ITASCA, Ill., April 25, 2017 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ:FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the first quarter of 2017. Net income for the first quarter of 2017 was $22.9 million, or $0.23 per share. This compares to $20.7 million, or $0.25 per share, for the fourth quarter of 2016, and $18.0 million, or $0.23 per share, for the first quarter of 2016.

Reported results were impacted by certain significant transactions, which include: acquisition and integration related expenses associated with completed and pending acquisitions (all periods presented) and the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation (fourth quarter of 2016).

Excluding these certain significant transactions, earnings per share (1) was $0.34 for the first quarter of 2017, compared to $0.32 for the fourth quarter of 2016 and $0.27 for the first quarter of 2016.

SELECT FIRST QUARTER HIGHLIGHTS

  • Generated earnings per share, excluding certain significant transactions (1), of $0.34, up 25% from the first quarter of 2016 and 6% from the fourth quarter of 2016.

  • Grew fee-based revenues to $38 million, an increase of 13% from the first quarter of 2016 and 2% from the fourth quarter of 2016.

  • Improved efficiency ratio (1) to 61%, down from 65% for the first quarter of 2016 and 64% for the fourth quarter of 2016.

  • Increased net interest income to $115 million, up 43% from the first quarter of 2016 and 31% from the fourth quarter of 2016.

  • Reduced charge-offs net of recoveries, to average loans, annualized, to 12 basis points, down 45% from both the first and fourth quarters of 2016.

  • Completed the acquisitions of Standard Bancshares, Inc. on January 6, 2017, adding $1.8 billion in loans and $2.0 billion in deposits, and Premier Asset Management LLC on February 28, 2017, adding approximately $550 million in trust assets under management.

"We’ve had a great start to 2017," said Michael L. Scudder, President and Chief Executive Officer of the Company. "The quarter closed with total assets of nearly $14 billion, 20% larger than we ended 2016, principally due to our successful combination with Standard Bank & Trust in early January. Excluding attendant integration and organizational costs, earnings per share for the quarter grew by 25% as compared to a year ago. While dominated by acquired growth, the quarter reflects the benefits of improved margins, lower credit costs, and solid legacy performance across our business lines."

Mr. Scudder continued, "Our accomplishments are a testament to an engaged team of colleagues. Through their efforts, we have greatly enhanced our balance sheet, infrastructure, and, most importantly, our ability to serve the financial needs of our clients. With operational and systems integration activities largely behind us, our underlying business momentum is building. This momentum, combined with our strong capital foundation, positions us well to pursue opportunities to grow and perform for our shareholders."

(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.

ACQUISITIONS

Standard Bancshares, Inc.

On January 6, 2017, the Company completed its acquisition of Standard Bancshares, Inc. ("Standard"), the holding company for Standard Bank and Trust Company. At the close of the acquisition, the Company acquired 35 banking offices located primarily in the southwest Chicago suburbs and adjacent markets in northwest Indiana, and added approximately $2.0 billion in deposits and $1.8 billion in loans. The merger consideration totaled $580.7 million and consisted of $533.6 million in Company common stock and $47.1 million in cash. All operating systems were converted during the first quarter of 2017.

Premier Asset Management LLC

On February 28, 2017, the Company completed its acquisition of Premier Asset Management LLC ("Premier"), a registered investment advisor based in Chicago, Illinois. At the close of the acquisition, the Company acquired approximately $550.0 million of trust assets under management. With this acquisition, the assets the Company collectively manages on behalf of its clients increased to nearly $10.0 billion, representing annualized revenues of approximately $40.0 million.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
 
 Quarters Ended
 March 31, 2017  December 31, 2016  March 31, 2016
 Average
Balance
 Interest Yield/
Rate
(%)
  Average
Balance
 Interest Yield/
Rate
(%)
  Average
Balance
 Interest Yield/
Rate
(%)
Assets:                   
Other interest-earning assets$215,915  $441  0.83   $177,974  $362  0.81   $241,645  $342  0.57 
Securities (1)2,021,157  11,535  2.28   2,016,588  11,088  2.20   1,495,462  9,998  2.67 
Federal Home Loan Bank ("FHLB") and
  Federal Reserve Bank ("FRB") stock
54,219  368  2.71   54,093  421  3.11   39,773  159  1.60 
Loans (1)9,920,513  113,409  4.64   8,177,036  86,520  4.21   7,346,035  79,356  4.34 
Total interest-earning assets (1)12,211,804  125,753  4.17   10,425,691  98,391  3.76   9,122,915  89,855  3.96 
Cash and due from banks176,953       145,807       133,268     
Allowance for loan losses(89,065)      (89,401)      (75,654)    
Other assets1,373,433       898,011       876,316     
Total assets$13,673,125       $11,380,108       $10,056,845     
Liabilities and Stockholders' Equity:                   
Interest-bearing core deposits (2)$5,837,150  1,497  0.10   $4,971,630  1,049  0.08   $4,607,738  948  0.08 
Time deposits1,515,597  1,712  0.46   1,213,048  1,426  0.47   1,183,463  1,437  0.49 
Borrowed funds734,091  2,194  1.21   617,975  1,716  1.10   303,232  1,316  1.75 
Senior and subordinated debt194,677  3,099  6.46   259,531  4,112  6.30   201,253  3,133  6.26 
Total interest-bearing liabilities8,281,515  8,502  0.42   7,062,184  8,303  0.47   6,295,686  6,834  0.44 
Demand deposits (2)3,355,674       2,803,016       2,463,017     
Total funding sources11,637,189       9,865,200       8,758,703     
Other liabilities272,398       244,915       119,554     
Stockholders' equity - common1,763,538       1,269,993       1,178,588     
Total liabilities and
  stockholders' equity
$13,673,125       $11,380,108       $10,056,845     
Tax-equivalent net interest
  income/margin (1)
  117,251  3.89     90,088  3.44     83,021  3.66 
Tax-equivalent adjustment  (2,054)      (2,064)      (2,307)  
Net interest income (GAAP) (1)  $115,197       $88,024       $80,714   
Impact of acquired loan accretion (1)  $11,345  0.38     $2,663  0.10     $2,423  0.11 
Tax-equivalent net interest margin,
  excluding the impact of acquired loan
  accretion (1)
  105,906  3.51     87,425  3.34     80,598  3.55 
  
(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 35%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. For further details on the calculation of tax-equivalent net interest income, net interest income and margin (GAAP), and tax-equivalent net interest margin, excluding the impact of acquired loan accretion, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release. 
(2) See the Deposit Composition table presented later in this release for average balance detail by category. 
  

