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First Midwest Bancorp, Inc. Announces 2016 Third Quarter Results

ITASCA, Ill., Oct. 18, 2016 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ:FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the third quarter of 2016. Net income for the third quarter of 2016 was $28.4 million, or $0.35 per share. This compares to $25.3 million, or $0.31 per share, for the second quarter of 2016, and $23.3 million, or $0.30 per share, for the third quarter of 2015. Performance for the third and second quarters of 2016 was impacted by acquisition and integration related pre-tax expenses of $1.2 million and $618,000, respectively. In addition, a pre-tax gain of $5.5 million was recorded in the third quarter of 2016 as a result of the completion of the Company's sale-leaseback transaction announced during the quarter. Excluding these transactions, earnings per share was $0.32 for the third quarter of 2016, consistent with the second quarter of 2016.

SELECT THIRD QUARTER HIGHLIGHTS

  • Increased earnings per share to $0.35, up 13% from the second quarter of 2016 and 17% from third quarter of 2015.
  • Grew fee-based revenues to $38 million, an increase of 7% from the second quarter of 2016 and 16% from the third quarter of 2015.
  • Improved efficiency ratio (1) to 61%, consistent with the second quarter of 2016 and down from 63% for the third quarter of 2015.
  • Expanded total loans to $8 billion, up 10% annualized from June 30, 2016 and 18% from September 30, 2015.
  • Grew average core deposits to $8 billion, up 2% from the second quarter of 2016 and 12% from the third quarter of 2015.
  • Completed the Company's previously announced sale-leaseback transaction, which resulted in proceeds of $150 million and a pre-tax gain of $5.5 million in the third quarter of 2016.
  • Enhanced total capital to risk-weighted assets to 12.3%, which benefited from the issuance of $150 million of 5.875% subordinated notes.

"Performance for the quarter was once again strong," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Operating performance for the quarter reflected robust production across our sales platforms and continued focus on improving our efficiency. Measured expansion of our lending capabilities continues to provide diversified portfolio growth. Additionally, we moved to strengthen our capital foundation, enhancing our future capacity for growth."

Mr. Scudder continued, "As we look to close the year, our underlying business momentum is building and aided by the strength of our balance sheet. Our pending acquisition of Standard Bank and Trust Company remains on track and will further position us as the premier market leader in metro Chicago. As always, we remain centered on those actions which help our clients to achieve financial success, enhance the value of our franchise, and inure to the long-term benefit of our shareholders."

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

SIGNIFICANT THIRD QUARTER EVENTS

Sale-Leaseback Transaction

On September 27, 2016, the Bank completed a sale-leaseback transaction, whereby the Bank sold to Oak Street Real Estate Capital, LLC ("Oak Street"), for an aggregate cash purchase price of $150.3 million, 55 properties owned and operated by the Bank as branches. Upon the sale of the branches to Oak Street, the Bank concurrently entered into triple net lease agreements with certain affiliates of Oak Street for each of the branches sold. Subject to the right of the Bank to terminate certain of the lease agreements at the end of the eleventh year, the lease agreements have initial terms of 14 years. Each lease agreement provides the Bank with five consecutive renewal options of five years each. The sale-leaseback transaction resulted in a pre-tax gain of $88.0 million, net of transaction related expenses, of which $5.5 million was immediately recognized in earnings with the remaining $82.5 million to be accreted into income on a straight-line basis over the initial terms of the leases. The Company expects the investment of proceeds and the gain from the sale of the branches, net of occupancy expenses associated with the branches, will be modestly accretive to the Company's earnings over the initial term of the lease agreements.

Issuance of Subordinated Notes

On September 29, 2016, the Company completed the issuance and sale of $150.0 million aggregate principal amount of its 5.875% subordinated notes due 2026. Interest on the notes is payable semiannually beginning on March 29, 2017. The Company received proceeds of $146.5 million, net of underwriting discounts and commissions and issuance costs. The Company expects to use the net proceeds to repay at maturity the entire $115.0 million aggregate principal amount outstanding of its 5.875% senior notes due November 22, 2016, plus accrued interest, and for other general corporate purposes.

ACQUISITION

Standard Bancshares, Inc.

On June 28, 2016, the Company entered into a definitive agreement to acquire Standard Bancshares, Inc. ("Standard"), the holding company for Standard Bank and Trust Company. With the acquisition, the Company would acquire 35 banking offices primarily in the southwest Chicago suburbs and adjacent markets in northwest Indiana. As of June 30, 2016, Standard had total assets of approximately $2.5 billion with $2.2 billion in deposits, of which over 90% were core deposits, and $1.8 billion in loans, of which 80% were commercial-related. If the merger is completed, the merger consideration to Standard shareholders will be Company common stock, with an overall transaction value of approximately $365 million as of the date of announcement. The acquisition is expected to close in late 2016 or early 2017, subject to customary regulatory approvals and closing conditions, as well as Company and Standard shareholder approval.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
Quarters Ended
September 30, 2016 June 30, 2016 September 30, 2015
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$282,101 $472 0.67 $300,945 $426 0.57 $820,318 $645 0.31
Securities (1)1,896,195 10,752 2.27 1,721,781 10,636 2.47 1,194,711 9,559 3.20
Federal Home Loan Bank ("FHLB") and
Federal Reserve Bank ("FRB") stock
51,451 261 2.03 42,561 200 1.88 38,748 369 3.81
Loans (1)(2)8,067,900 88,500 4.36 7,883,806 87,481 4.46 6,887,611 76,328 4.40
Total interest-earning assets (1)10,297,647 99,985 3.87 9,949,093 98,743 3.99 8,941,388 86,901 3.86
Cash and due from banks150,467 154,693 132,504
Allowance for loan losses(84,088) (80,561) (73,928)
Other assets958,299 945,291 875,668
Total assets$11,322,325 $10,968,516 $9,875,632
Liabilities and Stockholders' Equity:
Interest-bearing core deposits (3)$5,090,820 1,086 0.08 $4,941,779 991 0.08 $4,465,956 931 0.08
Time deposits1,248,425 1,434 0.46 1,277,694 1,491 0.47 1,173,127 1,398 0.47
Borrowed funds605,177 1,782 1.17 461,363 1,499 1.31 168,807 928 2.18
Senior and subordinated debt166,101 2,632 6.30 162,836 2,588 6.39 201,083 3,133 6.18
Total interest-bearing liabilities7,110,523 6,934 0.39 6,843,672 6,569 0.39 6,008,973 6,390 0.42
Demand deposits (3)2,806,851 2,771,813 2,601,442
Total funding sources9,917,374 9,615,485 8,610,415
Other liabilities143,249 117,534 130,250
Stockholders' equity - common1,261,702 1,235,497 1,134,967
Total liabilities and
stockholders' equity
$11,322,325 $10,968,516 $9,875,632
Tax-equivalent net interest
income/margin (1)
93,051 3.60 92,174 3.72 80,511 3.58
Tax-equivalent adjustment (2,079) (2,193) (2,609)
Net interest income (GAAP) $90,972 $89,981 $77,902

