1st Quarter 2004 Highlights:
-- EPS Increased 6.3% to $.51 vs. $.48 Last Year
-- Total Assets Up 13.2% Compared to 1st Quarter 2003
-- 20% Improvement in Nonperforming Assets Compared to 4th Quarter 2003
-- Commercial Loan Demand Strengthening
-- CoVest Banc Successfully Integrated
ITASCA, Ill., April 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 that
its net income for first quarter ended March 31, 2004 increased by 6.3% on a
per diluted share basis to $24.0 million, or $0.51 per diluted share, from
2003's first quarter of $22.7 million, or $0.48 per diluted share.
Performance for first quarter 2004 resulted in an annualized return on average
assets of 1.42%, as compared to 1.53% for first quarter 2003, and an
annualized return on average equity of 18.0%, as compared to 18.4% for first
quarter 2003.
"I am pleased to report another solid quarter of performance," First
Midwest President and Chief Executive Officer John O'Meara stated. "Higher
net interest income and lower credit costs were the main contributors to first
quarter 2004 results. The higher level of net interest income in 2004 was
fueled by earning asset growth, the result of the acquisition of CoVest
Bancshares on December 31, 2003 and continued corporate loan growth. Having
seamlessly integrated CoVest in February, we continue to focus on the tight
control of our operating costs. Subsequent quarters should see the full
impact of the cost savings that have been implemented at CoVest.
"Recent signs of further economic strength, as measured by economic output
and employment statistics, are beginning to be reflected in a movement to
higher interest rates," O'Meara said. "First Midwest's earnings are
positively influenced by higher interest rates, which improve the spreads on
commercial lending portfolios and slow prepayments on our mortgage-backed
securities. With $38.4 million in unrealized securities gains as of March 31,
2004, First Midwest can be patient as it awaits the normalization of interest
rates, which is widely anticipated later this year. We reaffirm our earlier
2004 diluted earnings per share guidance of $2.15 to $2.20."
Net Interest Margin
First Midwest's net interest income increased 9.1% to $56.9 million for
first quarter 2004 as compared to $52.1 million for 2003's first quarter.
This increase was due to earning asset growth of $685.1 million from first
quarter 2003, which was primarily due to the acquisition of CoVest on December
31, 2003. Net interest margin for first quarter 2004 was 3.97%, down from
4.06% for first quarter 2003 and 4.01% for fourth quarter 2003.
Loan Growth and Funding
First Midwest's total loans of $4.1 billion at March 31, 2004 were 19.6%
higher than at March 31, 2003 and 1.4% higher than at December 31, 2003. This
growth from first quarter 2003 was due primarily to the acquisition of
$531 million in loans from CoVest on December 31, 2003. On a linked-quarter
basis, corporate loans, consisting of commercial, real estate commercial and
real estate construction lending, increased 2.4%. We remain optimistic about
the prospects for commercial and real estate commercial loan growth over the
balance of the year. Encouragingly, the pipeline of loan proposals under
review by First Midwest is up significantly compared with 2003.
Total deposits for first quarter 2004 were $4.8 billion, as compared to
$4.2 billion at March 31, 2003. The 14.1% increase is primarily attributed to
deposits obtained through the acquisition of CoVest. Total deposits were
relatively unchanged on a linked-quarter basis.
Noninterest Income and Expense
First Midwest's total noninterest income for first quarter 2004 was
$17.4 million, a nominal decline of 2.1% from first quarter 2003. Excluding
certain transactions, noninterest income increased 4.1%. In first quarter
2004, these transactions included security gains totaling $1.9 million and
offsetting losses of $1.2 million from the early retirement of Federal Home
Loan Bank advances, while in first quarter 2003, these transactions included
the receipt of a $1.2 million litigation settlement and $0.5 million in gains
realized from the sale of property. Noninterest income in 2004 reflected
improved trust income and increased commissions earned from investment product
sales offset by lower mortgage-related fee income. Service charge revenue
increased in first quarter 2004 as compared to first quarter 2003 due to the
CoVest acquisition, but this increase was offset by lower fees generated from
accounts with insufficient funds and business deposit accounts.
Total noninterest expense for first quarter 2004 increased $3.4 million to
$40.2 million, an increase of 9.1% from first quarter 2003. This increase was
largely the result of greater expenses associated with operating the CoVest
franchise, including higher employee-related expenses and increased net
occupancy and equipment costs. First quarter 2004 expenses also included one-
time costs of $650,000 attributed to the integration of CoVest and $491,000 of
CoVest core deposit intangible amortization. First Midwest's efficiency ratio
was 50.5% for first quarter 2004, up from 49.2% for first quarter 2003
primarily due to these higher noninterest expenses. First Midwest expects
this ratio to improve as it fully integrates CoVest's operations in subsequent
quarters.
