First Midwest Bancorp, Inc. Announces 2020 Fourth Quarter and Full Year Results

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First Midwest Bancorp, Inc.
·25 min read
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CHICAGO, Jan. 26, 2021 (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 fourth quarter and full year of 2020. Net income applicable to common shares for the fourth quarter of 2020 was $37.2 million, or $0.33 per diluted common share, compared to $23.4 million, or $0.21 per diluted common share, for the third quarter of 2020, and $51.7 million, or $0.47 per diluted common share, for the fourth quarter of 2019. For the full year of 2020, the Company reported net income applicable to common shares of $97.8 million, or $0.87 per diluted common share, compared to $198.1 million, or $1.82 per diluted common share, for the year ended December 31, 2019.

Results for the fourth quarter and full year of 2020 were impacted by balance sheet and retail optimization strategies, as well as income tax benefits. For the full year 2020, the COVID-19 pandemic (the "pandemic"), including governmental responses to it, impacted performance, resulting in higher provision for loan losses, as well as lower net interest and noninterest income. In addition, securities gains impacted the full year of 2020. 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 FOURTH QUARTER HIGHLIGHTS

  • Generated EPS of $0.33, up 57% compared to the third quarter of 2020, reflective of lower credit costs, higher revenues, and income tax benefits; down 30% from the fourth quarter of 2019 due to the impact of the pandemic and optimization costs.

    • EPS, adjusted(1) of $0.43, up 30% from the third quarter of 2020 and down 16% from the fourth quarter of 2019.

  • Reported pre-tax, pre-provision earnings, adjusted(1) of $79 million, up 10% compared to third quarter 2020 due to:

    • Net interest income of $148 million at a net margin of 3.14%, up 4% and 19 basis points ("bps"), respectively, reflective of Paycheck Protection Program ("PPP") loan forgiveness.

    • Fee-based revenues up 10% due to record wealth management fees and record mortgage banking income.

  • Stable credit performance compared to the third quarter of 2020, risk rating migration as expected:

    • Net loan charge-offs ("NCOs") of 0.12%, down 14 bps excluding purchased credit deteriorated ("PCD") and PPP loans.

    • Allowance for credit losses ("ACL") of 1.67% of total loans, consistent with the prior quarter.

    • Non-performing assets ("NPAs") to total loans plus foreclosed assets of 1.11%, consistent with the prior quarter.

  • Grew loans to nearly $14 billion, up 4% and 9% from the prior quarter and prior year, excluding PPP.

  • Generated 118 basis points of total capital during 2020, ending the year at 14.14% of risk-weighted assets, benefiting from the issuance of $230.5 million of 7.0% fixed rate preferred stock.

"The best of First Midwest has been on display in what has been an unprecedented and turbulent period for our country," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "While the year's financial performance was impacted by the severe economic conditions caused by both the rapid onset and the magnitude of the pandemic, I am extremely proud of our 2,100 colleagues, who represent First Midwest each day. Amid the demands of a global health crisis, they were able to be agile, resilient and successfully pivot within our dramatically changed operating environment, working tirelessly to help support our clients, communities, and each other."

Mr. Scudder continued, "Importantly, earnings momentum for the quarter showed continued improvement, reflecting higher revenue, lower credit costs and controlled expenses. The quarter also saw the benefit of efforts undertaken to better position our balance sheet and efficiently manage our business to navigate today's low rate environment."

Mr. Scudder concluded, "As we look forward, we expect economic recovery to continue in 2021, complemented by COVID-19 vaccinations and execution of the federal government's fiscal policy. As these unfold, we remain centered on our collective drive to help our clients achieve financial success. While challenges certainly remain, times such as these also present an opportunity to build on that drive, leveraging our financial strength to best serve the needs of our clients and communities, as well as grow and enhance the value of our franchise."

OPTIMIZATION STRATEGIES

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 reflect First Midwest's commitment to best meet the evolving needs and preferences of its clients and resulted in pre-tax costs of $18.4 million and $1.5 million for the third and fourth quarters of 2020, respectively. These costs are associated with valuation adjustments related to locations identified for closure due to their close proximity to another branch, modernization of our ATM network, advisory fees, employee severance, and other expenses associated with locations identified for closure. These costs are recorded within optimization costs within noninterest expense and are expected to be earned back in approximately 2 years.

