4TH QUARTER 2003 HIGHLIGHTS:
-- EPS Increased 10.6% to $.52 from $.47 Last Year
-- ROAA of 1.54% vs. 1.49% Last Year
-- Quarterly Cash Dividend Increased 16%
-- Continued Sound Asset Quality
-- Acquisition of CoVest Bancshares Completed
-- Rural Streator, Illinois Branches Sold
ITASCA, Ill., Jan. 21 /PRNewswire-FirstCall/ -- First Midwest Bancorp,
Inc. ("First Midwest") (Nasdaq: FMBI), the premier relationship-based
franchise in the wealthy and growing suburbs of Chicago, today reported net
income for the fourth quarter ended December 31, 2003 of $24.2 million up from
$22.5 million in the comparable quarter of 2002. This represented an increase
of 10.6% on a per diluted share basis to $0.52, from $0.47 in the fourth
quarter 2002. First Midwest's performance during the quarter resulted in an
annualized return on average assets of 1.54% and an annualized return on
average equity of 18.6%, up from 1.49% and 17.9%, respectively, in last year's
fourth quarter.
For the full year 2003, First Midwest's net income increased 5.9% on a per
diluted share basis to a record $92.8 million, or $1.97 per diluted share,
from $90.2 million, or $1.86 per diluted share, in 2002. First Midwest's
annualized return on average assets and annualized return on average equity in
2003 was 1.50% and 18.3%, respectively, down marginally from 1.53% and 18.8%,
respectively, in 2002.
"First Midwest experienced another year of record performance in 2003,
despite challenging economic conditions," said John O'Meara, First Midwest's
President and Chief Executive Officer. "First Midwest generated strong
earnings while protecting future performance through continued sound credit
quality and strategic balance sheet repositioning. During the year, we
improved our market position in the important northwest Cook County corridor
by acquiring CoVest Bancshares and the O'Hare Financial Center branch from
Northern Trust."
2004 Outlook
"The coming year presents exciting opportunities and continued challenges
as the banking environment looks to emerge from the economic downturn."
O'Meara continued, "I am encouraged by the favorable trends experienced in
loan outstandings and fee growth as well as our improved margins. We continue
to focus on maintaining strict credit quality and expense management. With
the acquisition of CoVest completed, First Midwest's banking franchise begins
2004 with approximately $7 billion in total assets, roughly 90% of which are
located in the highly dynamic suburban Chicago market place. First Midwest
expects to grow diluted earnings per share to $2.15 - $2.20 in 2004."
Transactions Completed in Fourth Quarter
On December 31, 2003, First Midwest completed its acquisition of CoVest
Bancshares ("CoVest"), which had total loans of $531 million and total
deposits of $466 million. First Midwest paid cash for the acquisition, which
was accounted for under the purchase method. First Midwest incurred
$4.4 million of direct, after-tax merger costs and recorded approximately
$63.6 million of intangible assets.
First Midwest also completed a $125 million issuance of trust preferred
securities in November 2003 to finance the acquisition of CoVest. These
securities bear a coupon rate of 6.95% and mature in November 2033. In
conjunction with the issuance, First Midwest received investment grade ratings
from Standard & Poor's, Moody's and Fitch rating services.
On November 13, 2003, First Midwest sold two branches in rural Streator,
Illinois, representing $69 million in deposits and $11 million in loans. The
consideration received from the sale resulted in a pre-tax gain of
approximately $4.6 million.
Balance Sheet Restructuring Activities
During the fourth quarter of 2003, First Midwest continued to pursue
previously announced balance sheet restructuring strategies as a result of the
continued low interest rate environment and its expectation for higher
interest rates. During the quarter, First Midwest extinguished $100 million
of Federal Home Loan Bank advances with a weighted maturity of 18 months and a
weighted cost of 3.78% at a pre-tax cost of approximately $3 million. In a
separate transaction, this funding was replaced with Federal Home Loan Bank
advances having a weighted maturity of 24 months and a weighted cost of 1.96%.
Net Interest Margin
First Midwest's net interest income totaled $53.0 million for the fourth
quarter of 2003, in line with the prior year's fourth quarter of
$52.8 million. Net interest margin for the fourth quarter of 2003 was 4.01%,
down from 4.10% a year ago, but up from 3.90% in the third quarter of 2003.
