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First Midwest Bancorp, Inc. Announces 2017 First Quarter Results

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

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

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

SELECT FIRST QUARTER HIGHLIGHTS

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

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

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

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

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

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

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

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

(1) These metrics are non-GAAP financial measures. For details on the calculation of these metrics, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

ACQUISITIONS

Standard Bancshares, Inc.

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

Premier Asset Management LLC

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

OPERATING PERFORMANCE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LOAN PORTFOLIO AND ASSET QUALITY

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

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

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

Asset Quality
(Dollar amounts in thousands)
As of March 31, 2017
Percent Change From
March 31,
2017
December 31,
2016
March 31,
2016
December 31,
2016
March 31,
2016
Asset quality ��
Non-accrual loans $54,294 $59,289 $31,890 (8.4) 70.3
90 days or more past due loans, still accruing
interest (1)
2,633 5,009 5,835 (47.4) (54.9)
Total non-performing loans 56,927 64,298 37,725 (11.5) 50.9
Accruing troubled debt restructurings
("TDRs")
2,112 2,291 2,702 (7.8) (21.8)
OREO 29,140 26,083 29,649 11.7 (1.7)
Total non-performing assets $88,179 $92,672 $70,076 (4.8) 25.8
30-89 days past due loans (1) $23,641 $21,043 $30,142
Non-accrual loans to total loans (2) 0.54% 0.72% 0.41%
Non-performing loans to total loans (2) 0.57% 0.78% 0.48%
Non-performing assets to total loans plus
OREO (2)
0.87% 1.12% 0.89%
Allowance for credit losses
Allowance for loan losses $88,163 $86,083 $77,150
Reserve for unfunded commitments 1,000 1,000 1,225
Total allowance for credit losses $89,163 $87,083 $78,375
Allowance for credit losses to total loans (3) 0.89% 1.06% 1.00%
Allowance for credit losses to loans, excluding
acquired loans
1.11% 1.11% 1.11%
Allowance for credit losses to non-accrual
loans
164.22% 146.88% 245.77%
(1) Purchased credit impaired loans with an accretable yield are considered current and are not included in past due loan totals.
(2) Excluding the impact of loans and OREO acquired in the Standard transaction, non-accrual loans to total loans, non-performing loans to total loans, and non-performing assets to total loans plus OREO were 0.65%, 0.68%, and 0.95%, respectively, at March 31, 2017.
(3) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses on acquired loans is established as necessary to reflect credit deterioration.

Total non-performing assets represented 0.87% of total loans and OREO at March 31, 2017, down from 1.12% at December 31, 2016 and 0.89% at March 31, 2016. Included in non-performing assets as of March 31, 2017 was $8.4 million of OREO acquired in the Standard transaction.

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

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

DEPOSIT PORTFOLIO

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

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

CAPITAL MANAGEMENT

Capital Ratios
As of
March 31,
2017
December 31,
2016
March 31,
2016
Company regulatory capital ratios:
Total capital to risk-weighted assets 11.48% 12.23% 10.64%
Tier 1 capital to risk-weighted assets 9.53% 9.90% 9.81%
Common equity Tier 1 ("CET1") to risk-weighted assets 9.11% 9.39% 9.30%
Tier 1 capital to average assets 8.89% 8.99% 9.56%
Company tangible common equity ratios (1)(2):
Tangible common equity to tangible assets 8.07% 8.05% 8.25%
Tangible common equity, excluding accumulated other comprehensive
income ("AOCI"), to tangible assets
8.38% 8.42% 8.39%
Tangible common equity to risk-weighted assets 8.68% 8.88% 9.04%
(1) These ratios are not subject to formal Federal Reserve regulatory guidance.
(2) Tangible common equity ("TCE") represents common stockholders' equity less goodwill and identifiable intangible assets. For details of the calculation of these ratios, see the sections titled, "Non-GAAP Financial Information" and "Non-GAPP Reconciliations" presented later in this release.

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

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

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, April 26, 2017 at 11:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference ID 10103765 beginning one hour after completion of the live call until 9:00 A.M. (ET) on May 3, 2017. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

Press Release and Additional Information Available on Website

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

Forward-Looking Statements

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

Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2016, as well as our subsequent filings made with the Securities and Exchange Commission. However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.