Net interest income increased by 30.9% from the fourth quarter of 2016 and 42.7% compared to the first quarter of 2016. The rise in net interest income from both prior periods resulted primarily from the acquisition of interest-earning assets and acquired loan accretion from the Standard transaction early in the first quarter of 2017. Higher interest rates combined with increased levels of interest-earning assets from securities purchases and loan growth also contributed to the increase in net interest income compared to the first quarter of 2016.

Acquired loan accretion contributed $11.3 million, $2.7 million, and $2.4 million to net interest income for the first quarter of 2017, the fourth quarter of 2016, and the first quarter of 2016, respectively.

Tax-equivalent net interest margin for the current quarter was 3.89%, increasing 45 basis points from the fourth quarter of 2016 and 23 basis points from the first quarter of 2016. The rise in tax-equivalent net interest margin was impacted by a 28 basis point and 27 basis point increase in acquired loan accretion compared to the fourth and first quarters of 2016, respectively, due primarily to the Standard transaction. In addition, the impact of adding a greater mix of higher-yielding fixed-rate loans acquired from Standard contributed to the increase compared to both prior periods. Compared to the fourth quarter of 2016, tax-equivalent net interest margin also benefited from higher interest rates and a normalized level of senior and subordinated debt costs. Senior and subordinated debt costs were elevated in the fourth quarter of 2016 due to the timing of the issuance of subordinated notes and the subsequent repayment of maturing senior notes during the second half of 2016. Compared to the first quarter of 2016, the increases previously noted from Standard were partly offset by growth in the securities portfolio and the continued shift of loan originations and mix to lower-yielding floating rate loans.

For the first quarter of 2017, total average interest-earning assets rose $1.8 billion from the fourth quarter of 2016 and $3.1 billion from the first quarter of 2016. The increase compared to both prior periods resulted from interest-earning assets acquired in the Standard transaction early in the first quarter of 2017. In addition, the rise in average interest-earning assets compared to the first quarter of 2016 was impacted by organic loan growth, security purchases, and interest-earning assets acquired in the NI Bancshares Corporation ("NI Bancshares") transaction late in the first quarter of 2016.

Average funding sources increased by $1.8 billion from the fourth quarter of 2016 and $2.9 billion from the first quarter of 2016. The increase from both prior periods was impacted by deposits acquired in the Standard transaction early in the first quarter of 2017. Deposits acquired in the NI Bancshares transaction late in the first quarter of 2016 and the addition of FHLB advances during the second half of 2016 also contributed to the rise in average funding sources compared to the first quarter of 2016.

 
Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
 
  Quarters Ended March 31, 2017
Percent Change From
  March 31,
 2017
 December 31,
 2016
 March 31,
 2016
 December 31,
 2016
 March 31,
 2016
Service charges on deposit accounts $11,365  $10,315  $9,473  10.2  20.0 
Wealth management fees 9,660  8,375  7,559  15.3  27.8 
Card-based fees 8,116  7,462  6,718  8.8  20.8 
Merchant servicing fees 3,135  3,016  3,028  3.9  3.5 
Mortgage banking income 1,888  3,537  1,368  (46.6) 38.0 
Capital market products income 1,376  1,827  3,215  (24.7) (57.2)
Other service charges, commissions, and fees 2,307  2,575  2,233  (10.4) 3.3 
Total fee-based revenues 37,847  37,107  33,594  2.0  12.7 
Net securities gains   323  887  (100.0) (100.0)
Other income 2,104  2,281  1,445  (7.8) 45.6 
Total noninterest income $39,951  $39,711  $35,926  0.6  11.2 
                   

Total fee-based revenues of $37.8 million grew by $740,000, or 2.0%, compared to the fourth quarter of 2016 and by $4.3 million, or 12.7%, compared to the first quarter of 2016. Compared to the fourth quarter of 2016, growth in income resulted primarily from services provided to customers acquired in the Standard transaction, partially offset by a normal seasonal decline in service charges on deposit accounts and a reduction in mortgage banking and capital market products income. The increase in fee-based revenues compared to the first quarter of 2016 resulted primarily from services provided to customers acquired in the Standard transaction and the full-quarter impact of services provided to customers acquired in the NI Bancshares transaction late in the first quarter of 2016.

Mortgage banking income resulted from sales of $54.6 million of 1-4 family mortgage loans in the secondary market during the first quarter of 2017, down seasonally compared to $85.3 million in the fourth quarter of 2016, but up from sales of $38.7 million in the first quarter of 2016. In addition, mortgage banking income for the fourth quarter of 2016 benefited from an increase in the fair value of mortgage servicing rights, which fluctuate from quarter to quarter.

The decline in capital market products income compared to both prior periods was consistent with loan production during the first quarter of 2017.

