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First Midwest Bancorp, Inc. Announces 2016 Fourth Quarter and Full Year Results

ITASCA, Ill., Jan. 24, 2017 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ:FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the fourth quarter and full year of 2016. Net income for the fourth quarter of 2016 was $20.7 million, or $0.25 per share, compared to $28.4 million, or $0.35 per share, for the third quarter of 2016, and $16.3 million, or $0.21 per share, for the fourth quarter of 2015.

Reported results included the following certain significant transactions: acquisition and integration related expenses associated with completed and pending acquisitions (all periods presented), the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation (fourth quarter of 2016), the net gain on the sale-leaseback transaction (third quarter of 2016), and property valuation adjustments related to strategic branch initiatives (fourth quarter of 2015).

Excluding these certain significant transactions, earnings per share (1) was $0.32 for the fourth quarter of 2016, consistent with $0.32 the third quarter of 2016, and increased 10% compared to $0.29 for the fourth quarter of 2015.

FOURTH QUARTER HIGHLIGHTS

  • Generated earnings per share (1) of $0.32; up 10% from the fourth quarter of 2015, and consistent with a strong third quarter of 2016, excluding certain significant transactions.

  • Grew total loans 4% annualized from September 30, 2016.

  • Repaid $115 million of maturing senior notes with proceeds generated from the issuance of $150 million in subordinated notes late in the third quarter of 2016; absorbed approximately $1.5 million in overlapping interest costs.

  • Completed the acquisition of Standard Bancshares, Inc. on January 6, 2017, adding $1.9 billion in loans and $2.1 billion in deposits; absorbed $7.5 million in acquisition and integration related expenses in the fourth quarter of 2016.

  • Announced the decision to relocate corporate headquarters and consolidate certain centralized commercial sales platforms in 2018; absorbed approximately $1.0 million in lease cancellation fees.

FULL YEAR HIGHLIGHTS

  • Grew earnings per share to $1.14, up 9% from 2015.

  • Increased fee-based revenues 14% from 2015.

  • Expanded total loans 15% from 2015.

  • Increased average core deposits 11% from 2015.

"Strong performance in 2016 was capped by solid fourth quarter results, reflecting balanced business execution against a backdrop of substantial growth," said Michael L. Scudder, President and Chief Executive Officer. "Away from certain integration and organizational costs attendant to this growth, earnings per share improved 10% and 8% for the quarter and full year versus a year ago. This performance benefited from consistent sales success across major business lines as well as our acquisition of NI Bancshares Corporation in March of 2016. Further, we were very pleased to close on our acquisition of Standard Bancshares, Inc., a $2.3 billion asset financial institution, on January 6, 2017. As a result, we begin 2017 with $14 billion in assets, 40% larger than we began 2016, and having greatly strengthened our place as the premier commercial bank in metro Chicago."

Mr. Scudder concluded, "Our performance momentum is building amid optimism for improved operating conditions and a transition to higher rates. Continued focus on investing in our colleagues and infrastructure combined with our strong balance sheet leave us well positioned to capitalize on this momentum and operate as a larger more diverse company. As we do so, 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) Earnings per share, excluding certain significant transactions, 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 RECENT EVENTS

Acquisition

Standard Bancshares, Inc.

On January 6, 2017, the Company completed its acquisition of Standard Bancshares, Inc. ("Standard"), the holding company for Standard Bank and Trust Company. With the acquisition, the Company acquired 35 banking offices located primarily in the southwest Chicago suburbs and adjacent markets in northwest Indiana, and added approximately $2.1 billion in deposits and $1.9 billion in loans. The merger consideration totaled $570.6 million and consisted of 21,057,085 shares of Company common stock and $47.1 million in cash. Operating systems are expected to be converted in the first quarter of 2017.

Headquarters Relocation to Chicago's Dynamic O'Hare Airport Corridor

On January 3, 2017, the Company announced its plan to relocate its corporate headquarters in early 2018 to Chicago's dynamic O'Hare airport corridor from its current location in Itasca, Illinois. The new headquarters, located at Triangle Plaza at 8750 W. Bryn Mawr Avenue, is expected to offer greater accessibility and collaboration opportunities for the Company's colleagues and a larger space to accommodate future growth. The Company recognized a $950,000 lease cancellation fee during the fourth quarter of 2016 as a result of its planned move.

OPERATING PERFORMANCE

Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
Quarters Ended
December 31, 2016 September 30, 2016 December 31, 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 $177,974 $362 0.81 $282,101 $472 0.67 $587,112 $530 0.36
Securities (1) 2,016,588 11,088 2.20 1,896,195 10,752 2.27 1,260,167 9,855 3.13
Federal Home Loan Bank ("FHLB") and
Federal Reserve Bank ("FRB") stock
54,093 421 3.11 51,451 261 2.03 38,926 371 3.81
Loans (1)(2) 8,177,036 86,520 4.21 8,067,900 88,500 4.36 7,013,586 76,405 4.32
Total interest-earning assets (1) 10,425,691 98,391 3.76 10,297,647 99,985 3.87 8,899,791 87,161 3.89
Cash and due from banks 145,807 150,467 131,589
Allowance for loan losses (89,401) (84,088) (74,823)
Other assets 898,011 958,299 865,873
Total assets$11,380,108 $11,322,325 $9,822,430
Liabilities and Stockholders' Equity:
Interest-bearing core deposits (3) $4,971,630 1,049 0.08 $5,090,820 1,086 0.08 $4,471,645 930 0.08
Time deposits 1,213,048 1,426 0.47 1,248,425 1,434 0.46 1,152,895 1,341 0.46
Borrowed funds 617,975 1,716 1.10 605,177 1,782 1.17 167,120 1,250 2.97
Senior and subordinated debt 259,531 4,112 6.30 166,101 2,632 6.30 201,168 3,134 6.18
Total interest-bearing liabilities7,062,184 8,303 0.47 7,110,523 6,934 0.39 5,992,828 6,655 0.44
Demand deposits (3) 2,803,016 2,806,851 2,560,604
Total funding sources 9,865,200 9,917,374 8,553,432
Other liabilities244,915 143,249 114,492
Stockholders' equity - common1,269,993 1,261,702 1,154,506
Total liabilities and
stockholders' equity
$11,380,108 $11,322,325 $9,822,430
Tax-equivalent net interest
income/margin (1)
90,088 3.44 93,051 3.60 80,506 3.59
Tax-equivalent adjustment (2,064) (2,079) (2,494)
Net interest income (GAAP) $88,024 $90,972 $78,012
(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 $23.3 million at December 31, 2016, $24.3 million at September 30, 2016, and $30.8 million at December 31, 2015.
(3) See the Deposit Composition table presented later in this release for average balance detail by category.