Non-GAAP Financial Information

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

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

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it enhances comparability for peer comparison purposes. In addition, management believes that the tax-equivalent net interest margin, excluding the impact of acquired loan accretion, enhances comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate significantly based on the size of each acquisition.

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

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

About the Company

First Midwest is a relationship-focused financial institution and one of the largest independent publicly-traded bank holding companies based on assets headquartered in the Midwest, with approximately $14 billion in assets and an additional $9.5 billion in trust assets under management. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of commercial, equipment leasing, retail, wealth management, trust and private banking products and services through over 130 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest's common stock is traded on the NASDAQ Stock Market under the symbol FMBI. First Midwest's website is www.firstmidwest.com.

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
As of
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Period-End Balance Sheet
Assets
Cash and due from banks$174,268 $155,055 $139,538 $149,957 $135,049
Interest-bearing deposits in other banks74,892 107,093 362,153 105,432 171,312
Trading securities, at fair value19,130 17,920 18,351 17,693 17,408
Securities available-for-sale, at fair value1,937,124 1,919,450 1,964,030 1,773,759 1,625,579
Securities held-to-maturity, at amortized cost17,742 22,291 20,337 20,672 21,051
FHLB and FRB stock46,306 59,131 53,506 44,506 40,916
Loans:
Commercial and industrial3,370,780 2,827,658 2,849,399 2,699,742 2,634,391
Agricultural422,784 389,496 409,571 401,858 422,231
Commercial real estate:
Office, retail, and industrial1,988,979 1,581,967 1,537,181 1,529,811 1,566,572
Multi-family671,710 614,052 625,324 587,123 562,084
Construction568,460 451,540 401,857 371,016 260,743
Other commercial real estate1,357,781 979,528 971,030 1,000,829 1,060,481
Home equity880,667 747,983 748,571 738,263 698,309
1-4 family mortgages540,148 423,922 396,819 427,050 403,765
Installment253,061 237,999 232,030 223,845 213,979
Total loans10,054,370 8,254,145 8,171,782 7,979,537 7,822,555
Allowance for loan losses(88,163) (86,083) (85,308) (80,105) (77,150)
Net loans9,966,207 8,168,062 8,086,474 7,899,432 7,745,405
OREO29,140 26,083 28,049 29,990 29,649
Premises, furniture, and equipment, net140,653 82,577 82,443 140,554 141,323
Investment in BOLI276,960 219,746 219,064 218,133 218,873
Goodwill and other intangible assets754,621 366,876 367,961 369,962 369,979
Accrued interest receivable and other assets336,428 278,271 236,291 225,720 212,378
Total assets$13,773,471 $11,422,555 $11,578,197 $10,995,810 $10,728,922
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$3,492,987 $2,766,748 $2,766,265 $2,683,495 $2,627,530
Interest-bearing deposits7,463,554 6,061,855 6,339,839 6,287,821 6,153,288
Total deposits10,956,541 8,828,603 9,106,104 8,971,316 8,780,818
Borrowed funds547,923 879,008 639,539 449,744 387,411
Senior and subordinated debt194,745 194,603 309,444 162,876 201,293
Accrued interest payable and other liabilities269,529 263,261 253,846 160,985 134,835
Stockholders' equity1,804,733 1,257,080 1,269,264 1,250,889 1,224,565
Total liabilities and stockholders' equity$13,773,471 $11,422,555 $11,578,197 $10,995,810 $10,728,922
Stockholders' equity, excluding accumulated other
comprehensive income ("AOCI")
$1,844,997 $1,297,990 $1,282,666 $1,259,692 $1,239,606
Stockholders' equity, common1,804,733 1,257,080 1,269,264 1,250,889 1,224,565