During the fourth and third quarters of 2020, the Company terminated longer term interest rate swaps with a notional amount of $510 million and $1.1 billion, respectively, as well as reduced a portion of the borrowed funds related to the terminated swaps. As a result of these transactions, $17.6 million and $14.3 million of pre-tax losses on swap terminations were recorded within noninterest income for the quarters ended December 31, 2020 and September 30, 2020, respectively. For the third quarter of 2020, the loss was offset by $14.3 million of pre-tax securities gains. In addition, the Company purchased high quality 1-4 family mortgages of approximately $600 million, net during the fourth quarter of 2020 to reallocate securities cash flows into higher yielding assets and utilize excess liquidity. These actions are expected to positively impact future net interest income along with reducing higher levels of excess liquidity.

(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.

OPERATING PERFORMANCE

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

Quarters Ended

December 31, 2020

September 30, 2020

December 31, 2019

Average Balance

Interest
Earned/
Paid

Yield/
Rate
(%)

Average
Balance

Interest
Earned/
Paid

Yield/
Rate
(%)

Average
Balance

Interest
Earned/
Paid

Yield/
Rate
(%)

Assets

Other interest-earning assets

$

1,244,999

$

930

0.30

$

1,234,948

$

799

0.26

$

204,001

$

1,223

2.38

Securities(1)

3,164,310

17,051

2.16

3,291,724

19,721

2.40

2,893,856

19,989

2.76

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

123,287

1,342

4.35

150,033

976

2.60

117,994

881

2.99

Loans, excluding PPP loans(1)

13,335,154

126,474

3.77

13,558,857

131,680

3.86

12,753,436

155,863

4.85

PPP loans(1)

1,013,511

15,195

5.96

1,194,808

7,001

2.33

Total Loans(1)

14,348,665

141,669

3.93

14,753,665

138,681

3.74

12,753,436

155,863

4.85

Total interest-earning assets(1)

18,881,261

160,992

3.39

19,430,370

160,177

3.28

15,969,287

177,956

4.43

Cash and due from banks

252,268

284,730

241,616

Allowance for loan losses

(246,278

)

(243,667

)

(112,623

)

Other assets

1,995,074

2,055,262

1,790,878

Total assets

$

20,882,325

$

21,526,695

$

17,889,158


Liabilities and Stockholders' Equity

Savings deposits

$

2,436,930

109

0.02

$

2,342,355

104

0.02

$

2,044,386

220

0.04

NOW accounts

2,774,989

277

0.04

2,744,034

307

0.04

2,291,667

2,172

0.38

Money market deposits

2,923,881

694

0.09

2,781,666

724

0.10

2,178,518

3,980

0.72

Time deposits

2,047,260

3,131

0.61

2,302,019

5,702

0.99

3,033,903

13,554

1.77

Borrowed funds

1,661,731

4,158

1.00

2,436,922

6,021

0.98

1,559,326

4,579

1.17

Senior and subordinated debt

234,669

3,482

5.90

234,464

3,498

5.94

233,848

3,740

6.35

Total interest-bearing liabilities

12,079,460

11,851

0.39

12,841,460

16,356

0.51

11,341,648

28,245

0.99

Demand deposits

5,753,600

5,631,355

3,862,157

Total funding sources

17,833,060

0.26

18,472,815

0.35

15,203,805

0.74

Other liabilities

373,854

378,786

326,156

Stockholders' equity

2,675,411

2,675,094

2,359,197

Total liabilities and
stockholders' equity

$

20,882,325

$

21,526,695

$

17,889,158

Tax-equivalent net interest
income/margin(1)

149,141

3.14

143,821

2.95

149,711

3.72

Tax-equivalent adjustment

(1,030

)

(1,092

)

(1,352

)

Net interest income (GAAP)(1)

$

148,111

$

142,729

$

148,359

Impact of acquired loan accretion(1)

$

7,603

0.16

$

7,960

0.16

$

9,657

0.24

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

$

141,538

2.98

$

135,861

2.79

$

140,054

3.48


(1)

Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax 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 fourth quarter of 2020 increased by 3.8% from the third quarter of 2020 and was consistent with the fourth quarter of 2019. Net interest income compared to both prior periods was impacted by an increase in interest income and fees on PPP loans and lower cost of funds, partially offset by lower yields on loans and securities. Compared to the fourth quarter of 2019, net interest income was also impacted by growth in loans and securities as well as the acquisition of interest-earning assets from the Park Bank transaction that closed in the first quarter of 2020.

Acquired loan accretion contributed $7.6 million, $8.0 million, and $9.7 million to net interest income for the fourth quarter of 2020, the third quarter of 2020, and the fourth quarter of 2019, respectively.