Net interest income decreased by 3.2% from the third quarter of 2016 and increased by 12.8% compared to the fourth quarter of 2015. Compared to the third quarter of 2016, the decrease in net interest income resulted mainly from lower acquired loan accretion and higher funding costs related to the issuance of $150.0 million of subordinated notes late in the third quarter of 2016 and the subsequent repayment of $115.0 million of maturing senior notes late in the fourth quarter of 2016. The increase in net interest income compared to the fourth quarter of 2015 was driven primarily by organic loan growth and the acquisition of interest-earning assets from the NI Bancshares Corporation ("NI Bancshares") transaction, partially offset by higher senior and subordinated debt costs.

Acquired loan accretion contributed $1.8 million, $3.8 million, and $1.3 million to net interest income for the fourth quarter of 2016, the third quarter of 2016, and the fourth quarter of 2015, respectively.

Tax-equivalent net interest margin for the current quarter was 3.44%, decreasing 16 basis points from the third quarter of 2016 and 15 basis points from the fourth quarter of 2015. The decrease in tax-equivalent net interest margin compared to the third quarter of 2016 was due primarily to the decline in acquired loan accretion, temporarily higher funding costs related to the timing of the issuance of the aforementioned subordinated notes and the subsequent repayment of the maturing senior notes, and certain leveraging strategies initiated during the second half of 2016 in anticipation of additional liquidity from the January of 2017 closing of the Standard acquisition. Compared to the fourth quarter of 2015, the decline in net interest margin resulted primarily from organic growth in floating rate loans and higher senior and subordinated debt costs.

For the fourth quarter of 2016, total average interest-earning assets rose $128.0 million from the third quarter of 2016 and $1.5 billion from the fourth 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 fourth quarter of 2015 was impacted by interest-earning assets acquired in the 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 decreased by $52.2 million from the third quarter of 2016 and increased $1.3 billion from the fourth quarter of 2015. Compared to the third quarter of 2016, average funding sources were impacted by the normal seasonal reduction in interest-bearing core deposits, partly offset by the issuance of $150.0 million of subordinated notes late in the third quarter of 2016 in connection with the repayment of $115.0 million of maturing senior notes late in the fourth quarter of 2016. Deposits acquired in the NI Bancshares and Peoples transactions and the addition of $740.1 million of FHLB advances contributed to the increase in average funding sources compared to the fourth quarter of 2015.

Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
Quarters Ended December 31, 2016
Percent Change From
December 31,
2016
September 30,
2016
December 31,
2015
September 30,
2016
December 31,
2015
Service charges on deposit accounts $10,315 $10,708 $10,303 (3.7) 0.1
Wealth management fees 8,375 8,495 7,493 (1.4) 11.8
Card-based fees 7,462 7,332 6,761 1.8 10.4
Merchant servicing fees 3,016 3,319 2,929 (9.1) 3.0
Mortgage banking income 3,537 3,394 1,777 4.2 99.0
Other service charges, commissions, and fees 4,402 5,218 4,664 (15.6) (5.6)
Total fee-based revenues 37,107 38,466 33,927 (3.5) 9.4
Net securities gains 323 187 822 72.7 (60.7)
Net gain on sale-leaseback transaction 5,509 (100.0)
Other income 2,281 1,691 1,729 34.9 31.9
Total noninterest income $39,711 $45,853 $36,478 (13.4) 8.9

Total fee-based revenues of $37.1 million decreased by 3.5% from the third quarter of 2016 and grew by 9.4% compared to the fourth quarter of 2015. The decrease in fee-based revenues from the third quarter of 2016 was driven primarily by a seasonal decline in service charges on deposit accounts and lower sales of capital market products to commercial clients within other service charges, commissions, and fees. Mortgage banking income for the fourth quarter of 2016 resulted from sales of $85.3 million of 1-4 family mortgage loans in the secondary market, compared to $107.3 million in the third quarter of 2016 and $51.4 million in the fourth quarter of 2015. In addition, mortgage banking income for the fourth quarter of 2016 was positively impacted by changes in the fair value of mortgage servicing rights, which fluctuate from quarter to quarter.

Compared to the fourth quarter of 2015, services provided to customers acquired in the NI Bancshares transaction contributed to the majority of the increase in wealth management fees. The rise in card-based fees compared to the fourth quarter of 2015 resulted from higher transaction volumes and services provided to customers acquired in the NI Bancshares transaction.

Total noninterest income of $39.7 million grew 8.9% from the fourth quarter of 2015 and decreased 13.4% from the third quarter of 2016. Other income for the fourth quarter of 2016 includes a net gain of $630,000 from the disposition of a branch property. For the third quarter of 2016, total noninterest income benefitted from a $5.5 million gain recognized as a result of the Company's sale-leaseback transaction.