 
Noninterest Expense Analysis
(Dollar amounts in thousands)
 
  Quarters Ended March 31, 2017
Percent Change From
  March 31,
 2017
 December 31,
 2016
 March 31,
 2016
 December 31,
 2016
 March 31,
 2016
Salaries and employee benefits:          
Salaries and wages $44,890  $39,257  $36,296  14.3  23.7 
Retirement and other employee benefits 10,882  8,160  8,298  33.4  31.1 
Total salaries and employee benefits 55,772  47,417  44,594  17.6  25.1 
Net occupancy and equipment expense 12,325  10,774  9,697  14.4  27.1 
Professional services 8,463  7,138  5,920  18.6  43.0 
Technology and related costs 4,433  3,514  3,701  26.2  19.8 
Merchant card expense 2,585  2,603  2,598  (0.7) (0.5)
Advertising and promotions 1,066  2,330  1,589  (54.2) (32.9)
Cardholder expenses 1,764  1,426  1,359  23.7  29.8 
Net other real estate owned ("OREO") expense 1,700  925  664  83.8  156.0 
Other expenses 9,969  8,050  7,447  23.8  33.9 
Total noninterest expense excluding
  certain significant transactions (1)
 98,077  84,177  77,569  16.5  26.4 
Acquisition and integration related expenses 18,565  7,542  5,020  146.2  269.8 
Lease cancellation fee   950    (100.0)  
Total noninterest expense $116,642  $92,669  $82,589  25.9  41.2 
                   
(1) Total noninterest expense, excluding certain significant transactions, is a non-GAAP financial measure. See the Non-GAAP Financial Information discussion for detail. 
  

Total noninterest expense increased by 25.9% and 41.2% compared to the fourth and first quarters of 2016, respectively. Excluding certain significant transactions, total noninterest expense increased by 16.5% from the fourth quarter of 2016 and 26.4% compared to the first quarter of 2016.

Operating costs associated with the Standard transaction contributed more than two-thirds of the increase in total noninterest expense, excluding certain significant transactions, from the fourth quarter of 2016. These costs primarily occurred in salaries and employee benefits, net occupancy and equipment expense, technology and related costs, professional services, cardholder expenses, and other expenses. Net OREO expense increased from the fourth quarter of 2016 due to higher resolutions of OREO properties that resulted in an increase in losses on sales of OREO and expenses.

Compared to the first quarter of 2016, approximately half of the increase in total noninterest expense, excluding certain significant transactions, resulted from operating costs associated with the Standard transaction and the full quarter impact of the NI Bancshares transaction completed late in the first quarter of 2016. Net OREO expense increased from the first quarter of 2016 due to higher valuation adjustments and a rise in expenses related to the resolution of certain properties.

Compared to both prior periods, compensation costs associated with merit increases, investments in additional talent to support growth, and higher loan remediation expenses contributed to the rise in salaries and employee benefits and professional services. The decrease in advertising and promotions expense from both prior periods resulted from the timing of certain advertising costs.

Acquisition and integration related expenses resulted from the acquisition of Standard and Premier during the first quarter of 2017 and NI Bancshares during the first quarter of 2016. These expenses fluctuate based on the size and timing of each transaction.

During the fourth quarter of 2016, a lease cancellation fee of $950,000 was recognized as a result of the Company's planned 2018 corporate headquarters relocation.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)
 
  As of March 31, 2017
Percent Change From
  March 31, 2017        
  Legacy Acquired (1) Total December 31,
2016
 March 31,
2016
 December 31,
2016
 March 31,
2016
Commercial and industrial $2,855,259  $515,521  $3,370,780  $2,827,658  $2,634,391  19.2  28.0 
Agricultural 394,855  27,929  422,784  389,496  422,231  8.5  0.1 
Commercial real estate:              
Office, retail, and
  industrial
 1,542,831  446,148  1,988,979  1,581,967  1,566,572  25.7  27.0 
Multi-family 634,500  37,210  671,710  614,052  562,084  9.4  19.5 
Construction 453,001  115,459  568,460  451,540  260,743  25.9  118.0 
Other commercial real
  estate
 967,763  390,018  1,357,781  979,528  1,060,481  38.6  28.0 
Total commercial real
  estate
 3,598,095  988,835  4,586,930  3,627,087  3,449,880  26.5  33.0 
Total corporate loans 6,848,209  1,532,285  8,380,494  6,844,241  6,506,502  22.4  28.8 
Home equity 783,910  96,757  880,667  747,983  698,309  17.7  26.1 
1-4 family mortgages 451,488  88,660  540,148  423,922  403,765  27.4  33.8 
Installment 251,406  1,655  253,061  237,999  213,979  6.3  18.3 
Total consumer loans 1,486,804  187,072  1,673,876  1,409,904  1,316,053  18.7  27.2 
Total loans $8,335,013  $1,719,357  $10,054,370  $8,254,145  $7,822,555  21.8  28.5 
                           
(1) Amount represents loans acquired in the Standard transaction, which was completed in the first quarter of 2017. 
  

Total loans of $10.1 billion grew 21.8% and 28.5% from December 31, 2016 and March 31, 2016, respectively. Excluding loans acquired in the Standard transaction of $1.7 billion, total loans grew modestly from December 31, 2016 and 6.6% from March 31, 2016. The addition of shorter-duration, floating rate home equity loans and the expansion of mortgage and installment loans drove the increase compared to December 31, 2016.

Compared to March 31, 2016, the increase in commercial and industrial loans resulted primarily from broad-based increases within our middle market and sector-based lending business units and multi-family loans increased due to organic growth. The rise in construction loans compared to March 31, 2016 was driven primarily by select commercial projects for which permanent financing is expected upon their completion. Growth in consumer loans compared to the first quarter of 2016 resulted from the continued expansion of mortgage and installment loans and the addition of shorter-duration, floating rate home equity loans.