(1) Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. For details on the calculation of tax-equivalent net interest income, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

(2) Includes loans acquired through Federal Deposit Insurance Corporation ("FDIC")-assisted transactions subject to loss sharing agreements ("covered loans"), which totaled $24.3 million, $27.2 million, and $51.2 million at September 30, 2016, June 30, 2016, and September 30, 2015, respectively.

(3) See the Deposit Composition table presented later in this release for average balance detail by category.

For the third quarter of 2016, total average interest-earning assets rose $348.6 million from the second quarter of 2016 and $1.4 billion from the third quarter of 2015. The increase from both prior periods presented resulted from organic loan growth and security purchases. In addition, the rise in average interest-earning assets compared to the third quarter of 2015 was impacted by interest-earning assets acquired in the NI Bancshares Corporation ("NI Bancshares") transaction late in the first quarter of 2016 and the Peoples Bancorp, Inc. ("Peoples") transaction late in the fourth quarter of 2015.

Average funding sources increased by $301.9 million from the second quarter of 2016 and $1.3 billion from the third quarter of 2015. Compared to the second quarter of 2016, the rise resulted primarily from the addition of $200.0 million of FHLB advances and seasonally higher levels of interest-bearing core deposits and demand deposits. Deposits acquired in the NI Bancshares and Peoples transactions and the addition of $462.5 million of FHLB advances contributed to the increase in average funding sources compared to the third quarter of 2015.

Tax-equivalent net interest margin for the current quarter was 3.60%, decreasing 12 basis points from the second quarter of 2016 and increasing 2 basis points from the third quarter of 2015. The decline in tax-equivalent net interest margin from the second quarter of 2016 was due primarily to the redeployment of the typical third quarter seasonal increase of municipal tax deposits into investments, the continued shift in the loan mix to floating rate loans, and a modest decline in acquired loan accretion. Compared to the third quarter of 2015, the increase in tax-equivalent net interest margin was driven by higher accretion on acquired loans and the maturity of $38.5 million of subordinated notes early in the second quarter of 2016, which were partially offset by the continued shift in the loan mix to floating rate loans.

Net interest income increased by 4.4% on an annualized basis from the second quarter of 2016 and 16.8% compared to the third quarter of 2015. The rise in net interest income from the second quarter of 2016 resulted primarily from growth in interest-earning assets, which more than offset the decline in margin. Compared to the third quarter of 2015, the increase in net interest income was driven primarily by organic loan growth and the acquisition of interest-earning assets from the NI Bancshares and Peoples transactions.

Acquired loan accretion contributed $3.8 million, $3.9 million, and $1.8 million to net interest income for the third quarter of 2016, the second quarter of 2016, and the third quarter of 2015, respectively.

Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
Quarters Ended September 30, 2016
Percent Change From
September 30,
2016
June 30,
2016
September 30,
2015
June 30,
2016
September 30,
2015
Service charges on deposit accounts $10,708 $10,169 $10,519 5.3 1.8
Wealth management fees 8,495 8,642 7,222 (1.7) 17.6
Card-based fees 7,332 7,592 6,868 (3.4) 6.8
Merchant servicing fees 3,319 3,170 3,207 4.7 3.5
Mortgage banking income 3,394 1,863 1,402 82.2 142.1
Other service charges, commissions, and fees 5,218 4,498 3,900 16.0 33.8
Total fee-based revenues 38,466 35,934 33,118 7.0 16.1
Net gain on sale-leaseback transaction 5,509 100.0
Net securities gains 187 23 524 713.0 (64.3)
Other income 1,691 1,865 1,372 (9.3) 23.3
Total noninterest income $45,853 $37,822 $35,014 21.2 31.0

Total fee-based revenues of $38.5 million grew by $2.5 million, or 7.0%, compared to the second quarter of 2016, and $5.3 million, or 16.1%, compared to the third quarter of 2015. Higher mortgage banking income and sales of capital market products to commercial clients within other service charges, commissions, and fees drove the majority of the increase compared to both prior periods presented. Mortgage banking income rose as a result of $107.3 million in sales of 1-4 family mortgage loans in the secondary market during the third quarter of 2016, compared to $52.1 million in the second quarter of 2016 and $42.2 million in the third quarter of 2015. The rise in service charges on deposit accounts compared to the second quarter of 2016 reflects seasonally higher activity. Card-based fees declined modestly from the second quarter of 2016 due to normal seasonality. Compared to the third quarter of 2015, services provided to customers acquired in the NI Bancshares and Peoples transactions contributed to the increase.

During the third quarter of 2016, the Company completed a sale-leaseback transaction of 55 branches that resulted in a pre-tax gain of $88.0 million, net of transaction related expenses, of which $5.5 million was immediately recognized and the remaining $82.5 million was deferred and will be accreted against lease expense over the initial terms of the leases.

Total noninterest income of $45.9 million grew 21.2% and 31.0% from the second quarter of 2016 and the third quarter of 2015, respectively.