Credit Quality
First Midwest's level of overall credit quality improved, with
nonperforming assets decreasing by 18.7% in the first quarter of 2004 as
compared to year-end 2003. At March 31, 2004, nonperforming loans represented
0.45% of loans, compared with 0.57% at December 31, 2003, as $7.1 million of
loans restructured in second quarter 2003 were returned to performing status.
Nonperforming assets totaled $23.5 million at March 31, 2004, down from
$28.9 million at December 31, 2003. Loans past due 90 days and still accruing
totaled $7.0 million at March 31, 2004, up from $3.4 million as of December
31, 2003. This increase was due to a single manufacturing credit that First
Midwest is working rigorously to remediate.
Net charge-offs for first quarter 2004 improved to 0.17% of average loans,
a 41.4% reduction from 0.29% for first quarter 2003. Consumer credit costs
showed continued improvement, which should be sustained for the balance of the
year. The ratio of the reserve for loan losses to total loans as of March 31,
2004 was 1.38%, while the provision for loan losses exceeded net charge-offs.
The reserve for loan losses at March 31, 2004 represented 303% of
nonperforming loans, which represents the highest coverage ratio over the past
four quarters.
Capital Management
As of March 31, 2004 First Midwest's Total Risk Based Capital and Tier 1
Risk Based Capital ratios were 10.5% and 11.6%, respectively, exceeding the
minimum "well capitalized" levels for regulatory purposes of 10.0% and 6.0%,
respectively. First Midwest's Tier 1 Leverage Ratio as of such date was 8.0%,
again exceeding the regulatory minimum range of 3.0% - 5.0% required to be
considered a "well capitalized" institution.
First Midwest continued to repurchase its common stock during first
quarter 2004. It purchased 162,100 shares at an average price of
approximately $32.95 per share funded by cash on hand. As of March 31, 2004,
approximately 1.4 million shares remained under First Midwest's existing
repurchase authorization.
About the Company
First Midwest is the premier relationship-based banking franchise in the
wealthy and growing suburban Chicago banking markets. As one of the Chicago
metropolitan area's largest independent bank holding companies, First Midwest
provides the full range of both business and retail banking and trust and
investment management services through 66 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 2003 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 are available
through the "Investor Relations" section of First Midwest's website at
http://www.firstmidwest.com .
Operating Highlights Quarters Ended
Unaudited March 31,
(Amounts in thousands except per
share data) 2004 2003
Net income $24,032 $22,730
Diluted earnings per share $0.51 $0.48
Return on average equity 17.97% 18.39%
Return on average assets 1.42% 1.53%
Net interest margin 3.97% 4.06%
Efficiency ratio 50.53% 49.16%
Balance Sheet Highlights
Unaudited
(Amounts in thousands except per
share data) Mar. 31, 2004 Mar. 31, 2003
Total assets $6,848,701 $6,050,593
Total loans 4,114,667 3,439,281
Total deposits 4,788,812 4,195,468
Stockholders' equity 524,129 492,822
Book value per share $11.26 $10.58
Period end shares outstanding 46,537 46,582
Stock Performance Data Quarters Ended
Unaudited March 31,
2004 2003
Market Price:
Quarter End $34.22 $25.81
High $34.29 $28.12
Low $31.13 $24.89
Quarter end price to book value 3.0 x 2.4 x
Quarter end price to consensus estimated
2004 earnings 15.6 x N/A
Dividends declared per share $0.22 $0.19
Condensed Consolidated Statements of Condition
Unaudited(A) March 31,
(Amounts in thousands) 2004 2003
Assets
Cash and due from banks $159,339 $161,094
Funds sold and other short-term investments 13,190 19,035
Securities available for sale 2,139,140 2,094,071
Securities held to maturity, at amortized
cost 66,208 77,878
Loans 4,114,667 3,439,281
Reserve for loan losses (56,628) (48,020)
Net loans 4,058,039 3,391,261
Premises, furniture and equipment 92,021 81,312
Investment in corporate owned life insurance 147,688 142,658
Goodwill and other intangible assets 98,190 16,397
Accrued interest receivable and other assets 74,886 66,887
Total assets $6,848,701 $6,050,593
Liabilities and Stockholders' Equity
Deposits $4,788,812 $4,195,468
Borrowed funds 1,323,532 1,277,895
Subordinated debt - trust preferred
securities 129,785 -
Accrued interest payable and other liabilities 82,443 84,408
Total liabilities 6,324,572 5,557,771
Common stock 569 569
Additional paid-in capital 67,812 70,418
Retained earnings 663,906 608,055
Accumulated other comprehensive income 22,909 43,239
Treasury stock, at cost (231,067) (229,459)
Total stockholders' equity 524,129 492,822
Total liabilities and
stockholders' equity $6,848,701 $6,050,593
(A) While unaudited, the Condensed Consolidated Statements of Condition
have been prepared in accordance with accounting principles generally
accepted in the United States and, as of March 31, 2003, are derived
from quarterly financial statements on which Ernst & Young LLP, First
Midwest's independent external auditor, has rendered a Quarterly
Review Report; Ernst & Young is currently in the process of completing
their Quarterly Review Report for the quarter ended March 31, 2004.