 
Asset Quality
(Dollar amounts in thousands)
 
  As of March 31, 2017
Percent Change From
  March 31,
 2017
 December 31,
 2016
 March 31,
 2016
 December 31,
 2016
 March 31,
 2016
Asset quality          
Non-accrual loans $54,294  $59,289  $31,890  (8.4) 70.3 
90 days or more past due loans, still accruing
  interest (1)
 2,633  5,009  5,835  (47.4) (54.9)
Total non-performing loans 56,927  64,298  37,725  (11.5) 50.9 
Accruing troubled debt restructurings
  ("TDRs")
 2,112  2,291  2,702  (7.8) (21.8)
OREO 29,140  26,083  29,649  11.7  (1.7)
Total non-performing assets $88,179  $92,672  $70,076  (4.8) 25.8 
30-89 days past due loans (1) $23,641  $21,043  $30,142     
           
Non-accrual loans to total loans (2) 0.54% 0.72% 0.41%    
Non-performing loans to total loans (2) 0.57% 0.78% 0.48%    
Non-performing assets to total loans plus
  OREO (2)
 0.87% 1.12% 0.89%    
Allowance for credit losses                
Allowance for loan losses $88,163  $86,083  $77,150     
Reserve for unfunded commitments 1,000  1,000  1,225     
Total allowance for credit losses $89,163  $87,083  $78,375     
Allowance for credit losses to total loans (3) 0.89% 1.06% 1.00%    
Allowance for credit losses to loans, excluding
  acquired loans
 1.11% 1.11% 1.11%    
Allowance for credit losses to non-accrual
  loans
 164.22% 146.88% 245.77%    
 
(1) Purchased credit impaired loans with an accretable yield are considered current and are not included in past due loan totals.
 
(2) Excluding the impact of loans and OREO acquired in the Standard transaction, non-accrual loans to total loans, non-performing loans to total loans, and non-performing assets to total loans plus OREO were 0.65%, 0.68%, and 0.95%, respectively, at March 31, 2017.
 
(3) 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 0.87% of total loans and OREO at March 31, 2017, down from 1.12% at December 31, 2016 and 0.89% at March 31, 2016. Included in non-performing assets as of March 31, 2017 was $8.4 million of OREO acquired in the Standard transaction. 

 
Charge-Off Data
(Dollar amounts in thousands)
 
  Quarters Ended
  March 31,
 2017
 % of
Total
 December 31,
 2016
 % of
Total
 March 31,
 2016
 % of
Total
Net loan charge-offs (1):            
Commercial and industrial $1,894  66.7  $3,540  78.1  $1,396  34.3 
Agricultural 514  18.1         
Office, retail, and industrial (848) (29.9) 165  3.6  421  10.3 
Multi-family (28) (1.0) 17  0.4  179  4.4 
Construction (222) (7.8) (12) (0.3) 111  2.7 
Other commercial real estate 307  10.8  (111) (2.4) 1,294  31.8 
Consumer 1,221  43.0  933  20.6  672  16.5 
Total net loan charge-offs $2,838  100.0  $4,532  100.0  $4,073  100.0 
Total recoveries included above $3,440    $1,489    $1,116   
Net loan charge-offs to average
  loans, annualized:
            
Quarter-to-date (2) 0.12%   0.22%   0.22%  
 
(1) Amounts represent charge-offs, net of recoveries.
 
(2) Excluding the impact of loans acquired in the Standard transaction, net loan charge-offs to average loans, annualized, was 0.14% at March 31, 2017.
 

Net loan charge-offs to average loans, annualized were 0.12%, down from 0.22% for both quarters ended December 31, 2016 and March 31, 2016. Net loan charge-offs for the first quarter of 2017 include $3.4 million in recoveries, which relate primarily to three corporate loan relationships that were charged-off in prior periods.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)
 
  Average for Quarters Ended March 31, 2017 
Percent Change From
  March 31,
 2017
 December 31,
 2016
 March 31,
 2016
 December 31,
 2016
 March 31,
 2016
Demand deposits $3,355,674  $2,803,016  $2,463,017  19.7  36.2 
Savings deposits 2,029,631  1,633,010  1,575,174  24.3  28.9 
NOW accounts 1,916,816  1,715,228  1,448,666  11.8  32.3 
Money market accounts 1,890,703  1,623,392  1,583,898  16.5  19.4 
Core deposits 9,192,824  7,774,646  7,070,755  18.2  30.0 
Time deposits 1,515,597  1,213,048  1,183,463  24.9  28.1 
Total deposits $10,708,421  $8,987,694  $8,254,218  19.1  29.7 
                   

Average core deposits of $9.2 billion for the first quarter of 2017 increased by 18.2% and 30.0% compared to the fourth and first quarters of 2016, respectively. The rise in average core deposits compared to both prior periods resulted from $1.5 billion in average core deposits assumed in the Standard transaction in the first quarter of 2017. This increase more than offset the normal seasonal decline in commercial and municipal deposits compared to the fourth quarter of 2016. In addition, compared to the first quarter of 2016, organic growth and the full-quarter impact of deposits assumed in the NI Bancshares transaction contributed to the increase.

CAPITAL MANAGEMENT

Capital Ratios
  As of
  March 31,
 2017
 December 31,
 2016
 March 31,
 2016
Company regulatory capital ratios:
Total capital to risk-weighted assets 11.48% 12.23% 10.64%
Tier 1 capital to risk-weighted assets 9.53% 9.90% 9.81%
Common equity Tier 1 ("CET1") to risk-weighted assets 9.11% 9.39% 9.30%
Tier 1 capital to average assets 8.89% 8.99% 9.56%
Company tangible common equity ratios (1)(2):         
Tangible common equity to tangible assets 8.07% 8.05% 8.25%
Tangible common equity, excluding accumulated other comprehensive
  income ("AOCI"), to tangible assets
 8.38% 8.42% 8.39%
Tangible common equity to risk-weighted assets 8.68% 8.88% 9.04%
 
(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-GAPP Reconciliations" presented later in this release.
 

Overall, the Company's regulatory capital ratios decreased compared to both prior periods due primarily to the Standard and Premier acquisitions. The issuance of $150.0 million of subordinated notes during the second half of 2016 more than offset the impact of these acquisitions and drove the increase in total capital to risk-weighted assets compared to March 31, 2016.