Noninterest Expense Analysis
(Dollar amounts in thousands)
Quarters Ended September 30, 2016
Percent Change From
September 30,
2016
June 30,
2016
September 30,
2015
June 30,
2016
September 30,
2015
Salaries and employee benefits:
Salaries and wages $37,872 $37,916 $33,554 (0.1) 12.9
Retirement and other employee benefits 8,500 8,351 7,807 1.8 8.9
Total salaries and employee benefits 46,372 46,267 41,361 0.2 12.1
Net occupancy and equipment expense 10,755 9,928 9,406 8.3 14.3
Professional services 6,772 5,292 6,172 28.0 9.7
Technology and related costs 3,881 3,669 3,673 5.8 5.7
Merchant card expense 2,857 2,724 2,722 4.9 5.0
Advertising and promotions 1,941 1,927 1,828 0.7 6.2
Cardholder expenses 1,515 1,512 1,354 0.2 11.9
Net other real estate owned ("OREO") expense 313 1,122 1,290 (72.1) (75.7)
Other expenses 7,310 8,295 6,559 (11.9) 11.4
Total noninterest expense excluding
acquisition and integration related
expenses (1)
81,716 80,736 74,365 1.2 9.9
Acquisition and integration related expenses 1,172 618 89.6 100.0
Total noninterest expense $82,888 $81,354 $74,365 1.9 11.5
Efficiency ratio (2) 61% 61% 63%

(1) See the Non-GAAP Financial Information discussion for detail.

(2) The efficiency ratio expresses noninterest expense, excluding OREO expense, as a percentage of tax-equivalent net interest income plus total fee-based revenues, other income, and tax-equivalent adjusted bank-owned life insurance ("BOLI") income. In addition, acquisition and integration related pre-tax expenses of $1.2 million and $618,000 are excluded from the efficiency ratio for the third and second quarters of 2016, respectively. For details on the calculation of the efficiency ratio, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

The efficiency ratio was consistent at 61% compared to the second quarter of 2016 and improved from 63% for the third quarter of 2015. Excluding acquisition and integration related expenses, total noninterest expense increased by 1.2% from the second quarter of 2016 and 9.9% compared to the third quarter of 2015.

Compared to the second quarter of 2016, the rise in net occupancy and equipment expense was driven primarily by seasonally higher utilities, as well as increases in computer processing and software maintenance contracts. The increase in professional services from the second quarter of 2016 was impacted by lower than normal loan remediation expenses in the second quarter of 2016 and also reflects the variability in the timing of these expenditures. Net OREO expense decreased from the second quarter of 2016 due to reduced valuation adjustments and lower operating expenses. Other expenses were lower in the third quarter of 2016 due primarily to the change in the reserve for unfunded commitments compared to the third quarter of 2016.

The operations associated with the NI Bancshares and Peoples transactions contributed to approximately half of the increase from third quarter of 2015. These costs primarily occurred within salaries and employee benefits expense, net occupancy and equipment expense, professional services, and other expense. In addition, compensation costs associated with merit increases and investments in additional talent and systems to support organizational growth contributed to the rise compared to the third quarter of 2015.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)
As of September 30, 2016
Percent Change From
September 30,
2016
June 30,
2016
September 30,
2015
June 30,
2016
September 30,
2015
Commercial and industrial $2,849,399 $2,699,742 $2,392,860 5.5 19.1
Agricultural 409,571 401,858 393,732 1.9 4.0
Commercial real estate:
Office, retail, and industrial 1,537,038 1,529,675 1,414,077 0.5 8.7
Multi-family 625,305 587,104 539,308 6.5 15.9
Construction 401,857 371,016 192,086 8.3 109.2
Other commercial real estate 970,855 1,000,655 869,748 (3.0) 11.6
Total commercial real estate 3,535,055 3,488,450 3,015,219 1.3 17.2
Total corporate loans 6,794,025 6,590,050 5,801,811 3.1 17.1
Home equity 733,260 722,881 647,223 1.4 13.3
1-4 family mortgages 388,145 415,581 294,261 (6.6) 31.9
Installment 232,030 223,845 131,185 3.7 76.9
Total consumer loans 1,353,435 1,362,307 1,072,669 (0.7) 26.2
Covered loans 24,322 27,180 51,219 (10.5) (52.5)
Total loans $8,171,782 $7,979,537 $6,925,699 2.4 18.0

Total loans grew by 9.6% on an annualized basis from June 30, 2016 and 13.7% from September 30, 2015, excluding loans acquired in the NI Bancshares transaction of $299.7 million. Compared to both prior periods presented, growth in commercial and industrial loans reflects broad-based increases within our middle market and sector-based lending business units. Multi-family loans increased compared to both prior periods due to organic growth. The rise in construction loans compared to both prior periods was driven mainly by select commercial projects for which permanent financing is expected upon their completion.

Growth in consumer loans compared to September 30, 2015 was due to the continued expansion of mortgage and installment loans, as well as the addition of shorter-duration, floating rate home equity loans. Compared to June 30, 2016, sales of 1-4 family mortgages on the secondary market more than offset organic growth in consumer loans.

Asset Quality
(Dollar amounts in thousands)
As of September 30, 2016
Percent Change From
September 30,
2016
June 30,
2016
September 30,
2015
June 30,
2016
September 30,
2015
Asset quality, excluding covered
loans and covered OREO
Non-accrual loans $43,797 $36,859 $32,308 18.8 35.6
90 days or more past due loans, still accruing
interest
4,318 5,406 4,559 (20.1) (5.3)
Total non-performing loans 48,115 42,265 36,867 13.8 30.5
Accruing troubled debt restructurings
("TDRs")
2,368 2,491 2,771 (4.9) (14.5)
OREO 27,986 29,452 31,129 (5.0) (10.1)
Total non-performing assets $78,469 $74,208 $70,767 5.7 10.9
30-89 days past due loans $25,849 $22,770 $28,629
Non-accrual loans to total loans 0.54% 0.46% 0.47%
Non-performing loans to total loans 0.59% 0.53% 0.54%
Non-performing assets to total loans plus
OREO
0.96% 0.93% 1.02%
Allowance for Credit Losses
Allowance for loan losses $85,308 $80,105 $72,500
Reserve for unfunded commitments 1,000 1,400 1,225
Total allowance for credit losses $86,308 $81,505 $73,725
Allowance for credit losses to total loans (1) 1.06% 1.02% 1.06%
Allowance for credit losses to loans, excluding
acquired loans
1.13% 1.11% 1.14%
Allowance for credit losses to non-accrual
loans, excluding covered loans
194.11% 217.34% 215.45%

(1) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses on acquired loans is established as necessary to reflect credit deterioration.

Non-accrual loans increased by $6.9 million from June 30, 2016, due primarily to the transfer of a corporate loan relationship to non-accrual status during the third quarter of 2016, for which the Bank believes it is adequately collateralized.