Noninterest Expense Analysis
(Dollar amounts in thousands)
Quarters Ended December 31, 2016
Percent Change From
December 31,
2016
September 30,
2016
December 31,
2015
September 30,
2016
December 31,
2015
Salaries and employee benefits:
Salaries and wages $39,257 $37,872 $34,295 3.7 14.5
Retirement and other employee benefits 8,160 8,500 8,925 (4.0) (8.6)
Total salaries and employee benefits 47,417 46,372 43,220 2.3 9.7
Net occupancy and equipment expense 10,774 10,755 9,256 0.2 16.4
Professional services 7,138 6,772 6,117 5.4 16.7
Technology and related costs 3,514 3,881 3,694 (9.5) (4.9)
Merchant card expense 2,603 2,857 2,495 (8.9) 4.3
Advertising and promotions 2,330 1,941 2,211 20.0 5.4
Cardholder expenses 1,426 1,515 1,329 (5.9) 7.3
Net other real estate owned ("OREO")
expense
925 313 926 195.5 (0.1)
Other expenses 8,050 7,310 7,525 10.1 7.0
Total noninterest expense, excluding
certain significant transactions (1)
84,177 81,716 76,773 3.0 9.6
Acquisition and integration related expenses 7,542 1,172 1,389 543.5 443.0
Lease cancellation fee 950 100.0 100.0
Property valuation adjustments 8,581 (100.0)
Total noninterest expense $92,669 $82,888 $86,743 11.8 6.8
(1) Total noninterest expense, excluding certain significant transactions, is a Non-GAAP metric. See the Non-GAAP Financial Information discussion for detail.

Total noninterest expense increased by 11.8% and 6.8% compared to the third quarter of 2016 and the fourth quarter of 2015, respectively. Excluding certain significant transactions, total noninterest expense increased by 3.0% from the third quarter of 2016 and 9.6% from the fourth quarter of 2015.

Compared to the third quarter of 2016, approximately half of the increase in salaries and wages was due to the rise in the Company's stock price, which resulted in higher expenses related to the Company's nonqualified retirement plan, and timing of certain compensation accruals. The rise in advertising and promotions expense from the third quarter of 2016 resulted from the timing of certain advertising costs. Net OREO expense increased from the third quarter of 2016 due primarily to a higher level of valuation adjustments. For the third quarter of 2016, a $400,000 reduction in the reserve for unfunded commitments resulted in lower other expenses compared to the fourth quarter of 2016.

Operating costs associated with the NI Bancshares and Peoples transactions contributed nearly two thirds of the increase in total noninterest expense, excluding certain significant transactions, from the fourth quarter of 2015. These costs primarily occurred within salaries and employee benefits, net occupancy and equipment expense, professional services, advertising and promotions, and other expenses. In addition, compensation costs associated with merit increases, investments in additional talent to support organizational growth, and higher loan remediation costs contributed to the rise compared to the fourth quarter of 2015.

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

Property valuation adjustments of $8.6 million were recognized during the fourth quarter of 2015 on twelve closed branches and seven parcels of land as part of the Company's strategic branch initiatives.

LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
As of December 31, 2016
Percent Change From
December 31,
2016
September 30,
2016
December 31,
2015
September 30,
2016
December 31,
2015
Commercial and industrial $2,827,658 $2,849,399 $2,524,726 (0.8) 12.0
Agricultural 389,496 409,571 387,440 (4.9) 0.5
Commercial real estate:
Office, retail, and industrial 1,581,827 1,537,038 1,395,454 2.9 13.4
Multi-family 614,034 625,305 528,324 (1.8) 16.2
Construction 451,540 401,857 216,882 12.4 108.2
Other commercial real estate 979,359 970,855 931,190 0.9 5.2
Total commercial real estate 3,626,760 3,535,055 3,071,850 2.6 18.1
Total corporate loans 6,843,914 6,794,025 5,984,016 0.7 14.4
Home equity 732,604 733,260 653,468 (0.1) 12.1
1-4 family mortgages 416,354 388,145 355,854 7.3 17.0
Installment 237,999 232,030 137,602 2.6 73.0
Total consumer loans 1,386,957 1,353,435 1,146,924 2.5 20.9
Covered loans 23,274 24,322 30,775 (4.3) (24.4)
Total loans $8,254,145 $8,171,782 $7,161,715 1.0 15.3

Total loans grew by 4.0% on an annualized basis from September 30, 2016, and 15.3% from December 31, 2015 including loans acquired in the NI Bancshares transaction of $279.7 million, or 11.3% excluding these acquired loans. Compared to the third quarter of 2016, the increase in loans was driven primarily by commercial real estate and 1-4 family mortgages. The rise in construction loans compared to both prior periods was driven primarily by select commercial projects for which permanent financing is expected upon their completion.

Compared to the fourth quarter of 2015, the increase in commercial and industrial loans resulted primarily from broad-based increases within our middle market and sector-based lending business units. Office, retail, and industrial and multi-family loans increased compared to the fourth quarter of 2015 due to organic growth. The rise in consumer loans compared to the fourth quarter of 2015 resulted from the continued expansion of mortgage and installment loans and the addition of shorter-duration, floating rate home equity loans.

Asset Quality
(Dollar amounts in thousands)
As of
December 31,
2016
September 30,
2016
December 31,
2015
Asset Quality, Excluding Covered
Loans and Covered OREO
Non-accrual loans $58,810 $43,797 $28,875
90 days or more past due loans, still accruing interest 4,876 4,318 2,883
Total non-performing loans 63,686 48,115 31,758
Accruing troubled debt restructurings ("TDRs") 2,291 2,368 2,743
OREO 26,020 27,986 27,349
Total non-performing assets $91,997 $78,469 $61,850
30-89 days past due loans $20,125 $25,849 $16,329
Non-accrual loans to total loans 0.71% 0.54% 0.40%
Non-performing loans to total loans 0.77% 0.59% 0.45%
Non-performing assets to total loans plus OREO 1.11% 0.96% 0.86%
Allowance for Credit Losses
Allowance for loan losses $86,083 $85,308 $73,630
Reserve for unfunded commitments 1,000 1,000 1,225
Total allowance for credit losses $87,083 $86,308 $74,855
Allowance for credit losses to total loans (1) 1.06% 1.06% 1.05%
Allowance for credit losses to loans, excluding acquired loans 1.11% 1.13% 1.11%
Allowance for credit losses to non-accrual loans, excluding covered loans 146.51% 194.11% 253.57%
(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 is established as necessary to reflect credit deterioration.