Condensed Consolidated Statements of
Income Quarters Ended
Unaudited(A) March 31,
(Amounts in thousands except per
share data) 2004 2003
Interest Income
Loans $54,645 $51,196
Securities 22,644 23,120
Other 100 249
Total interest income 77,389 74,565
Interest Expense
Deposits 13,669 15,169
Borrowed funds 4,817 7,255
Subordinated debt - trust preferred securities 2,014 -
Total interest expense 20,500 22,424
Net interest income 56,889 52,141
Provision for Loan Losses 1,928 2,530
Net interest income after provision for
loan losses 54,961 49,611
Noninterest Income
Service charges on deposit accounts 6,241 6,281
Trust and investment management fees 2,962 2,553
Other service charges, commissions, and fees 3,632 3,468
Card-based fees 2,146 2,081
Corporate owned life insurance income 1,267 1,296
Security gains, net 1,939 66
(Losses) on early extinguishment of debt (1,240) -
Other 438 2,019
Total noninterest income 17,385 17,764
Noninterest Expense
Salaries and employee benefits 22,116 20,012
Net occupancy expense 4,103 3,679
Equipment expenses 2,242 1,912
Technology and related costs 2,035 2,331
Other 9,709 8,904
Total noninterest expense 40,205 36,838
Income before taxes 32,141 30,537
Income tax expense 8,109 7,807
Net Income $24,032 $22,730
Diluted Earnings Per Share $0.51 $0.48
Dividends Declared Per Share $0.22 $0.19
Weighted Average Diluted Shares
Outstanding 46,953 47,229
(A) While unaudited, the Condensed Consolidated Statements of Income have
been prepared in accordance with accounting principles generally
accepted in the United States and, for the quarter ended March 31,
2003, are derived from quarterly financial statements on which
Ernst & Young LLP, First Midwest's independent external auditor, has
rendered a Quarterly Review Report; Ernst & Young is currently in the
process of completing their Quarterly Review Report for the quarter
ended March 31, 2004.
Selected Quarterly Data
Unaudited Quarters Ended
(Amounts in thousands except
per share data) 3/31/04 12/31/03 9/30/03 6/30/03 3/31/03
Net interest income $56,889 $52,962 $52,007 $52,644 $52,141
Provision for loan
losses 1,928 3,075 2,660 2,540 2,530
Noninterest income 17,385 19,419 15,772 21,215 17,764
Noninterest expense 40,205 37,109 37,551 37,954 36,838
Net income 24,032 24,199 21,202 24,647 22,730
Diluted earnings per
share $0.51 $0.52 $0.45 $0.53 $0.48
Return on average
equity 17.97% 18.59% 16.73% 19.40% 18.39%
Return on average
assets 1.42% 1.54% 1.33% 1.59% 1.53%
Net interest margin 3.97% 4.01% 3.90% 4.01% 4.06%
Efficiency ratio 50.53% 45.66% 48.72% 49.92% 49.16%
Period end shares
outstanding 46,537 46,581 46,551 46,534 46,582
Book value per share $11.26 $11.22 $10.94 $10.92 $10.58
Dividends declared per
share $0.22 $0.22 $0.19 $0.19 $0.19
Asset Quality
Unaudited Quarters Ended
(Amounts in thousands) 3/31/04 12/31/03 9/30/03 6/30/03 3/31/03
Nonaccrual loans $18,704 $15,930 $11,442 $9,423 $13,596
Restructured loans - 7,137 7,219 7,328 -
Total Nonperforming
loans $18,704 $23,067 $18,661 $16,751 $13,596
Foreclosed real estate 4,779 5,812 3,842 4,576 4,044
Loans past due 90 days
and still accruing 6,977 3,384 4,806 5,723 7,497
Nonperforming loans to
loans 0.45% 0.57% 0.53% 0.48% 0.40%
Nonperforming assets to
loans plus foreclosed
real estate 0.57% 0.71% 0.64% 0.61% 0.51%
Reserve for loan losses
to loans 1.38% 1.39% 1.41% 1.40% 1.40%
Reserve for loan losses
to nonperforming loans 303% 245% 263% 293% 353%
Provision for loan losses $1,928 $3,075 $2,660 $2,540 $2,530
Net loan charge-offs 1,704 3,055 2,620 1,436 2,439
Net loan charge-offs to
average loans 0.17% 0.35% 0.30% 0.17% 0.29%
SOURCE First Midwest Bancorp, Inc.
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Related links:
http://www.firstmidwest.com
CONTACT:
Steven H. Shapiro, EVP, Corporate Secretary,
+1-630-875-7345, or Michael L. Scudder, EVP, Chief Financial
Officer, +1-630-875-7283, both of First Midwest Bancorp
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