The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the first quarter of 2017, which is consistent with the fourth quarter of 2016.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, April 26, 2017 at 11:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (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 ID 10103765 beginning one hour after completion of the live call until 9:00 A.M. (ET) on May 3, 2017. 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 and Additional Information Available on Website

This press release 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 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," "predict," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts 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. Forward-looking statements are not guarantees of future performance, and First Midwest cautions you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and First Midwest undertakes no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.

Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2016, as well as our subsequent filings made with the Securities and Exchange Commission. However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our 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 earnings per share ("EPS"), excluding certain significant transactions, the efficiency ratio, total non-interest expense, excluding certain significant transactions, return on average assets, excluding certain significant transactions, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, excluding the impact of acquired loan accretion, tangible common equity to tangible assets, tangible common equity, excluding accumulated other comprehensive loss, to tangible assets, tangible common equity to risk-weighted assets, return on average tangible common equity, and return on average tangible common equity, excluding certain significant transactions.

The Company presents EPS, the efficiency ratio, total noninterest expense, return on average assets, and return on average tangible common equity, all excluding certain significant transactions. Certain significant transactions include acquisition and integration related expenses (all periods presented), a net gain related to a sale-leaseback transaction (third quarter of 2016), and the lease cancellation fee (fourth quarter of 2016). Management believes excluding these transactions from EPS, the efficiency ratio, total noninterest expense, return on average assets, and return on average tangible common equity are useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion facilitates better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics is 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 enhances comparability 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 and assumes a 35% tax rate. 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 enhances comparability for peer comparison purposes. In addition, management believes that the tax-equivalent net interest margin, excluding the impact of acquired loan accretion, enhances comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate significantly based on the size of each acquisition.

In management's view, tangible common equity measures are capital adequacy metrics 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. 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.

About the Company

First Midwest is a relationship-focused financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest, with approximately $14 billion in assets and an additional $9.5 billion in trust assets under management. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, equipment leasing, retail, wealth management, trust and private banking products and services through over 130 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's common stock is traded on the NASDAQ Stock Market under the symbol FMBI. First Midwest's website is 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,
 2017 2016 2016 2016 2016
Period-End Balance Sheet         
Assets         
Cash and due from banks$174,268  $155,055  $139,538  $149,957  $135,049 
Interest-bearing deposits in other banks74,892  107,093  362,153  105,432  171,312 
Trading securities, at fair value19,130  17,920  18,351  17,693  17,408 
Securities available-for-sale, at fair value1,937,124  1,919,450  1,964,030  1,773,759  1,625,579 
Securities held-to-maturity, at amortized cost17,742  22,291  20,337  20,672  21,051 
FHLB and FRB stock46,306  59,131  53,506  44,506  40,916 
Loans:         
Commercial and industrial3,370,780  2,827,658  2,849,399  2,699,742  2,634,391 
Agricultural422,784  389,496  409,571  401,858  422,231 
Commercial real estate:         
Office, retail, and industrial1,988,979  1,581,967  1,537,181  1,529,811  1,566,572 
Multi-family671,710  614,052  625,324  587,123  562,084 
Construction568,460  451,540  401,857  371,016  260,743 
Other commercial real estate1,357,781  979,528  971,030  1,000,829  1,060,481 
Home equity880,667  747,983  748,571  738,263  698,309 
1-4 family mortgages540,148  423,922  396,819  427,050  403,765 
Installment253,061  237,999  232,030  223,845  213,979 
Total loans10,054,370  8,254,145  8,171,782  7,979,537  7,822,555 
Allowance for loan losses(88,163) (86,083) (85,308) (80,105) (77,150)
Net loans9,966,207  8,168,062  8,086,474  7,899,432  7,745,405 
OREO29,140  26,083  28,049  29,990  29,649 
Premises, furniture, and equipment, net140,653  82,577  82,443  140,554  141,323 
Investment in BOLI276,960  219,746  219,064  218,133  218,873 
Goodwill and other intangible assets754,621  366,876  367,961  369,962  369,979 
Accrued interest receivable and other assets336,428  278,271  236,291  225,720  212,378 
Total assets$13,773,471  $11,422,555  $11,578,197  $10,995,810  $10,728,922 
Liabilities and Stockholders' Equity         
Noninterest-bearing deposits$3,492,987  $2,766,748  $2,766,265  $2,683,495  $2,627,530 
Interest-bearing deposits7,463,554  6,061,855  6,339,839  6,287,821  6,153,288 
Total deposits10,956,541  8,828,603  9,106,104  8,971,316  8,780,818 
Borrowed funds547,923  879,008  639,539  449,744  387,411 
Senior and subordinated debt194,745  194,603  309,444  162,876  201,293 
Accrued interest payable and other liabilities269,529  263,261  253,846  160,985  134,835 
Stockholders' equity1,804,733  1,257,080  1,269,264  1,250,889  1,224,565 
Total liabilities and stockholders' equity$13,773,471  $11,422,555  $11,578,197  $10,995,810  $10,728,922 
Stockholders' equity, excluding accumulated other
  comprehensive income ("AOCI")
$1,844,997  $1,297,990  $1,282,666  $1,259,692  $1,239,606 
Stockholders' equity, common1,804,733  1,257,080  1,269,264  1,250,889  1,224,565 