Total non-performing assets represented 1.11% of total loans and OREO at December 31, 2016, compared to 0.96% at September 30, 2016 and 0.86% at December 31, 2015. Non-accrual loans increased by $15.0 million from September 30, 2016, due primarily to the transfer of a single corporate relationship to non-accrual status during the fourth quarter of 2016. The Company has recorded the expected loss and implemented a remediation plan associated with this credit.

Charge-Off Data
(Dollar amounts in thousands)
Quarters Ended Years Ended
December 31,
2016
September 30,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Net Loan Charge-offs (1):
Commercial and industrial $3,402 $1,145 $1,781 $7,393 $13,312
Agricultural
Office, retail, and industrial 165 2,151 267 4,370 2,420
Multi-family 17 (69) (27) 210 530
Construction (12) (9) 105 78 (214)
Other commercial real estate (111) 415 110 2,408 650
Consumer 933 1,162 1,134 3,931 3,004
Covered 138 140 514
Total net loan charge-offs $4,532 $4,795 $3,370 $18,530 $20,216
Net loan charge-offs to average loans 0.22% 0.24% 0.19% 0.24% 0.29%
(1) Amounts represent charge-offs, net of recoveries.



DEPOSIT PORTFOLIO
Deposit Composition
(Dollar amounts in thousands)
Average for Quarters Ended December 31, 2016
Percent Change From
December 31,
2016
September 30,
2016
December 31,
2015
September 30,
2016
December 31,
2015
Demand deposits $2,803,016 $2,806,851 $2,560,604 (0.1) 9.5
Savings deposits 1,633,010 1,655,604 1,483,962 (1.4) 10.0
NOW accounts 1,715,228 1,754,330 1,411,425 (2.2) 21.5
Money market accounts 1,623,392 1,680,886 1,576,258 (3.4) 3.0
Core deposits 7,774,646 7,897,671 7,032,249 (1.6) 10.6
Time deposits 1,213,048 1,248,425 1,152,895 (2.8) 5.2
Total deposits $8,987,694 $9,146,096 $8,185,144 (1.7) 9.8

Average core deposits were $7.8 billion for the fourth quarter of 2016 compared to $7.9 billion and $7.0 billion for the third quarter of 2016 and fourth quarter of 2015, respectively. The slight decrease in core deposits compared to the third quarter of 2016 resulted from a normal seasonal decline in average municipal deposits. Compared to the fourth quarter of 2015, the rise in average core deposits reflects the impact of the $500.5 million of core deposits assumed in the NI Bancshares and Peoples transactions and organic growth.

CAPITAL MANAGEMENT
Capital Ratios
As of
December 31,
2016
September 30,
2016
December 31,
2015
Company regulatory capital ratios :
Total capital to risk-weighted assets 12.23% 12.25% 11.15%
Tier 1 capital to risk-weighted assets 9.90% 9.89% 10.28%
Common equity Tier 1 ("CET1") to risk-weighted assets 9.39% 9.38% 9.73%
Tier 1 capital to average assets 8.99% 8.90% 9.40%
Company tangible common equity ratios (1)(2):
Tangible common equity to tangible assets 8.05% 8.04% 8.59%
Tangible common equity, excluding accumulated other
comprehensive income ("AOCI"), to tangible assets
8.42% 8.16% 8.89%
Tangible common equity to risk-weighted assets 8.88% 9.13% 9.29%
(1) These ratios are not subject to formal Federal Reserve regulatory guidance.
(2) Tangible common equity 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.

Overall, the Company's regulatory capital ratios modestly improved compared to September 30, 2016. The reduction in the Company's Tier 1 and CET1 capital ratios compared to December 31, 2015 resulted mainly from the impact of the NI Bancshares transaction in the first quarter of 2016. The increase in total capital to risk-weighted assets compared to December 31, 2015 resulted primarily from the issuance of $150.0 million of subordinated notes during the third quarter of 2016, which more than offset the impact of the NI Bancshares transaction.

The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the fourth quarter of 2016, which is consistent with the third quarter of 2016. The dividend increased 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, January 25, 2017 at 11:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10099063 beginning one hour after completion of the live call until 9:00 A.M. (ET) on February 1, 2017. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

Press Release and Additional Information Available on Website

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

Forward-Looking Statements

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

Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, including First Midwest's acquisition of Standard Bancshares, Inc., 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 ("EPS"), excluding certain significant transactions, the efficiency ratio, total non-interest expense, excluding certain significant transactions, return on average assets, excluding certain significant transactions, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tangible common equity to tangible assets, tangible common equity, excluding accumulated other comprehensive loss, to tangible assets, tangible common equity to risk-weighted assets, return on average tangible common equity, and return on average tangible common equity, excluding certain significant transactions.

The Company presents EPS, the efficiency ratio, total noninterest expense, return on average assets, and return on average tangible common equity, all excluding certain significant transactions. All of these metrics exclude acquisition and integration related expenses, the net gain on the sale-leaseback transaction, the lease cancellation fee, and property valuation adjustments. Management believes excluding these transactions from EPS, the efficiency ratio, total noninterest expense, return on average assets, and return on average tangible common equity are useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion facilitates better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics is useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these transactions from these metrics enhances comparability for peer comparison purposes.

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

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

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

About the Company

First Midwest is a relationship-based financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest, with approximately $14 billion in assets and $8.5 billion in trust assets under management. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, leasing, retail, wealth management, trust and private banking products and services through over 130 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's common stock is traded on the NASDAQ Stock Market under the symbol FMBI. First Midwest's website is www.firstmidwest.com.