Total non-performing assets represented 0.96% of total loans and OREO at September 30, 2016, compared to 0.93% at June 30, 2016 and down from 1.02% at September 30, 2015.

Charge-Off Data
(Dollar amounts in thousands)
Quarters Ended
September 30,
2016
% of
Total
June 30,
2016
% of
Total
September 30,
2015
% of
Total
Net loan charge-offs (1):
Commercial and industrial $1,145 23.9 $1,450 28.3 $1,601 52.3
Agricultural
Office, retail, and industrial 2,151 44.9 1,633 31.8 457 14.9
Multi-family (69) (1.4) 83 1.6 67 2.2
Construction (9) (0.2) (12) (0.2) (114) (3.7)
Other commercial real estate 415 8.7 810 15.8 92 3.0
Consumer 1,162 24.2 1,164 22.7 959 31.3
Covered 2 1
Total net loan charge-offs $4,795 100.0 $5,130 100.0 $3,063 100.0
Net loan charge-offs to average
loans, annualized:
Quarter-to-date 0.24% 0.26% 0.18%
Year-to-date 0.24% 0.24% 0.33%

(1) Amounts represent charge-offs, net of recoveries.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)
Average for Quarters Ended September 30, 2016
Percent Change From
September 30,
2016
June 30,
2016
September 30,
2015
June 30,
2016
September 30,
2015
Demand deposits $2,806,851 $2,771,813 $2,601,442 1.3 7.9
Savings deposits 1,655,604 1,655,566 1,471,003 12.5
NOW accounts 1,754,330 1,615,677 1,405,371 8.6 24.8
Money market accounts 1,680,886 1,670,536 1,589,582 0.6 5.7
Core deposits 7,897,671 7,713,592 7,067,398 2.4 11.7
Time deposits and other 1,248,425 1,277,694 1,173,127 (2.3) 6.4
Total deposits $9,146,096 $8,991,286 $8,240,525 1.7 11.0

Average core deposits of $7.9 billion for the third quarter of 2016 increased by 2.4% and 11.7% compared to the second quarter of 2016 and the third quarter of 2015, respectively. The rise in average core deposits compared to the second quarter of 2016 resulted primarily from a seasonal increase in average municipal deposits. Compared to the third quarter of 2015, the rise reflects the impact of the core deposits assumed in the NI Bancshares and Peoples transactions, and organic growth.

CAPITAL MANAGEMENT

Capital Ratios
As of
September 30,
2016
June 30,
2016
December 31,
2015
September 30,
2015
Company regulatory capital ratios:
Total capital to risk-weighted assets 12.25% 10.68% 11.15% 11.43%
Tier 1 capital to risk-weighted assets 9.89% 9.83% 10.28% 10.55%
Common equity Tier 1 ("CET1") to risk-weighted assets 9.38% 9.32% 9.73% 10.00%
Tier 1 capital to average assets 8.90% 8.94% 9.40% 9.29%
Company tangible common equity ratios (1)(2):
Tangible common equity to tangible assets 8.04% 8.29% 8.59% 8.50%
Tangible common equity, excluding other comprehensive loss, to
tangible assets
8.16% 8.37% 8.89% 8.67%
Tangible common equity to risk-weighted assets 9.13% 9.14% 9.29% 9.70%

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

(2) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. See the accompanying Non-GAAP Reconciliations for details of the calculation of these ratios.

The Company's total capital to risk-weighted assets was 12.25% as of September 30, 2016, increasing compared to the prior periods presented due primarily to the issuance of $150.0 million of subordinated notes during the third quarter of 2016.

The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the third quarter of 2016, which is consistent with the quarterly dividend paid to shareholders in the second quarter of 2016 and follows a dividend increase from $0.08 to $0.09 per common share during the first quarter of 2015.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 19, 2016 at 11:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference ID 10094285 beginning one hour after completion of the live call until 9:00 A.M. (ET) on October 27, 2016. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

Press Release and Additional Information Available on Website

This press release and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.

Forward-Looking Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and we undertake no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.

Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, including those relating to our strategic objectives regarding the sale-leaseback transaction, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, including First Midwest's proposed acquisition of Standard, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2015, as well as our subsequent filings made with the Securities and Exchange Commission. However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.

Non-GAAP Financial Information

The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include earnings per share and the efficiency ratio, excluding certain significant transactions, total non-interest expense, excluding acquisition and integration related expenses, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tangible common equity to tangible assets, tangible common equity, excluding accumulated other comprehensive loss, to tangible assets, tangible common equity to risk-weighted assets, return on average tangible common equity, and return on average tangible common equity, excluding certain significant transactions.

The Company presents earnings per share, excluding certain significant transactions, and the efficiency ratio, both of which exclude acquisition and integration related expenses, the net gain on the sale-leaseback transaction, and property valuation adjustments. In addition, the Company presents noninterest expense, excluding acquisition and integration related expenses. Management believes excluding these transactions from earnings per share, the efficiency ratio, and noninterest expense are useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion facilitates better comparability between periods.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it enhances comparability for peer comparison purposes.

In management's view, tangible common equity measures are capital adequacy metrics meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength since they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive loss in stockholders' equity.

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

Additional Information for Stockholders

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and Standard, First Midwest has filed a registration statement on Form S-4 (file no. 333-213532) with the SEC. The registration statement includes a joint proxy statement of First Midwest and Standard, which also constitutes a prospectus of First Midwest, that First Midwest and Standard will send to their respective shareholders once finalized. Investors and shareholders are advised to read the joint proxy statement/prospectus because it contains important information about First Midwest, Standard and the proposed transaction. This document and other documents relating to the merger filed by First Midwest can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest's website at www.firstmidwest.com under the tab "Investor Relations" and then under "SEC Filings." Alternatively, these documents can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 or by calling (630) 875-7463, or from Standard upon written request to Standard Bancshares, Inc., Attn: Lawrence P. Kelley, President and Chief Executive Officer, 7800 West 95th Street, Hickory Hills, Illinois 60457 or by calling (708) 499-2000.

