First Midwest Bancorp, Inc. Announces 2020 Third Quarter Results

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CHICAGO, Oct. 20, 2020 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest"), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the third quarter of 2020. Net income applicable to common shares for the third quarter of 2020 was $23.4 million, or $0.21 per share, compared to $17.8 million, or $0.16 per share, for the second quarter of 2020, and $54.1 million, or $0.49 per share, for the third quarter of 2019.

Results for the third quarter of 2020 were impacted by retail and balance sheet optimization strategies as well as securities gains. For the first nine months of 2020, the COVID-19 pandemic (the "pandemic") and governmental responses to it impacted performance for 2020, resulting in higher provision for loan losses, as well as lower net interest and noninterest income. Reported results for all periods were impacted by acquisition and integration related expenses. For additional detail on these adjustments, see the "Non-GAAP Financial Information" section presented later in this release.

SELECT THIRD QUARTER VS. SECOND QUARTER HIGHLIGHTS

  • Generated EPS of $0.21, compared to $0.16 for the prior quarter, impacted by:

    • $0.12 per share, or $18 million, for retail and balance sheet optimization costs in the third quarter of 2020.

    • $0.07 per share, or $10 million, for the third quarter of 2020 and $0.17 per share, or $25 million, for the prior quarter, for the estimated impact of the pandemic on the allowance for credit losses ("ACL").

    • $0.01 per share, or $1 million, of other pandemic related expenses compared to $0.02 in the prior quarter.

  • Reported pre-tax, pre-provision earnings, adjusted (1) of $71 million, up 13% from the prior quarter due primarily to:

    • Higher fee-based revenues of $38 million, up 25% from the prior quarter, reflective of record mortgage banking income and higher transaction volumes.

    • Controlled noninterest expense, adjusted (1) , to $112 million, down 3% from the prior quarter.

  • Produced net interest income of $143 million at a net margin of 2.95%, down 18 basis points from the prior quarter, reflective of lower interest rates and the full quarter impact of Paycheck Protection Program ("PPP") loans.

  • Credit performance stable with risk rating migration as expected:

    • ACL of 1.68% of total loans, 1.83% excluding PPP loans, consistent with 1.80% as of June 30, 2020.

    • Non-performing assets ("NPAs") to total loans plus foreclosed assets of 1.11%, consistent with 1.09% at June 30, 2020.

    • Net loan charge-offs ("NCOs") of 0.26% of average loans excluding purchased credit deteriorated ("PCD") and PPP loans, consistent with 0.27% for the prior quarter.

    • Adverse rated performing loan migration to $707 million, increasing from $450 million in the prior quarter, concentrated in elevated risk sectors.

  • Total loans of $15 billion, down 2% from the prior quarter reflecting lower customer demand and higher customer liquidity levels.

  • Increased total average deposits to $16 billion, up 3% from the prior quarter reflecting higher customer balances resulting from PPP funds, other government stimuli, and seasonal inflows of municipal deposits.

"Operating performance for the quarter benefited from improved fee-based revenues and tightened cost management," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "Encouragingly, business activity showed signs of recovery after widespread shutdowns, even as the lag in demand and low interest rates weighed on the quarter's production. Against a backdrop of uncertainty, we prudently maintained our credit reserves, strengthened capital and took steps to better position our balance sheet for today's lower rate environment. We also took steps to further optimize our retail distribution to better align with client preferences and needs. Combined, these actions position our Company for both improved performance and future investment."

Mr. Scudder concluded, "As we look ahead, our collective drive remains centered on helping our clients achieve financial success. While times such as these present challenges, they also provide opportunities to leverage our financial strength to serve the needs of our clients, grow and enhance the value of our franchise."

RETAIL OPTIMIZATION

First Midwest continues its commitment to best meet the evolving needs and preferences of its clients. During the third quarter of 2020, the Company initiated certain actions that include optimizing its retail branch network and delivery model through the consolidation of 17 branches, or approximately 15% of its branch network, in early 2021. These actions resulted in pre-tax costs of $18 million associated with valuation adjustments related to locations identified for closure, modernization of our ATM network, and advisory fees and are recorded within optimization costs within noninterest expense.

BALANCE SHEET OPTIMIZATION

During the third quarter of 2020, the Company terminated longer term interest rate swaps with a notional amount of $1.1 billion, as well as reduced a portion of the borrowed funds related to the terminated swaps. At the same time, the Company liquidated $160 million of securities. As a result of these transactions, $14 million of pre-tax securities gains was fully offset by $14 million of pre-tax loss on swap terminations, with both items recorded within noninterest income. These actions are expected to positively impact future net interest income along with reducing high levels of excess liquidity as the remaining borrowed funds hedged by the terminated swaps mature in the fourth quarter of 2020.

(1) This metric is a non-GAAP financial measure. For details on the calculation of this metric, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)

 

Quarters Ended

 

September 30, 2020

 

 

June 30, 2020

 

 

September 30, 2019

 

Average
Balance

 

Interest

 

Yield/
Rate
(%)

 

 

Average
Balance

 

Interest

 

Yield/
Rate
(%)

 

 

Average
Balance

 

Interest

 

Yield/
Rate
(%)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other interest-earning assets

$

1,234,948

 

 

$

799

 

 

0.26

 

 

 

$

646,887

 

 

$

471

 

 

 

0.29

 

 

 

$

283,178

 

 

$

1,702

 

 

2.38

 

Securities (1)

3,291,724

 

 

19,721

 

 

2.40

 

 

 

3,357,984

 

 

21,040

 

 

 

2.51

 

 

 

2,869,461

 

 

19,906

 

 

2.77

 

Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock

150,033

 

 

976

 

 

2.60

 

 

 

154,678

 

 

368

 

 

 

0.95

 

 

 

108,735

 

 

831

 

 

3.06

 

Loans, excluding PPP loans (1)