Tax-equivalent net interest margin for the current quarter was 3.14%, increasing by 19 basis points from the third quarter of 2020 and decreasing 58 basis points from the fourth quarter of 2019. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 2.98%, up 19 basis points from the third quarter of 2020 and down 50 basis points from the fourth quarter of 2019. Compared to the third quarter of 2020 tax-equivalent net interest margin increased primarily due to accelerated income due to the forgiveness of approximately $410 million of PPP loans partly offset by lower cost of funds and lower yields on loans. Tax equivalent net interest income decreased compared to the fourth quarter of 2019 as a result of lower interest rates on loans and securities, as well as a higher balance of other interest earnings assets due to higher demand deposits as a result of PPP loan funds and other government stimuli, partially offset by lower cost of funds and higher yields on PPP loans.

For the fourth quarter of 2020, total average interest-earning assets decreased by $549.1 million from the third quarter of 2020 and increased $2.9 billion from the fourth quarter of 2019. The decrease compared to the third quarter of 2020 resulted primarily from a decrease in average loans and securities, while the increase compared to the fourth quarter of 2019 was driven primarily by PPP loans, a higher balance of other interest-earning assets, and interest-earning assets acquired in the Park Bank transaction.

Total average funding sources for the fourth quarter of 2020 decreased by $639.8 million from the third quarter of 2020 and increased $2.6 billion from the fourth quarter of 2019. The decrease compared to the third quarter of 2020 resulted primarily from lower levels of borrowed funds. Compared to the fourth quarter of 2019, the increase was driven primarily by deposit growth due to higher customer balances resulting from PPP funds and other government stimuli, as well as deposits assumed in the Park Bank transaction.

Noninterest Income Analysis
(Dollar amounts in thousands)

Quarters Ended

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Wealth management fees

$

13,548

$

12,837

$

12,484

5.5

8.5

Service charges on deposit accounts

10,811

10,342

12,664

4.5

(14.6

)

Mortgage banking income

9,191

6,659

4,134

38.0

122.3

Card-based fees, net

4,530

4,472

4,512

1.3

0.4

Capital market products income

659

886

6,337

(25.6

)

(89.6

)

Other service charges, commissions, and fees

2,993

2,823

2,946

6.0

1.6

Total fee-based revenues

41,732

38,019

43,077

9.8

(3.1

)

Other income

3,550

2,523

3,419

40.7

3.8

Swap termination costs

(17,567

)

(14,285

)

23.0

N/M

Net securities gains

14,328

(100.0

)

N/M

Total noninterest income

$

27,715

$

40,585

$

46,496

(31.7

)

(40.4

)

N/M – Not meaningful.

Total noninterest income of $27.7 million was down by 31.7% and 40.4% from the third quarter of 2020 and the fourth quarter of 2019, respectively. Excluding the impact of swap termination costs and net securities gains, total noninterest income of $45.3 million increased 11.7% and decreased 2.6% compared to the third quarter of 2020 and fourth quarter of 2019, respectively. Record wealth management fees resulted from a higher market environment and continued sales of fiduciary and investment advisory services to new and existing customers compared to both prior periods. The decrease in service charges on deposit accounts compared to the fourth quarter of 2019 resulted from the impact of lower transaction volumes due to the pandemic.

Record mortgage banking income for the fourth quarter of 2020 resulted from sales of $275.6 million of 1-4 family mortgage loans in the secondary market, compared to $251.8 million in the third quarter of 2020 and $173.0 million in the fourth quarter of 2019. In addition, mortgage banking income for the fourth quarter of 2020 increased compared to both prior periods due to increases in market pricing on sales of 1-4 family mortgage loans.

Capital market products income decreased compared to both prior periods as a result of continuing lower levels of sales to corporate clients in light of market conditions. Other income increased compared to the third quarter of 2020 primarily due to higher fair value adjustments on equity securities as a result of the higher market environment and benefit settlements on bank-owned life insurance.

During the fourth and third quarters of 2020, the Company terminated longer term interest rate swaps with notional amounts of $510 million and $1.1 billion, respectively, due to excess liquidity and in response to market conditions. As a result of these transactions, $17.6 million and $14.3 million of pre-tax losses on swap terminations were recorded in the same periods, respectively. At the same time as the swap terminations during the third quarter of 2020, the Company liquidated $160 million of securities, which resulted in $14.3 million of pre-tax securities gains to fully offset the loss on swap terminations.