Participants in the Proposed Standard Transaction

First Midwest, Standard and certain of their respective directors and executive officers may be deemed under the rules of the SEC to be participants in the solicitation of proxies from the respective shareholders of First Midwest and Standard in connection with the proposed Standard transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the joint proxy statement/prospectus regarding the proposed Standard transaction. Additional information about First Midwest and its directors and officers may be found in the definitive proxy statement of First Midwest relating to its 2016 Annual Meeting of Stockholders filed with the SEC on April 14, 2016 and First Midwest's annual report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 23, 2016. The definitive proxy statement and annual report can be obtained free of charge from the SEC's website at www.sec.gov.

About the Company

First Midwest is a relationship-based financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, equipment financing, retail, wealth management, trust and private banking products and services through over 110 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's website is www.firstmidwest.com.

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
As of
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Period-End Balance Sheet
Assets
Cash and due from banks$139,538 $149,957 $135,049 $114,587 $125,279
Interest-bearing deposits in other banks362,153 105,432 171,312 266,615 822,264
Trading securities, at fair value18,351 17,693 17,408 16,894 17,038
Securities available-for-sale, at fair value1,964,030 1,773,759 1,625,579 1,306,636 1,151,418
Securities held-to-maturity, at amortized cost20,337 20,672 21,051 23,152 23,723
FHLB and FRB stock53,506 44,506 40,916 39,306 38,748
Loans:
Commercial and industrial2,849,399 2,699,742 2,634,391 2,524,726 2,392,860
Agricultural409,571 401,858 422,231 387,440 393,732
Commercial real estate:
Office, retail, and industrial1,537,038 1,529,675 1,566,395 1,395,454 1,414,077
Multi-family625,305 587,104 562,065 528,324 539,308
Construction401,857 371,016 260,743 216,882 192,086
Other commercial real estate970,855 1,000,655 1,060,302 931,190 869,748
Home equity733,260 722,881 683,171 653,468 647,223
1-4 family mortgages388,145 415,581 390,887 355,854 294,261
Installment232,030 223,845 213,979 137,602 131,185
Covered loans24,322 27,180 28,391 30,775 51,219
Total loans8,171,782 7,979,537 7,822,555 7,161,715 6,925,699
Allowance for loan losses(85,308) (80,105) (77,150) (73,630) (72,500)
Net loans8,086,474 7,899,432 7,745,405 7,088,085 6,853,199
OREO28,049 29,990 29,649 27,782 32,035
Premises, furniture, and equipment, net82,443 140,554 141,323 122,278 127,443
Investment in BOLI219,064 218,133 218,873 209,601 208,666
Goodwill and other intangible assets367,961 369,962 369,979 339,277 331,250
Accrued interest receivable and other assets236,291 225,720 212,378 178,463 203,983
Total assets$11,578,197 $10,995,810 $10,728,922 $9,732,676 $9,935,046
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$2,766,265 $2,683,495 $2,627,530 $2,414,454 $2,671,793
Interest-bearing deposits6,339,839 6,287,821 6,153,288 5,683,284 5,624,657
Total deposits9,106,104 8,971,316 8,780,818 8,097,738 8,296,450
Borrowed funds639,539 449,744 387,411 165,096 169,943
Senior and subordinated debt309,444 162,876 201,293 201,208 201,123
Accrued interest payable and other liabilities253,846 160,985 134,835 122,366 119,861
Stockholders' equity1,269,264 1,250,889 1,224,565 1,146,268 1,147,669
Total liabilities and stockholders' equity$11,578,197 $10,995,810 $10,728,922 $9,732,676 $9,935,046
Stockholders' equity, excluding accumulated other
comprehensive income ("AOCI")
$1,282,666 $1,259,692 $1,239,606 $1,174,657 $1,163,487
Stockholders' equity, common1,269,264 1,250,889 1,224,565 1,146,268 1,147,669


First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Income Statement
Interest income$97,906 $96,550 $87,548 $84,667 $84,292 $282,004 $251,317
Interest expense6,934 6,569 6,834 6,655 6,390 20,337 17,731
Net interest income90,972 89,981 80,714 78,012 77,902 261,667 233,586
Provision for loan losses9,998 8,085 7,593 4,500 4,100 25,676 16,652
Net interest income after
provision for loan losses
80,974 81,896 73,121 73,512 73,802 235,991 216,934
Noninterest Income
Service charges on deposit
accounts
10,708 10,169 9,473 10,303 10,519 30,350 29,676
Wealth management fees8,495 8,642 7,559 7,493 7,222 24,696 21,669
Card-based fees7,332 7,592 6,718 6,761 6,868 21,642 20,223
Merchant servicing fees3,319 3,170 3,028 2,929 3,207 9,517 8,810
Mortgage banking income3,394 1,863 1,368 1,777 1,402 6,625 3,964
Other service charges,
commissions, and fees
5,218 4,498 5,448 4,664 3,900 15,164 8,990
Total fee-based revenues38,466 35,934 33,594 33,927 33,118 107,994 93,332
Net gain on sale-leaseback
transaction
5,509 5,509
Net securities gains187 23 887 822 524 1,097 1,551
Other income1,691 1,865 1,445 1,729 1,372 5,001 5,220
Total noninterest income45,853 37,822 35,926 36,478 35,014 119,601 100,103
Noninterest Expense
Salaries and employee
benefits:
Salaries and wages37,872 37,916 36,296 34,295 33,554 112,084 99,444
Retirement and other
employee benefits
8,500 8,351 8,298 8,925 7,807 25,149 22,927
Total salaries and
employee benefits
46,372 46,267 44,594 43,220 41,361 137,233 122,371
Net occupancy and
equipment expense
10,755 9,928 9,697 9,256 9,406 30,380 29,464
Professional services6,772 5,292 5,920 6,117 6,172 17,984 16,603
Technology and related costs3,881 3,669 3,701 3,694 3,673 11,251 10,887
Merchant card expense2,857 2,724 2,598 2,495 2,722 8,179 7,391
Advertising and promotions1,941 1,927 1,589 2,211 1,828 5,457 5,395
Cardholder expenses1,515 1,512 1,359 1,329 1,354 4,386 3,914
Net OREO expense313 1,122 664 926 1,290 2,099 4,355
Other expenses7,310 8,295 7,447 7,525 6,559 23,052 20,093
Acquisition and integration
related expenses
1,172 618 5,020 1,389 6,810
Property valuation
adjustments
8,581
Total noninterest expense82,888 81,354 82,589 86,743 74,365 246,831 220,473
Income before income tax
expense
43,939 38,364 26,458 23,247 34,451 108,761 96,564
Income tax expense15,537 13,097 8,496 6,923 11,167 37,130 30,824
Net income$28,402 $25,267 $17,962 $16,324 $23,284 $71,631 $65,740
Net income applicable to
common shares
$28,078 $24,977 $17,750 $16,145 $23,058 $70,805 $65,037
Net income applicable to
common shares, excluding
certain significant
transactions (1)
$25,476 $25,348 $20,762 $22,127 $23,058 $71,586 $65,037

Footnotes to Condensed Consolidated Statements of Income
(1) Certain significant transactions include the net gain on sale-leaseback transaction, acquisition and integration related expenses associated with completed and pending acquisitions, and property valuation adjustments related to strategic branch initiatives.