13,558,857

 

 

131,680

 

 

3.86

 

 

 

13,729,250

 

 

135,952

 

 

 

3.98

 

 

 

12,539,541

 

 

160,756

 

 

5.09

 

PPP loans (1)

1,194,808

 

 

7,001

 

 

2.33

 

 

 

887,997

 

 

5,368

 

 

 

2.43

 

 

 

 

 

 

 

 

Total loans (1)

14,753,665

 

 

138,681

 

 

3.74

 

 

 

14,617,247

 

 

141,320

 

 

 

3.89

 

 

 

12,539,541

 

 

160,756

 

 

5.09

 

Total interest-earning assets (1)

19,430,370

 

 

160,177

 

 

3.28

 

 

 

18,776,796

 

 

163,199

 

 

 

3.49

 

 

 

15,800,915

 

 

183,195

 

 

4.60

 

Cash and due from banks

284,730

 

 

 

 

 

 

 

275,696

 

 

 

 

 

 

 

224,127

 

 

 

 

 

Allowance for loan losses

(243,667

)

 

 

 

 

 

 

(224,519

)

 

 

 

 

 

 

(110,616

)

 

 

 

 

Other assets

2,055,262

 

 

 

 

 

 

 

2,040,133

 

 

 

 

 

 

 

1,784,754

 

 

 

 

 

Total assets

$

21,526,695

 

 

 

 

 

 

 

$

20,868,106

 

 

 

 

 

 

 

$

17,699,180

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savings deposits

$

2,342,355

 

 

104

 

 

0.02

 

 

 

$

2,246,643

 

 

99

 

 

 

0.02

 

 

 

$

2,056,128

 

 

308

 

 

0.06

 

NOW accounts

2,744,034

 

 

307

 

 

0.04

 

 

 

2,549,088

 

 

637

 

 

 

0.10

 

 

 

2,483,176

 

 

3,462

 

 

0.55

 

Money market deposits

2,781,666

 

 

724

 

 

0.10

 

 

 

2,663,622

 

 

1,157

 

 

 

0.17

 

 

 

2,080,274

 

 

4,111

 

 

0.78

 

Time deposits

2,302,019

 

 

5,702

 

 

0.99

 

 

 

2,539,996

 

 

8,184

 

 

 

1.30

 

 

 

3,026,423

 

 

13,873

 

 

1.82

 

Borrowed funds

2,436,922

 

 

6,021

 

 

0.98

 

 

 

2,466,300

 

 

3,156

 

 

 

0.51

 

 

 

1,369,079

 

 

5,639

 

 

1.63

 

Senior and subordinated debt

234,464

 

 

3,498

 

 

5.94

 

 

 

234,259

 

 

3,577

 

 

 

6.14

 

 

 

233,642

 

 

3,783

 

 

6.42

 

Total interest-bearing liabilities

12,841,460

 

 

16,356

 

 

0.51

 

 

 

12,699,908

 

 

16,810

 

 

 

0.53

 

 

 

11,248,722

 

 

31,176

 

 

1.10

 

Demand deposits

5,631,355

 

 

 

 

 

 

 

5,305,109

 

 

 

 

 

 

 

3,800,569

 

 

 

 

 

Total funding sources

18,472,815

 

 

 

 

0.35

 

 

 

18,005,017

 

 

 

 

0.38

 

 

 

15,049,291

 

 

 

 

0.82

 

Other liabilities

378,786

 

 

 

 

 

 

 

361,311

 

 

 

 

 

 

 

322,610

 

 

 

 

 

Stockholders' equity

2,675,094

 

 

 

 

 

 

 

2,501,778

 

 

 

 

 

 

 

2,327,279

 

 

 

 

 

Total liabilities and
stockholders' equity

$

21,526,695

 

 

 

 

 

 

 

$

20,868,106

 

 

 

 

 

 

 

$

17,699,180

 

 

 

 

 

Tax-equivalent net interest         
income/margin (1)

 

 

143,821

 

 

2.95

 

 

 

 

 

146,389

 

 

 

3.13

 

 

 

 

 

152,019

 

 

3.82

 

Tax-equivalent adjustment

 

 

(1,092

)

 

 

 

 

 

 

(1,155

)

 

 

 

 

 

 

 

(1,232

)

 

 

Net interest income (GAAP) (1)

 

 

$

142,729

 

 

 

 

 

 

 

$

145,234

 

 

 

 

 

 

 

 

$

150,787

 

 

 

Impact of acquired loan accretion (1)

 

 

$

7,960

 

 

0.16

 

 

 

 

 

$

6,999

 

 

 

0.15

 

 

 

 

 

$

9,244

 

 

0.23

 

Tax-equivalent net interest income/        
margin, adjusted (1)

 

 

$

135,861

 

 

2.79

 

 

 

 

 

$

139,390

 

 

 

2.98

 

 

 

 

 

$

142,775

 

 

3.59

 


(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 21%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

 

 

Net interest income for the third quarter of 2020 was down 1.7% from the second quarter of 2020 and 5.3% from the third quarter of 2019. The decrease in net interest income compared to both prior periods resulted primarily from lower interest rates, partially offset by lower costs of funds and an increase in interest income and fees on PPP loans. Compared to the second quarter of 2020, net interest income was also impacted by a decrease in average loans, excluding PPP loans, and securities, partially offset by the number of days in the quarter. Net interest income compared to the third quarter of 2019 was impacted by growth in loans and securities as well as the acquisition of interest-earning assets from the Park transaction in the first quarter of 2020.

Acquired loan accretion contributed $8.0 million, $7.0 million, and $9.2 million to net interest income for the third quarter of 2020, second quarter of 2020, and third quarter of 2019, respectively.

