | 33,199 | $ | 34,131 | $ | 171,279 | $ | 136,599 | ||||||||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||||||||||||||
| Weighted-average common shares outstanding (basic) | 105,116 | 102,178 | 102,159 | 101,922 | 101,766 | 102,850 | 101,423 | |||||||||||||||||||||
| Dilutive effect of common stock equivalents | — | — | — | 16 | 21 | 4 | 20 | |||||||||||||||||||||
| Weighted-average diluted common shares outstanding | 105,116 | 102,178 | 102,159 | 101,938 | 101,787 | 102,854 | 101,443 | |||||||||||||||||||||
| Basic EPS | $ | 0.39 | $ | 0.52 | $ | 0.29 | $ | 0.33 | $ | 0.02 | $ | 1.52 | $ | 0.96 | ||||||||||||||
| Diluted EPS | $ | 0.39 | $ | 0.52 | $ | 0.29 | $ | 0.33 | $ | 0.02 | $ | 1.52 | $ | 0.96 | ||||||||||||||
| Diluted EPS, adjusted(2) | $ | 0.48 | $ | 0.46 | $ | 0.40 | $ | 0.33 | $ | 0.34 | $ | 1.67 | $ | 1.35 | ||||||||||||||
| Anti-dilutive shares not included in the computation of diluted EPS | — | — | — | 110 | 190 | 27 | 229 | |||||||||||||||||||||
| Effective Tax Rate | ||||||||||||||||||||||||||||
| Income before income tax expense | $ | 54,452 | $ | 59,968 | $ | 39,320 | $ | 43,317 | $ | 43,886 | $ | 197,057 | $ | 187,954 | ||||||||||||||
| Income tax expense | $ | 13,044 | $ | 6,616 | $ | 9,720 | $ | 9,807 | $ | 41,539 | $ | 39,187 | $ | 89,567 | ||||||||||||||
| Income tax benefits(1) | — | 7,798 | — | — | — | 7,798 | — | |||||||||||||||||||||
| DTA revaluation | — | — | — | — | (26,555 | ) | — | (23,709 | ) | |||||||||||||||||||
| Income tax expense, adjusted | $ | 13,044 | $ | 14,414 | $ | 9,720 | $ | 9,807 | $ | 14,984 | $ | 46,985 | $ | 65,858 | ||||||||||||||
| Effective income tax rate | 23.96 | % | 11.03 | % | 24.72 | % | 22.64 | % | 94.65 | % | 19.89 | % | 47.65 | % | ||||||||||||||
| Effective income tax rate, adjusted | 23.96 | % | 24.04 | % | 24.72 | % | 22.64 | % | 34.14 | % | 23.84 | % | 35.04 | % | ||||||||||||||
| 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 | Years Ended | |||||||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| Return on Average Common and Tangible Common Equity | ||||||||||||||||||||||||||||
| Net income applicable to common shares | $ | 41,088 | $ | 52,911 | $ | 29,360 | $ | 33,199 | $ | 2,341 | $ | 156,558 | $ | 97,471 | ||||||||||||||
| Intangibles amortization | 2,077 | 1,772 | 1,794 | 1,802 | 1,806 | 7,444 | 7,865 | |||||||||||||||||||||
| Tax effect of intangibles amortization | (519 | ) | (443 | ) | (449 | ) | (508 | ) | (740 | ) | (1,919 | ) | (3,183 | ) | ||||||||||||||
| Net income applicable to common shares, excluding intangibles amortization | 42,646 | 54,240 | 30,705 | 34,493 | 3,407 | 162,083 | 102,153 | |||||||||||||||||||||
| Total adjustments to net income, net of tax(2) | 9,534 | (6,074 | ) | 11,261 | — | 31,790 | 14,721 | 39,128 | ||||||||||||||||||||
| Net income applicable to common shares, adjusted(2) | $ | 52,180 | $ | 48,166 | $ | 41,966 | $ | 34,493 | $ | 35,197 | $ | 176,804 | $ | 141,281 | ||||||||||||||
| Average stockholders' equity | $ | 2,015,217 | $ | 1,909,330 | $ | 1,890,727 | $ | 1,873,419 | $ | 1,880,265 | $ | 1,922,527 | $ | 1,832,880 | ||||||||||||||
| Less: average intangible assets | (754,495 | ) | (752,109 | ) | (753,887 | ) | (753,870 | ) | (749,700 | ) | (753,588 | ) | (751,292 | ) | ||||||||||||||
| Average tangible common equity | $ | 1,260,722 | $ | 1,157,221 | $ | 1,136,840 | $ | 1,119,549 | $ | 1,130,565 | $ | 1,168,939 | $ | 1,081,588 | ||||||||||||||