As expected, First Midwest's margin improved from the prior quarter primarily
due to improved yields on mortgage-backed securities and benefits realized
from retiring and redeploying Federal Home Loan Bank advances at lower
interest rates. First Midwest also incurred $1.1 million in interest expense
stemming from the $125 million trust preferred issuance. The impact of this
cost on net interest margin was increased as the proceeds from the issuance
were held in liquid, lower yielding assets until the completion of the CoVest
acquisition.
Loan Growth and Funding
Total loans at December 31, 2003 were 19.2% higher than at December 31,
2002, primarily due to loans acquired as part of the CoVest acquisition.
Excluding the $531 million in loans First Midwest acquired from CoVest, total
loans increased approximately 3.6% over 2002 as loans in all categories
experienced growth, except 1-4 family real estate and indirect consumer
lending. Total loans, excluding CoVest, increased 1.2% on a linked-quarter
basis and represented 4.8% on an annualized basis. Excluding CoVest,
commercial loan growth on a linked-quarter basis was 1.65% and 11.6% year-
over-year for 2003.
Average deposits for the fourth quarter 2003 increased from the prior
year's fourth quarter by 4.6%, primarily due to growth in core transactional
accounts (demand, savings, NOW, and money market accounts). Compared to the
fourth quarter of 2002, core transactional deposits increased 14.1%, largely
due to targeted pricing and promotional efforts.
Noninterest Income and Expense
Noninterest income for the fourth quarter of 2003 totaled $19.4 million,
including the $4.6 million gain realized from the sale of the Streator
branches and $3.0 million in losses created by the early retirement of Federal
Home Loan Bank advances. Excluding these transactions, noninterest income was
$17.8 million, a slight increase from the $17.6 million earned in the prior
year's fourth quarter. Service charges on deposit accounts, commissions
earned from the sale of third-party investment products and trust income all
increased in fourth quarter 2003 when compared to the prior year's fourth
quarter. This increase was partly offset by lower income from corporate owned
life insurance, mortgage-related sales commissions and debit card revenues.
Noninterest income was relatively stable on a linked-quarter basis after
excluding debt retirement and securities gains and losses from both periods.
For the full year of 2003, total noninterest income totaled $74.2 million, an
increase of 10.7% over 2002.
Total noninterest expense for the fourth quarter of 2003 increased 4.0%
from the prior year's fourth quarter and increased 1.0% for full year 2003
from 2002. On a linked-quarter basis, noninterest expense was essentially
unchanged.
First Midwest's combination of top line revenue performance and continued
cost control resulted in solid efficiency ratios for both fourth quarter 2003
and full year 2003 of 45.7% and 48.3%, respectively.
Credit Quality
First Midwest's overall credit quality remains sound. Nonperforming loans
at December 31, 2003 totaled $23.1 million, representing 0.57% of total
outstanding loans. This ratio is up from the September 30, 2003 level of
0.53% and a historically low level of 0.37% as of December 31, 2002. As
anticipated in pre-acquisition due diligence, nonperforming loans include
$4.9 million of nonaccruing loans acquired from CoVest. Nonperforming loans
also include $7.1 million of loans restructured by First Midwest that are
expected to return to performing status by the end of the first quarter of
2004 as the result of sustained borrower performance under the restructured
terms.
Nonperforming assets totaled $28.9 million at December 31, 2003. Loans
past due 90 days decreased by 29.6% to $3.4 million on a linked-quarter basis.
Net charge-offs for the fourth quarter and full year of 2003 were 0.35%
and 0.28% of average loans, respectively, down from 0.49% and 0.45% for the
fourth quarter and full year of 2002, respectively. Provisions for loan
losses for both the fourth quarter and full year of 2003 fully covered net
charge-offs, resulting in First Midwest maintaining its ratio of the reserve
for loan losses to total loans at the close of the fourth quarter of 2003 at
1.39%. Loan loss reserves acquired as a part of the CoVest acquisition
totaled $7.2 million and represented 1.36% of the loans acquired. The reserve
for loan losses at December 31, 2003 represented 245% of nonperforming loans
as compared to the historically high level of 383% at year-end 2002.