First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Earnings Per Share
Basic earnings per common
share ("EPS") (1)
$0.35 $0.31 $0.23 $0.21 $0.30 $0.89 $0.84
Diluted EPS (1)$0.35 $0.31 $0.23 $0.21 $0.30 $0.89 $0.84
Diluted EPS, excluding certain
significant transactions (1) (6)
$0.32 $0.32 $0.27 $0.29 $0.30 $0.90 $0.84
Common Stock and Related Per Common Share Data
Book value$15.61 $15.38 $15.06 $14.70 $14.72 $15.61 $14.72
Tangible book value$11.08 $10.83 $10.51 $10.35 $10.47 $11.08 $10.47
Dividends declared per share$0.09 $0.09 $0.09 $0.09 $0.09 $0.27 $0.27
Closing price at period end$19.36 $17.56 $18.02 $18.43 $17.54 $19.36 $17.54
Closing price to book value1.2 1.1 1.2 1.3 1.2 1.2 1.2
Period end shares outstanding81,324 81,312 81,298 77,952 77,942 81,324 77,942
Period end treasury shares9,957 9,965 9,976 10,276 10,286 9,957 10,286
Common dividends$7,408 $7,240 $7,228 $7,017 $7,014 $21,876 $21,047
Key Ratios/Data
Return on average common
equity (1) (2)
8.85% 8.13% 6.06% 5.55% 8.06% 7.72% 7.73%
Return on average tangible
common equity (1) (2)
12.85% 11.94% 8.87% 8.06% 11.68% 11.27% 11.28%
Return on average tangible
common equity, excluding
certain significant
transactions (1) (2) (6)
11.69% 12.11% 10.32% 10.94% 11.68% 11.39% 11.28%
Return on average assets (2)1.00% 0.93% 0.72% 0.66% 0.94% 0.89% 0.91%
Return on average assets,
excluding certain significant
transactions (1) (2) (6)
0.91% 0.94% 0.84% 0.90% 0.94% 0.90% 0.91%
Loans to deposits89.74% 88.94% 89.09% 88.44% 83.48% 89.74% 83.48%
Efficiency ratio (1)60.83% 60.98% 64.82% 64.95% 63.20% 62.12% 63.10%
Net interest margin (3)3.60% 3.72% 3.66% 3.59% 3.58% 3.66% 3.70%
Yield on average interest-earning
assets (3)
3.87% 3.99% 3.96% 3.89% 3.86% 3.94% 3.98%
Cost of funds0.39% 0.39% 0.44% 0.44% 0.42% 0.40% 0.40%
Net noninterest expense to
average assets
1.50% 1.61% 1.90% 2.08% 1.60% 1.66% 1.69%
Effective income tax rate35.36% 34.14% 32.11% 29.78% 32.41% 34.14% 31.92%
Capital Ratios
Total capital to risk-weighted
assets (1)
12.25% 10.68% 10.64% 11.15% 11.43% 12.25% 11.43%
Tier 1 capital to risk-weighted
assets (1)
9.89% 9.83% 9.81% 10.28% 10.55% 9.89% 10.55%
CET1 to risk-weighted assets (1)9.38% 9.32% 9.30% 9.73% 10.00% 9.38% 10.00%
Tier 1 capital to average assets (1)8.90% 8.94% 9.56% 9.40% 9.29% 8.90% 9.29%
Tangible common equity to
tangible assets (1)
8.04% 8.29% 8.25% 8.59% 8.50% 8.04% 8.50%
Tangible common equity,
excluding AOCI, to tangible
assets (1)
8.16% 8.37% 8.39% 8.89% 8.67% 8.16% 8.67%
Tangible common equity to
risk-weighted assets (1)
9.13% 9.14% 9.04% 9.29% 9.70% 9.13% 9.70%
Note: Selected Financial Information footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Asset Quality Performance Data
Non-performing assets (4)
Commercial and industrial$13,823 $6,303 $5,364 $5,587 $6,438 $13,823 $6,438
Agricultural184 475 295 355 112 184 112
Commercial real estate:
Office, retail, and industrial17,670 16,815 10,910 6,875 6,961 17,670 6,961
Multi-family316 321 410 796 1,046 316 1,046
Construction287 360 778 905 3,332 287 3,332
Other commercial real estate3,361 4,797 5,555 5,611 5,898 3,361 5,898
Consumer8,156 7,788 8,071 8,746 8,521 8,156 8,521
Total non-accrual loans43,797 36,859 31,383 28,875 32,308 43,797 32,308
90 days or more past due loans,
still accruing interest
4,318 5,406 5,483 2,883 4,559 4,318 4,559
Total non-performing loans48,115 42,265 36,866 31,758 36,867 48,115 36,867
Accruing TDRs2,368 2,491 2,702 2,743 2,771 2,368 2,771
OREO27,986 29,452 29,238 27,349 31,129 27,986 31,129
Total non-performing assets$78,469 $74,208 $68,806 $61,850 $70,767 $78,469 $70,767
30-89 days past due loans (4)$25,849 $22,770 $29,826 $16,329 $28,629 $25,849 $28,629
Allowance for credit losses
Allowance for loan losses$84,016 $78,711 $75,582 $71,992 $68,384 $84,016 $68,384
Allowance for covered loan
losses
1,292 1,394 1,568 1,638 4,116 1,292 4,116
Reserve for unfunded
commitments
1,000 1,400 1,225 1,225 1,225 1,000 1,225
Total allowance for credit
losses
$86,308 $81,505 $78,375 $74,855 $73,725 $86,308 $73,725
Provision for loan losses$9,998 $8,085 $7,593 $4,500 $4,100 $25,676 $16,652
Net charge-offs by category
Commercial and industrial$1,145 $1,450 $1,396 $1,781 $1,601 $3,991 $11,531
Agricultural
Commercial real estate:
Office, retail, and industrial2,151 1,633 421 267 457 4,205 2,153
Multi-family(69) 83 179 (27) 67 193 557
Construction(9) (12) 111 105 (114) 90 (319)
Other commercial real estate415 810 1,294 110 92 2,519 540
Consumer1,162 1,164 672 1,134 959 2,998 1,870
Covered loans 2 1 2 514
Total net charge-offs$4,795 $5,130 $4,073 $3,370 $3,063 $13,998 $16,846
Total recoveries included above$1,155 $1,003 $1,116 $1,031 $1,294 $3,274 $5,670
Note: Selected Financial Information footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Asset Quality ratios (4)
Non-accrual loans to total loans 0.54% 0.46% 0.40% 0.40% 0.47%
Non-performing loans to total loans 0.59% 0.53% 0.47% 0.45% 0.54%
Non-performing assets to total loans plus OREO 0.96% 0.93% 0.88% 0.86% 1.02%
Non-performing assets to tangible common equity plus allowance
for credit losses
7.96% 7.72% 7.39% 7.03% 7.99%
Non-accrual loans to total assets 0.38% 0.34% 0.29% 0.30% 0.33%
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans (5) 1.06% 1.02% 1.00% 1.05% 1.06%
Allowance for credit losses to loans, excluding acquired loans 1.13% 1.11% 1.11% 1.11% 1.14%
Allowance for credit losses to non-accrual loans (4) 194.11% 217.34% 244.74% 253.57% 215.45%
Allowance for credit losses to non-performing loans (4) 176.69% 189.54% 208.34% 230.55% 188.81%
Net charge-offs to average loans (2) 0.24% 0.26% 0.22% 0.19% 0.18%