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,
 2017 2016 2016 2016 2016
Income Statement         
Interest income$123,699  $96,328  $97,906  $96,550  $87,548 
Interest expense8,502  8,304  6,934  6,569  6,834 
Net interest income115,197  88,024  90,972  89,981  80,714 
Provision for loan losses4,918  5,307  9,998  8,085  7,593 
Net interest income after provision for loan losses110,279  82,717  80,974  81,896  73,121 
Noninterest Income         
Service charges on deposit accounts11,365  10,315  10,708  10,169  9,473 
Wealth management fees9,660  8,375  8,495  8,642  7,559 
Card-based fees8,116  7,462  7,332  7,592  6,718 
Merchant servicing fees3,135  3,016  3,319  3,170  3,028 
Mortgage banking income1,888  3,537  3,394  1,863  1,368 
Capital market products income1,376  1,827  2,916  2,066  3,215 
Other service charges, commissions, and fees2,307  2,575  2,302  2,432  2,233 
Total fee-based revenues37,847  37,107  38,466  35,934  33,594 
Net securities gains  323  187  23  887 
Net gain on sale-leaseback transaction    5,509     
Other income2,104  2,281  1,691  1,865  1,445 
Total noninterest income39,951  39,711  45,853  37,822  35,926 
Noninterest Expense         
Salaries and employee benefits:         
Salaries and wages44,890  39,257  37,872  37,916  36,296 
Retirement and other employee benefits10,882  8,160  8,500  8,351  8,298 
Total salaries and employee benefits55,772  47,417  46,372  46,267  44,594 
Net occupancy and equipment expense12,325  10,774  10,755  9,928  9,697 
Professional services8,463  7,138  6,772  5,292  5,920 
Technology and related costs4,433  3,514  3,881  3,669  3,701 
Merchant card expense2,585  2,603  2,857  2,724  2,598 
Advertising and promotions1,066  2,330  1,941  1,927  1,589 
Cardholder expenses1,764  1,426  1,515  1,512  1,359 
Net OREO expense1,700  925  313  1,122  664 
Other expenses9,969  8,050  7,310  8,295  7,447 
Acquisition and integration related expenses18,565  7,542  1,172  618  5,020 
Lease cancellation fee  950       
Total noninterest expense116,642  92,669  82,888  81,354  82,589 
Income before income tax expense33,588  29,759  43,939  38,364  26,458 
Income tax expense10,733  9,041  15,537  13,097  8,496 
Net income$22,855  $20,718  $28,402  $25,267  $17,962 
Net income applicable to common shares$22,621  $20,501  $28,078  $24,977  $17,750 
Net income applicable to common shares, excluding
  certain significant transactions (1)
$33,760  $25,596  $25,476  $25,348  $20,762 
 
Footnotes to Condensed Consolidated Statements of Income
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.


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,
 2017 2016 2016 2016 2016
Earnings Per Share         
Basic earnings per common share ("EPS") (1)$0.23  $0.25  $0.35  $0.31  $0.23 
Diluted EPS (1)$0.23  $0.25  $0.35  $0.31  $0.23 
Diluted EPS, excluding certain significant transactions (1) (5)$0.34  $0.32  $0.32  $0.32  $0.27 
Common Stock and Related Per Common Share Data
Book value$17.56  $15.46  $15.61  $15.38  $15.06 
Tangible book value$10.22  $10.95  $11.08  $10.83  $10.51 
Dividends declared per share$0.09  $0.09  $0.09  $0.09  $0.09 
Closing price at period end$23.68  $25.23  $19.36  $17.56  $18.02 
Closing price to book value1.3  1.6  1.2  1.1  1.2 
Period end shares outstanding102,757  81,325  81,324  81,312  81,298 
Period end treasury shares9,586  9,959  9,957  9,965  9,976 
Common dividends$9,126  $7,315  $7,408  $7,240  $7,228 
Key Ratios/Data         
Return on average common equity (1) (2)5.20% 6.42% 8.85% 8.13% 6.06%
Return on average tangible common equity (1) (2)7.16% 9.35% 12.85% 11.94% 8.87%
Return on average tangible common equity, excluding certain
  significant transactions (1) (2) (5)
10.51% 11.60% 11.69% 12.11% 10.32%
Return on average assets (2)0.68% 0.72% 1.00% 0.93% 0.72%
Return on average assets, excluding certain significant 
  transactions (1) (2) (5)
1.01% 0.90% 0.91% 0.94% 0.84%
Loans to deposits91.77% 93.49% 89.74% 88.94% 89.09%
Efficiency ratio (1)60.98% 63.98% 60.83% 60.98% 64.82%
Net interest margin (3)3.89% 3.44% 3.60% 3.72% 3.66%
Yield on average interest-earning assets (3)4.17% 3.76% 3.87% 3.99% 3.96%
Cost of funds0.42% 0.47% 0.39% 0.39% 0.44%
Net noninterest expense to average assets2.27% 1.86% 1.50% 1.61% 1.90%
Effective income tax rate31.95% 30.38% 35.36% 34.14% 32.11%
Capital Ratios                   
Total capital to risk-weighted assets (1)11.48% 12.23% 12.25% 10.68% 10.64%
Tier 1 capital to risk-weighted assets (1)9.53% 9.90% 9.89% 9.83% 9.81%
CET1 to risk-weighted assets (1)9.11% 9.39% 9.38% 9.32% 9.30%
Tier 1 capital to average assets (1)8.89% 8.99% 8.90% 8.94% 9.56%
Tangible common equity to tangible assets (1)8.07% 8.05% 8.04% 8.29% 8.25%
Tangible common equity, excluding AOCI, to tangible assets (1)8.38% 8.42% 8.16% 8.37% 8.39%
Tangible common equity to risk-weighted assets (1)8.68% 8.88% 9.13% 9.14% 9.04%
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,
 2017 2016 2016 2016 2016
Asset Quality Performance Data        
Non-performing assets         
Commercial and industrial$21,514  $29,938  $13,823  $6,303  $5,364 
Agricultural1,283  181  184  475  295 
Commercial real estate:         
Office, retail, and industrial19,505  17,277  17,670  16,815  10,910 
Multi-family163  311  316  321  410 
Construction198  286  287  360  778 
Other commercial real estate3,858  2,892  3,361  4,797  5,555 
Consumer7,773  8,404  8,648  8,241  8,578 
Total non-accrual loans54,294  59,289  44,289  37,312  31,890 
90 days or more past due loans, still accruing interest2,633  5,009  4,318  5,406  5,835 
Total non-performing loans56,927  64,298  48,607  42,718  37,725 
Accruing TDRs2,112  2,291  2,368  2,491  2,702 
OREO29,140  26,083  28,049  29,990  29,649 
Total non-performing assets$88,179  $92,672  $79,024  $75,199  $70,076 
30-89 days past due loans$23,641  $21,043  $26,140  $23,380  $30,142 
Allowance for credit losses         
Allowance for loan losses$88,163  $86,083  $85,308  $80,105  $77,150 
Reserve for unfunded commitments1,000  1,000  1,000  1,400  1,225 
Total allowance for credit losses$89,163  $87,083  $86,308  $81,505  $78,375 
Provision for loan losses$4,918  $5,307  $9,998  $8,085  $7,593 
Net charge-offs by category         
Commercial and industrial$1,894  $3,540  $1,145  $1,450  $1,396 
Agricultural514         
Commercial real estate:         
Office, retail, and industrial(848) 165  2,151  1,633  421 
Multi-family(28) 17  (69) 83  179 
Construction(222) (12) (9) (12) 111 
Other commercial real estate307  (111) 415  810  1,294 
Consumer1,221  933  1,162  1,166  672 
Total net charge-offs$2,838  $4,532  $4,795  $5,130  $4,073 
Total recoveries included above$3,440  $1,489  $1,155  $1,003  $1,116 
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,
  2017 2016 2016 2016 2016
Asset Quality ratios          
Non-accrual loans to total loans  0.54% 0.72% 0.54% 0.47% 0.41%
Non-performing loans to total loans  0.57% 0.78% 0.59% 0.54% 0.48%
Non-performing assets to total loans plus OREO  0.87% 1.12% 0.96% 0.94% 0.89%
Non-performing assets to tangible common equity plus allowance
  for credit losses 
 7.74% 9.48% 8.00% 7.81% 7.51%
Non-accrual loans to total assets  0.39% 0.52% 0.38% 0.34% 0.30%
Allowance for credit losses and net charge-off ratios               
Allowance for credit losses to total loans (4)  0.89% 1.06% 1.06% 1.02% 1.00%
Allowance for credit losses to loans, excluding acquired loans 1.11% 1.11% 1.13% 1.11% 1.11%
Allowance for credit losses to non-accrual loans  164.22% 146.88% 194.87% 218.44% 245.77%
Allowance for credit losses to non-performing loans  156.63% 135.44% 177.56% 190.80% 207.75%
Net charge-offs to average loans (2)  0.12% 0.22% 0.24% 0.26% 0.22%
 