| Return on average common equity(3) | 8.09 | % | 10.99 | % | 6.23 | % | 7.19 | % | 0.49 | % | 8.14 | % | 5.32 | % | ||||||||||||||
| Return on average common equity, adjusted(2)(3) | 9.97 | % | 9.73 | % | 8.62 | % | 7.19 | % | 7.20 | % | 8.91 | % | 7.45 | % | ||||||||||||||
| Return on average tangible common equity(3) | 13.42 | % | 18.60 | % | 10.83 | % | 12.50 | % | 1.20 | % | 13.87 | % | 9.44 | % | ||||||||||||||
| Return on average tangible common equity, adjusted(2)(3) | 16.42 | % | 16.51 | % | 14.81 | % | 12.50 | % | 12.35 | % | 15.13 | % | 13.06 | % | ||||||||||||||
| Return on Average Assets | ||||||||||||||||||||||||||||
| Net income | $ | 41,408 | $ | 53,352 | $ | 29,600 | $ | 33,510 | $ | 2,347 | $ | 157,870 | $ | 98,387 | ||||||||||||||
| Total adjustments to net income, net of tax(2) | 9,534 | (6,074 | ) | 11,261 | — | 31,790 | 14,721 | 39,128 | ||||||||||||||||||||
| Net income, adjusted(2) | $ | 50,942 | $ | 47,278 | $ | 40,861 | $ | 33,510 | $ | 34,137 | $ | 172,591 | $ | 137,515 | ||||||||||||||
| Average assets | $ | 15,503,399 | $ | 14,894,670 | $ | 14,605,715 | $ | 14,187,053 | $ | 14,118,625 | $ | 14,801,581 | $ | 13,978,693 | ||||||||||||||
| Return on average assets(3) | 1.06 | % | 1.42 | % | 0.81 | % | 0.96 | % | 0.07 | % | 1.07 | % | 0.70 | % | ||||||||||||||
| Return on average assets, adjusted(2)(3) | 1.30 | % | 1.26 | % | 1.12 | % | 0.96 | % | 0.96 | % | 1.17 | % | 0.98 | % | ||||||||||||||
| Efficiency Ratio Calculation | ||||||||||||||||||||||||||||
| Noninterest expense | $ | 110,828 | $ | 96,477 | $ | 113,416 | $ | 95,582 | $ | 102,326 | $ | 416,303 | $ | 415,909 | ||||||||||||||
| Less: | ||||||||||||||||||||||||||||
| Net OREO expense | (763 | ) | 413 | 256 | (1,068 | ) | (695 | ) | (1,162 | ) | (4,683 | ) | ||||||||||||||||
| Delivering Excellence implementation costs | (3,159 | ) | (2,239 | ) | (15,015 | ) | — | — | (20,413 | ) | — | |||||||||||||||||
| Acquisition and integration related expenses | (9,553 | ) | (60 | ) | — | — | — | (9,613 | ) | (20,123 | ) | |||||||||||||||||
| Special bonus | — | — | — | — | (1,915 | ) | — | (1,915 | ) | |||||||||||||||||||
| Charitable contribution | — | — | — | — | (1,600 | ) | — | (1,600 | ) | |||||||||||||||||||
| Total | $ | 97,353 | $ | 94,591 | $ | 98,657 | $ | 94,514 | $ | 98,116 | $ | 385,115 | $ | 387,588 | ||||||||||||||
| Tax-equivalent net interest income(4) | $ | 139,755 | $ | 133,161 | $ | 128,442 | $ | 119,538 | $ | 121,154 | $ | 520,896 | $ | 479,965 | ||||||||||||||
| Noninterest income | 36,462 | 35,666 | 36,947 | 35,517 | 34,905 | 144,592 | 163,149 | |||||||||||||||||||||
| Less: net securities losses | — | — | — | — | 5,357 | — | 1,876 | |||||||||||||||||||||
| Total | $ | 176,217 | $ | 168,827 | $ | 165,389 | $ | 155,055 | $ | 161,416 | $ | 665,488 | $ | 644,990 | ||||||||||||||
| Efficiency ratio | 55.25 | % | 56.03 | % | 59.65 | % | 60.96 | % | 60.78 | % | 57.87 | % | 60.09 | % | ||||||||||||||
| 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 | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | ||||||||||||||||
| Risk-Based Capital Data | ||||||||||||||||||||
| Common stock | $ | 1,157 | $ | 1,124 | $ | 1,124 | $ | 1,123 | $ | 1,123 | ||||||||||
| Additional paid-in capital | 1,114,580 | 1,028,635 | 1,025,703 | 1,021,923 | 1,031,870 | |||||||||||||||
| Retained earnings | 1,192,767 | 1,164,133 | 1,122,107 | 1,103,840 | 1,074,990 | |||||||||||||||
| Treasury stock, at cost | (200,994 | ) | (201,084 | ) | (200,971 | ) | (200,068 | ) | (210,073 | ) | ||||||||||