Dividend Increase
On November 19, 2003, First Midwest increased its quarterly cash dividend
by 15.8% from $.19 to $.22 per share. This represents the Company's 84th
consecutive quarterly dividend payment since its formation in 1983. First
Midwest has increased its annual dividend at a compound annual growth rate of
10% and 12% over the past five and ten years, respectively. Based on First
Midwest's December 31, 2003 closing price of $32.43 per share, the current
dividend payment represents an annual yield of 2.71%.
Capital Management
First Midwest's Total Risk Based Capital and Tier 1 Risk Based Capital
ratios at the year-end 2003 were 11.37% and 10.24%, respectively, exceeding
the minimum "well capitalized" levels for regulatory purposes of 10.0% and
6.0%, respectively. First Midwest's Tier 1 Leverage Ratio of 8.43% also
exceeded the "well capitalized" range of 3.0% - 5.0%. First Midwest's tangible
capital ratio, which represents the ratio of stockholders' equity to total
assets excluding intangible assets, declined from 7.97% as of December 31,
2002 to 6.22% as of December 31, 2003, due to the $82.9 million of intangible
assets created by the CoVest and O'Hare branch acquisitions.
First Midwest made no share repurchases during the fourth quarter of 2003
and repurchased 842 thousand shares at an average price of $26.60 for the
entire year 2003. As of December 31, 2003, approximately 1.6 million shares
remained under First Midwest's existing repurchase authorization. First
Midwest expects to continue to repurchase shares in 2004, the pace of which
will continue to be influenced by the expected rate of return of alternate
capital investment opportunities.
About the Company
First Midwest is the premier relationship-based banking franchise in the
wealthy and growing suburban Chicago banking markets. As the largest
independent bank holding company and one of the overall largest banking
companies in the Chicago metropolitan area, First Midwest provides the full
range of both business and retail banking, trust and investment management
services through approximately 70 offices located in 49 communities, primarily
in northeastern Illinois.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Act of 1995: Statements
in this news release that are forward-looking statements are subject to
various risks and uncertainties concerning specific factors described in First
Midwest Bancorp's 2002 Form 10-K and other filings with the U.S. Securities
and Exchange Commission. Such information contained herein represents
management's best judgment as of the date hereof based on information
currently available. First Midwest does not intend to update this information
and disclaims any legal obligation to the contrary. Historical information is
not necessarily indicative of future performance.
Accompanying Financial Statements and Tables
Accompanying this press release is the following unaudited financial
information:
-- Operating Highlights, Balance Sheet Highlights and Stock Performance
Data
-- Condensed Consolidated Statements of Condition
-- Condensed Consolidated Statements of Income
-- Selected Quarterly Data and Asset Quality
Press Release and Additional Information Available on Website
This press release, the accompanying financial statements and tables and
certain additional unaudited selected financial information (totaling 3 pages)
are available through the "Investor Relations" section of First Midwest's
website at http://www.firstmidwest.com .
Operating Highlights Quarters Ended Years Ended
Unaudited December 31, December 31,
(Amounts in thousands except per 2003 2002 2003 2002
share data)
Net income $24,199 $22,466 $92,778 $90,150
Diluted earnings per share $0.52 $0.47 $1.97 $1.86
Return on average equity 18.59% 17.92% 18.28% 18.82%
Return on average assets 1.54% 1.49% 1.50% 1.53%
Net interest margin 4.01% 4.10% 3.99% 4.28%
Efficiency ratio 45.66% 47.24% 48.32% 48.20%
Balance Sheet Highlights
Unaudited
(Amounts in thousands except per
share data) Dec. 31, Dec. 31,
2003 2002
Total assets $6,906,658 $5,980,533
Total loans 4,059,782 3,406,846
Total deposits 4,815,108 4,172,954
Stockholders' equity 522,540 491,953
Book value per share $11.22 $10.42
Period end shares outstanding 46,581 47,206
Stock Performance Data Quarters Ended Years Ended
Unaudited December 31, December 31,
2003 2002 2003 2002
