2nd Quarter 2003 Highlights:
- EPS Increased 12.8% to $.53 vs. $.47 Last Year
- ROAA of 1.59% vs. 1.57% Last Year
- Continued Sound Asset Quality, Lower Credit Costs
- Branch Transactions Announced
ITASCA, Ill., July 23 /PRNewswire-FirstCall/ -- First Midwest Bancorp,
Inc. ("First Midwest") (Nasdaq: FMBI) today reported that net income for
second quarter ended June 30, 2003 increased by 12.8% on a per diluted share
basis to $24.6 million, or $.53 per diluted share, as compared to 2002's
second quarter of $22.9 million, or $.47 per diluted share. Performance for
second quarter 2003 resulted in an annualized return on average assets of
1.59%, as compared to 1.57% for second quarter 2002, and an annualized return
on average equity of 19.4%, as compared to 19.6% for second quarter 2002.
For the first six months of 2003, net income increased 9.8% on a per
diluted share basis to $47.4 million, or $1.01 per diluted share, as compared
to 2002's $45.0 million, or $.92 per diluted share. Performance for the first
six months of 2003 resulted in an annualized return on average assets of 1.56%
equal to 1.56% for the same period of 2002 and an annualized return on average
equity of 18.9% as compared to 19.5% for the 2002 period.
"Second quarter 2003 earnings growth remained solid in spite of the
overall softness in the economy," said First Midwest President and Chief
Executive Officer, John O'Meara. "Although the low level of interest rates
continues to put pressure on net interest margin, we are encouraged that asset
quality remains sound, charge-off levels have been modest, fee revenue is
improving, and expenses remain tightly controlled. The strength of the fixed
income security markets created an opportunity to realize security gains of
$3.3 million, representing, on an after tax basis, $.04 per diluted share.
These gains will be used in third quarter 2003 to further restructure the
balance sheet. Even without this transaction, second quarter 2003 results
represented solid operating performance."
"We remain optimistic about our full year 2003 prospects," O'Meara said.
"The pace of continued earnings growth depends on maintaining favorable trends
in asset generation, funding mix, asset quality, fee growth, and expense
management. Given the solid earnings performance of the first and second
quarters and the flexibility to further restructure the balance sheet, we are
comfortable offering full year 2003 diluted earnings per share guidance in the
range of $1.97 to $2.00, representing growth over full year 2002 in the range
of 6% to 8%."
Branch Transactions Announced
On June 13, 2003, First Midwest Bancorp, Inc. completed the previously
announced acquisition of a branch of The Northern Trust Corporation, located
on Higgins Road in Chicago at the threshold of the expansive O'Hare
International Airport Corridor. First Midwest immediately commenced
operations of what will now be known as the O'Hare Financial Center with
$106 million in acquired depository relationships.
First Midwest also recently announced the signing of a definitive
agreement to sell its two branches in rural Streator, Illinois to First
National Bank of Ottawa, Ottawa, Illinois. The transaction will see the sale
of approximately $73 million in deposits and $15 million in loans. Pending
due diligence and regulatory approval, the closing is expected during fourth
quarter 2003. Consideration received from the sale will be finalized at
closing and is expected to result in a pretax gain on sale of approximately
$5.2 million. Given the conditional status of this transaction, First
Midwest's earnings guidance for 2003 does not include the expected gain from
this transaction.
Together these transactions will further strengthen First Midwest's focus
on its strategic suburban Chicago franchise.
Balance Sheet Positioning Strategies
Expanding on the above comments, second quarter 2003's income included
security gains of $3.3 million, which resulted from the sale of $37.9 million
of longer-duration, higher-yield securities. This gain should offset losses
resulting from the planned early retirement in third quarter 2003 of certain
higher-costing, shorter-maturity Federal Home Loan Bank borrowings. When
completed, this combined restructuring should enhance opportunities in a
rising interest rate environment as the retired borrowings will be replaced
with longer-term, lower-cost borrowings.
Acknowledging the forty-year lows in interest rates, the continued
negative impact of accelerated prepayment speeds on higher coupon assets, and
the approximate $74 million in unrealized securities gains resident in its
investment portfolio, First Midwest continues to evaluate opportunities to
reduce its exposure to higher interest rates through both outright security
sales and shorter-duration reinvestments as well as liability extension
strategies, including strategies to refinance and re-extend debt. Extensive
analysis of strategies of this nature is ongoing and embraces both net
interest income and economic value of equity risk metrics.