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, which reflects federal and state tax benefits.
(4) 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. 
(5) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.


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,
 2017 2016 2016 2016 2016
Earnings Per Share         
Net income$22,855  $20,718  $28,402  $25,267  $17,962 
Net income applicable to non-vested restricted shares(234) (217) (324) (290) (212)
Net income applicable to common shares22,621  20,501  28,078  24,977  17,750 
Acquisition and integration related expenses18,565  7,542  1,172  618  5,020 
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee  950       
Tax effect of lease cancellation fee  (380)      
Net gain on sale-leaseback transaction    (5,509)    
Tax effect of net gain on sale-leaseback transaction    2,204     
Net income applicable to common shares, excluding certain
  significant transactions (1)
$33,760  $25,596  $25,476  $25,348  $20,762 
Weighted-average common shares outstanding:        
Weighted-average common shares outstanding (basic)100,411  80,415  80,396  80,383  77,980 
Dilutive effect of common stock equivalents21  15  13  13  12 
Weighted-average diluted common shares outstanding100,432  80,430  80,409  80,396  77,992 
Basic EPS$0.23  $0.25  $0.35  $0.31  $0.23 
Diluted EPS$0.23  $0.25  $0.35  $0.31  $0.23 
Diluted EPS, excluding certain significant transactions (1)$0.34  $0.32  $0.32  $0.32  $0.27 
Anti-dilutive shares not included in the computation of diluted EPS343  445  454  469  608 
Efficiency Ratio Calculation         
Noninterest expense$116,642  $92,669  $82,888  $81,354  $82,589 
Less:         
Net OREO expense(1,700) (925) (313) (1,122) (664)
Acquisition and integration related expenses(18,565) (7,542) (1,172) (618) (5,020)
Lease cancellation fee  (950)      
Total$96,377  $83,252  $81,403  $79,614  $76,905 
Tax-equivalent net interest income (2)$117,251  $90,088  $93,051  $92,174  $83,021 
Fee-based revenues37,847  37,107  38,466  35,934  33,594 
Add:         
Other income, excluding BOLI income844  1,310  762  984  579 
BOLI1,260  971  929  881  866 
Tax-equivalent adjustment of BOLI840  647  619  587  577 
Total$158,042  $130,123  $133,827  $130,560  $118,637 
Efficiency ratio60.98% 63.98% 60.83% 60.98% 64.82%
          
