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First Midwest Bancorp, Inc. Announces 2019 First Quarter Results
Globe Newswire 23-Apr-2019 5:35 PM
CHICAGO, April 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 first quarter of 2019. Net income for the first quarter of 2019 was $46.1 million, or $0.43 per share, compared to $41.4 million, or $0.39 per share, for the fourth quarter of 2018, and $33.5 million, or $0.33 per share, for the first quarter of 2018.
Reported results for the first quarter of 2019 and fourth quarter of 2018 were impacted by acquisition and integration related expenses and implementation costs related to the Company's Delivering Excellence initiative ("Delivering Excellence"). 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 $0.46 for the first quarter of 2019, compared to $0.48 for the fourth quarter of 2018 and $0.33 for the first quarter of 2018.
SELECT FIRST QUARTER HIGHLIGHTS
Increased EPS to $0.43 compared to $0.39 and $0.33 for the fourth and first quarters of 2018, respectively. -- Generated EPS, adjusted(1) of $0.46, seasonally down 4% from the fourth quarter of 2018 and up 39% from the first quarter of 2018. -- Produced returns on average tangible common equity, adjusted(1) of 15.3% for the first quarter of 2019, down 111 basis points and up 281 basis points from the fourth and first quarters of 2018, respectively.
Expanded net interest income and margin to $139 million and 4.04%, up 8 basis points from the fourth quarter of 2018 and 24 basis points from the first quarter of 2018.
Controlled noninterest expense, reported an efficiency ratio(1) of 56%, consistent with the fourth quarter of 2018 and down from 61% in the first quarter of 2018.
Grew loans to $12 billion, up 4%, annualized from December 31, 2018 and 8% from March 31, 2018.
Increased total average deposits to $12 billion, up 10% from the first quarter of 2018.
Increased common equity Tier 1 capital to 10.52%, up 32 basis points from the fourth quarter of 2018 and 87 basis points from the first quarter of 2018.
Completed the acquisition of Northern Oak Wealth Management, Inc, on January 16, 2019, adding approximately $800 million of assets under management.
Announced a share repurchase program authorizing the Company to repurchase up to $180 million of its common stock.
"We had a solid start to the year, reflecting significant growth in earnings from a year ago," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "Operating performance benefitted from strong earning asset growth, higher interest rates, and stable core funding and, in turn, improved interest margins and our already solid operating efficiency. Sales activity remained active, with quarterly comparisons largely reflective of both normal seasonality and the impact of market volatility on certain fee-based businesses."
Mr. Scudder continued, "We remain well-positioned for continued growth and expansion. Our acquisition of Bridgeview Bank will close in May, adding $1.3 billion of assets and a strong team of colleagues to our presence in metro Chicago. At the same time, Northern Oak Wealth Management, which we acquired in January, will further augment our commercial and private banking expansion into the Milwaukee marketplace. The strength of our earnings and balance sheet continue to provide flexibility as we manage our capital and consider opportunities for further business expansion."
ACQUISITIONS
Completed
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 assets under management at closing.
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. As of December 31, 2018, Bridgeview had approximately $1.3 billion of assets, $1.0 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. We anticipate issuing approximately 4.7 million shares at closing. As of the date of announcement, the overall transaction was valued at approximately $145 million. The acquisition is subject to the approval of Bridgeview's stockholders and the completion of various closing conditions, and is anticipated to close in May 9, 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
March 31, 2019
December 31, 2018
March 31, 2018
Average Balance
Interest
Yield/ Rate (%)
Average Balance
Interest
Yield/ Rate (%)
Average Balance
Interest
Yield/ Rate (%)
Assets
Other interest-earning assets
$
125,615
$
728
2.35
$
145,436
$
476
1.30
$
112,137
$
423
1.53
Securities(1)
2,371,692
16,387
2.76
2,359,083
15,907
2.70
2,063,223
12,141
2.35
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock
79,821
952
4.77
85,427
709
3.32
76,883
438
2.28
Loans(1)
11,458,233
145,531
5.15
11,408,062
143,561
4.99
10,499,283
119,318
4.61
Total interest-earning assets(1)
14,035,361
163,598
4.72
13,998,008
160,653
4.56
12,751,526
132,320
4.20
Cash and due from banks
202,101
211,312
181,797
Allowance for loan losses
(107,520
)
(104,681
)
(99,234
)
Other assets
1,537,897
1,398,760
1,352,964
Total assets
$
15,667,839
$
15,503,399
$
14,187,053
Liabilities and Stockholders' Equity
Savings deposits
$
2,037,831
346
0.07
$
2,044,312
358
0.07
$
2,015,679
368
0.07
NOW accounts
2,083,366
2,162
0.42
2,128,722
1,895
0.35
1,992,672
1,048
0.21
Money market deposits
1,809,234
2,349
0.53
1,831,311
1,990
0.43
1,814,057
824
0.18
Time deposits
2,647,316
11,745
1.80
2,311,453
8,894
1.53
1,735,155
3,939
0.92
Borrowed funds
877,995
3,551
1.64
1,031,249
4,469
1.72
858,297
3,479
1.64
Senior and subordinated debt
203,899
3,313
6.59
204,030
3,292
6.40
195,243
3,124
6.49
Total interest-bearing liabilities
9,659,641
23,466
0.99
9,551,077
20,898
0.87
8,611,103
12,782
0.60
Demand deposits
3,587,480
3,685,806
3,466,832
Total funding sources
13,247,121
0.72
13,236,883
0.63
12,077,935
0.43
Other liabilities
282,437
251,299
235,699
Stockholders' equity - common
2,138,281
2,015,217
1,873,419
Total liabilities and stockholders' equity
$
15,667,839
$
15,503,399
$
14,187,053
Tax-equivalent net interest income/margin(1)
140,132
4.04
139,755
3.96
119,538
3.80
Tax-equivalent adjustment
(1,108
)
(1,126
)
(975
)
Net interest income (GAAP)(1)
$
139,024
$
138,629
$
118,563
Impact of acquired loan accretion(1)
$
6,369
0.18
$
5,426
0.15
$
5,112
0.16
Tax-equivalent net interest income/ margin, adjusted(1)
$
133,763
3.86
$
134,329
3.81
$
114,426
3.64
(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 first quarter of 2019 was consistent with the fourth quarter of 2018 and up 17.3% compared to the first quarter of 2018. Compared to the fourth quarter of 2018, the impact of higher rates and acquired loan accretion was offset by higher funding costs and fewer days in the quarter. The rise in net interest income compared to the first quarter of 2018 resulted primarily from the acquisition of interest-earning assets from the Northern States Financial Corporation ("Northern States") transaction in the fourth quarter of 2018, higher interest rates, growth in loans and securities, and higher acquired loan accretion, partially offset by higher cost of funds.