Net Interest Margin
Net interest income decreased 6.6% to $52.6 million for second quarter
2003, as compared to $56.3 million for 2002's second quarter. Net interest
margin for second quarter 2003 was 4.01%, down from 4.43% for second quarter
2002 and 4.06% for first quarter 2003. This 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. Management expects continued downward pressure on margins
as the forty-year lows in interest rates work to further tighten spreads.
Loan Growth and Funding
First Midwest's total loans at June 30, 2003 were 3.1% higher than at June
30, 2002. All loan categories experienced growth, except 1-4 family real
estate and indirect lending. On a linked-quarter basis, total loans increased
1.7%, with growth in all categories except indirect lending. Commercial loan
growth remained solid, as commercial loans outstanding as of June 30, 2003
increased by 10.3% compared with both December 31, 2002 and June 30, 2002.
Total average deposits for second quarter 2003 increased 1.4% from second
quarter 2002 and increased 3.8% on a linked-quarter basis. The mix of average
deposits, however, changed from second quarter 2002. Reflecting customer
liquidity preferences, targeted pricing, and an increase in public fund
deposits, average core transactional balances (demand, savings, money market,
and NOW accounts) grew 8.5%, or $208.7 million, from second quarter 2002. For
these same periods, average time deposits decreased by $148.5 million.
Noninterest Income and Expense
Total noninterest income increased by 29.5% to $21.2 million, an increase
of $4.8 million for second quarter 2003 as compared to the same period in
2002. Noninterest income for the first six months of 2003 increased 19.8% to
$39.0 million compared to the same 2002 period.
Excluding the previously discussed gain of $3.3 million, noninterest
income increased by 9.3%, or $1.5 million, as compared to second quarter 2002.
This increase in noninterest income from the second quarter 2002 resulted from
continued improvement in fee income derived from service charges on deposit
accounts, mortgage origination commissions, trust fees, and investment product
sales. This increase was partially offset by lower income from corporate
owned life insurance.
Total noninterest expense for second quarter 2003 was $38.0 million,
representing a decrease of $.7 million, or 1.7%, as compared to second quarter
2002. Total noninterest expense for the first six months of 2003 was
$74.8 million, an increase of 0.7% from $74.2 million for the same period in
2002.
The efficiency ratio was 49.9% for second quarter 2003, as compared to
49.2% for 2002's second quarter. The increase resulted from lower net
interest income and its impact on First Midwest's top line revenue.
Credit Quality
First Midwest's overall credit quality remains sound. Nonperforming loans
at June 30, 2003 represented .48% of loans, up from .40% at March 31, 2003 and
up from .35% for the same quarter of 2002. Included in nonperforming loans as
of June 30, 2003 are two loans totaling $7.3 million that were renegotiated
and restructured under current market terms during second quarter 2003. Of
these restructured loans, $4.2 million (which migrated from the ninety-day
past due category at March 31, 2003) represent balances anticipated to remain
in accrual status and $3.1 million continuing to be carried as nonaccruing,
pending demonstrated borrower performance. Nonperforming assets totaled
$21.3 million at June 30, 2003, up $3.7 million from $17.6 million at
March 31, 2003. Loans past due 90 days and still accruing decreased by
$1.8 million, or 24%, on a linked-quarter basis.
Net charge-offs for second quarter 2003 were .17% of average loans and
improved from .36% for second quarter 2002 and .29% for first quarter 2003.
Both commercial and consumer charge-offs were at current credit cycle lows
while second quarter 2003 provisions for loan losses fully covered net charge-
offs. As a result, the ratio of the reserve for loan losses to total loans as
of June 30, 2003 was maintained at 1.40% and approximated the level as of
year-end 2002. The reserve for loan losses at June 30, 2003 represented 293%
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
During second quarter 2003, First Midwest repurchased 123,000 shares at an
average price of $28.28 per share. As of June 30, 2003, approximately 1.6
million shares remained under First Midwest's existing repurchase
authorization.
First Midwest's Total Risk Based Capital and Tier 1 Risk Based Capital
ratios at quarter end 2003 were 10.3% and 9.3%, respectively, exceeding the
minimum "well capitalized" levels for regulatory purposes of 10.0% and 7.0%,
respectively. First Midwest's Tier 1 Leverage Ratio as of such date was 6.9%,
exceeding the regulatory minimum range of 3.0% - 5.0% required to be
considered a "well capitalized" institution.