Tax-equivalent net interest margin for the current quarter was 2.95%, decreasing 18 and 87 basis points from the second quarter of 2020 and third quarter of 2019, respectively. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 2.79%, down 19 and 80 basis points from the second quarter of 2020 and third quarter of 2019, respectively. Compared to both prior periods, tax-equivalent net interest margin decreased as a result of lower interest rates on loans and securities, lower yields on PPP loans, as well as a higher balance of other interest-earning assets due to higher demand deposits as a result of PPP loan funds and other government stimuli, partially offset by lower cost of funds. In addition, tax-equivalent net interest margin compared to the second quarter of 2020 was impacted by higher interest rate swap expense on borrowed funds.

For the third quarter of 2020, total average interest-earning assets rose by $653.6 million and $3.6 billion from the second quarter of 2020 and third quarter of 2019, respectively. The increase compared to both prior periods resulted primarily from PPP loans and a higher balance of other interest-earning assets. In addition, the increase in average interest-earning assets compared to the third quarter of 2019 was impacted by the assets acquired in the Park Bank transaction, loan growth, and securities purchases.

Total average funding sources for the third quarter of 2020 increased by $467.8 million and $3.4 billion from the second quarter of 2020 and third quarter of 2019, respectively. The increase compared to both prior periods was driven primarily by deposit growth due to higher customer balances resulting from PPP funds and other government stimuli. In addition, the increase compared to the second quarter of 2020 was impacted by seasonal inflows of municipal deposits and compared to the third quarter of 2019 was impacted by deposits assumed in the Park Bank transaction and a higher balance of FHLB advances.

Noninterest Income Analysis
(Dollar amounts in thousands)

 

 

Quarters Ended

 

September 30, 2020
Percent Change From

 

 

September 30,
2020

 

June 30, 
 2020

 

September 30,
2019

 

June 30, 
 2020

 

September 30,
2019

Wealth management fees

 

$

12,837

 

 

$

11,942

 

 

$

12,063

 

 

7.5

 

 

6.4

 

 

Service charges on deposit accounts

 

10,342

 

 

9,125

 

 

13,024

 

 

13.3

 

 

(20.6

)

 

Mortgage banking income

 

6,659

 

 

3,477

 

 

3,066

 

 

91.5

 

 

117.2

 

 

Card-based fees, net

 

4,472

 

 

3,180

 

 

4,694

 

 

40.6

 

 

(4.7

)

 

Capital market products income

 

886

 

 

694

 

 

4,161

 

 

27.7

 

 

(78.7

)

 

Other service charges, commissions, and fees

 

2,823

 

 

2,078

 

 

3,023

 

 

35.9

 

 

(6.6

)

 

Total fee-based revenues

 

38,019

 

 

30,496

 

 

40,031

 

 

24.7

 

 

(5.0

)

 

Other income

 

2,523

 

 

2,495

 

 

2,920

 

 

1.1

 

 

(13.6

)

 

Swap termination costs

 

(14,285

)

 

 

 

 

 

N/M

 

 

N/M

 

 

Net securities gains

 

14,328

 

 

 

 

 

 

N/M

 

 

N/M

 

 

Total noninterest income

 

$

40,585 

 

 

$

32,991 

 

 

$

42,951 

 

 

23.0 

 

 

(5.5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

N/M Not meaningful.

Total noninterest income of $40.6 million was up 23.0% from the second quarter of 2020 and down 5.5% from the third quarter of 2019. Compared to both prior periods, the increase in wealth management fees was driven primarily by continued sales of fiduciary and investment advisory services to existing customers and a recovering market environment. The increase in service charges on deposit accounts, net card-based fees, and other service charges, commissions, and fees from the second quarter of 2020 was due to higher transaction volumes, whereas the decrease from the third quarter of 2019 resulted from the impact of lower transaction volumes as a result of the pandemic.

Record mortgage banking income for the third quarter of 2020 resulted from sales of $251.8 million of 1-4 family mortgage loans in the secondary market, compared to $168.7 million and $141.0 million in the second quarter of 2020 and third quarter of 2019, respectively.

Capital market products income decreased compared to the third quarter of 2019 as a result of lower levels of sales to corporate clients in light of market conditions.

During the third quarter of 2020, the Company terminated longer term interest rate swaps with a notional amount of $1.1 billion as a result of excess liquidity and in response to current market conditions. At the same time, the Company liquidated $160 million of securities.

As a result of these transactions, $14 million of pre-tax securities gains was fully offset by $14 million of pre-tax loss on swap terminations.

Noninterest Expense Analysis
(Dollar amounts in thousands)

 

 

Quarters Ended

 

September 30, 2020
Percent Change From

 

 

September 30,
2020

 

June 30, 
 2020

 

September 30,
2019

 

June 30, 
 2020

 

September 30,
2019

Salaries and employee benefits:

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

$

53,385

 

 

$

52,592

 

 

$

50,686

 

 

 

1.5

 

 

5.3

 

 

Retirement and other employee benefits

 

11,349

 

 

11,080

 

 

10,795

 

 

 

2.4

 

 

5.1

 

 

Total salaries and employee benefits

 

64,734

 

 

63,672

 

 

61,481

 

 

 

1.7

 

 

5.3

 

 

Net occupancy and equipment expense (1)

 

13,736

 

 

15,116

 

 

12,787

 

 

 

(9.1

)

 

7.4

 

 

Technology and related costs (1)

 

10,416

 

 

9,853

 

 

6,960

 

 

 

5.7

 

 

49.7

 

 

Professional services (1)

 

7,325

 

 

8,880

 

 

8,768

 

 

 

(17.5

)

 

(16.5

)

 

Advertising and promotions

 

2,688

 

 

2,810

 

 

2,955

 

 

 

(4.3

)

 

(9.0

)

 

Net other real estate owned ("OREO") expense

 

544

 

 

126

 

 

381

 

 

 

331.7

 

 

42.8

 

 

Other expenses

 

12,374

 

 

14,624

 

 

11,432

 

 

 

(15.4

)

 