Acquired loan accretion contributed $6.4 million, $5.4 million, and $5.1 million to net interest income for the first quarter of 2019, the fourth quarter of 2018, and the first quarter of 2018, respectively.
Tax-equivalent net interest margin for the current quarter was 4.04%, increasing by 8 basis points from the fourth quarter of 2018 and 24 basis points from the first quarter of 2018. Compared to both prior periods, the benefit of higher interest rates more than offset the rise in funding costs. In addition, tax-equivalent net interest margin was impacted by a 3 basis point and 2 basis point increase in acquired loan accretion compared to the fourth and first quarters of 2018, respectively.
For the first quarter of 2019, total average interest-earning assets were consistent with the fourth quarter of 2018 and rose by $1.3 billion from the first quarter of 2018. The increase compared to the first quarter of 2018 resulted primarily from the Northern States transaction, organic loan growth, and security purchases.
Total average funding sources for the first quarter of 2019 were consistent with the fourth quarter of 2018 and increased by $1.2 billion from the first quarter of 2018. The increase compared to the first quarter of 2018 resulted primarily from the Northern States transaction and time deposits.
Noninterest Income Analysis (Dollar amounts in thousands)
Quarters Ended
March 31, 2019 Percent Change From
March 31, 2019
December 31, 2018
March 31, 2018
December 31, 2018
March 31, 2018
Service charges on deposit accounts
$
11,540
$
12,627
$
11,652
(8.6
)
(1.0
)
Wealth management fees
11,600
10,951
10,958
5.9
5.9
Card-based fees, net
4,378
4,574
3,933
(4.3
)
11.3
Capital market products income
1,279
1,408
1,558
(9.2
)
(17.9
)
Mortgage banking income
1,004
1,304
2,397
(23.0
)
(58.1
)
Merchant servicing fees, net
337
365
330
(7.7
)
2.1
Other service charges, commissions, and fees
2,274
2,353
2,218
(3.4
)
2.5
Total fee-based revenues
32,412
33,582
33,046
(3.5
)
(1.9
)
Other income
2,494
2,880
2,471
(13.4
)
0.9
Total noninterest income
$
34,906
$
36,462
$
35,517
(4.3
)
(1.7
)
Total noninterest income of $34.9 million was down 4.3% and 1.7% from the fourth and first quarters of 2018, respectively. Overall, noninterest income for the first quarter of 2019 was impacted by seasonality and market volatility, which were partially offset by services provided to customers acquired in the Northern Oak transaction. The decrease in service charges on deposit accounts and net card-based fees compared to the fourth quarter of 2018 was due primarily to seasonality. The rise in net card-based fees compared to the first quarter of 2018 resulted from higher transaction volumes and services provided to customers acquired in the Northern States transaction. Compared to both prior periods, the increase in wealth management fees was driven primarily by customers acquired in the Northern Oak transaction.
Capital market products income decreased compared to both prior periods, and fluctuates from quarter to quarter based on the size and frequency of sales to corporate clients.
The decrease in mortgage banking income compared to both prior periods resulted primarily from a reduction in the fair value of mortgage servicing rights during the first quarter of 2019. The change in the fair value of mortgage servicing rights fluctuates from quarter to quarter, and resulted in a decrease to mortgage banking income of $400,000 compared to the fourth quarter of 2018 and $1.1 million compared to the first quarter of 2018.
Other income was elevated in the fourth quarter of 2018 due primarily to higher fair value adjustments on equity securities and other miscellaneous items.