About the Company
With assets of $6.5 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. Press Release Dated July 23, 2003
Operating Highlights Quarters Ended Six Months Ended
Unaudited June 30, June 30,
(Amounts in thousands except per
share data) 2003 2002 2003 2002
Net income $24,647 $22,934 $47,377 $45,005
Diluted earnings per share $0.53 $0.47 $1.01 $0.92
Return on average equity 19.40% 19.60% 18.90% 19.50%
Return on average assets 1.59% 1.57% 1.56% 1.56%
Net interest margin 4.01% 4.43% 4.03% 4.38%
Efficiency ratio 49.92% 49.15% 49.54% 48.22%
Balance Sheet Highlights
Unaudited
(Amounts in thousands except per
share data) June 30, 2003 June 30, 2002
Total assets $6,455,651 $5,910,959
Total loans 3,498,992 3,392,481
Total deposits 4,527,403 4,224,840
Stockholders' equity 508,004 477,162
Book value per share $10.92 $9.91
Period end shares outstanding 46,534 48,165
Stock Performance Data Quarters Ended Six Months Ended
Unaudited June 30, June 30,
2003 2002 2003 2002
Market Price:
Quarter End $28.81 $27.78 $28.81 $27.78
High $29.87 $32.16 $29.87 $32.16
Low $25.55 $26.24 $24.89 $26.24
Quarter end price to book value 2.6 x 2.8 x 2.6 x 2.8 x
Quarter end price to consensus
estimated 2003 earnings 14.7 x N/A 14.7 x N/A
Dividends declared per share $0.19 $0.17 $0.38 $0.34
First Midwest Bancorp, Inc. Press Release Dated July 23, 2003
Condensed Consolidated Statements of Condition
Unaudited(a) June 30,
(Amounts in thousands) 2003 2002
Assets
Cash and due from banks $194,792 $184,792
Funds sold and other short-term investments 20,988 14,529
Securities available for sale 2,371,459 1,993,905
Securities held to maturity, at amortized
cost 89,955 69,880
Loans 3,498,992 3,392,481
Reserve for loan losses (49,124) (47,818)
Net loans 3,449,868 3,344,663
Premises, furniture and equipment 81,632 80,652
Investment in corporate owned life insurance 143,884 138,287
Accrued interest receivable and other assets 103,073 84,251
Total assets $6,455,651 $5,910,959
Liabilities and Stockholders' Equity
Deposits $4,527,403 $4,224,840
Borrowed funds 1,312,510 1,145,351
Accrued interest payable and other
liabilities 107,734 63,606
Total liabilities 5,947,647 5,433,797
Common stock 569 569
Additional paid-in capital 69,924 71,441
Retained earnings 623,848 566,133
Accumulated other comprehensive income 44,566 26,087
Treasury stock, at cost (230,903) (187,068)
Total stockholders' equity 508,004 477,162
Total liabilities and stockholders' equity $6,455,651 $5,910,959
(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 June 30, 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 June 30, 2003.
First Midwest Bancorp, Inc. Press Release Dated July 23, 2003
Condensed Consolidated Statements
of Income Quarters Ended Six Months Ended
Unaudited(a) June 30, June 30,
(Amounts in thousands except per
share data) 2003 2002 2003 2002
Interest Income
Loans $50,719 $56,719 $101,915 $113,656
Securities 22,529 27,353 45,649 54,197
Other 277 169 526 331
Total interest income 73,525 84,241 148,090 168,184
Interest Expense
Deposits 14,208 21,241 29,377 43,857
Borrowed funds 6,673 6,704 13,928 13,784
Total interest expense 20,881 27,945 43,305 57,641
Net interest income 52,644 56,296 104,785 110,543
Provision for Loan Losses 2,540 3,100 5,070 8,155
Net interest income after
provision for loan losses 50,104 53,196 99,715 102,388
Noninterest Income
Service charges on deposit accounts 7,078 6,219 13,359 11,975
Trust and investment management
fees 2,768 2,551 5,321 5,259
Other service charges, commissions,
and fees 5,368 4,458 9,913 8,751
Corporate owned life insurance
income 1,226 1,739 2,522 3,437
Gains on available for sale
securities 3,335 24 3,401 24
Other 1,440 1,391 4,463 3,078
Total noninterest income 21,215 16,382 38,979 32,524
Noninterest Expense
Salaries and employee benefits 21,413 20,217 41,425 39,776
Occupancy expenses 3,633 3,598 7,312 7,113
Equipment expenses 1,893 1,972 3,805 3,854
Technology and related costs 2,514 2,551 4,845 5,017
Other 8,501 10,276 17,405 18,490
Total noninterest expense 37,954 38,614 74,792 74,250
Income before taxes 33,365 30,964 63,902 60,662
Income tax expense 8,718 8,030 16,525 15,657
Net Income $24,647 $22,934 $47,377 $45,005
Diluted Earnings Per Share $0.53 $0.47 $1.01 $0.92
Dividends Declared Per Share $0.19 $0.17 $0.38 $0.34
Weighted Average Diluted Shares
Outstanding 46,871 48,774 47,049 48,909
(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 and six ended
June 30, 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 and six months ended June 30, 2003.