8.2

 

 

Optimization costs

 

18,376

 

 

 

 

 

 

 

100.0

 

 

100.0

 

 

Acquisition and integration related expenses

 

881

 

 

5,249

 

 

3,397

 

 

 

(83.2

)

 

(74.1

)

 

Delivering Excellence implementation costs

 

 

 

 

 

234

 

 

 

 

 

(100.0

)

 

Total noninterest expense

 

$

131,074 

 

 

$

120,330 

 

 

$

108,395 

 

 

 

8.9 

 

 

20.9 

 

 

Optimization costs

 

(18,376

)

 

 

 

 

 

 

(100.0

)

 

(100.0

)

 

Acquisition and integration related expenses

 

(881

)

 

(5,249

)

 

(3,397

)

 

 

(83.2

)

 

(74.1

)

 

Delivering Excellence implementation costs

 

 

 

 

 

(234

)

 

 

 

 

(100.0

)

 

Total noninterest expense, adjusted (2)

 

$

111,817

 

 

$

115,081

 

 

$

104,764

 

 

 

(2.8

)

 

6.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)

Certain reclassifications were made to prior year amounts to conform to the current year presentation.

(2)

See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

 

 

Total noninterest expense increased 8.9% from the second quarter of 2020 and 20.9% from the third quarter of 2019. Noninterest expense for all periods presented was impacted by acquisition and integration related expenses. The third quarter of 2020 was impacted by optimization costs associated with retail optimization strategies, and the third quarter of 2019 was impacted by costs related to our Delivering Excellence initiative. Excluding these items, noninterest expense for the third quarter of 2020 was $111.8 million, down 2.8% from the second quarter of 2020 and up 6.7% from the third quarter of 2019. Overall, noninterest expense, adjusted, to average assets, excluding PPP loans decreased to 2.19% for the third quarter of 2020, down 6% and 7% from the second quarter of 2020 and third quarter of 2019, respectively.

Operating costs associated with the Park Bank transaction completed in the first quarter of 2020 contributed to the increase in noninterest expense compared to the third quarter of 2019. These costs primarily occurred in salaries and employee benefits, net occupancy and equipment expense, professional services, technology and related costs, and other expenses.

Compared to the second quarter of 2020, salaries and employee benefits increased primarily due to lower levels of deferred loan salaries. The increase from the third quarter of 2019 was also impacted by merit increases and higher commissions resulting from sales of 1-4 family mortgage loans in the secondary market, partially offset by lower incentive compensation expenses. Occupancy and equipment costs for the second quarter of 2020 were elevated by expenses resulting from the pandemic. Technology and related costs compared to the third quarter of 2019 was impacted by investments in technology, including the origination of PPP loans. Professional services expenses were lower compared to both prior periods due to elevated prior period expenses associated with process enhancements and organizational growth. Other expenses for the second quarter of 2020 was impacted by a valuation adjustment on a foreclosed asset.

Optimization costs of $18.4 million for the third quarter of 2020 primarily include valuation adjustments related to locations identified for closure, modernization of our ATM network, and advisory fees.

Acquisition and integration related expenses for the third quarter of 2020 and second quarter of 2020 resulted primarily from the acquisition of Park Bank. In addition, acquisition and integration related expenses for the second quarter of 2020 and third quarter of 2019 resulted from the acquisition of Bridgeview Bank.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

 

 

As of

 

September 30, 2020
Percent Change From

 

 

September 30, 
 2020

 

June 30, 
 2020

 

September 30, 
 2019

 

June 30, 
 2020

 

September 30, 
 2019

Commercial and industrial

 

$

4,635,571

 

 

$

4,789,556

 

 

$

4,570,361

 

 

(3.2

)

 

 

1.4

 

 

Agricultural

 

377,466

 

 

381,124

 

 

417,740

 

 

(1.0

)

 

 

(9.6

)

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

Office, retail, and industrial

 

1,950,406

 

 

2,020,318

 

 

1,892,877

 

 

(3.5

)

 

 

3.0

 

 

Multi-family

 

868,293

 

 

874,861

 

 

817,444

 

 

(0.8

)

 

 

6.2

 

 

Construction

 

631,607

 

 

687,063

 

 

637,256

 

 

(8.1

)

 

 

(0.9

)

 

Other commercial real estate

 

1,452,994

 

 

1,475,937

 

 

1,425,292

 

 

(1.6

)

 

 

1.9

 

 

Total commercial real estate

 

4,903,300

 

 

5,058,179

 

 

4,772,869

 

 

(3.1

)

 

 

2.7

 

 

Total corporate loans, excluding PPP        
loans

 

9,916,337

 

 

10,228,859

 

 

9,760,970

 

 

(3.1

)

 

 

1.6

 

 

PPP loans

 

1,196,538

 

 

1,179,403

 

 

 

 

1.5

 

 

 

N/M

 

 

Total corporate loans

 

11,112,875

 

 

11,408,262

 

 

9,760,970

 

 

(2.6

)

 

 

13.9

 

 

Home equity

 

827,746

 

 

892,867

 

 

833,955

 

 

(7.3

)

 

 

(0.7

)

 

1-4 family mortgages

 

2,287,555

 

 

2,175,322

 

 

1,686,967

 

 

5.2

 

 

 

35.6

 

 

Installment

 

425,012

 

 

457,207

 

 

491,427

 

 

(7.0

)

 

 

(13.5

)

 

Total consumer loans

 

3,540,313

 

 

3,525,396

 

 

3,012,349

 

 

0.4

 

 

 

17.5

 

 

Total loans

 

$

14,653,188

 

 

$

14,933,658

 

 

$

12,773,319

 

 

(1.9

)

 

 

14.7

 

 

 

 

 

 

 

 

 

 

 

 

 

N/M Not meaningful.