Footnotes to Selected Financial Information
(1) See the Non-GAAP Reconciliations section for the detailed calculation.
(2) Annualized based on the actual number of days for each period presented.
(3) Presented on a tax-equivalent basis, which reflects federal and state tax benefits.
(4) Excludes covered loans and covered OREO.
(5) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established on acquired loans as necessary to reflect credit deterioration.
(6) Certain significant transactions include the net gain on sale-leaseback transaction, acquisition and integration related expenses associated with completed and pending acquisitions, and property valuation adjustments related to strategic branch initiatives.

First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Earnings Per Share
Net income$28,402 $25,267 $17,962 $16,324 $23,284 $71,631 $65,740
Net income applicable to
non-vested restricted shares
(324) (290) (212) (179) (226) (826) (703)
Net income applicable to
common shares
28,078 24,977 17,750 16,145 23,058 70,805 65,037
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Acquisition and integration
related expenses
1,172 618 5,020 1,389 6,810
Tax effect of acquisition and
integration related expenses
(469) (247) (2,008) (556) (2,724)
Property valuation adjustments 8,581
Tax effect of property valuation
adjustments
(3,432)
Net income applicable to
common shares, excluding
certain significant
transactions (1)
$25,476 $25,348 $20,762 $22,127 $23,058 $71,586 $65,037
Weighted-average common shares outstanding:
Weighted-average common
shares outstanding (basic)
80,396 80,383 77,980 77,121 77,106 79,589 77,038
Dilutive effect of common
stock equivalents
13 13 12 13 13 13 13
Weighted-average diluted
common shares
outstanding
80,409 80,396 77,992 77,134 77,119 79,602 77,051
Basic EPS$0.35 $0.31 $0.23 $0.21 $0.30 $0.89 $0.84
Diluted EPS$0.35 $0.31 $0.23 $0.21 $0.30 $0.89 $0.84
Diluted EPS, excluding certain
significant transactions (1)
$0.32 $0.32 $0.27 $0.29 $0.30 $0.90 $0.84
Anti-dilutive shares not included
in the computation of diluted
EPS
454 469 608 735 751 510 822
Efficiency Ratio Calculation
Noninterest expense$82,888 $81,354 $82,589 $86,743 $74,365 $246,831 $220,473
Less:
Net OREO expense(313) (1,122) (664) (926) (1,290) (2,099) (4,355)
Acquisition and integration
related expenses
(1,172) (618) (5,020) (1,389) (6,810)
Property valuation
adjustments
(8,581)
Total$81,403 $79,614 $76,905 $75,847 $73,075 $237,922 $216,118
Tax-equivalent net interest
income (2)
$93,051 $92,174 $83,021 $80,506 $80,511 $268,246 $241,771
Fee-based revenues38,466 35,934 33,594 33,927 33,118 107,994 93,332
Add:
Other income, excluding
BOLI income
762 984 579 807 446 2,325 1,957
BOLI929 881 866 922 926 2,676 3,263
Tax-equivalent adjustment of
BOLI
619 587 577 615 617 1,784 2,175
Total$133,827 $130,560 $118,637 $116,777 $115,618 $383,025 $342,498
Efficiency ratio60.83% 60.98% 64.82% 64.95% 63.20% 62.12% 63.10%
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Tax-Equivalent Net Interest Income
Net interest income$90,972 $89,981 $80,714 $78,012 $77,902 $261,667 $233,586
Tax-equivalent adjustment2,079 2,193 2,307 2,494 2,609 6,579 8,185
Tax-equivalent net interest
income (2)
$93,051 $92,174 $83,021 $80,506 $80,511 $268,246 $241,771
Risk-Based Capital Data
Common stock$913 $913 $913 $882 $882 $913 $882
Additional paid-in capital496,918 495,159 493,153 446,672 445,037 496,918 445,037
Retained earnings1,003,271 982,277 964,250 953,516 944,209 1,003,271 944,209
Treasury stock, at cost(218,436) (218,657) (218,710) (226,413) (226,641) (218,436) (226,641)
Goodwill and other intangible
assets, net of deferred tax
liabilities
(357,079) (358,582) (357,895) (327,115) (318,854) (357,079) (318,854)
Disallowed deferred tax assets(383) (2,263) (2,956) (1,902) (2,889) (383) (2,889)
CET1 capital925,204 898,847 878,755 845,640 841,744 925,204 841,744
Trust-preferred securities50,690 50,690 50,690 50,690 50,690 50,690 50,690
Other disallowed deferred tax
assets
(255) (1,508) (1,970) (2,868) (4,334) (255) (4,334)
Tier 1 capital975,639 948,029 927,475 893,462 888,100 975,639 888,100
Tier 2 capital232,792 81,505 78,375 74,855 73,725 232,792 73,725
Total capital$1,208,431 $1,029,534 $1,005,850 $968,317 $961,825 $1,208,431 $961,825
Risk-weighted assets$9,867,406 $9,641,953 $9,452,551 $8,687,864 $8,414,729 $9,867,406 $8,414,729
Adjusted average assets$10,959,119 $10,608,085 $9,700,671 $9,501,087 $9,559,796 $10,959,119 $9,559,796
Total capital to risk-weighted
assets