Market Price:
Quarter End $32.43 $26.71 $32.43 $26.71
High $32.80 $28.79 $32.80 $32.16
Low $29.61 $23.80 $24.89 $23.34
Quarter end price to book value 2.9 x 2.6 x 2.9 x 2.6 x
Quarter end price to 2003 earnings 16.5 x N/A 16.5 x N/A
Dividends declared per share $0.22 $0.19 $0.79 $0.70
Condensed Consolidated Statements of Condition
December 31,
(Amounts in thousands) 2003 2002
Assets Unaudited(A) Audited
Cash and due from banks $186,900 $195,153
Funds sold and other short-term 15,409 30,266
Securities available for sale 2,229,650 2,021,767
Securities held to maturity, at
amortized cost 67,446 69,832
Loans 4,059,782 3,406,846
Reserve for loan losses (56,404) (47,929)
Net loans 4,003,378 3,358,917
Premises, furniture and equipment 91,535 81,627
Investment in corporate owned life
insurance 146,421 141,362
Accrued interest receivable and
other assets 165,919 81,609
Total assets $6,906,658 $5,980,533
Liabilities and Stockholders' Equity
Deposits $4,815,108 $4,172,954
Borrowed funds 1,371,672 1,237,408
Subordinated debt-trust preferred
securities 128,716 -
Accrued interest payable and other
liabilities 68,622 78,218
Total liabilities 6,384,118 5,488,580
Common stock 569 569
Additional paid-in capital 68,755 71,020
Retained earnings 650,128 594,192
Accumulated other comprehensive
income 32,656 39,365
Treasury stock, at cost (229,568) (213,193)
Total stockholders' equity 522,540 491,953
Total liabilities and
stockholders' equity $6,906,658 $5,980,533
(A) While unaudited, the 2003 Condensed Consolidated Statement of
Condition has been prepared in accordance with accounting principles generally
accepted in the United States and is derived from the 2003 financial
statements on which Ernst & Young LLP, First Midwest's independent external
auditor will issue an audit opinion upon completion of their audit procedures.
Condensed Consolidated Statements
of Income Quarters Ended Years Ended
December 31, December 31,
(Amounts in thousands except per 2003 2002 2003 2002
share data) Unaudited Unaudited Unaudited Audited
(A) (A) (B)
Interest Income
Loans $48,439 $53,528 $200,013 $223,393
Securities 23,085 24,427 89,972 105,454
Other 144 266 1,082 817
Total interest income 71,668 78,221 291,067 329,664
Interest Expense
Deposits 13,182 17,685 56,272 81,616
Borrowed funds 4,445 7,783 23,962 29,294
Subordinated debt-trust preferred
securities 1,079 - 1,079 -
Total interest expense 18,706 25,468 81,313 110,910
Net interest income 52,962 52,753 209,754 218,754
Provision for Loan Losses 3,075 4,235 10,805 15,410
Net interest income after
provision for loan losses 49,887 48,518 198,949 203,344
Noninterest Income
Service charges on deposit
accounts 7,269 6,948 27,924 25,362
Trust and investment management
fees 2,727 2,507 10,810 10,309
Other service charges,
commissions, and fees 4,675 4,767 20,250 18,019
Corporate owned life insurance
income 1,354 1,460 5,059 6,728
Gains on available for sale
securities 202 427 2,988 460
(Losses) on early extinguishment
of debt (3,018) - (6,025) -
Other 6,210 1,469 13,164 6,113
Total noninterest income 19,419 17,578 74,170 66,991
Noninterest Expense
Salaries and employee benefits 21,241 19,833 84,284 80,626
Occupancy expenses 3,544 3,503 14,508 14,298
Equipment expenses 2,106 1,959 7,979 7,769
Technology and related costs 1,899 2,331 8,913 9,796
Other 8,319 8,070 33,768 35,563
Total noninterest expense 37,109 35,696 149,452 148,052
Income before taxes 32,197 30,400 123,667 122,283
Income tax expense 7,998 7,934 30,889 32,133
Net Income $24,199 $22,466 $92,778 $90,150
Diluted Earnings Per Share $0.52 $0.47 $1.97 $1.86
Dividends Declared Per Share $0.22 $0.19 $0.79 $0.70
Weighted Average Diluted Shares
Outstanding 46,944 47,714 46,982 48,415
(A) While unaudited, the Condensed Consolidated Statements of Income for
the quarters ended December 31, 2003 and 2002 have been prepared in accordance
with principles generally accepted in the United States and are derived from
quarterly financial statements.
(B) While unaudited, the Condensed Consolidated Statement of Income for
the year ended December 31, 2003 has been prepared in accordance with
accounting principles generally accepted in the United States and is derived
from the 2003 financial statements on which Ernst & Young LLP, First Midwest's
independent external auditor will issue an audit opinion upon completion of
their audit procedures.