Total loans includes loans originated under the PPP loan program in the second and third quarters of 2020, which totaled $1.2 billion as of September 30, 2020. Excluding these loans, total loans decreased 2.2% from June 30, 2020. Excluding PPP loans and the loans acquired in the Park Bank acquisition in the first quarter of 2020, total loans decreased 0.8% from September 30, 2019. Compared to both prior periods, corporate loans, excluding PPP loans were impacted by lower production and line usage and higher paydowns due to current economic conditions as a result of the ongoing pandemic.

Growth in consumer loans compared to both prior periods resulted primarily from strong production and purchases of 1-4 family mortgages, which more than offset higher prepayments. In addition, compared to the third quarter of 2019, purchases of home equity loans contributed to the increase.

Allowance for Credit Losses
(Dollar amounts in thousands)

 

 

As of

 

September 30, 2020
Percent Change From

 

 

September 30,
2020

 

June 30, 
 2020

 

September 30,
2019

 

June 30, 
 2020

 

September 30,
2019

Allowance for credit losses

 

 

 

 

 

 

 

 

 

 

ACL, excluding PCD loans

 

$

209,988

 

 

$

203,243

 

 

$

110,228

 

 

3.3

 

 

90.5

 

PCD loan ACL

 

36,885

 

 

44,434

 

 

 

 

(17.0

)

 

100.0

 

Total ACL

 

$

246,873

 

 

$

247,677

 

 

$

110,228

 

 

(0.3

)

 

124.0

 

Provision for credit losses

 

$

15,927

 

 

$

32,649

 

 

$

12,498

 

 

(51.2

)

 

27.4

 

ACL to total loans (1)

 

1.68

%

 

1.66

%

 

0.86

%

 

 

 

 

ACL to total loans, excluding PPP loans (1)(2)

 

1.83

%

 

1.80

%

 

0.86

%

 

 

 

 

ACL to non-accrual loans

 

171.95

%

 

177.98

%

 

141.88

%

 

 

 

 


(1)

Prior to the adoption of the current expected credit losses accounting standard ("CECL") on January 1, 2020, this ratio included acquired loans that were recorded at fair value through an acquisition adjustment netted in loans. Subsequent to adoption, an ACL on acquired loans is established as of the acquisition date and the acquired loans are no longer recorded net of a credit-related acquisition adjustment.

(2)

This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans. See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

 

 

The Company adopted CECL on January 1, 2020, which impacted both the level of ACL as well as other asset quality metrics due to the change in accounting for acquired PCD loans. In addition, the Company participated in the PPP program, which resulted in $1.2 billion of loans originated in the second and third quarters of 2020 that are expected to be forgiven by the Small Business Administration ("SBA"). As a result, certain metrics are presented excluding PCD and PPP loans to provide comparability to prior periods.

The ACL was $246.9 million or 1.68% of total loans as of September 30, 2020, consistent with June 30, 2020 and increasing $136.6 million compared to September 30, 2019. Excluding the impact of PPP loans, ACL to total loans was 1.83% as of September 30, 2020, consistent with 1.80% and up from 0.86% as of June 30, 2020 and September 30, 2019, respectively. Compared to September 30, 2019, the increase in ACL is a result of the adoption of the CECL accounting standard, the Park Bank acquisition, as well as additional ACL established as a result of the pandemic.

Asset Quality
(Dollar amounts in thousands)

 

 

As of

 

September 30, 2020
Percent Change From

 

 

September 30,
2020

 

June 30, 
 2020

 

September 30,
2019

 

June 30, 
 2020

 

September 30,
2019

Asset quality

 

 

 

 

 

 

 

 

 

 

Non-accrual loans, excluding PCD loans (1)(2)

 

$

103,582

 

 

$

94,044

 

 

$

77,692

 

 

10.1

 

 

33.3

 

 

Non-accrual PCD loans (1)

 

39,990

 

 

45,116

 

 

 

 

(11.4

)

 

N/M

 

 

Total non-accrual loans

 

143,572

 

 

139,160

 

 

77,692

 

 

3.2

 

 

84.8

 

 

90 days or more past due loans, still accruing        
interest (1)

 

3,781

 

 

3,241

 

 

4,657

 

 

16.7

 

 

(18.8

)

 

Total non-performing loans, ("NPLs")

 

147,353

 

 

142,401

 

 

82,349

 

 

3.5

 

 

78.9

 

 

Accruing troubled debt restructurings        
("TDRs")

 

841

 

 

1,201

 

 

1,422

 

 

(30.0

)

 

(40.9

)

 

Foreclosed assets (3)

 

15,299

 

 

19,024

 

 

25,266

 

 

(19.6

)

 

(39.4

)

 

Total NPAs

 

$

163,493

 

 

$

162,626

 

 

$

109,037

 

 

0.5

 

 

49.9

 

 

30-89 days past due loans (1)

 

$

21,551

 

 

$

36,342

 

 

$

46,171

 

 

(40.7

)

 

(53.3

)

 

30-89 days past due loans, excluding PCD        
loans (1)(2)

 

$

19,042

 

 

$

34,872

 

 

$

46,171

 

 

(45.4

)

 

(58.8

)

 

Special mention loans (4)

 

$

395,295

 

 

$

256,373

 

 

$

185,369

 

 

54.2

 

 

113.2

 

 

Substandard loans (4)

 

311,430

 

 

193,337

 

 

171,731

 

 

61.1

 

 

81.3

 

 

Total adverse rated performing loans (4)

 

$

706,725

 

 

$

449,710

 

 

$

357,100

 

 

57.2

 

 

97.9

 

 

Non-accrual loans to total loans:

 

 

 

 

 

 

 

 

 

 

Non-accrual loans to total loans

 

0.98

%

 

0.93

%

 

0.61

%

 

 

 

 

Non-accrual loans to total loans, excluding        
PPP loans (1)(2)(5)

 

1.07

%

 

1.01

%

 

0.61

%

 

