1st QUARTER 2003 HIGHLIGHTS:
- EPS Increased 6.7% to $.48 vs. $.45 Last Year
- Significant Branch Acquisition Announced
- ROAA of 1.53% vs. 1.55% Last Year
- Continued Sound Asset Quality
ITASCA, Ill., April 23 /PRNewswire-FirstCall/ --
First Midwest Bancorp, Inc. ("First Midwest") (Nasdaq: FMBI) today reported
that net income for first quarter ended March 31, 2003 increased by 6.7% on a
per diluted share basis to $22.7 million, or $.48 per diluted share, as
compared to 2002's first quarter of $22.1 million, or $.45 per diluted share.
Performance for first quarter 2003 resulted in an annualized return on average
assets of 1.53%, as compared to 1.55% for first quarter 2002, and an
annualized return on average equity of 18.4%, as compared to 19.4% for first
quarter 2002.
"We are very pleased with the first quarter results given the tenuous
state of the economy," First Midwest President and Chief Executive Officer
John O'Meara stated. "First Midwest's asset quality remains solid, its loan
growth has been steady, particularly in our commercial platform, and its
operating costs remain tightly controlled."
"We expect 2003 to be challenging, given the absolute low level of
interest rates, uncertain economic and market conditions, and investor
concerns regarding the pace and timing of economic recovery," O'Meara stated.
"Continued earnings growth should be reliant upon maintaining favorable trends
in asset generation, funding mix, asset quality, fee growth and expense
management. We remain optimistic about our 2003 prospects and are comfortable
with the mid-single digit growth in earnings per diluted share implicit in the
current 2003 analyst consensus estimate, qualified by existent uncertainties,
consequences and unfolding events, as well as unknown factors that could
negatively affect performance."
Branch Acquisition
Amplifying the news communicated in an April 15, 2003 press release,
President and Chief Executive Officer John O'Meara announced aggressive
development plans for the new approximately $114 million deposit branch to be
acquired from The Northern Trust Company in an anticipated June closing. "The
branch's location at the threshold of the expansive O'Hare International
Airport market makes it an ideal site for commercial, trust and retail
business expansion," he commented. "We intend to leverage our existing
business relationships in this important marketplace with the deposit and loan
relationships acquired from The Northern Trust Company. The branch's
strategic placement provides an ideal location to consolidate our Commercial
Real Estate Division to better serve this important client segment
representing more than $1.4 billion in outstanding loans. The more than 6,200
commercial businesses located within a three mile radius of the new branch
represent an enormous business development opportunity for First Midwest," he
continued. Final financial terms of the transaction will be forthcoming
following the closing in June.
Net Interest Margin
Net interest income was $52.1 million for first quarter 2003, as compared
to $54.2 million for 2002's first quarter, a decrease of 3.9%. Net interest
margin for first quarter 2003 was 4.06%, down from 4.32% for first quarter
2002 and 4.10% for fourth quarter 2002. Margin contraction resulted from the
repricing of earning assets in the low interest rate environment and the
acceleration of cash flows due to refinance related prepayments on mortgage-
backed securities. The full benefit of the Federal Reserve's 50 basis points
rate cut in November 2002 was realized in first quarter 2003 and helped offset
margin contraction from fourth quarter 2002.
Interest margin performance is a major determinant of future earnings
dynamics. Acknowledging the forty-year lows in interest rates and the
negative impacts of accelerated prepayment speeds on higher coupon assets,
First Midwest may elect to reduce its exposure to longer-term assets through
both outright security sales and shorter duration reinvestments. The effect
of this approach may well see security gains being used to fund temporary
margin give up while First Midwest waits for interest rates to approximate
historical spreads. Extensive analysis of strategies of this nature are
ongoing and embrace both net interest income and economic value of equity risk
metrics. The timing of decisions should be finalized in the second and third
quarters. First Midwest has significant flexibility in its securities
portfolio to execute this type of strategy.
Loan Growth and Funding
First Midwest's total loans at March 31, 2003 were 1.9% higher than at
March 31, 2002. All loan categories experienced growth, except 1-4 family
real estate and indirect lending. On a linked-quarter basis, total loans
increased 1.0%, as growth in commercial and real estate construction lending
offset decreases in commercial real estate, 1-4 family real estate, direct
consumer and indirect lending. Commercial loan growth remained solid, as
commercial loans outstanding as of March 31, 2003 increased by 4.3% and 9.6%
as compared to December 31, 2002 and March 31, 2002, respectively.
Total average deposits for first quarter 2003 were essentially unchanged
from the prior year's like quarter and declined 1.8% on a linked-quarter
basis. The mix of average deposits, however, has changed from first quarter
2002. Reflecting customer liquidity preferences and targeted pricing, average
core transactional balances (demand, savings, money market and NOW accounts)
grew $110.9 million, or 4.6%, from the prior year's like quarter, while
average time deposits decreased by $110.1 million for the comparable periods.
Pricing is likely to continue to encourage core deposit growth in the longer
duration instruments consistent with our outlook for higher interest rates in
the future.