Noninterest Expense Analysis
(Dollar amounts in thousands)

Quarters Ended

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Salaries and employee benefits:

Salaries and wages

$

55,950

$

53,385

$

53,043

4.8

5.5

Retirement and other employee benefits

10,430

11,349

9,930

(8.1

)

5.0

Total salaries and employee benefits

66,380

64,734

62,973

2.5

5.4

Net occupancy and equipment expense(1)

14,002

13,736

12,940

1.9

8.2

Technology and related costs(1)

11,005

10,416

7,429

5.7

48.1

Professional services(1)

8,424

7,325

10,949

15.0

(23.1

)

Advertising and promotions

1,850

2,688

2,896

(31.2

)

(36.1

)

Net other real estate owned ("OREO") expense

106

544

1,080

(80.5

)

(90.2

)

Other expenses

12,851

12,374

13,000

3.9

(1.1

)

Optimization costs

1,493

18,376

(91.9

)

100.0

Acquisition and integration related expenses

1,860

881

5,258

111.1

(64.6

)

Delivering Excellence implementation costs

223

(100.0

)

Total noninterest expense

$

117,971

$

131,074

$

116,748

(10.0

)

1.0

Optimization costs

(1,493

)

(18,376

)

(91.9

)

(100.0

)

Acquisition and integration related expenses

(1,860

)

(881

)

(5,258

)

111.1

(64.6

)

Delivering Excellence implementation costs

(223

)

(100.0

)

Total noninterest expense, adjusted(2)

$

114,618

$

111,817

$

111,267

2.5

3.0


(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 for the fourth quarter of 2020 decreased 10.0% compared to the third quarter of 2020 and increased 1.0% compared to the fourth quarter of 2019. Noninterest expense for all periods presented was impacted by acquisition and integration related expenses. In addition, the fourth and third quarters of 2020 were impacted by optimization costs and the fourth quarter of 2019 was impacted by costs related to our Delivering Excellence initiative. Excluding these items, noninterest expense for the fourth quarter of 2020 was $114.6 million, up 2.5% and 3.0% from the third quarter of 2020 and fourth quarter of 2019, respectively. Overall, noninterest expense, adjusted, to average assets, excluding PPP loans was 2.29% for the fourth quarter of 2020, up 5% and down 7% from the third quarter of 2020 and fourth quarter of 2019, respectively.

Operating costs associated with the Park transaction completed in the first quarter of 2020 contributed to the increase in noninterest expense compared to the fourth 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.

The increase in salaries and employee benefits compared to the third quarter was driven primarily by higher compensation accruals and equity compensation valuations. Compared to the fourth quarter of 2019, the increase in salaries and employee benefits was driven by merit increases, partially offset by lower compensation accruals. In addition, salaries and employee benefits compared to both prior periods was impacted by higher commissions resulting from sales of 1-4 family mortgage loans in the secondary market and higher levels of deferred loan salaries. Occupancy and equipment costs increased compared to the fourth quarter of 2019 primarily due to expenses resulting from the pandemic. Technology and related costs compared to the fourth quarter of 2019 was impacted by investments in technology, including the origination of PPP loans. Professional services for the fourth quarter of 2019 were elevated due to process enhancements and services associated with organizational growth. Advertising and promotions expense decreased compared to both prior periods due to the timing of certain costs related to marketing campaigns. The decrease in net OREO expense compared to both prior periods was due mainly to sales of properties at gains.

Optimization costs of $1.5 million and $18.4 million for the fourth quarter and third quarter of 2020, respectively, primarily include valuation adjustments related to locations identified for closure, modernization of our ATM network, advisory fees, employee severance, and other expenses associated with locations identified for closure.

Acquisition and integration related expenses for all periods resulted from the acquisition of Park Bank. In addition, acquisition and integration related expenses for the fourth quarter of 2019 also resulted from the acquisition of Bridgeview, which closed in the second quarter of 2019.