 

 

 

Non-accrual loans to total loans, excluding        
PCD and PPP loans (1)(2)(5)

 

0.78

%

 

0.70

%

 

0.61

%

 

 

 

 

Non-performing loans to total loans:

 

 

 

 

 

 

 

 

 

 

NPLs to total loans

 

1.01

%

 

0.95

%

 

0.64

%

 

 

 

 

NPLs to total loans, excluding PPP loans (1)(2)(5)

 

1.10

%

 

1.04

%

 

0.64

%

 

 

 

 

NPLs to total loans, excluding PCD and PPP         
loans (1)(2)(5)

 

0.81

%

 

0.72

%

 

0.64

%

 

 

 

 

Non-performing assets to total loans plus foreclosed assets:

 

 

 

 

 

 

 

 

NPAs to total loans plus foreclosed assets

 

1.11

%

 

1.09

%

 

0.85

%

 

 

 

 

NPAs to total loans plus foreclosed assets,         
excluding PPP loans (1)(2)(5)

 

1.21

%

 

1.18

%

 

0.85

%

 

 

 

 

NPAs to total loans plus foreclosed assets,         
excluding PCD and PPP loans (1)(2)(5)

 

0.93

%

 

0.87

%

 

0.85

%

 

 

 

 

Adverse rated performing loans to total loans:

 

 

 

 

 

 

 

 

Adverse rated performing loans to corporate        
loans

 

6.36

%

 

3.94

%

 

3.66

%

 

 

 

 

Adverse rated performing loans, excluding PPP        
loans to corporate loans

 

7.13

%

 

4.40

%

 

3.66

%

 

 

 

 


N/M Not meaningful.

(1)

Prior to the adoption of CECL on January 1, 2020, purchased credit impaired ("PCI") loans with an accretable yield were considered current and were not included in past due loan totals. In addition, PCI loans with an accretable yield were excluded from non-accrual loans. Subsequent to adoption, PCD loans, including those previously classified as PCI, are included in past due and non-accrual loan totals. In addition, an ACL is established as of the acquisition date or upon the adoption of CECL for loans previously classified as PCI, as PCD loans are no longer recorded net of a credit-related acquisition adjustment.

(2)

See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

(3)

Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.

(4)

Adverse rated performing loans excludes accruing TDRs.

(5)

This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans.

 

 

NPAs represented 1.11% of total loans and foreclosed assets at September 30, 2020 compared to 1.09% and 0.85% at June 30, 2020 and September 30, 2019, respectively. Excluding the impact of PCD and PPP loans, NPAs to total loans plus foreclosed assets was 0.93% at September 30, 2020, compared to 0.87% at June 30, 2020 and 0.85% at September 30, 2019, reflective of normal fluctuations that occur on a quarterly basis.

Adverse rated performing loans increased to $707 million for the third quarter of 2020 from $450 million and $357 million at June 30, 2020 and September 30, 2019, respectively. This increase is as a result of the pandemic's impact on certain borrowers primarily focused in elevated risk sectors that the Company has determined require additional monitoring. These loans exhibit potential or well-defined weaknesses but continue to accrue interest because they are well secured, and collection of principal and interest is expected.

Charge-Off Data
(Dollar amounts in thousands)

 

 

Quarters Ended

 

 

September 30,
2020

 

% of
Total

 

June 30, 
 2020

 

% of
Total

 

September 30,
2019

 

% of
Total

Net loan charge-offs (1)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

5,470

 

 

 

34.7

 

 

$

4,735

 

 

 

36.6

 

 

$

5,532

 

 

 

60.1

 

 

Agricultural

 

265

 

 

 

1.7

 

 

118

 

 

 

0.9

 

 

439

 

 

 

4.8

 

 

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Office, retail, and industrial

 

1,339

 

 

 

8.5

 

 

3,086

 

 

 

23.9

 

 

219

 

 

 

2.4

 

 

Multi-family

 

 

 

 

 

 

9

 

 

 

0.1

 

 

(38

)

 

 

(0.4

)

 

Construction

 

4,889

 

 

 

31.1

 

 

798

 

 

 

6.2

 

 

(2

)

 

 

 

 

Other commercial real estate

 

1,753

 

 

 

11.1

 

 

19

 

 

 

0.1

 

 

(43

)

 

 

(0.5

)

 

Consumer

 

2,027

 

 

 

12.9

 

 

4,158

 

 

 

32.2

 

 

3,092

 

 

 

33.6

 

 

Total NCOs

 

$

15,743 

 

 

100.0 $12,923 100.0 $9,199 100.0 Less: NCOs on PCD loans(2)(3) (6,923) 44.0 (3,833) 29.7 — N/ATotal NCOs, excluding PCD loans(2)(3) $8,820 $9,090 $9,199 Recoveries included in total NCOs $1,795 $1,311 $2,073 Quarter-to-date(1)(4): Net loan charge-offs to average loans 0.42% 0.36% 0.29% Net loan charge-offs to average loans,
excluding PPP loans(3)(5) 0.46% 0.38% 0.29% Net loan charge-offs to average loans,
excluding PCD and PPP loans(3)(5) 0.26% 0.27% 0.29% Year-to-date(1)(4): Net loan charge-offs to average loans 0.38% 0.36% 0.31% Net loan charge-offs to average loans,
excluding PPP loans(3)(5) 0.40% 0.38% 0.31% Net loan charge-offs to average loans,
excluding PCD and PPP loans(3)(5) 0.29% 0.30% 0.31%


N/A – Not applicable.

(1)

Amounts represent charge-offs, net of recoveries.

(2)

Prior to the adoption of CECL on January 1, 2020, the portion of PCI loans deemed to be uncollectible was recorded as a reduction of the credit-related acquisition adjustment, which was netted within loans. Subsequent to adoption, an ACL on PCD loans, including those previously identified as PCI, is established as of the acquisition date and the PCD loans are no longer recorded net of a credit-related acquisition adjustment. PCD loans deemed to be uncollectible are recorded as a charge-off through the ACL.