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
As of
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Period-End Balance Sheet
Assets
Cash and due from banks $155,055 $139,538 $149,957 $135,049 $114,587
Interest-bearing deposits in other banks 107,093 362,153 105,432 171,312 266,615
Trading securities, at fair value 17,920 18,351 17,693 17,408 16,894
Securities available-for-sale, at fair value 1,919,450 1,964,030 1,773,759 1,625,579 1,306,636
Securities held-to-maturity, at amortized cost 22,291 20,337 20,672 21,051 23,152
FHLB and FRB stock 59,131 53,506 44,506 40,916 39,306
Loans:
Commercial and industrial 2,827,658 2,849,399 2,699,742 2,634,391 2,524,726
Agricultural 389,496 409,571 401,858 422,231 387,440
Commercial real estate:
Office, retail, and industrial 1,581,827 1,537,038 1,529,675 1,566,395 1,395,454
Multi-family 614,034 625,305 587,104 562,065 528,324
Construction 451,540 401,857 371,016 260,743 216,882
Other commercial real estate 979,359 970,855 1,000,655 1,060,302 931,190
Home equity 732,604 733,260 722,881 683,171 653,468
1-4 family mortgages 416,354 388,145 415,581 390,887 355,854
Installment 237,999 232,030 223,845 213,979 137,602
Covered loans 23,274 24,322 27,180 28,391 30,775
Total loans 8,254,145 8,171,782 7,979,537 7,822,555 7,161,715
Allowance for loan losses (86,083) (85,308) (80,105) (77,150) (73,630)
Net loans 8,168,062 8,086,474 7,899,432 7,745,405 7,088,085
OREO 26,083 28,049 29,990 29,649 27,782
Premises, furniture, and equipment, net 82,577 82,443 140,554 141,323 122,278
Investment in BOLI 219,746 219,064 218,133 218,873 209,601
Goodwill and other intangible assets 366,876 367,961 369,962 369,979 339,277
Accrued interest receivable and other assets 278,271 236,291 225,720 212,378 178,463
Total assets $11,422,555 $11,578,197 $10,995,810 $10,728,922 $9,732,676
Liabilities and Stockholders' Equity
Noninterest-bearing deposits $2,766,748 $2,766,265 $2,683,495 $2,627,530 $2,414,454
Interest-bearing deposits 6,061,855 6,339,839 6,287,821 6,153,288 5,683,284
Total deposits 8,828,603 9,106,104 8,971,316 8,780,818 8,097,738
Borrowed funds 879,008 639,539 449,744 387,411 165,096
Senior and subordinated debt 194,603 309,444 162,876 201,293 201,208
Accrued interest payable and other liabilities 263,261 253,846 160,985 134,835 122,366
Stockholders' equity 1,257,080 1,269,264 1,250,889 1,224,565 1,146,268
Total liabilities and stockholders' equity $11,422,555 $11,578,197 $10,995,810 $10,728,922 $9,732,676
Stockholders' equity, excluding AOCI $1,297,990 $1,282,666 $1,259,692 $1,239,606 $1,174,657
Stockholders' equity, common 1,257,080 1,269,264 1,250,889 1,224,565 1,146,268