12.25% 10.68% 10.64% 11.15% 11.43% 12.25% 11.43%
Tier 1 capital to risk-weighted
assets
9.89% 9.83% 9.81% 10.28% 10.55% 9.89% 10.55%
CET1 to risk-weighted assets9.38% 9.32% 9.30% 9.73% 10.00% 9.38% 10.00%
Tier 1 capital to average assets8.90% 8.94% 9.56% 9.40% 9.29% 8.90% 9.29%
Tangible Common Equity
Stockholders' equity$1,269,264 $1,250,889 $1,224,565 $1,146,268 $1,147,669 $1,269,264 $1,147,669
Less: goodwill and other
intangible assets
(367,961) (369,962) (369,979) (339,277) (331,250) (367,961) (331,250)
Tangible common equity901,303 880,927 854,586 806,991 816,419 901,303 816,419
Less: AOCI13,402 8,803 15,041 28,389 15,818 13,402 15,818
Tangible common equity,
excluding AOCI
$914,705 $889,730 $869,627 $835,380 $832,237 $914,705 $832,237
Total assets$11,578,197 $10,995,810 $10,728,922 $9,732,676 $9,935,046 $11,578,197 $9,935,046
Less: goodwill and other
intangible assets
(367,961) (369,962) (369,979) (339,277) (331,250) (367,961) (331,250)
Tangible assets$11,210,236 $10,625,848 $10,358,943 $9,393,399 $9,603,796 $11,210,236 $9,603,796
Tangible common equity to
tangible assets
8.04% 8.29% 8.25% 8.59% 8.50% 8.04% 8.50%
Tangible common equity,
excluding AOCI, to tangible
assets
8.16% 8.37% 8.39% 8.89% 8.67% 8.16% 8.67%
Tangible common equity to
risk-weighted assets
9.13% 9.14% 9.04% 9.29% 9.70% 9.13% 9.70%
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended Nine Months Ended
September 30, June 30, March 31, December 31, September 30, September 30, September 30,
2016 2016 2016 2015 2015 2016 2015
Return on Average Common and Tangible Common Equity
Net income applicable to
common shares
$28,078 $24,977 $17,750 $16,145 $23,058 $70,805 $65,037
Intangibles amortization1,245 1,245 985 971 973 3,475 2,949
Tax effect of intangibles
amortization
(498) (498) (394) (388) (389) (1,390) (1,180)
Net income applicable to
common shares, excluding
intangibles amortization
28,825 25,724 18,341 16,728 23,642 72,890 66,806
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Acquisition and integration
related expenses
1,172 618 5,020 1,389 6,810
Tax effect of acquisition and
integration related expenses
(469) (247) (2,008) (556) (2,724)
Property valuation adjustments 8,581
Tax effect of property valuation
adjustments
(3,432)
Net income applicable to
common shares, excluding
intangibles amortization
and certain significant
transactions (1)
$26,223 $26,095 $21,353 $22,710 $23,642 $73,671 $66,806
Average stockholders' equity$1,261,702 $1,235,497 $1,178,588 $1,154,506 $1,134,967 1,225,396 $1,124,493
Less: average intangible assets(369,281) (369,177) (346,549) (331,013) (331,720) (361,697) (332,692)
Average tangible common
equity
$892,421 $866,320 $832,039 $823,493 $803,247 $863,699 $791,801
Return on average common
equity (3)
8.85% 8.13% 6.06% 5.55% 8.06% 7.72% 7.73%
Return on average tangible
common equity (3)
12.85% 11.94% 8.87% 8.06% 11.68% 11.27% 11.28%
Return on average tangible
common equity, excluding
certain significant
transactions (1) (3)
11.69% 12.11% 10.32% 10.94% 11.68% 11.39% 11.28%
Return on Average Assets
Net income$28,402 $25,267 $17,962 $16,324 $23,284 $71,631 $65,740
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Acquisition and integration
related expenses
1,172 618 5,020 1,389 6,810
Tax effect of acquisition and
integration related expenses
(469) (247) (2,008) (556) (2,724)
Property valuation adjustments 8,581
Tax effect of property valuation
adjustments
(3,432)
Net income, excluding certain
significant transactions (1)
$25,800 $25,638 $20,974 $22,306 $23,284 $72,412 $65,740
Average assets$11,322,325 $10,968,516 $10,056,845 $9,822,430 $9,875,632 $10,784,532 $9,661,483
Return on average assets (3)1.00% 0.93% 0.72% 0.66% 0.94% 0.89% 0.91%
Return on average assets,
excluding certain significant
transactions (1) (3)
0.91% 0.94% 0.84% 0.90% 0.94% 0.90% 0.91%

Footnotes to Non-GAAP Reconciliations
(1) Certain significant transactions include the net gain on sale-leaseback transaction, acquisition and integration related expenses associated with completed and pending acquisitions, and property valuation adjustments related to strategic branch initiatives.
(2) Presented on a tax-equivalent basis, which reflects federal and state tax benefits.
(3) Annualized based on the actual number of days for each period presented.

Contact Information Investors: Paul F. Clemens EVP and Chief Financial Officer (630) 875-7347 paul.clemens@firstmidwest.com Media: James M. Roolf SVP and Corporate Relations Officer (630) 875-7533 jim.roolf@firstmidwest.com

Source:First Midwest Bancorp, Inc.