(3)

See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

(4)

Annualized based on the actual number of days for each period presented.

(5)

This ratio excludes PPP loans that are expected to be forgiven if employee retention criteria are met and funds are used for eligible expenses. As a result, no allowance for credit losses is associated with these loans.

NCOs to average loans, annualized was 0.42%, compared to 0.36% for the second quarter of 2020 and 0.29% for the third quarter of 2019. Excluding charge-offs on PCD and the impact of PPP loans on this metric, NCOs to average loans was 0.26% for the third quarter of 2020, down from 0.27% for the second quarter of 2020 and 0.29% for the third quarter of 2019.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

Average for the Quarters Ended

September 30, 2020
Percent Change From

September 30,
2020

June 30,
2020

September 30,
2019

June 30,
2020

September 30,
2019

Demand deposits

$

5,631,355

$

5,305,109

$

3,800,569

6.1

48.2

Savings deposits

2,342,355

2,246,643

2,056,128

4.3

13.9

NOW accounts

2,744,034

2,549,088

2,483,176

7.6

10.5

Money market accounts

2,781,666

2,663,622

2,080,274

4.4

33.7

Core deposits

13,499,410

12,764,462

10,420,147

5.8

29.6

Time deposits

2,302,019

2,539,996

3,026,423

(9.4

)

(23.9

)

Total deposits

$

15,801,429

$

15,304,458

$

13,446,570

3.2

17.5

Total average deposits were $15.8 billion for the third quarter of 2020, up 3.2% from the second quarter of 2020 and 17.5% from the third quarter of 2019. Compared to both prior periods, the rise in total average deposits was impacted by higher customer balances resulting from PPP funds and other government stimuli. In addition, the increase in total average deposits compared to the second quarter of 2020 was impacted by seasonal inflows of municipal deposits and compared to the third quarter of 2019 was impacted by the deposits assumed in the Park Bank transaction in March 2020.

CAPITAL MANAGEMENT

Capital Ratios

As of

September 30,
2020

June 30,
2020

December 31,
2019

September 30,
2019

Company regulatory capital ratios:

Total capital to risk-weighted assets

14.06

%

13.70

%

12.96

%

12.62

%

Tier 1 capital to risk-weighted assets

11.48

%

11.19

%

10.52

%

10.18

%

Common equity Tier 1 ("CET1") to risk-weighted assets

9.97

%

9.70

%

10.52

%

10.18

%

Tier 1 capital to average assets

8.50

%

8.70

%

8.81

%

8.67

%

Company tangible common equity ratios(1)(2):

Tangible common equity to tangible assets

7.43

%

7.32

%

8.81

%

8.54

%

Tangible common equity to tangible assets, excluding PPP loans

7.90

%

7.77

%

8.81

%

8.54

%

Tangible common equity, excluding accumulated other comprehensive
income ("AOCI"), to tangible assets

7.30

%

7.17

%

8.82

%

8.50

%

Tangible common equity, excluding accumulated other comprehensive
income ("AOCI"), to tangible assets, excluding PPP loans

7.77

%

7.62

%

8.82

%

8.50

%

Tangible common equity to risk-weighted assets

9.84

%

9.61

%

10.51

%

10.24

%


(1)

These ratios are not subject to formal Federal Reserve regulatory guidance.

(2)

Tangible common equity ("TCE") is a non-GAAP measure that 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-GAAP Reconciliations" presented later in this release.

Total and Tier 1 capital to risk-weighted assets ratios increased compared to all prior periods primarily as a result of retained earnings and the mix of risk-weighted assets. Compared to September 30, 2019 total and Tier 1 capital ratios also benefited from the issuance of preferred stock. In addition, compared to September 30, 2019, all capital ratios were impacted by the approximately 50 basis point decrease due to the Park Bank acquisition, 15 basis point decrease due to stock repurchases, and the impact of loan growth and securities purchases on risk-weighted and average assets. The Company elected the five year CECL transition relief for regulatory capital, which retained approximately 30 basis points of CET1 and tier 1 capital at September 30, 2020.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the third quarter of 2020, which is consistent with the second quarter of 2020 and the third quarter of 2019. This dividend represents the 151st consecutive cash dividend paid by the Company since its inception in 1983.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 21, 2020 at 11 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, investor.firstmidwest.com. 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 I.D. 10148585 beginning one hour after completion of the live call until 9:00 A.M. (ET) on January 20, 2021. 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, Presentation Materials, and Additional Information Available on Website

This press release, the presentation materials to be discussed during the conference call, and the accompanying unaudited Selected Financial Information are available through the Investor Relations section of First Midwest's website at investor.firstmidwest.com.

Forward-Looking Statements

This press release, as well as any oral statements made by or on behalf of First Midwest, 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," "outlook," "predict," "project," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts or guarantees of future performance 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. First Midwest cautions you not to place undue reliance on these statements. Forward-looking statements speak only as of the date made, and First Midwest undertakes no obligation to update any forward-looking statements.