Noninterest Income and Expense
Total noninterest income for first quarter 2003 was $17.8 million,
representing an increase of $1.6 million, or 10.0%, as compared to first
quarter 2002. First quarter 2003 income included the nonrecurring receipt of
$1.2 million from the settlement of litigation initiated by First Midwest in
1998. After recouping the expenses associated with the litigation, the net
proceeds of $750,000 were used to fund a contribution to First Midwest
Charitable Foundation (the "Foundation"). The Foundation was formed in
December 2002 and concentrates on serving charitable organizations within the
communities served by First Midwest.
Excluding the litigation proceeds of $1.2 million, the increase in
noninterest income as compared to first quarter 2002 resulted from continued
improvement in fee income derived from service charges on deposit accounts and
mortgage origination commissions. The increase was partially offset by lower
income from market sensitive revenue streams, such as trust, investment
product sales, and corporate owned life insurance.
Total noninterest expense for first quarter 2003 was $36.8 million,
representing an increase of $1.2 million, or 3.4%, as compared to first
quarter 2002. First quarter 2003 expenses included the previously described
contribution to the Foundation of $750,000.
The efficiency ratio was 49.2% for first quarter 2003, as compared to
47.3% for 2002's like quarter. The increase resulted primarily from the
impact of lower top line revenue performance due to lower levels of net
interest income.
Credit Quality
Despite the weaker economy and contrary to the well-publicized credit
problems within the industry, First Midwest's level of overall credit quality
at the end of first quarter 2003 remained solid. Nonperforming loans at
March 31, 2003 represented .40% of loans, up slightly from the historically
low level of .37% at December 31, 2002. Nonperforming assets totaled
$17.6 million at March 31, 2003 and approximated the level of $18.0 million
existent at December 31, 2002. Loans past due 90 days and still accruing
totaled $7.5 million at March 31, 2003, up from a record low level of
$3.3 million as of December 31, 2002. This increase was primarily due to a
single credit that is the subject of rigorous remediation efforts by First
Midwest.
Net charge-offs for first quarter 2003 were .29% of average loans as
compared to .61% for first quarter 2002. Provisions for loan losses fully
covered net charge-offs, resulting in the ratio of the reserve for loan losses
to total loans as of March 31, 2003 being maintained at 1.40% and
approximating the level as of year end 2002. Importantly, the reserve for
loan losses at March 31, 2003 represented 353% of nonperforming loans. First
Midwest continues to have virtually no credit exposure to such high profile
sectors as energy, cable, telecommunications and airlines. Participations in
either shared national credits or syndicated loans represent negligible
portions of overall credit outstandings.
Capital Management
First Midwest continued to repurchase its common stock during first
quarter 2003 with 667,000 shares being repurchased at an average price of
approximately $26.05 per share funded by cash on hand. As of March 31, 2003,
approximately 1.7 million shares remained under First Midwest's existing
repurchase authorization.
As of March 31, 2003 First Midwest's Total Risk Based Capital and Tier 1
Risk Based Capital ratios were 11.0% and 10.0%, 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 7.4%
again exceeding the regulatory minimum range of 3.0% - 5.0% required to be
considered a "well capitalized" institution.
About the Company
With assets of over $6 billion, First Midwest is the largest independent
and one of the overall largest banking companies in the highly attractive
suburban Chicago banking market. As the premier independent suburban Chicago
bank holding company, First Midwest provides commercial banking, trust,
investment management and related financial services to a broad array of
customers through some 70 offices located in more than 40 communities
primarily in northern 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 (1 page)
-- Condensed Consolidated Statements of Condition (1 page)
-- Condensed Consolidated Statements of Income (1 page)
-- Selected Quarterly Data and Asset Quality (1 page)
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 .
First Midwest Bancorp, Inc.
Operating Highlights Quarters Ended
Unaudited March 31,
(Amounts in thousands except per share data) 2003 2002
Net income $22,730 $22,071
Diluted earnings per share $0.48 $0.45
Return on average equity 18.39% 19.39%
Return on average assets 1.53% 1.55%
Net interest margin 4.06% 4.32%
Efficiency ratio 49.16% 47.26%
Balance Sheet Highlights
Unaudited
(Amounts in thousands except per share data)
Mar. 31, 2003 Mar. 31, 2002
Total assets $6,050,593 $5,842,789
Total loans 3,439,281 3,373,742
Total deposits 4,195,468 4,170,178
Stockholders' equity 492,822 446,823
Book value per share $10.58 $9.21
Period end shares outstanding 46,582 48,534
Stock Performance Data Quarters Ended
Unaudited March 31,
2003 2002
Market Price:
Quarter End $25.81 $29.04
High $28.12 $29.81
Low $24.89 $27.01
Quarter end price to book value 2.4x 3.2x
Quarter end price to consensus
estimated 2003 earnings 13.1x N/A
Dividends declared per share $0.19 $0.17
First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Condition
Unaudited(1)
March 31,
(Amounts in thousands) 2003 2002
Assets
Cash and due from banks $161,094 $182,559
Funds sold and other short-term investments 19,035 19,650
Securities available for sale 2,057,684 1,907,294
Securities held to maturity, at amortized
cost 114,265 96,956
Loans 3,439,281 3,373,742
Reserve for loan losses (48,020) (47,774)
Net loans 3,391,261 3,325,968
Premises, furniture and equipment 81,312 81,625
Investment in corporate owned life insurance 142,658 136,819
Accrued interest receivable and other assets 83,284 91,918
Total assets $6,050,593 $5,842,789
Liabilities and Stockholders' Equity
Deposits $4,195,468 $4,170,178
Borrowed funds 1,277,895 1,174,370
Accrued interest payable and other liabilities 84,408 51,418
Total liabilities 5,557,771 5,395,966
Common stock 569 569
Additional paid-in capital 70,418 72,500
Retained earnings 608,055 551,400
Accumulated other comprehensive income (loss) 43,239 (1,129)
Treasury stock, at cost (229,459) (176,517)
Total stockholders' equity 492,822 446,823
Total liabilities and stockholders' equity $6,050,593 $5,842,789
(1) 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, 2002, 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, 2003.