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,
2016 2016 2016 2016 2015 2016 2015
Income Statement
Interest income $96,328 $97,906 $96,550 $87,548 $84,667 $378,332 $335,984
Interest expense 8,304 6,934 6,569 6,834 6,655 28,641 24,386
Net interest income 88,024 90,972 89,981 80,714 78,012 349,691 311,598
Provision for loan losses 5,307 9,998 8,085 7,593 4,500 30,983 21,152
Net interest income after
provision for loan losses
82,717 80,974 81,896 73,121 73,512 318,708 290,446
Noninterest Income
Service charges on deposit
accounts
10,315 10,708 10,169 9,473 10,303 40,665 39,979
Wealth management fees 8,375 8,495 8,642 7,559 7,493 33,071 29,162
Card-based fees 7,462 7,332 7,592 6,718 6,761 29,104 26,984
Merchant servicing fees 3,016 3,319 3,170 3,028 2,929 12,533 11,739
Mortgage banking income 3,537 3,394 1,863 1,368 1,777 10,162 5,741
Other service charges,
commissions, and fees
4,402 5,218 4,498 5,448 4,664 19,566 13,654
Total fee-based revenues 37,107 38,466 35,934 33,594 33,927 145,101 127,259
Net securities gains 323 187 23 887 822 1,420 2,373
Net gain on sale-leaseback
transaction
5,509 5,509
Other income 2,281 1,691 1,865 1,445 1,729 7,282 6,949
Total noninterest income 39,711 45,853 37,822 35,926 36,478 159,312 136,581
Noninterest Expense
Salaries and employee
benefits:
Salaries and wages 39,257 37,872 37,916 36,296 34,295 151,341 133,739
Retirement and other
employee benefits
8,160 8,500 8,351 8,298 8,925 33,309 31,852
Total salaries and
employee benefits
47,417 46,372 46,267 44,594 43,220 184,650 165,591
Net occupancy and
equipment expense
10,774 10,755 9,928 9,697 9,256 41,154 38,720
Professional services 7,138 6,772 5,292 5,920 6,117 25,122 22,720
Technology and related costs 3,514 3,881 3,669 3,701 3,694 14,765 14,581
Merchant card expense 2,603 2,857 2,724 2,598 2,495 10,782 9,886
Advertising and promotions 2,330 1,941 1,927 1,589 2,211 7,787 7,606
Cardholder expenses 1,426 1,515 1,512 1,359 1,329 5,812 5,243
Net OREO expense 925 313 1,122 664 926 3,024 5,281
Other expenses 8,050 7,310 8,295 7,447 7,525 31,102 27,618
Acquisition and integration
related expenses
7,542 1,172 618 5,020 1,389 14,352 1,389
Lease cancellation fee 950 950
Property valuation adjustments 8,581 8,581
Total noninterest expense 92,669 82,888 81,354 82,589 86,743 339,500 307,216
Income before income
tax expense
29,759 43,939 38,364 26,458 23,247 138,520 119,811
Income tax expense 9,041 15,537 13,097 8,496 6,923 46,171 37,747
Net income $20,718 $28,402 $25,267 $17,962 $16,324 $92,349 $82,064
Net income applicable to
common shares
$20,501 $28,078 $24,977 $17,750 $16,145 $91,306 $81,182
Net income applicable to
common shares, excluding
certain significant
transactions (1)
$25,596 $25,476 $25,348 $20,762 $22,127 $97,182 $87,164
Footnotes to Condensed Consolidated Statements of Income
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee
recognized as a result of the Company's planned 2018 corporate headquarters relocation, the net gain on the sale-leaseback transaction, 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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Earnings Per Share
Basic EPS (1) $0.25 $0.35 $0.31 $0.23 $0.21 $1.14 $1.05
Diluted EPS (1) $0.25 $0.35 $0.31 $0.23 $0.21 $1.14 $1.05
Diluted EPS, excluding
certain significant
transactions (1)(6)
$0.32 $0.32 $0.32 $0.27 $0.29 $1.22 $1.13
Common Stock and Related Per Common Share Data
Book value $15.46 $15.61 $15.38 $15.06 $14.70 $15.46 $14.70
Tangible book value $10.95 $11.08 $10.83 $10.51 $10.35 $10.95 $10.35
Dividends declared per share $0.09 $0.09 $0.09 $0.09 $0.09 $0.36 $0.36
Closing price at period end $25.23 $19.36 $17.56 $18.02 $18.43 $25.23 $18.43
Closing price to book value 1.6 1.2 1.1 1.2 1.3 1.6 1.3
Period end shares outstanding 81,325 81,324 81,312 81,298 77,952 81,325 77,952
Period end treasury shares 9,959 9,957 9,965 9,976 10,276 9,959 10,276
Common dividends $7,315 $7,408 $7,240 $7,228 $7,017 $29,191 $28,064
Key Ratios/Data
Return on average common
equity (1)(2)
6.42% 8.85% 8.13% 6.06% 5.55% 7.38% 7.17%
Return on average tangible
common equity (1)(2)
9.35% 12.85% 11.94% 8.87% 8.06% 10.77% 10.44%
Return on average tangible
common equity, excluding
certain significant
transactions (1)(2)(6)
11.60% 11.69% 12.11% 10.32% 10.94% 11.45% 11.19%
Return on average assets (2) 0.72% 1.00% 0.93% 0.72% 0.66% 0.84% 0.85%
Return on average assets,
excluding certain significant
transactions (1)(2)(6)
0.90% 0.91% 0.94% 0.84% 0.90% 0.90% 0.91%
Loans to deposits 93.49% 89.74% 88.94% 89.09% 88.44% 93.49% 88.44%
Efficiency ratio (1) 63.98% 60.83% 60.98% 64.82% 64.95% 62.59% 63.57%
Net interest margin (3) 3.44% 3.60% 3.72% 3.66% 3.59% 3.60% 3.68%
Yield on average interest-earning
assets (3)
3.76% 3.87% 3.99% 3.96% 3.89% 3.89% 3.95%
Cost of funds 0.47% 0.39% 0.39% 0.44% 0.44% 0.42% 0.41%
Net noninterest expense to
average assets
1.86% 1.50% 1.61% 1.90% 2.08% 1.71% 1.79%
Effective income tax rate 30.38% 35.36% 34.14% 32.11% 29.78% 33.33% 31.51%
Capital Ratios
Total capital to risk-weighted
assets (1)
12.23% 12.25% 10.68% 10.64% 11.15% 12.23% 11.15%
Tier 1 capital to risk-weighted
assets (1)
9.90% 9.89% 9.83% 9.81% 10.28% 9.90% 10.28%
CET1 to risk-weighted assets (1) 9.39% 9.38% 9.32% 9.30% 9.73% 9.39% 9.73%
Tier 1 capital to average assets (1) 8.99% 8.90% 8.94% 9.56% 9.40% 8.99% 9.40%
Tangible common equity to
tangible assets (1)
8.05% 8.04% 8.29% 8.25% 8.59% 8.05% 8.59%
Tangible common equity,
excluding AOCI, to tangible
assets (1)
8.42% 8.16% 8.37% 8.39% 8.89% 8.42% 8.89%
Tangible common equity to risk-
weighted assets (1)
8.88% 9.13% 9.14% 9.04% 9.29% 8.88% 9.29%
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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Asset Quality Performance Data
Non-performing assets (4)
Commercial and industrial $29,938 $13,823 $6,303 $5,364 $5,587 $29,938 $5,587