Noninterest Expense Analysis (Dollar amounts in thousands)
Quarters Ended
March 31, 2019 Percent Change From
March 31, 2019
December 31, 2018
March 31, 2018
December 31, 2018
March 31, 2018
Salaries and employee benefits:
Salaries and wages
$
46,135
$
45,011
$
45,830
2.5
0.7
Retirement and other employee benefits
11,238
10,378
10,957
8.3
2.6
Total salaries and employee benefits
57,373
55,389
56,787
3.6
1.0
Net occupancy and equipment expense
14,770
12,827
13,773
15.1
7.2
Professional services
7,788
8,859
7,580
(12.1
)
2.7
Technology and related costs
4,596
4,849
4,771
(5.2
)
(3.7
)
Advertising and promotions
2,372
2,011
1,650
18.0
43.8
Net other real estate owned ("OREO") expense
681
763
1,068
(10.7
)
(36.2
)
Other expenses
10,581
13,418
9,953
(21.1
)
6.3
Acquisition and integration related expenses
3,691
9,553
—
(61.4
)
100.0
Delivering Excellence implementation costs
258
3,159
—
(91.8
)
100.0
Total noninterest expense
$
102,110
$
110,828
$
95,582
(7.9
)
6.8
Acquisition and integration related expenses
(3,691
)
(9,553
)
—
(61.4
)
(100.0
)
Delivering Excellence implementation costs
(258
)
(3,159
)
—
(91.8
)
(100.0
)
Total noninterest expense, adjusted(1)
$
98,161
$
98,116
$
95,582
—
2.7
(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 decreased by 7.9% from the fourth quarter of 2018 and increased by 6.8% from the first quarter of 2018. During the first quarter of 2019 and fourth quarter of 2018, noninterest expense was impacted by acquisition and integration related expenses and costs related to the implementation of the Delivering Excellence initiative. Excluding these items, noninterest expense for the first quarter of 2019 was $98.2 million, consistent with the fourth quarter of 2018 and up 2.7% from first quarter of 2018.
Compared to the fourth quarter of 2018, the increase in salaries and employee benefits was driven primarily by merit increases, payroll tax timing, and lower levels of deferred loan salaries, partially offset by ongoing benefits of the Delivering Excellence initiative. The decrease in professional services from the fourth quarter of 2018 was driven by lower loan remediation and legal fees.
Net occupancy and equipment expense increased compared to both prior periods due to the adoption of lease accounting guidance at the beginning of the first quarter of 2019. Upon adoption of this guidance, a deferred gain that resulted from a prior sale-leaseback transaction is no longer included as a reduction in net occupancy and equipment expense in the amount of approximately $1.5 million on a quarterly basis. In addition, higher costs related to winter weather conditions contributed to the rise in net occupancy and equipment expense from the fourth quarter of 2018. Advertising and promotions expense increased from both prior periods due to higher costs related to marketing campaigns.
The decrease in net OREO expense compared to the first quarter of 2018 was due mainly to higher levels of gains on sales of properties and a reduction in operating expenses.
Other expenses were elevated in the fourth quarter of 2018 due primarily to property valuation adjustments, the reserve for unfunded commitments, and other miscellaneous expenses.
Acquisition and integration related expenses for the first quarter of 2019 resulted from the acquisition of Northern States and Northern Oak and the pending acquisition of Bridgeview. For the fourth quarter of 2018, acquisition and integration related expenses resulted from the acquisition of Northern States.
Delivering Excellence implementation costs for the first quarter of 2019 and the fourth quarter of 2018 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
March 31, 2019 Percent Change From
March 31, 2019
December 31, 2018
March 31, 2018
December 31, 2018
March 31, 2018
Commercial and industrial
$
4,183,262
$
4,120,293
$
3,659,066
1.5
14.3
Agricultural
438,461
430,928
435,734
1.7
0.6
Commercial real estate:
Office, retail, and industrial
1,806,892
1,820,917
1,931,202
(0.8
)
(6.4
)
Multi-family
752,943
764,185
695,830
(1.5
)
8.2
Construction
683,475
649,337
585,766
5.3
16.7
Other commercial real estate
1,309,878
1,361,810
1,363,238
(3.8
)
(3.9
)
Total commercial real estate
4,553,188
4,596,249
4,576,036
(0.9
)
(0.5
)
Total corporate loans
9,174,911
9,147,470
8,670,836
0.3
5.8
Home equity
862,068
851,607
881,534
1.2
(2.2
)
1-4 family mortgages
1,086,264
1,017,181
798,902
6.8
36.0
Installment
445,760
430,525
325,502
3.5
36.9
Total consumer loans
2,394,092
2,299,313
2,005,938
4.1
19.4
Total loans
$
11,569,003
$
11,446,783
$
10,676,774
1.1
8.4
Total loans of $11.6 billion increased by 4.3%, annualized from December 31, 2018 and by 8.4% from March 31, 2018. The increase in loans compared to March 31, 2018 benefitted from the Northern States transaction. Compared to both prior periods, growth in commercial and industrial loans, primarily within our sector-based lending, drove the rise in total corporate loans. The rise in construction loans compared to both prior periods was due to new loan originations and 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 or investment real estate properties, as well as refinancing with non-bank lenders and real estate investors.
Growth in consumer loans compared to both prior periods resulted from purchases of shorter-duration home equity loans and 1-4 family mortgages and organic growth. Compared to March 31, 2018, growth in consumer loans also benefited from the purchase of installment loans.
Asset Quality (Dollar amounts in thousands)
As of
March 31, 2019 Percent Change From
March 31, 2019
December 31, 2018
March 31, 2018
December 31, 2018
March 31, 2018
Asset quality
Non-accrual loans
$
70,205
$
56,935
$
75,015
23.3
(6.4
)
90 days or more past due loans, still accruing interest(1)
8,446
8,282
4,633
2.0
82.3
Total non-performing loans
78,651
65,217
79,648
20.6
(1.3
)
Accruing troubled debt restructurings ("TDRs")
1,844
1,866
1,778
(1.2
)
3.7
OREO
10,818
12,821
17,472
(15.6
)
(38.1
)
Total non-performing assets
$
91,313
$
79,904
$
98,898
14.3
(7.7
)
30-89 days past due loans(1)
$
45,764
$
37,524
$
42,573
Non-accrual loans to total loans
0.61
%
0.50
%
0.70
%
Non-performing loans to total loans
0.68
%
0.57
%
0.75
%
Non-performing assets to total loans plus OREO
0.79
%
0.70
%
0.92
%
Allowance for credit losses
Allowance for credit losses
$
104,779
$
103,419
$
95,854
Allowance for credit losses to total loans(2)
0.91
%
0.90
%
0.90
%
Allowance for credit losses to loans, excluding acquired loans
1.00
%
1.01
%
1.01
%
Allowance for credit losses to non-accrual loans
149.25
%
181.64
%
127.78
%
(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 0.79% of total loans and OREO at March 31, 2019 compared to 0.70% and 0.92% at December 31, 2018 and March 31, 2018, respectively, reflective of normal fluctuations that can occur on a quarterly basis. The decline in OREO compared to March 31, 2018 resulted from sales of OREO properties.