Selected Quarterly Data
Unaudited Years Ended
(Amounts in thousands except per
share data) 12/31/03 12/31/02
Net interest income $209,754 $218,754
Provision for loan losses 10,805 15,410
Noninterest income 74,170 66,991
Noninterest expense 149,452 148,052
Net income 92,778 90,150
Diluted earnings per share $1.97 $1.86
Return on average equity 18.28% 18.82%
Return on average assets 1.50% 1.53%
Net interest margin 3.99% 4.28%
Efficiency ratio 48.32% 48.20%
Period end shares outstanding 46,581 47,206
Book value per share $11.22 $10.42
Dividends declared per share $0.79 $0.70
Selected Quarterly Data
Unaudited Quarters Ended
(Amounts in thousands except
per share data) 12/31/03 9/30/03 6/30/03 3/31/03 12/31/02
Net interest income $52,962 $52,007 $52,644 $52,141 $52,753
Provision for loan losses 3,075 2,660 2,540 2,530 4,235
Noninterest income 19,419 15,772 21,215 17,764 17,578
Noninterest expense 37,109 37,551 37,954 36,838 35,696
Net income 24,199 21,202 24,647 22,730 22,466
Diluted earnings per share $0.52 $0.45 $0.53 $0.48 $0.47
Return on average equity 18.59% 16.73% 19.40% 18.39% 17.92%
Return on average assets 1.54% 1.33% 1.59% 1.53% 1.49%
Net interest margin 4.01% 3.90% 4.01% 4.06% 4.10%
Efficiency ratio 45.66% 48.72% 49.92% 49.16% 47.24%
Period end shares outstanding 46,581 46,551 46,534 46,582 47,206
Book value per share $11.22 $10.94 $10.92 $10.58 $10.42
Dividends declared per share $0.22 $0.19 $0.19 $0.19 $0.19
Asset Quality
Unaudited Years Ended
(Amounts in thousands) 12/31/03 12/31/02
Nonaccrual loans $15,930 $12,525
Restructured loans 7,137 -
Total Nonperforming loans $23,067 $12,525
Foreclosed real estate 5,812 5,496
Loans past due 90 days and still
accruing 3,384 3,307
Nonperforming loans to loans 0.57% 0.37%
Nonperforming assets to loans
plus foreclosed real estate 0.71% 0.53%
Reserve for loan losses to loans 1.39% 1.41%
Reserve for loan losses to
nonperforming loans 245% 383%
Provision for loan losses $10,805 $15,410
Net loan charge-offs 9,550 15,226
Net loan charge-offs to average loans 0.28% 0.45%
Asset Quality
Unaudited Quarters Ended
(Amounts in thousands) 12/31/02 9/30/03 6/30/03 3/31/03 12/31/02
Nonaccrual loans $15,930 $11,442 $9,423 $13,596 $12,525
Restructured loans 7,137 7,219 7,328 - -
Total Nonperforming loans $23,067 $18,661 $16,751 $13,596 $12,525
Foreclosed real estate 5,812 3,842 4,576 4,044 5,496
Loans past due 90 days and
still accruing 3,384 4,806 5,723 7,497 3,307
Nonperforming loans to loans 0.57% 0.53% 0.48% 0.40% 0.37%
Nonperforming assets to loans
plus foreclosed real estate 0.71% 0.64% 0.61% 0.51% 0.53%
Reserve for loan losses to
loans 1.39% 1.41% 1.40% 1.40% 1.41%
Reserve for loan losses to
nonperforming loans 245% 263% 293% 353% 383%
Provision for loan losses $3,075 $2,660 $2,540 $2,530 $4,235
Net loan charge-offs 3,055 2,620 1,436 2,439 4,225
Net loan charge-offs to
average loans 0.35% 0.30% 0.17% 0.29% 0.49%
SOURCE First Midwest Bancorp, Inc.
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Related links:
http://www.firstmidwest.com
CONTACT:
Michael L. Scudder, EVP, Chief Financial
Officer, +1-630-875-7283, or Steven H. Shapiro, EVP, Corporate
Secretary, +1-630-875-7345, both of First Midwest Bancorp
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