Agricultural 181 184 475 295 355 181 355
Commercial real estate:
Office, retail, and industrial 17,277 17,670 16,815 10,910 6,875 17,277 6,875
Multi-family 311 316 321 410 796 311 796
Construction 286 287 360 778 905 286 905
Other commercial real estate 2,892 3,361 4,797 5,555 5,611 2,892 5,611
Consumer 7,925 8,156 7,788 8,071 8,746 7,925 8,746
Total non-accrual loans 58,810 43,797 36,859 31,383 28,875 58,810 28,875
90 days or more past due loans,
still accruing interest
4,876 4,318 5,406 5,483 2,883 4,876 2,883
Total non-performing loans 63,686 48,115 42,265 36,866 31,758 63,686 31,758
Accruing TDRs 2,291 2,368 2,491 2,702 2,743 2,291 2,743
OREO 26,020 27,986 29,452 29,238 27,349 26,020 27,349
Total non-performing assets $91,997 $78,469 $74,208 $68,806 $61,850 $91,997 $61,850
30-89 days past due loans (4) $20,125 $25,849 $22,770 $29,826 $16,329 $20,125 $16,329
Allowance for credit losses
Allowance for loan losses $85,165 $84,016 $78,711 $75,582 $71,992 $85,165 $71,992
Allowance for covered loan
losses
918 1,292 1,394 1,568 1,638 918 1,638
Reserve for unfunded
commitments
1,000 1,000 1,400 1,225 1,225 1,000 1,225
Total allowance for credit
losses
$87,083 $86,308 $81,505 $78,375 $74,855 $87,083 $74,855
Provision for loan losses $5,307 $9,998 $8,085 $7,593 $4,500 $30,983 $21,152
Net charge-offs by category
Commercial and industrial $3,402 $1,145 $1,450 $1,396 $1,781 $7,393 $13,312
Agricultural
Commercial real estate:
Office, retail, and industrial 165 2,151 1,633 421 267 4,370 2,420
Multi-family 17 (69) 83 179 (27) 210 530
Construction (12) (9) (12) 111 105 78 (214)
Other commercial real estate (111) 415 810 1,294 110 2,408 650
Consumer 933 1,162 1,164 672 1,134 3,931 3,004
Covered 138 2 140 514
Total net charge-offs 4,532 4,795 5,130 4,073 3,370 18,530 20,216
Total recoveries included above $1,489 $1,155 $1,003 $1,116 $1,031 $4,763 $6,701
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
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
Asset Quality ratios (4)
Non-accrual loans to total loans 0.71% 0.54% 0.46% 0.40% 0.40%
Non-performing loans to total loans 0.77% 0.59% 0.53% 0.47% 0.45%
Non-performing assets to total loans plus OREO 1.11% 0.96% 0.93% 0.88% 0.86%
Non-performing assets to tangible common equity plus allowance for credit losses 9.42% 7.96% 7.72% 7.39% 7.03%
Non-accrual loans to total assets 0.52% 0.38% 0.34% 0.29% 0.30%
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans (5) 1.06% 1.06% 1.02% 1.00% 1.05%
Allowance for credit losses to loans, excluding acquired loans 1.11% 1.13% 1.11% 1.11% 1.11%
Allowance for credit losses to non-accrual loans (4) 146.51% 194.11% 217.34% 244.74% 253.57%
Allowance for credit losses to non-performing loans (4) 135.30% 176.69% 189.54% 208.34% 230.55%
Net charge-offs to average loans (2) 0.22% 0.24% 0.26% 0.22% 0.19%
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 acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, the net gain on the sale-leaseback transaction, 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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Earnings Per Share
Net income$20,718 $28,402 $25,267 $17,962 $16,324 $92,349 $82,064
Net income applicable to non-
vested restricted shares
(217) (324) (290) (212) (179) (1,043) (882)
Net income applicable to
common shares
20,501 28,078 24,977 17,750 16,145 91,306 81,182
Acquisition and integration
related expenses
7,542 1,172 618 5,020 1,389 14,352 1,389
Tax effect of acquisition and
integration related expenses
(3,017) (469) (247) (2,008) (556) (5,741) (556)
Lease cancellation fee 950 950
Tax effect of lease cancellation
fee
(380) (380)
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Property valuation adjustments 8,581 8,581
Tax effect of property valuation
adjustments
(3,432) (3,432)
Net income applicable to
common shares, excluding
certain significant
transactions (1)
$25,596 $25,476 $25,348 $20,762 $22,127 $97,182 $87,164
Weighted-average common shares outstanding:
Weighted-average common
shares outstanding (basic)
80,415 80,396 80,383 77,980 77,121 79,797 77,059
Dilutive effect of common
stock equivalents
15 13 13 12 13 13 13
Weighted-average diluted
common shares
outstanding
80,430 80,409 80,396 77,992 77,134 79,810 77,072
Basic EPS $0.25 $0.35 $0.31 $0.23 $0.21 $1.14 $1.05
Diluted EPS $0.25 $0.35 $0.31 $0.23 $0.21 $1.14 $1.05
Diluted EPS, excluding certain
significant transactions (1)
$0.32 $0.32 $0.32 $0.27 $0.29 $1.22 $1.13
Anti-dilutive shares not included
in the computation of diluted EPS
445 454 469 608 735 494 800
Efficiency Ratio Calculation
Noninterest expense$92,669 $82,888 $81,354 $82,589 $86,743 $339,500 $307,216
Less:
Net OREO expense (925) (313) (1,122) (664) (926) (3,024) (5,281)
Acquisition and integration
related expenses
(7,542) (1,172) (618) (5,020) (1,389) (14,352) (1,389)
Lease cancellation fee(950) (950)
Property valuation
adjustments
(8,581) (8,581)
Total $83,252 $81,403 $79,614 $76,905 $75,847 $321,174 $291,965
Tax-equivalent net interest
income (2)
$90,088 $93,051 $92,174 $83,021 $80,506 $358,334 $322,277
Fee-based revenues 37,107 38,466 35,934 33,594 33,927 145,101 127,259
Add:
Other income, excluding
BOLI income
1,310 762 984 579 807 3,635 2,764
BOLI Income 971 929 881 866 922 3,647 4,185
Tax-equivalent adjustment of BOLI 647 619 587 577 615 2,431 2,790
Total $130,123 $133,827 $130,560 $118,637 $116,777 $513,148 $459,275
Efficiency ratio 63.98% 60.83% 60.98% 64.82% 64.95% 62.59% 63.57%
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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Tax-Equivalent Net Interest Income
Net interest income $88,024 $90,972 $89,981 $80,714 $78,012 $349,691 $311,598
Tax-equivalent adjustment 2,064 2,079 2,193 2,307 2,494 8,643 10,679
Tax-equivalent net interest
income (2)