The allowance for credit losses to total loans was 0.91% at March 31, 2019, consistent with December 31, 2018 and March 31, 2018.
Charge-Off Data (Dollar amounts in thousands)
Quarters Ended
March 31, 2019
% of Total
December 31, 2018
% of Total
March 31, 2018
% of Total
Net loan charge-offs(1)
Commercial and industrial
$
5,061
55.7
$
5,558
73.9
$
13,149
81.9
Agricultural
89
1.0
71
0.9
983
6.1
Office, retail, and industrial
618
6.8
713
9.5
364
2.3
Multi-family
339
3.7
(3
)
—
—
—
Construction
—
—
(99
)
(1.3
)
(13
)
(0.1
)
Other commercial real estate
189
2.1
(817
)
(10.9
)
30
0.2
Consumer
2,788
30.7
2,094
27.9
1,543
9.6
Total net loan charge-offs
$
9,084
100.0
$
7,517
100.0
$
16,056
100.0
Total recoveries included above
$
1,693
$
2,810
$
1,029
Net loan charge-offs to average loans(1)(2):
Quarter-to-date(1)
0.32
%
0.26
%
0.62
%
(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 0.32%, compared to 0.26% for the fourth quarter of 2018 and 0.62% for the first quarter of 2018. Net loan charge-offs were elevated in the first quarter of 2018 due to losses on two corporate loan relationships based upon circumstances unique to these borrowers.
DEPOSIT PORTFOLIO
Deposit Composition (Dollar amounts in thousands)
Average for the Quarters Ended
March 31, 2019 Percent Change From
March 31, 2019
December 31, 2018
March 31, 2018
December 31, 2018
March 31, 2018
Demand deposits
$
3,587,480
$
3,685,806
$
3,466,832
(2.7
)
3.5
Savings deposits
2,037,831
2,044,312
2,015,679
(0.3
)
1.1
NOW accounts
2,083,366
2,128,722
1,992,672
(2.1
)
4.6
Money market accounts
1,809,234
1,831,311
1,814,057
(1.2
)
(0.3
)
Core deposits
9,517,911
9,690,151
9,289,240
(1.8
)
2.5
Time deposits
2,647,316
2,311,453
1,735,155
14.5
52.6
Total deposits
$
12,165,227
$
12,001,604
$
11,024,395
1.4
10.3
Total average deposits were $12.2 billion for the first quarter of 2019, up 1.4% and 10.3% from the fourth and first quarters of 2018, respectively. The decrease in average core deposits compared to the fourth quarter of 2018 resulted primarily from the normal seasonal decline in commercial and municipal deposits. Compared to the first quarter of 2018, the rise in total average core deposits was driven by deposits acquired in the Northern States transaction. The increase in average time deposits compared to both prior periods resulted from the continued success of time deposit marketing initiatives.
CAPITAL MANAGEMENT
Capital Ratios
As of
March 31, 2019
December 31, 2018
March 31, 2018
Company regulatory capital ratios:
Total capital to risk-weighted assets
12.91
%
12.62
%
12.07
%
Tier 1 capital to risk-weighted assets
10.52
%
10.20
%
10.07
%
Common equity Tier 1 ("CET1") to risk-weighted assets
10.52
%
10.20
%
9.65
%
Tier 1 capital to average assets
9.28
%
8.90
%
9.07
%
Company tangible common equity ratios(1)(2):
Tangible common equity to tangible assets
9.00
%
8.59
%
8.18
%
Tangible common equity, excluding accumulated other comprehensive income ("AOCI"), to tangible assets
9.21
%
8.95
%
8.60
%
Tangible common equity to risk-weighted assets
10.29
%
9.81
%
9.18
%
(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, the increase in capital ratios resulted primarily from strong earnings and the approximately 25 basis point impact, or $47.3 million, of deferred gains, net of tax, which resulted from the adoption of lease accounting guidance at the beginning of the first quarter of 2019. These increases were partially offset by the Northern Oak acquisition and the impact of loan growth and securities purchases on risk-weighted assets. Compared to March 31, 2018, capital ratio increases were also partially offset by the Northern States acquisition. In addition, Tier 1 capital ratios compared to March 31, 2018 were impacted by the phase-out of Tier 1 treatment of the Company's trust-preferred securities in the fourth quarter of 2018.
The Board of Directors approved a quarterly cash dividend of $0.12 per common share during the first quarter of 2019, which follows a dividend increase from $0.11 to $0.12 per common share during the fourth quarter of 2018. This dividend represents the 145th 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, April 24, 2019 at 11 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-6039 (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. 10130490 beginning one hour after completion of the live call until 9:00 A.M. (ET) on May 8, 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 our 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, 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 quarter of 2019), Delivering Excellence implementation costs (second, third and fourth quarters of 2018 and first quarter of 2019), 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.