INCOME TAXES

The Company's effective tax rate for the fourth quarter of 2020 was 12.1% compared to 23.9% for both the third quarter of 2020 and the fourth quarter of 2019. The Company's effective tax rate for the fourth quarter of 2020 decreased compared to both prior periods due primarily to $3.6 million of income tax benefits resulting from deferred tax asset adjustments, as well as the finalization of the prior year returns and the expiration of the statute of limitations on uncertain tax positions.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

As of

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Commercial and industrial

$

4,578,254

$

4,635,571

$

4,481,525

(1.2

)

2.2

Agricultural

364,038

377,466

405,616

(3.6

)

(10.3

)

Commercial real estate:

Office, retail, and industrial

1,861,768

1,950,406

1,848,718

(4.5

)

0.7

Multi-family

872,813

868,293

856,553

0.5

1.9

Construction

612,611

631,607

593,093

(3.0

)

3.3

Other commercial real estate

1,481,976

1,452,994

1,383,708

2.0

7.1

Total commercial real estate

4,829,168

4,903,300

4,682,072

(1.5

)

3.1

Total corporate loans, excluding PPP
loans

9,771,460

9,916,337

9,569,213

(1.5

)

2.1

PPP loans

785,563

1,196,538

(34.3

)

N/M

Total corporate loans

10,557,023

11,112,875

9,569,213

(5.0

)

10.3

Home equity

761,725

827,746

851,454

(8.0

)

(10.5

)

1-4 family mortgages

3,022,413

2,287,555

1,927,078

32.1

56.8

Installment

410,071

425,012

492,585

(3.5

)

(16.8

)

Total consumer loans

4,194,209

3,540,313

3,271,117

18.5

28.2

Total loans

$

14,751,232

$

14,653,188

$

12,840,330

0.7

14.9

N/M – Not meaningful.

Total loans includes loans originated under the PPP loan program beginning in the second quarter of 2020, which totaled $785.6 million and $1.2 billion as of December 31, 2020 and September 30, 2020, respectively. Excluding these loans, total loans grew by 3.8% from September 30, 2020 and 8.8% from December 31, 2019. Excluding PPP loans and loans acquired in the Park Bank transaction in the first quarter of 2020, total loans grew by 2.5% from December 31, 2019. Compared to December 31, 2019, 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. Production increased in the fourth quarter of 2020 compared to the third quarter of 2020; however, this continued to be more than offset by excess borrower liquidity and paydowns as a result of the pandemic.

Growth in consumer loans compared to both prior periods resulted primarily from purchases of high-quality 1-4 family mortgages, as well as organic growth.

Allowance for Credit Losses
(Dollar amounts in thousands)

As of

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Allowance for credit losses

ACL, excluding PCD loans

$

215,915

$

209,988

$

109,222

2.8

97.7

PCD loan ACL

31,127

36,885

(15.6

)

100.0

Total ACL

$

247,042

$

246,873

$

109,222

0.1

126.2

Provision for credit losses

$

10,507

$

15,927

$

9,594

(34.0

)

9.5

ACL to total loans(1)

1.67

%

1.68

%

0.85

%

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

1.77

%

1.83

%

0.85

%

ACL to non-accrual loans

173.33

%

171.95

%

132.76

%


(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, resulting in $1.2 billion of loans originated in the second and third quarters of 2020 with a total outstanding balance of $785.6 million as of December 31, 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 $247.0 million or 1.67% of total loans as of December 31, 2020, consistent with September 30, 2020 and increasing $137.8 million compared to December 31, 2019. Excluding the impact of PPP loans, ACL to total loans was 1.77% as of December 31, 2020, down from 1.83% and up from 0.85% as of September 30, 2020 and December 31, 2019, respectively. The decrease from September 30, 2020 reflects net charge-offs on PCD loans that previously had an ACL established upon acquisition. Compared to December 31, 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

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Asset quality

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

$

109,957

$

103,582

$

82,269

6.2

33.7

Non-accrual PCD loans(1)

32,568

39,990

(18.6

)

N/M

Non-accrual loans

142,525

143,572

82,269

(0.7

)

73.2

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

4,395

3,781

5,001

16.2

(12.1

)

Total non-performing loans, ("NPLs")

146,920

147,353

87,270

(0.3

)

68.4

Accruing troubled debt restructurings
("TDRs")

813

841

1,233

(3.3

)

(34.1

)

Foreclosed assets(3)

16,671

15,299

20,458

9.0

(18.5

)

Total NPAs

$

164,404

$

163,493

$

108,961

0.6

50.9

30-89 days past due loans(1)

$

40,656

$

21,551

$

31,958

88.7

27.2

Special mention loans(4)

$

409,083

$

395,295

$

188,703

3.5

116.8

Substandard loans(4)

357,219

311,430

188,811

14.7

89.2

Total performing loans classified as
substandard and special mention(4)

$

766,302

$

706,725

$

377,514

8.4

103.0

Non-accrual loans to total loans:

Non-accrual loans to total loans

0.97

%

0.98

%

0.64

%

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

1.02

%

1.07

%

0.64

%

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

0.80

%

0.78

%

0.64

%

Non-performing loans to total loans:

NPLs to total loans

1.00

%

1.01

%

0.68

%

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

1.05

%

1.10

%

0.68

%

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

0.83

%

0.81

%

0.68

%

Non-performing assets to total loans plus foreclosed assets:

NPAs to total loans plus foreclosed assets

1.11

%

1.11

%

0.85

%

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

1.18

%

1.21

%

0.85

%

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

0.96

%

0.93

%

0.85

%

Performing loans classified as substandard and special mention to corporate loans:

Performing loans classified as substandard and
special mention to corporate loans(4)

7.26

%

6.36

%

3.95

%

Performing loans classified as substandard and
special mention to corporate loans, excluding
PPP loans(4)(5)

7.84

%

7.13

%

3.95

%

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)

Performing loans classified as substandard and special mention 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 December 31, 2020 compared to 1.11% and 0.85% at September 30, 2020 and December 31, 2019, respectively. Excluding the impact of PCD and PPP loans, NPAs to total loans plus foreclosed assets was 0.96% at December 31, 2020, compared to 0.93% at September 30, 2020 and 0.85% at December 31, 2019, reflective of normal fluctuations that occur on a quarterly basis.

Performing loans classified as substandard and special mention increased to $766.3 million for the fourth quarter of 2020 up from $706.7 million and $377.5 million at September 30, 2020 and December 31, 2019, respectively. This increase is 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

December 31,
2020

% of
Total

September 30,
2020

% of
Total

December 31,
2019

% of
Total

Net loan charge-offs(1)

Commercial and industrial

$

3,536

33.6

$

5,470

34.7

$

6,799

64.2

Agricultural

1,779

16.9

265

1.7

15

0.1

Commercial real estate:

Office, retail, and industrial

1,701

16.1

1,339

8.5

256

2.4

Multi-family

19

0.2

(439

)

(4.1

)

Construction

140

1.3

4,889

31.1

3

Other commercial real estate

916

8.7

1,753

11.1

13

0.1

Consumer

2,448

23.2

2,027

12.9

3,953

37.3

Total net loan charge-offs

$

10,539

100.0

$

15,743

100.0

$

10,600

100.0

Less: NCOs on PCD loans(2)(3)

(6,488

)

61.6

(6,923

)

44.0

N/A

Total NCOs, excluding PCD
loans(2)(3)

$

4,051

$

8,820

$

10,600

Total recoveries included above

$

2,588

$

1,795

$

2,135

Quarter-to-Date(1)(4):

Net charge-offs to average loans

0.29

%

0.42

%

0.33

%

Net charge-offs to average loans,
excluding PPP loans(3)(5)

0.31

%

0.46

%

0.33

%

Net charge-offs to average loans,
excluding PCD and PPP loans(3)(5)

0.12

%

0.26

%

0.33

%

Year-to-Date(1)(4):

Net charge-offs to average loans

0.36

%

0.38

%

0.31

%

Net charge-offs to average loans,
excluding PPP loans(3)(5)

0.38

%

0.40

%

0.31

%

Net charge-offs to average loans,
excluding PCD and PPP loans(3)(5)

0.24

%

0.29

%

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. As a result, no allowance for credit losses is associated with these loans.

Net loan charge-offs to average loans, annualized, were 0.29% for the fourth quarter of 2020, compared to 0.42% for the third quarter of 2020 and 0.33% for the fourth quarter of 2019. Excluding charge-offs on PCD and PPP loans on this metric, NCOs to average loans was 0.12% for the fourth quarter of 2020, down from 0.26% for the third quarter of 2020 and 0.33% for the fourth quarter of 2019. For the year ended December 31, 2020, net loan charge-offs to average loans was 0.36% compared to 0.31% for the same period in 2019. Excluding charge-offs on PCD and PPP loans on this metric for 2020, NCOs to average loans was 0.24% for 2020.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

Average for Quarters Ended

December 31, 2020
Percent Change From

December 31,
2020

September 30,
2020

December 31,
2019

September 30,
2020

December 31,
2019

Demand deposits

$

5,753,600

$

5,631,355

$

3,862,157

2.2

49.0

Savings deposits

2,436,930

2,342,355

2,044,386

4.0

19.2

NOW accounts

2,774,989

2,744,034

2,291,667

1.1

21.1

Money market accounts

2,923,881

2,781,666

2,178,518

5.1

34.2

Core deposits

13,889,400

13,499,410

10,376,728

2.9

33.9

Time deposits

2,047,260

2,302,019

3,033,903

(11.1

)