| Goodwill and other intangible assets, net of deferred tax liabilities | (790,744 | ) | (751,248 | ) | (753,020 | ) | (754,814 | ) | (743,327 | ) | ||||||||||
| Disallowed DTAs | (1,334 | ) | — | (389 | ) | (522 | ) | (644 | ) | |||||||||||
| CET1 capital | 1,315,432 | 1,241,560 | 1,194,554 | 1,171,482 | 1,153,939 | |||||||||||||||
| Trust-preferred securities | — | 50,690 | 50,690 | 50,690 | 50,690 | |||||||||||||||
| Other disallowed DTAs | (334 | ) | — | (97 | ) | (131 | ) | (161 | ) | |||||||||||
| Tier 1 capital | 1,315,098 | 1,292,250 | 1,245,147 | 1,222,041 | 1,204,468 | |||||||||||||||
| Tier 2 capital | 311,391 | 248,118 | 244,795 | 242,870 | 243,656 | |||||||||||||||
| Total capital | $ | 1,626,489 | $ | 1,540,368 | $ | 1,489,942 | $ | 1,464,911 | $ | 1,448,124 | ||||||||||
| Risk-weighted assets | $ | 12,892,180 | $ | 12,500,342 | $ | 12,345,200 | $ | 12,135,662 | $ | 11,920,372 | ||||||||||
| Adjusted average assets | $ | 14,782,327 | $ | 14,202,776 | $ | 13,907,100 | $ | 13,472,294 | $ | 13,404,998 | ||||||||||
| Total capital to risk-weighted assets | 12.62 | % | 12.32 | % | 12.07 | % | 12.07 | % | 12.15 | % | ||||||||||
| Tier 1 capital to risk-weighted assets | 10.20 | % | 10.34 | % | 10.09 | % | 10.07 | % | 10.10 | % | ||||||||||
| CET1 to risk-weighted assets | 10.20 | % | 9.93 | % | 9.68 | % | 9.65 | % | 9.68 | % | ||||||||||
| Tier 1 capital to average assets | 8.90 | % | 9.10 | % | 8.95 | % | 9.07 | % | 8.99 | % | ||||||||||
| Tangible Common Equity | ||||||||||||||||||||
| Stockholders' equity | $ | 2,054,998 | $ | 1,917,675 | $ | 1,883,563 | $ | 1,869,287 | $ | 1,864,874 | ||||||||||
| Less: goodwill and other intangible assets | (790,744 | ) | (751,248 | ) | (753,020 | ) | (754,814 | ) | (754,757 | ) | ||||||||||
| Tangible common equity | 1,264,254 | 1,166,427 | 1,130,543 | 1,114,473 | 1,110,117 | |||||||||||||||
| Less: AOCI | 52,512 | 75,133 | 64,400 | 57,531 | 33,036 | |||||||||||||||
| Tangible common equity, excluding AOCI | $ | 1,316,766 | $ | 1,241,560 | $ | 1,194,943 | $ | 1,172,004 | $ | 1,143,153 | ||||||||||
| Total assets | $ | 15,505,649 | $ | 14,961,499 | $ | 14,818,076 | $ | 14,379,971 | $ | 14,077,052 | ||||||||||
| Less: goodwill and other intangible assets | (790,744 | ) | (751,248 | ) | (753,020 | ) | (754,814 | ) | (754,757 | ) | ||||||||||
| Tangible assets | $ | 14,714,905 | $ | 14,210,251 | $ | 14,065,056 | $ | 13,625,157 | $ | 13,322,295 | ||||||||||
| Tangible common equity to tangible assets | 8.59 | % | 8.21 | % | 8.04 | % | 8.18 | % | 8.33 | % | ||||||||||
| Tangible common equity, excluding AOCI, to tangible assets | 8.95 | % | 8.74 | % | 8.50 | % | 8.60 | % | 8.58 | % | ||||||||||
| Tangible common equity to risk-weighted assets | 9.81 | % | 9.33 | % | 9.16 | % | 9.18 | % | 9.31 | % | ||||||||||
Footnotes to Non-GAAP Reconciliations
(1) Includes certain income tax benefits resulting from tax reform.
(2) 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.
(3) Annualized based on the actual number of days for each period presented.
(4) Presented on a tax-equivalent basis, assuming the applicable federal income tax rate for each period presented. As a result, interest income and yields on tax-exempt securities and loans subsequent to December 31, 2017 are presented using the current federal income tax rate of 21% and prior periods are computed using the federal income tax rate applicable at that time of 35%.