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 has filed a registration statement on Form S-4 (333-229674) with the SEC. The registration statement includes a proxy statement of Bridgeview, which also constitutes a prospectus of First Midwest, that has been sent to Bridgeview stockholders. Investors and stockholders are advised to read the registration statement and proxy statement/prospectus because it contains important information about First Midwest, Bridgeview and the proposed transaction. 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: Chief Financial Officer, 4753 North Broadway, Chicago, Illinois 60640 or by calling (708) 594-7400.
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, is included in the proxy statement/prospectus regarding the proposed Bridgeview transaction. 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 2019 Annual Meeting of Stockholders filed with the SEC on April 4, 2019 and First Midwest's annual report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 1, 2019. 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 approximately $16 billion in 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, retail, 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.
Accompanying Unaudited Selected Financial Information
First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited) (Dollar amounts in thousands)
As of
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Period-End Balance Sheet
Assets
Cash and due from banks
$
186,230
$
211,189
$
185,239
$
181,482
$
150,138
Interest-bearing deposits in other banks
76,529
78,069
111,360
192,785
84,898
Equity securities, at fair value
33,304
30,806
29,046
28,441
28,513
Securities available-for-sale, at fair value
2,350,195
2,272,009
2,179,410
2,142,865
2,040,950
Securities held-to-maturity, at amortized cost
12,842
10,176
12,673
13,042
13,400
FHLB and FRB stock
85,790
80,302
87,728
82,778
80,508
Loans:
Commercial and industrial
4,183,262
4,120,293
3,994,142
3,844,067
3,659,066
Agricultural
438,461
430,928
432,220
433,175
435,734
Commercial real estate:
Office, retail, and industrial
1,806,892
1,820,917
1,782,757
1,834,918
1,931,202
Multi-family
752,943
764,185
698,611
703,091
695,830
Construction
683,475
649,337
632,779
633,601
585,766
Other commercial real estate
1,309,878
1,361,810
1,348,831
1,337,396
1,363,238
Home equity
862,068
851,607
853,887
847,903
881,534
1-4 family mortgages
1,086,264
1,017,181
888,797
880,181
798,902
Installment
445,760
430,525
418,524
377,233
325,502
Total loans
11,569,003
11,446,783
11,050,548
10,891,565
10,676,774
Allowance for loan losses
(103,579
)
(102,219
)
(99,925
)
(96,691
)
(94,854
)
Net loans
11,465,424
11,344,564
10,950,623
10,794,874
10,581,920
OREO
10,818
12,821
12,244
12,892
17,472
Premises, furniture, and equipment, net
131,014
132,502
126,389
127,024
126,348
Investment in bank-owned life insurance ("BOLI")
295,899
296,733
284,074
282,664
281,285
Goodwill and other intangible assets
808,852
790,744
751,248
753,020
754,814
Accrued interest receivable and other assets
360,872
245,734
231,465
206,209
219,725
Total assets
$
15,817,769
$
15,505,649
$
14,961,499
$
14,818,076
$
14,379,971
Liabilities and Stockholders' Equity
Noninterest-bearing deposits
$
3,588,943
$
3,642,989
$
3,618,384
$
3,667,847
$
3,527,081
Interest-bearing deposits
8,572,039
8,441,123
7,908,730
7,824,416
7,618,941
Total deposits
12,160,982
12,084,112
11,527,114
11,492,263
11,146,022
Borrowed funds
973,852
906,079
1,073,546
981,044
950,688
Senior and subordinated debt
203,984
203,808
195,595
195,453
195,312
Accrued interest payable and other liabilities
319,480
256,652
247,569
265,753
218,662
Stockholders' equity
2,159,471
2,054,998
1,917,675
1,883,563
1,869,287
Total liabilities and stockholders' equity
$
15,817,769
$
15,505,649
$
14,961,499
$
14,818,076
$
14,379,971
Stockholders' equity, excluding AOCI
$
2,191,630
$
2,107,510
$
1,992,808
$
1,947,963
$
1,926,818
Stockholders' equity, common
2,159,471
2,054,998
1,917,675
1,883,563
1,869,287
First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited) (Dollar amounts in thousands)
Quarters Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Income Statement
Interest income
$
162,490
$
159,527
$
149,532
$
142,088
$
131,345
Interest expense
23,466
20,898
17,505
14,685
12,782
Net interest income
139,024
138,629
132,027
127,403
118,563
Provision for loan losses
10,444
9,811
11,248
11,614
15,181
Net interest income after provision for loan losses
128,580
128,818
120,779
115,789