(32.5

)

Total deposits

$

15,936,660

$

15,801,429

$

13,410,631

0.9

18.8

Total average deposits were $15.9 billion for the fourth quarter of 2020, up modestly from the third quarter of 2020 and up 18.8% from the fourth quarter of 2019. The rise in total average deposits compared to both prior periods was impacted by higher customer balances resulting from PPP funds and other government stimuli. Compared to the third quarter of 2020, the increase in total average deposits was partially offset by seasonal outflows of municipal deposits. In addition, the increase in total average deposits compared to the fourth quarter of 2019 was also driven by deposits assumed in the Park Bank transaction during the first quarter of 2020.

CAPITAL MANAGEMENT

Capital Ratios

As of

December 31,
2020

September 30,
2020

December 31,
2019

Company regulatory capital ratios:

Total capital to risk-weighted assets

14.14

%

14.06

%

12.96

%

Tier 1 capital to risk-weighted assets

11.55

%

11.48

%

10.52

%

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

10.06

%

9.97

%

10.52

%

Tier 1 capital to average assets

8.91

%

8.50

%

8.81

%

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

Tangible common equity to tangible assets

7.67

%

7.43

%

8.81

%

Tangible common equity to tangible assets, excluding PPP loans

7.98

%

7.90

%

8.81

%

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

7.54

%

7.30

%

8.82

%

Tangible common equity, excluding AOCI, to tangible assets, excluding
PPP loans

7.85

%

7.77

%

8.82

%

Tangible common equity to risk-weighted assets

9.93

%

9.84

%

10.51

%


(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 December 31, 2019, total and Tier 1 capital ratios also benefited from the issuance of preferred stock. In addition, compared to December 31, 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 December 31, 2020.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the fourth quarter of 2020, which is consistent with third quarter of 2020 and the fourth quarter of 2019. This dividend represents the 152nd 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, January 27, 2021 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, 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. 10151130 beginning one hour after completion of the live call until 8:00 A.M. (ET) on April 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 2021, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit allowances 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 or completed transactions, growth strategies, including possible future acquisitions, and the continued effects of the pandemic on our business, financial condition, liquidity, capital, 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, and the pandemic's continued effects on our business, operations and employees, as well as on our clients 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, 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, performing loans classified as substandard and special mention to corporate loans, excluding 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 swap termination costs (fourth and third quarters of 2020), income tax benefits (fourth quarter of 2020), optimization costs (fourth and third quarters 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). In addition, net OREO expense is excluded from the calculation of the efficiency ratio. 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, non-accrual loans to total loans, NPLs to total loans, NPAs to total loans plus foreclosed assets, performing loans classified as substandard and special mention to corporate loans, excluding PPP loans, 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 the Company

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 $14 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

December 31,

September 30,

June 30,

March 31,

December 31,

2020

2020

2020

2020

2019

Period-End Balance Sheet

Assets

Cash and due from banks

$

196,364

$

254,212

$

304,445

$

252,138

$

214,894

Interest-bearing deposits in other banks

920,880

936,528

637,856

229,474

84,327

Equity securities, at fair value

76,404

55,021

43,954

40,098

42,136

Securities available-for-sale, at fair value

3,096,408

3,279,884

3,435,862

3,382,865

2,873,386

Securities held-to-maturity, at amortized cost

12,071

22,193

19,628

19,825

21,997

FHLB and FRB stock

117,420

138,120

148,512

154,357

115,409

Loans:

Commercial and industrial

4,578,254

4,635,571

4,789,556

5,064,295

4,481,525

Agricultural

364,038

377,466

381,124

393,063

405,616

Commercial real estate:

Office, retail, and industrial

1,861,768

1,950,406

2,020,318

2,092,097

1,848,718

Multi-family

872,813

868,293

874,861

918,944

856,553

Construction

612,611

631,607

687,063

661,363

593,093

Other commercial real estate

1,481,976

1,452,994

1,475,937

1,415,892

1,383,708

PPP loans

785,563

1,196,538

1,179,403

Home equity

761,725

827,746

892,867

973,658

851,454

1-4 family mortgages

3,022,413

2,287,555

2,175,322

1,957,037

1,927,078

Installment

410,071

425,012

457,207

488,668

492,585

Total loans

14,751,232

14,653,188

14,933,658

13,965,017

12,840,330

Allowance for loan losses

(239,017

)

(239,048

)

(240,052

)

(219,948

)

(108,022

)