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,
 2017 2016 2016 2016 2016
Tax-Equivalent Net Interest Income        
Net interest income$115,197  $88,024  $90,972  $89,981  $80,714 
Tax-equivalent adjustment2,054  2,064  2,079  2,193  2,307 
Tax-equivalent net interest income (2)117,251  90,088  93,051  92,174  83,021 
Less: acquired loan accretion(11,345) (2,663) (4,555) (4,927) (2,423)
Tax-equivalent net interest income, excluding the impact of
  acquired loan accretion
$105,906  $87,425  $88,496  $87,247  $80,598 
Average interest-earning assets$12,211,804  $10,425,691  $10,297,647  $9,949,093  $9,122,915 
Net interest margin (GAAP)3.83% 3.36% 3.51% 3.64% 3.56%
Tax-equivalent net interest margin3.89% 3.44% 3.60% 3.72% 3.66%
Tax-equivalent net interest margin, excluding the impact of 
  acquired loan accretion
3.51% 3.34% 3.42% 3.53% 3.55%
Risk-Based Capital Data                   
Common stock$1,123  $913  $913  $913  $913 
Additional paid-in capital1,022,417  498,937  496,918  495,159  493,153 
Retained earnings1,030,403  1,016,674  1,003,271  982,277  964,250 
Treasury stock, at cost(208,946) (218,534) (218,436) (218,657) (218,710)
Goodwill and other intangible assets, net of deferred tax liabilities(742,012) (356,477) (357,079) (358,582) (357,895)
Disallowed deferred tax assets(1,150) (198) (383) (2,263) (2,956)
CET1 capital1,101,835  941,315  925,204  898,847  878,755 
Trust-preferred securities50,690  50,690  50,690  50,690  50,690 
Other disallowed deferred tax assets(287) (132) (255) (1,508) (1,970)
Tier 1 capital1,152,238  991,873  975,639  948,029  927,475 
Tier 2 capital235,825  233,656  232,792  81,505  78,375 
Total capital$1,388,063  $1,225,529  $1,208,431  $1,029,534  $1,005,850 
Risk-weighted assets$12,095,592  $10,019,434  $9,867,406  $9,641,953  $9,452,551 
Adjusted average assets$12,965,450  $11,036,835  $10,959,119  $10,608,085  $9,700,671 
Total capital to risk-weighted assets11.48% 12.23% 12.25% 10.68% 10.64%
Tier 1 capital to risk-weighted assets9.53% 9.90% 9.89% 9.83% 9.81%
CET1 to risk-weighted assets9.11% 9.39% 9.38% 9.32% 9.30%
Tier 1 capital to average assets8.89% 8.99% 8.90% 8.94% 9.56%
Tangible Common Equity                   
Stockholders' equity$1,804,733  $1,257,080  $1,269,264  $1,250,889  $1,224,565 
Less: goodwill and other intangible assets(754,621) (366,876) (367,961) (369,962) (369,979)
Tangible common equity1,050,112  890,204  901,303  880,927  854,586 
Less: AOCI40,264  40,910  13,402  8,803  15,041 
Tangible common equity, excluding AOCI$1,090,376  $931,114  $914,705  $889,730  $869,627 
Total assets$13,773,471  $11,422,555  $11,578,197  $10,995,810  $10,728,922 
Less: goodwill and other intangible assets(754,621) (366,876) (367,961) (369,962) (369,979)
Tangible assets$13,018,850  $11,055,679  $11,210,236  $10,625,848  $10,358,943 
Tangible common equity to tangible assets8.07% 8.05% 8.04% 8.29% 8.25%
Tangible common equity, excluding AOCI, to tangible assets8.38% 8.42% 8.16% 8.37% 8.39%
Tangible common equity to risk-weighted assets8.68% 8.88% 9.13% 9.14% 9.04%
          
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,
 2017 2016 2016 2016 2016
Return on Average Common and Tangible Common Equity      
Net income applicable to common shares$22,621  $20,501  $28,078  $24,977  $17,750 
Intangibles amortization1,965  1,207  1,245  1,245  985 
Tax effect of intangibles amortization(786) (483) (498) (498) (394)
Net income applicable to common shares, excluding intangibles
  amortization
23,800  21,225  28,825  25,724  18,341 
Acquisition and integration related expenses18,565  7,542  1,172  618  5,020 
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee  950       
Tax effect of lease cancellation fee  (380)      
Net gain on sale-leaseback transaction    (5,509)    
Tax effect of net gain on sale-leaseback transaction    2,204     
Net income applicable to common shares, excluding intangibles
  amortization and certain significant transactions (1)
$34,939  $26,320  $26,223  $26,095  $21,353 
Average stockholders' equity$1,763,538  $1,269,993  $1,261,702  $1,235,497  $1,178,588 
Less: average intangible assets(415,521) (367,328) (369,281) (369,177) (346,549)
Average tangible common equity$1,348,017  $902,665  $892,421  $866,320  $832,039 
Return on average common equity (3)5.20% 6.42% 8.85% 8.13% 6.06%
Return on average tangible common equity (3)7.16% 9.35% 12.85% 11.94% 8.87%
Return on average tangible common equity, excluding certain
  significant transactions (1) (3)
10.51% 11.60% 11.69% 12.11% 10.32%
Return on Average Assets      
Net income$22,855  $20,718  $28,402  $25,267  $17,962 
Acquisition and integration related expenses18,565  7,542  1,172  618  5,020 
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee  950       
Tax effect of lease cancellation fee  (380)      
Net gain on sale-leaseback transaction    (5,509)    
Tax effect of net gain on sale-leaseback transaction    2,204     
Net income, excluding certain significant transactions (1)$33,994  $25,813  $25,800  $25,638  $20,974 
Average assets$13,673,125  $11,380,108  $11,322,325  $10,968,516  $10,056,845 
Return on average assets (3)0.68% 0.72% 1.00% 0.93% 0.72%
Return on average assets, excluding certain significant 
  transactions (1) (3)
1.01% 0.90% 0.91% 0.94% 0.84%
               
Footnotes to Non-GAAP Reconciliations
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.
(2) Presented on a tax-equivalent basis, which reflects federal and state tax benefits.
(3) Annualized based on the actual number of days for each period presented.


Contact Information

Investors:
Patrick S. Barrett
EVP, Chief Financial Officer 
(630) 875-7273 
pat.barrett@firstmidwest.com

Media:
James M. Roolf
SVP, Corporate Relations Officer 
(630) 875-7533 
jim.roolf@firstmidwest.com

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