103,382
Noninterest Income
Service charges on deposit accounts
11,540
12,627
12,378
12,058
11,652
Wealth management fees
11,600
10,951
10,622
10,981
10,958
Card-based fees, net
4,378
4,574
4,123
4,394
3,933
Capital market products income
1,279
1,408
1,936
2,819
1,558
Mortgage banking income
1,004
1,304
1,657
1,736
2,397
Merchant servicing fees, net
337
365
387
383
330
Other service charges, commissions, and fees
2,274
2,353
2,399
2,455
2,218
Total fee-based revenues
32,412
33,582
33,502
34,826
33,046
Other income
2,494
2,880
2,164
2,121
2,471
Net securities gains (losses)
—
—
—
—
—
Total noninterest income
34,906
36,462
35,666
36,947
35,517
Noninterest Expense
Salaries and employee benefits:
Salaries and wages
46,135
45,011
44,067
46,256
45,830
Retirement and other employee benefits
11,238
10,378
10,093
11,676
10,957
Total salaries and employee benefits
57,373
55,389
54,160
57,932
56,787
Net occupancy and equipment expense
14,770
12,827
13,183
13,651
13,773
Professional services
7,788
8,859
7,944
8,298
7,580
Technology and related costs
4,596
4,849
4,763
4,837
4,771
Advertising and promotions
2,372
2,011
3,526
2,061
1,650
Net OREO expense
681
763
(413
)
(256
)
1,068
Other expenses
10,581
13,418
11,015
11,878
9,953
Acquisition and integration related expenses
3,691
9,553
60
—
—
Delivering Excellence implementation costs
258
3,159
2,239
15,015
—
Total noninterest expense
102,110
110,828
96,477
113,416
95,582
Income before income tax expense
61,376
54,452
59,968
39,320
43,317
Income tax expense
15,318
13,044
6,616
9,720
9,807
Net income
$
46,058
$
41,408
$
53,352
$
29,600
$
33,510
Net income applicable to common shares
$
45,655
$
41,088
$
52,911
$
29,360
$
33,199
Net income applicable to common shares, adjusted(1)
48,616
50,622
46,837
40,621
33,199
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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
EPS
Basic EPS
$
0.43
$
0.39
$
0.52
$
0.29
$
0.33
Diluted EPS
$
0.43
$
0.39
$
0.52
$
0.29
$
0.33
Diluted EPS, adjusted(1)
$
0.46
$
0.48
$
0.46
$
0.40
$
0.33
Common Stock and Related Per Common Share Data
Book value
$
20.20
$
19.32
$
18.61
$
18.28
$
18.13
Tangible book value
$
12.63
$
11.88
$
11.32
$
10.97
$
10.81
Dividends declared per share
$
0.12
$
0.12
$
0.11
$
0.11
$
0.11
Closing price at period end
$
20.46
$
19.81
$
26.59
$
25.47
$
24.59
Closing price to book value
1.0
1.0
1.4
1.4
1.4
Period end shares outstanding
106,900
106,375
103,058
103,059
103,092
Period end treasury shares
8,775
9,297
9,301
9,297
9,261
Common dividends
$
12,837
$
12,774
$
11,326
$
11,333
$
11,349
Key Ratios/Data
Return on average common equity(2)
8.66
%
8.09
%
10.99
%
6.23
%
7.19
%
Return on average common equity, adjusted(1)(2)
9.22
%
9.97
%
9.73
%
8.62
%
7.19
%
Return on average tangible common equity(2)
14.41
%
13.42
%
18.60
%
10.83
%
12.50
%
Return on average tangible common equity, adjusted(1)(2)
15.31
%
16.42
%
16.51
%
14.81
%
12.50
%
Return on average assets(2)
1.19
%
1.06
%
1.42
%
0.81
%
0.96
%
Return on average assets, adjusted(1)(2)
1.27
%
1.30
%
1.26
%
1.12
%
0.96
%
Loans to deposits
95.13
%
94.73
%
95.87
%
94.77
%
95.79
%
Efficiency ratio(1)
55.69
%
55.25
%
56.03
%
59.65
%
60.96
%
Net interest margin(2)(3)
4.04
%
3.96
%
3.92
%
3.91
%
3.80
%
Yield on average interest-earning assets(2)(3)
4.72
%
4.56
%
4.44
%
4.35
%
4.20
%
Cost of funds(2)(4)
0.72
%
0.63
%
0.55
%
0.47
%
0.43
%
Net noninterest expense to average assets(2)
1.74
%
1.90
%
1.62
%
2.10
%
1.72
%
Effective income tax rate
24.96
%
23.96
%
11.03
%
24.72
%
22.64
%
Effective income tax rate, adjusted(1)
24.96
%
23.96
%
24.04
%
24.72
%
22.64
%
Capital Ratios
Total capital to risk-weighted assets(1)
12.91
%
12.62
%
12.32
%
12.07
%
12.07
%
Tier 1 capital to risk-weighted assets(1)
10.52
%
10.20
%
10.34
%
10.09
%
10.07
%
CET1 to risk-weighted assets(1)
10.52
%
10.20
%
9.93
%
9.68
%
9.65
%
Tier 1 capital to average assets(1)
9.28
%
8.90
%
9.10
%
8.95
%
9.07
%
Tangible common equity to tangible assets(1)
9.00
%
8.59
%
8.21
%
8.04
%
8.18
%
Tangible common equity, excluding AOCI, to tangible assets(1)
9.21
%
8.95
%
8.74
%
8.50
%
8.60
%
Tangible common equity to risk -weighted assets(1)
10.29
%
9.81
%
9.33
%
9.16
%
9.18
%
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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Asset Quality Performance Data
Non-performing assets
Commercial and industrial
$
34,694
$
33,507
$
37,981
$
22,672
$
43,974
Agricultural
2,359
1,564
2,104
2,992
4,086
Commercial real estate:
Office, retail, and industrial