Forward-looking statements may be deemed to include, among other things, statements relating to First Midwest's future financial performance, including the related outlook for 2020, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, including the impact of certain actions and initiatives, anticipated trends in First Midwest's business, regulatory developments, acquisition transactions, estimated synergies, cost savings and financial benefits of announced and completed transactions, growth strategies, including possible future acquisitions, and the continued or potential effects of the pandemic on our business, financial condition, liquidity, loans, asset quality and results of operations. These statements are subject to certain risks, uncertainties and assumptions, including the duration, extent and severity of the pandemic, including the continued effects on our business, operations and employees, as well as on our customers and service providers, and on economies and markets more generally and other risks, uncertainties and assumptions that are discussed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in First Midwest's Annual Report on Form 10-K for the year ended December 31, 2019, and in First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). These risks and uncertainties are not exhaustive, and other sections of these reports describe additional factors that could adversely impact First Midwest's 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 EPS, adjusted, the efficiency ratio, return on average assets, adjusted, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, adjusted, noninterest expense, adjusted, tangible common equity to tangible assets, tangible common equity, excluding AOCI, to tangible assets, tangible common equity to risk-weighted assets, return on average common equity, adjusted, return on average tangible common equity, return on average tangible common equity, adjusted, non-accrual loans, excluding PCD loans, 30-89 days past due loans, excluding PCD loans, non-accrual loans to total loans, excluding PPP loans, non-accrual loans to total loans, excluding PCD and PPP loans, NPLs to total loans, excluding PPP loans, NPLs to total loans, excluding PCD and PPP loans, NPAs to total loans plus foreclosed assets, excluding PPP loans, NPAs to total loans plus foreclosed assets, excluding PCD and PPP loans, NCOs, excluding PCD loans, NCOs to average loans, excluding PPP loans, NCOs to average loans, excluding PCD and PPP loans, and pre-tax, pre-provision earnings, adjusted.

The Company presents EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity, all adjusted for certain significant transactions. These transactions include optimization costs (third quarter of 2020), swap termination costs (third quarter of 2020) acquisition and integration related expenses associated with completed and pending acquisitions (all periods), net securities gains (losses) (third and first quarters of 2020), and Delivering Excellence implementation costs (all periods in 2019). Management believes excluding these transactions from EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics may be 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 may enhance comparability for peer comparison purposes.

Income tax expense, provision for loan losses, and the certain significant transactions listed above are excluded from the calculation of pre-tax, pre-provision earnings, adjusted due to the fluctuation in income before income tax and the level of provision for loan losses required based on the estimated impact of the pandemic on the ACL. Management believes pre-tax, pre-provision earnings, adjusted may be useful in assessing the Company's underlying operational performance and their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The Company presents noninterest expense, adjusted, which excludes optimization costs, acquisition and integration related expenses, and Delivering Excellence implementation costs. Management believes that excluding these items from noninterest expense may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and 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. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. 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 may enhance comparability for peer comparison purposes. In addition, management believes that presenting tax-equivalent net interest margin, adjusted, may enhance comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate based on the size of each acquisition, as well as from period to period.

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

The Company presents non-accrual loans, 30-89 days past due loans, non-accrual loans to total loans, NPLs to total loans, NPAs to total loans plus foreclosed assets, NCOs, and NCOs to average loans, all excluding PCD and/or PPP loans. Management believes excluding PCD and PPP loans is useful as it facilitates better comparability between periods. Prior to the adoption of CECL on January 1, 2020, PCI loans with an accretable yield were considered current and were not included in past due and non-accrual loan totals and the portion of PCI loans deemed to be uncollectible was recorded as a reduction of the credit-related acquisition adjustment, which was netted within loans. Subsequent to adoption, PCD loans, including those previously classified as PCI, are included in past due and non-accrual loan totals and an ACL on PCD loans is established as of the acquisition date and the PCD loans are no longer recorded net of a credit-related acquisition adjustment. PCD loans deemed to be uncollectible are recorded as a charge-off through the ACL. The Company began originating PPP loans during the second quarter of 2020 and the loans are expected to be forgiven by the SBA if the applicable criteria are met. Additionally, management believes excluding PCD and PPP loans from these metrics may enhance comparability for peer comparison purposes.

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. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. 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 First Midwest

First Midwest (NASDAQ: FMBI) is a relationship-focused financial institution and one of the largest independent publicly traded bank holding companies based on assets headquartered in Chicago and the Midwest, with approximately $21 billion of assets and an additional $13 billion of assets under management. First Midwest Bank and First Midwest's other affiliates provide a full range of commercial, treasury management, equipment leasing, consumer, wealth management, trust and private banking products and services. First Midwest operates branches and other locations throughout metropolitan Chicago, southeast Wisconsin, northwest Indiana, eastern Iowa and other markets in the Midwest. Visit First Midwest at www.firstmidwest.com.

CONTACTS:

Investors
Patrick S. Barrett
EVP, Chief Financial Officer
708.831.7231
pat.barrett@firstmidwest.com

Media
Maurissa Kanter
SVP, Director of Corporate Communications
708.831.7345
maurissa.kanter@firstmidwest.com

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.

Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)

As of

September 30,

June 30,

March 31,

December 31,

September 30,

2020

2020

2020

2019

2019

Period-End Balance Sheet

Assets

Cash and due from banks

$

254,212

$

304,445

$

252,138

$

214,894

$

273,613

Interest-bearing deposits in other banks

936,528

637,856

229,474

84,327

202,054

Equity securities, at fair value

55,021

43,954

40,098

42,136

40,723

Securities available-for-sale, at fair value

3,279,884

3,435,862

3,382,865

2,873,386

2,905,738

Securities held-to-maturity, at amortized cost

22,193

19,628

19,825

21,997

22,566

FHLB and FRB stock

138,120

148,512

154,357

115,409

112,845

Loans:

Commercial and industrial

4,635,571

4,789,556

5,064,295

4,481,525

4,570,361

Agricultural

377,466

381,124

393,063

405,616

417,740

Commercial real estate:

Office, retail, and industrial

1,950,406

2,020,318

2,092,097

1,848,718

1,892,877

Multi-family

868,293

874,861

918,944

856,553

817,444

Construction

631,607

687,063

661,363

593,093

637,256

Other commercial real estate

1,452,994

1,475,937

1,415,892

1,383,708

1,425,292

PPP loans

1,196,538

1,179,403

Home equity

827,746

892,867

973,658

851,454

833,955

1-4 family mortgages

2,287,555

2,175,322

1,957,037

1,927,078

1,686,967

Installment

425,012

457,207