$90,088 $93,051 $92,174 $83,021 $80,506 $358,334 $322,277
Risk-Based Capital Data
Common stock $913 $913 $913 $913 $882 $913 $882
Additional paid-in capital 498,937 496,918 495,159 493,153 446,672 498,937 446,672
Retained earnings 1,016,674 1,003,271 982,277 964,250 953,516 1,016,674 953,516
Treasury stock, at cost (218,534) (218,436) (218,657) (218,710) (226,413) (218,534) (226,413)
Goodwill and other intangible
assets, net of deferred tax
liabilities
(356,477) (357,079) (358,582) (357,895) (327,115) (356,477) (327,115)
Disallowed deferred tax assets (198) (383) (2,263) (2,956) (1,902) (198) (1,902)
CET1 capital 941,315 925,204 898,847 878,755 845,640 941,315 845,640
Trust preferred securities 50,690 50,690 50,690 50,690 50,690 50,690 50,690
Other disallowed deferred tax
assets
(132) (255) (1,508) (1,970) (2,868) (132) (2,868)
Tier 1 capital 991,873 975,639 948,029 927,475 893,462 991,873 893,462
Tier 2 capital 233,656 232,792 81,505 78,375 74,855 233,656 74,855
Total capital $1,225,529 $1,208,431 $1,029,534 $1,005,850 $968,317 $1,225,529 $968,317
Risk-weighted assets $10,019,434 $9,867,406 $9,641,953 $9,452,551 $8,687,864 $10,019,434 $8,687,864
Adjusted average assets $11,036,835 $10,959,119 $10,608,085 $9,700,671 $9,501,087 $11,036,835 $9,501,087
Total capital to risk-weighted
assets
12.23% 12.25% 10.68% 10.64% 11.15% 12.23% 11.15%
Tier 1 capital to risk-weighted
assets
9.90% 9.89% 9.83% 9.81% 10.28% 9.90% 10.28%
CET1 to risk-weighted assets 9.39% 9.38% 9.32% 9.30% 9.73% 9.39% 9.73%
Tier 1 capital to average assets 8.99% 8.90% 8.94% 9.56% 9.40% 8.99% 9.40%
Tangible Common Equity
Stockholders' equity $1,257,080 $1,269,264 $1,250,889 $1,224,565 $1,146,268 $1,257,080 $1,146,268
Less: goodwill and other
intangible assets
(366,876) (367,961) (369,962) (369,979) (339,277) (366,876) (339,277)
Tangible common equity 890,204 901,303 880,927 854,586 806,991 890,204 806,991
Less: AOCI 40,910 13,402 8,803 15,041 28,389 40,910 28,389
Tangible common equity,
excluding AOCI
$931,114 $914,705 $889,730 $869,627 $835,380 $931,114 $835,380
Total assets $11,422,555 $11,578,197 $10,995,810 $10,728,922 $9,732,676 $11,422,555 $9,732,676
Less: goodwill and other
intangible assets
(366,876) (367,961) (369,962) (369,979) (339,277) (366,876) (339,277)
Tangible assets $11,055,679 $11,210,236 $10,625,848 $10,358,943 $9,393,399 $11,055,679 $9,393,399
Tangible common equity to
tangible assets
8.05% 8.04% 8.29% 8.25% 8.59% 8.05% 8.59%
Tangible common equity,
excluding AOCI, to tangible
assets
8.42% 8.16% 8.37% 8.39% 8.89% 8.42% 8.89%
Tangible common equity to risk-
weighted assets
8.88% 9.13% 9.14% 9.04% 9.29% 8.88% 9.29%
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 Years Ended
December 31, September 30, June 30, March 31, December 31, December 31, December 31,
2016 2016 2016 2016 2015 2016 2015
Return on Average Common and Tangible Common Equity
Net income applicable to
common shares
$20,501 $28,078 $24,977 $17,750 $16,145 $91,306 $81,182
Intangibles amortization 1,207 1,245 1,245 985 971 4,682 3,920
Tax effect of intangibles
amortization
(483) (498) (498) (394) (388) (1,873) (1,568)
Net income applicable to
common shares, excluding
intangibles amortization
21,225 28,825 25,724 18,341 16,728 94,115 83,534
Acquisition and integration
related expenses
7,542 1,172 618 5,020 1,389 14,352 1,389
Tax effect of acquisition and
integration related expenses
(3,017) (469) (247) (2,008) (556) (5,741) (556)
Lease cancellation fee 950 950
Tax effect of lease cancellation
fee
(380) (380)
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Property valuation adjustments 8,581 8,581
Tax effect of property valuation
adjustments
(3,432) (3,432)
Net income applicable to
common shares, excluding
certain significant
transactions (1)
$26,320 $26,223 $26,095 $21,353 $22,710 $99,991 $89,516
Average stockholders' equity $1,269,993 $1,261,702 $1,235,497 $1,178,588 $1,154,506 $1,236,606 $1,132,058
Less: average intangible assets (367,328) (369,281) (369,177) (346,549) (331,013) (363,112) (332,269)
Average tangible common
equity
$902,665 $892,421 $866,320 $832,039 $823,493 $873,494 $799,789
Return on average common
equity (3)
6.42% 8.85% 8.13% 6.06% 5.55% 7.38% 7.17%
Return on average tangible
common equity (3)
9.35% 12.85% 11.94% 8.87% 8.06% 10.77% 10.44%
Return on average tangible
common equity, excluding
certain significant
transactions (1)(3)
11.60% 11.69% 12.11% 10.32% 10.94% 11.45% 11.19%
Return on Average Assets
Net Income $20,718 $28,402 $25,267 $17,962 $16,324 $92,349 $82,064
Acquisition and integration
related expenses
7,542 1,172 618 5,020 1,389 14,352 1,389
Tax effect of acquisition and
integration related expenses
(3,017) (469) (247) (2,008) (556) (5,741) (556)
Lease cancellation fee 950 950
Tax effect of lease cancellation
fee
(380) (380)
Net gain on sale-leaseback
transaction
(5,509) (5,509)
Tax effect of net gain on sale-
leaseback transaction
2,204 2,204
Property valuation adjustments 8,581 8,581
Tax effect of property valuation
adjustments
(3,432) (3,432)
Net income, excluding certain
significant transactions (1)
$25,813 $25,800 $25,638 $20,974 $22,306 $98,225 $88,046
Average assets $11,380,108 $11,322,325 $10,968,516 $10,056,845 $9,822,430 $10,934,240 $9,702,051
Return on average assets (3) 0.72% 1.00% 0.93% 0.72% 0.66% 0.84% 0.85%
Return on average assets,
excluding certain significant
transactions (1)(3)
0.90% 0.91% 0.94% 0.84% 0.90% 0.90% 0.91%
Footnotes to Non-GAAP Reconciliations
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, the net gain on the sale-leaseback transaction, 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: Patrick S. Barrett EVP, Chief Financial Officer (630) 875-7273 pat.barrett@firstmidwest.com Media: James M. Roolf SVP and Corporate Relations Officer (630) 875-7533 jim.roolf@firstmidwest.com

Source:First Midwest Bancorp, Inc.