Net loans

14,512,215

14,414,140

14,693,606

13,745,069

12,732,308

OREO

8,253

6,552

9,947

9,814

8,750

Premises, furniture, and equipment, net

132,045

132,267

143,001

145,844

147,996

Investment in bank-owned life insurance ("BOLI")

301,101

300,429

299,649

298,827

296,351

Goodwill and other intangible assets

932,764

935,801

940,182

935,241

875,262

Accrued interest receivable and other assets

532,753

612,996

568,239

539,748

437,581

Total assets

$

20,838,678

$

21,088,143

$

21,244,881

$

19,753,300

$

17,850,397

Liabilities and Stockholders' Equity

Noninterest-bearing deposits

$

5,797,899

$

5,555,735

$

5,602,016

$

4,222,523

$

3,802,422

Interest-bearing deposits

10,214,565

10,215,838

10,055,640

9,876,427

9,448,856

Total deposits

16,012,464

15,771,573

15,657,656

14,098,950

13,251,278

Borrowed funds

1,546,414

1,957,180

2,305,195

2,648,210

1,658,758

Senior and subordinated debt

234,768

234,563

234,358

234,153

233,948

Accrued interest payable and other liabilities

355,026

460,656

391,461

336,280

335,620

Stockholders' equity

2,690,006

2,664,171

2,656,211

2,435,707

2,370,793

Total liabilities and stockholders' equity

$

20,838,678

$

21,088,143

$

21,244,881

$

19,753,300

$

17,850,397

Stockholders' equity, excluding AOCI

$

2,663,627

$

2,638,422

$

2,627,484

$

2,400,384

$

2,372,747

Stockholders' equity, common

2,459,506

2,433,671

2,425,711

2,435,707

2,370,793


First Midwest Bancorp, Inc.

Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)

Quarters Ended

Years Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

December 31,

2020

2020

2020

2020

2019

2020

2019

Income Statement

Interest income

$

159,962

$

159,085

$

162,044

$

170,227

$

176,604

$

651,318

$

698,739

Interest expense

11,851

16,356

16,810

26,652

28,245

71,669

110,257

Net interest income

148,111

142,729

145,234

143,575

148,359

579,649

588,482

Provision for loan losses

10,507

15,927

32,649

39,532

9,594

98,615

44,027

Net interest income after
provision for loan losses

137,604

126,802

112,585

104,043

138,765

481,034

544,455

Noninterest Income

Wealth management fees

13,548

12,837

11,942

12,361

12,484

50,688

48,337

Service charges on deposit
accounts

10,811

10,342

9,125

11,781

12,664

42,059

49,424

Mortgage banking income

9,191

6,659

3,477

1,788

4,134

21,115

10,105

Card-based fees, net

4,530

4,472

3,180

3,968

4,512

16,150

18,133

Capital market products
income

659

886

694

4,722

6,337

6,961

13,931

Other service charges,
commissions, and fees

2,993

2,823

2,078

2,682

2,946

10,576

11,363

Total fee-based revenues

41,732

38,019

30,496

37,302

43,077

147,549

151,293

Other income

3,550

2,523

2,495

3,065

3,419

11,633

11,586

Swap termination costs

(17,567

)

(14,285

)

(31,852

)

Net securities gains (losses)

14,328

(1,005

)

13,323

Total noninterest
income

27,715

40,585

32,991

39,362

46,496

140,653

162,879

Noninterest Expense

Salaries and employee benefits:

Salaries and wages

55,950

53,385

52,592

49,990

53,043

211,917

197,640

Retirement and other
employee benefits

10,430

11,349

11,080

12,869

9,930

45,728

42,879

Total salaries and
employee benefits

66,380

64,734

63,672

62,859

62,973

257,645

240,519

Net occupancy and
equipment expense

14,002

13,736

15,116

14,227

12,940

57,081

51,818

Technology and related costs

11,005

10,416

9,853

8,548

7,429

39,822

27,787

Professional services

8,424

7,325

8,880

10,390

10,949

35,019

36,428

Advertising and promotions

1,850

2,688

2,810

2,761

2,896

10,109

11,561

Net OREO expense

106

544

126

420

1,080

1,196

2,436

Other expenses

12,851

12,374

14,624

12,654

13,000

52,503

47,829

Optimization costs

1,493

18,376

19,869

Acquisition and integration related expenses

1,860

881

5,249

5,472

5,258

13,462

21,860

Delivering Excellence
implementation costs

223

1,157

Total noninterest expense

117,971

131,074

120,330

117,331

116,748