17,484
6,510
6,685
9,007
12,342
Multi-family
2,959
3,107
3,184
3,551
144
Construction
—
144
208
208
208
Other commercial real estate
2,971
2,854
4,578
5,288
4,088
Consumer
9,738
9,249
10,026
9,757
10,173
Total non-accrual loans
70,205
56,935
64,766
53,475
75,015
90 days or more past due loans, still accruing interest
8,446
8,282
2,949
7,954
4,633
Total non-performing loans
78,651
65,217
67,715
61,429
79,648
Accruing TDRs
1,844
1,866
1,741
1,760
1,778
OREO
10,818
12,821
12,244
12,892
17,472
Total non-performing assets
$
91,313
$
79,904
$
81,700
$
76,081
$
98,898
30-89 days past due loans
$
45,764
$
37,524
$
46,257
$
39,171
$
42,573
Allowance for credit losses
Allowance for loan losses
$
103,579
$
102,219
$
99,925
$
96,691
$
94,854
Reserve for unfunded commitments
1,200
1,200
1,000
1,000
1,000
Total allowance for credit losses
$
104,779
$
103,419
$
100,925
$
97,691
$
95,854
Provision for loan losses
$
10,444
$
9,811
$
11,248
$
11,614
$
15,181
Net charge-offs by category
Commercial and industrial
$
5,061
$
5,558
$
5,230
$
7,081
$
13,149
Agricultural
89
71
631
828
983
Commercial real estate:
Office, retail, and industrial
618
713
596
279
364
Multi-family
339
(3
)
1
4
—
Construction
—
(99
)
(4
)
(8
)
(13
)
Other commercial real estate
189
(817
)
23
(358
)
30
Consumer
2,788
2,094
1,537
1,951
1,543
Total net charge-offs
$
9,084
$
7,517
$
8,014
$
9,777
$
16,056
Total recoveries included above
$
1,693
$
2,810
$
1,250
$
1,532
$
1,029
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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Asset quality ratios
Non-accrual loans to total loans
0.61
%
0.50
%
0.59
%
0.49
%
0.70
%
Non-performing loans to total loans
0.68
%
0.57
%
0.61
%
0.56
%
0.75
%
Non-performing assets to total loans plus OREO
0.79
%
0.70
%
0.74
%
0.70
%
0.92
%
Non-performing assets to tangible common equity plus allowance for credit losses
6.27
%
5.84
%
6.45
%
6.19
%
8.17
%
Non-accrual loans to total assets
0.44
%
0.37
%
0.43
%
0.36
%
0.52
%
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans(5)
0.91
%
0.90
%
0.91
%
0.90
%
0.90
%
Allowance for credit losses to loans, excluding acquired loans
1.00
%
1.01
%
1.01
%
1.00
%
1.01
%
Allowance for credit losses to non-accrual loans
149.25
%
181.64
%
155.83
%
182.69
%
127.78
%
Allowance for credit losses to non-performing loans
133.22
%
158.58
%
149.04
%
159.03
%
120.35
%
Net charge-offs to average loans(2)
0.32
%
0.26
%
0.29
%
0.36
%
0.62
%
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) 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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
EPS
Net income
$
46,058
$
41,408
$
53,352
$
29,600
$
33,510
Net income applicable to non-vested restricted shares
(403
)
(320
)
(441
)
(240
)
(311
)
Net income applicable to common shares
45,655
41,088
52,911
29,360
33,199
Adjustments to net income:
Acquisition and integration related expenses
3,691
9,553
60
—
—
Tax effect of acquisition and integration related expenses
(923
)
(2,388
)
(15
)
—
—
Delivering Excellence implementation costs
258
3,159
2,239
15,015
—
Tax effect of Delivering Excellence implementation costs
(65
)
(790
)
(560
)
(3,754
)
—
Income tax benefits(1)
—
—
(7,798
)
—
—
Total adjustments to net income, net of tax
2,961
9,534
(6,074
)
11,261
—
Net income applicable to common shares, adjusted(1)
$
48,616
$
50,622
$
46,837
$
40,621
$
33,199
Weighted-average common shares outstanding:
Weighted-average common shares outstanding (basic)
105,770
105,116
102,178
102,159
101,922
Dilutive effect of common stock equivalents
—
—
—
—
16
Weighted-average diluted common shares outstanding
105,770
105,116
102,178
102,159
101,938
Basic EPS
$
0.43
$
0.39
$
0.52
$
0.29
$
0.33
Diluted EPS
$
0.43
$
0.39
$
0.52
$
0.29
$
0.33
Diluted EPS, adjusted(1)
$
0.46
$
0.48
$
0.46
$
0.40
$
0.33
Anti-dilutive shares not included in the computation of diluted EPS
—
—
—
—
110
Effective Tax Rate
Income before income tax expense
$
61,376
$
54,452
$
59,968
$
39,320
$
43,317
Income tax expense
$
15,318
$
13,044
$
6,616
$
9,720
$
9,807
Income tax benefits
$
—
$
—
$
7,798
$
—
$
—
Income tax expense, adjusted
$
15,318
$
13,044
$
14,414
$
9,720
$
9,807
Effective income tax rate
24.96
%
23.96
%
11.03
%
24.72
%
22.64
%
Effective income tax rate, adjusted
24.96
%
23.96
%
24.04
%
24.72
%
22.64
%
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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Return on Average Common and Tangible Common Equity
Net income applicable to common shares
$
45,655
$
41,088
$