First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income
Quarters Ended
Unaudited(1) March 31,
(Amounts in thousands except per share data) 2003 2002
Interest Income
Loans $51,196 $56,937
Securities 23,120 26,844
Other 249 162
Total interest income 74,565 83,943
Interest Expense
Deposits 15,169 22,616
Borrowed funds 7,255 7,080
Total interest expense 22,424 29,696
Net interest income 52,141 54,247
Provision for Loan Losses 2,530 5,055
Net interest income after provision for
loan losses 49,611 49,192
Noninterest Income
Service charges on deposit accounts 6,281 5,756
Trust and investment management fees 2,553 2,708
Other service charges, commissions, and fees 4,545 4,293
Corporate owned life insurance income 1,296 1,698
Securities gains, net 66 -
Other 3,023 1,687
Total noninterest income 17,764 16,142
Noninterest Expense
Salaries and employee benefits 20,012 19,559
Occupancy expenses 3,679 3,515
Equipment expenses 1,912 1,882
Technology and related costs 2,331 2,466
Other 8,904 8,214
Total noninterest expense 36,838 35,636
Income before taxes 30,537 29,698
Income tax expense 7,807 7,627
Net Income $22,730 $22,071
Diluted Earnings Per Share $0.48 $0.45
Dividends Declared Per Share $0.19 $0.17
Weighted Average Diluted Shares Outstanding 47,229 49,047
(1) 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,
2002, 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, 2003.
First Midwest Bancorp, Inc.
Selected Quarterly Data
Unaudited
(Amounts in thousands except per share data)
Quarters Ended
03/31/03 12/31/02 09/30/02 06/30/02 03/31/02
Net interest
income $52,141 $52,753 $55,458 $56,296 $54,247
Provision for
loan losses 2,530 4,235 3,020 3,100 5,055
Noninterest
income 17,764 17,578 16,889 16,382 16,142
Noninterest
expense 36,838 35,696 38,106 38,614 35,636
Net income 22,730 22,466 22,679 22,934 22,071
Diluted earnings
per share $0.48 $0.47 $0.47 $0.47 $0.45
Return on average
equity 18.39% 17.92% 18.46% 19.60% 19.39%
Return on average
assets 1.53% 1.49% 1.50% 1.57% 1.55%
Net interest
margin 4.06% 4.10% 4.26% 4.43% 4.32%
Efficiency ratio 49.16% 47.24% 49.08% 49.15% 47.26%
Period end shares
outstanding 46,582 47,206 47,616 48,165 48,534
Book value per
share $10.58 $10.42 $10.44 $9.91 $9.21
Dividends per share $0.19 $0.19 $0.17 $0.17 $0.17
Asset Quality
Unaudited
(Amounts in thousands)
Quarters Ended
03/31/03 12/31/02 09/30/02 06/30/02 03/31/02
Nonperforming
loans $13,596 $12,525 $9,988 $11,879 $15,277
Foreclosed real
estate 4,044 5,496 2,972 4,582 4,289
Loans past due
90 days and
still accruing 7,497 3,307 9,820 3,564 4,739
Nonperforming
loans to loans 0.40% 0.37% 0.29% 0.35% 0.45%
Nonperforming
assets to loans
plus foreclosed
real estate 0.51% 0.53% 0.38% 0.48% 0.58%
Reserve for loan
losses to loans 1.40% 1.41% 1.41% 1.41% 1.42%
Reserve for
loan losses
to nonperforming
loans 353% 383% 480% 403% 313%
Provision for
loan losses $2,530 $4,235 $3,020 $3,100 $5,055
Net loan
charge-offs 2,439 4,225 2,919 3,056 5,026
Net loan
charge-offs to
average loans 0.29% 0.49% 0.34% 0.36% 0.61%
SOURCE First Midwest Bancorp, Inc.
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Related links:
http://www.firstmidwest.com
Company News On-Call:
http://www.prnewswire.com/comp/122621.html
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, Inc.
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