First Midwest Bancorp, Inc.
Selected Quarterly Data
Unaudited Year to Date
(Amounts in thousands except per
share data) 6/30/03 6/30/02
Net interest income $104,785 $110,543
Provision for loan losses 5,070 8,155
Noninterest income 38,979 32,524
Noninterest expense 74,792 74,250
Net income 47,377 45,005
Diluted earnings per share $1.01 $0.92
Return on average equity 18.90% 19.50%
Return on average assets 1.56% 1.56%
Net interest margin 4.03% 4.38%
Efficiency ratio 49.54% 48.22%
Period end shares outstanding 46,534 48,165
Book value per share $10.92 $9.91
Dividends declared per share $0.38 $0.34
First Midwest Bancorp, Inc. Press Release Dated July 23, 2003
Selected Quarterly Data
Unaudited Quarters Ended
(Amounts in thousands except
per share data) 6/30/03 3/31/03 12/31/02 9/30/02 6/30/02
Net interest income $52,644 $52,141 $52,753 $55,458 $56,296
Provision for loan losses 2,540 2,530 4,235 3,020 3,100
Noninterest income 21,215 17,764 17,578 16,889 16,382
Noninterest expense 37,954 36,838 35,696 38,106 38,614
Net income 24,647 22,730 22,466 22,679 22,934
Diluted earnings per share $0.53 $0.48 $0.47 $0.47 $0.47
Return on average equity 19.40% 18.39% 17.92% 18.46% 19.60%
Return on average assets 1.59% 1.53% 1.49% 1.50% 1.57%
Net interest margin 4.01% 4.06% 4.10% 4.26% 4.43%
Efficiency ratio 49.92% 49.16% 47.24% 49.08% 49.15%
Period end shares outstanding 46,534 46,582 47,206 47,616 48,165
Book value per share $10.92 $10.58 $10.42 $10.44 $9.91
Dividends declared per share $0.19 $0.19 $0.19 $0.17 $0.17
Asset Quality
Unaudited Year to Date
(Amounts in thousands) 6/30/03 6/30/02
Nonaccrual loans $9,423 $11,879
Restructured loans 7,328 -
Total Nonperforming loans $16,751 $11,879
Foreclosed real estate 4,576 4,582
Loans past due 90 days and still accruing 5,723 3,564
Nonperforming loans to loans 0.48% 0.35%
Nonperforming assets to loans
plus foreclosed real estate 0.61% 0.48%
Reserve for loan losses to loans 1.40% 1.41%
Reserve for loan losses to
nonperforming loans 293% 403%
Provision for loan losses $5,070 $8,155
Net loan charge-offs 3,875 8,082
Net loan charge-offs to average loans 0.23% 0.48%
Asset Quality
Unaudited Quarters Ended
(Amounts in thousands) 6/30/03 3/31/03 12/31/02 9/30/02 6/30/02
Nonaccrual loans $9,423 $13,596 $12,525 $9,988 $11,879
Restructured loans 7,328 - - - -
Total Nonperforming loans $16,751 $13,596 $12,525 $9,988 $11,879
Foreclosed real estate 4,576 4,044 5,496 2,972 4,582
Loans past due 90 days and
still accruing 5,723 7,497 3,307 9,820 3,564
Nonperforming loans to loans 0.48% 0.40% 0.37% 0.29% 0.35%
Nonperforming assets to loans
plus foreclosed real estate 0.61% 0.51% 0.53% 0.38% 0.48%
Reserve for loan losses to
loans 1.40% 1.40% 1.41% 1.41% 1.41%
Reserve for loan losses to
nonperforming loans 293% 353% 383% 480% 403%
Provision for loan losses $2,540 $2,530 $4,235 $3,020 $3,100
Net loan charge-offs 1,436 2,439 4,225 2,919 3,056
Net loan charge-offs to
average loans 0.17% 0.29% 0.49% 0.34% 0.36%
SOURCE First Midwest Bancorp, Inc.
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Related links:
http://www.firstmidwest.com
Company News On-Call:
http://www.prnewswire.com/gh/cnoc/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
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