52,911
$
29,360
$
33,199
Intangibles amortization
2,363
2,077
1,772
1,794
1,802
Tax effect of intangibles amortization
(591
)
(519
)
(443
)
(449
)
(508
)
Net income applicable to common shares, excluding intangibles amortization
47,427
42,646
54,240
30,705
34,493
Total adjustments to net income, net of tax(1)
2,961
9,534
(6,074
)
11,261
—
Net income applicable to common shares, adjusted(1)
$
50,388
$
52,180
$
48,166
$
41,966
$
34,493
Average stockholders' equity
$
2,138,281
$
2,015,217
$
1,909,330
$
1,890,727
$
1,873,419
Less: average intangible assets
(803,408
)
(754,495
)
(752,109
)
(753,887
)
(753,870
)
Average tangible common equity
$
1,334,873
$
1,260,722
$
1,157,221
$
1,136,840
$
1,119,549
Return on average common equity(2)
8.66
%
8.09
%
10.99
%
6.23
%
7.19
%
Return on average common equity, adjusted(1)(2)
9.22
%
9.97
%
9.73
%
8.62
%
7.19
%
Return on average tangible common equity(2)
14.41
%
13.42
%
18.60
%
10.83
%
12.50
%
Return on average tangible common equity, adjusted(1)(2)
15.31
%
16.42
%
16.51
%
14.81
%
12.50
%
Return on Average Assets
Net income
$
46,058
$
41,408
$
53,352
$
29,600
$
33,510
Total adjustments to net income, net of tax(1)
2,961
9,534
(6,074
)
11,261
—
Net income, adjusted(1)
$
49,019
$
50,942
$
47,278
$
40,861
$
33,510
Average assets
$
15,667,839
$
15,503,399
$
14,894,670
$
14,605,715
$
14,187,053
Return on average assets(2)
1.19
%
1.06
%
1.42
%
0.81
%
0.96
%
Return on average assets, adjusted(1)(2)
1.27
%
1.30
%
1.26
%
1.12
%
0.96
%
Efficiency Ratio Calculation
Noninterest expense
$
102,110
$
110,828
$
96,477
$
113,416
$
95,582
Less:
Net OREO expense
(681
)
(763
)
413
256
(1,068
)
Acquisition and integration related expenses
(3,691
)
(9,553
)
(60
)
—
—
Delivering Excellence implementation costs
(258
)
(3,159
)
(2,239
)
(15,015
)
—
Total
$
97,480
$
97,353
$
94,591
$
98,657
$
94,514
Tax-equivalent net interest income(3)
$
140,132
$
139,755
$
133,161
$
128,442
$
119,538
Noninterest income
34,906
36,462
35,666
36,947
35,517
Total
$
175,038
$
176,217
$
168,827
$
165,389
$
155,055
Efficiency ratio
55.69
%
55.25
%
56.03
%
59.65
%
60.96
%
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
March 31,
December 31,
September 30,
June 30,
March 31,
2019
2018
2018
2018
2018
Risk-Based Capital Data
Common stock
$
1,157
$
1,157
$
1,124
$
1,124
$
1,123
Additional paid-in capital
1,103,991
1,114,580
1,028,635
1,025,703
1,021,923
Retained earnings
1,273,245
1,192,767
1,164,133
1,122,107
1,103,840
Treasury stock, at cost
(186,763
)
(200,994
)
(201,084
)
(200,971
)
(200,068
)
Goodwill and other intangible assets, net of deferred tax liabilities
(808,852
)
(790,744
)
(751,248
)
(753,020
)
(754,814
)
Disallowed DTAs
(809
)
(1,334
)
—
(389
)
(522
)
CET1 capital
1,381,969
1,315,432
1,241,560
1,194,554
1,171,482
Trust-preferred securities
—
—
50,690
50,690
50,690
Other disallowed DTAs
—
(334
)
—
(97
)
(131
)
Tier 1 capital
1,381,969
1,315,098
1,292,250
1,245,147
1,222,041
Tier 2 capital
312,840
311,391
248,118
244,795
242,870
Total capital
$
1,694,809
$
1,626,489
$
1,540,368
$
1,489,942
$
1,464,911
Risk-weighted assets
$
13,131,237
$
12,892,180
$
12,500,342
$
12,345,200
$
12,135,662
Adjusted average assets
$
14,891,534
$
14,782,327
$
14,202,776
$
13,907,100
$
13,472,294
Total capital to risk-weighted assets
12.91
%
12.62
%
12.32
%
12.07
%
12.07
%
Tier 1 capital to risk-weighted assets
10.52
%
10.20
%
10.34
%
10.09
%
10.07
%
CET1 to risk-weighted assets
10.52
%
10.20
%
9.93
%
9.68
%
9.65
%
Tier 1 capital to average assets
9.28
%
8.90
%
9.10
%
8.95
%
9.07
%
Tangible Common Equity
Stockholders' equity
$
2,159,471
$
2,054,998
$
1,917,675
$
1,883,563
$
1,869,287
Less: goodwill and other intangible assets
(808,852
)
(790,744
)
(751,248
)
(753,020
)
(754,814
)
Tangible common equity
1,350,619
1,264,254
1,166,427
1,130,543
1,114,473
Less: AOCI
32,159
52,512
75,133
64,400
57,531
Tangible common equity, excluding AOCI
$
1,382,778
$
1,316,766
$
1,241,560
$
1,194,943
$
1,172,004
Total assets
$
15,817,769
$
15,505,649
$
14,961,499
$
14,818,076
$
14,379,971
Less: goodwill and other intangible assets
(808,852
)
(790,744
)
(751,248
)
(753,020
)
(754,814
)
Tangible assets
$
15,008,917
$
14,714,905
$
14,210,251
$
14,065,056
$
13,625,157
Tangible common equity to tangible assets
9.00
%
8.59
%
8.21
%
8.04
%
8.18
%
Tangible common equity, excluding AOCI, to tangible assets
9.21
%
8.95
%
8.74
%
8.50
%
8.60
%
Tangible common equity to risk-weighted assets
10.29
%
9.81
%
9.33
%
9.16
%
9.18
%
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%.