First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Income Statement
Interest income$123,699 $96,328 $97,906 $96,550 $87,548
Interest expense8,502 8,304 6,934 6,569 6,834
Net interest income115,197 88,024 90,972 89,981 80,714
Provision for loan losses4,918 5,307 9,998 8,085 7,593
Net interest income after provision for loan losses110,279 82,717 80,974 81,896 73,121
Noninterest Income
Service charges on deposit accounts11,365 10,315 10,708 10,169 9,473
Wealth management fees9,660 8,375 8,495 8,642 7,559
Card-based fees8,116 7,462 7,332 7,592 6,718
Merchant servicing fees3,135 3,016 3,319 3,170 3,028
Mortgage banking income1,888 3,537 3,394 1,863 1,368
Capital market products income1,376 1,827 2,916 2,066 3,215
Other service charges, commissions, and fees2,307 2,575 2,302 2,432 2,233
Total fee-based revenues37,847 37,107 38,466 35,934 33,594
Net securities gains 323 187 23 887
Net gain on sale-leaseback transaction 5,509
Other income2,104 2,281 1,691 1,865 1,445
Total noninterest income39,951 39,711 45,853 37,822 35,926
Noninterest Expense
Salaries and employee benefits:
Salaries and wages44,890 39,257 37,872 37,916 36,296
Retirement and other employee benefits10,882 8,160 8,500 8,351 8,298
Total salaries and employee benefits55,772 47,417 46,372 46,267 44,594
Net occupancy and equipment expense12,325 10,774 10,755 9,928 9,697
Professional services8,463 7,138 6,772 5,292 5,920
Technology and related costs4,433 3,514 3,881 3,669 3,701
Merchant card expense2,585 2,603 2,857 2,724 2,598
Advertising and promotions1,066 2,330 1,941 1,927 1,589
Cardholder expenses1,764 1,426 1,515 1,512 1,359
Net OREO expense1,700 925 313 1,122 664
Other expenses9,969 8,050 7,310 8,295 7,447
Acquisition and integration related expenses18,565 7,542 1,172 618 5,020
Lease cancellation fee 950
Total noninterest expense116,642 92,669 82,888 81,354 82,589
Income before income tax expense33,588 29,759 43,939 38,364 26,458
Income tax expense10,733 9,041 15,537 13,097 8,496
Net income$22,855 $20,718 $28,402 $25,267 $17,962
Net income applicable to common shares$22,621 $20,501 $28,078 $24,977 $17,750
Net income applicable to common shares, excluding
certain significant transactions (1)
$33,760 $25,596 $25,476 $25,348 $20,762
Footnotes to Condensed Consolidated Statements of Income
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Earnings Per Share
Basic earnings per common share ("EPS") (1)$0.23 $0.25 $0.35 $0.31 $0.23
Diluted EPS (1)$0.23 $0.25 $0.35 $0.31 $0.23
Diluted EPS, excluding certain significant transactions (1) (5)$0.34 $0.32 $0.32 $0.32 $0.27
Common Stock and Related Per Common Share Data
Book value$17.56 $15.46 $15.61 $15.38 $15.06
Tangible book value$10.22 $10.95 $11.08 $10.83 $10.51
Dividends declared per share$0.09 $0.09 $0.09 $0.09 $0.09
Closing price at period end$23.68 $25.23 $19.36 $17.56 $18.02
Closing price to book value1.3 1.6 1.2 1.1 1.2
Period end shares outstanding102,757 81,325 81,324 81,312 81,298
Period end treasury shares9,586 9,959 9,957 9,965 9,976
Common dividends$9,126 $7,315 $7,408 $7,240 $7,228
Key Ratios/Data
Return on average common equity (1) (2)5.20% 6.42% 8.85% 8.13% 6.06%
Return on average tangible common equity (1) (2)7.16% 9.35% 12.85% 11.94% 8.87%
Return on average tangible common equity, excluding certain
significant transactions (1) (2) (5)
10.51% 11.60% 11.69% 12.11% 10.32%
Return on average assets (2)0.68% 0.72% 1.00% 0.93% 0.72%
Return on average assets, excluding certain significant
transactions (1) (2) (5)
1.01% 0.90% 0.91% 0.94% 0.84%
Loans to deposits91.77% 93.49% 89.74% 88.94% 89.09%
Efficiency ratio (1)60.98% 63.98% 60.83% 60.98% 64.82%
Net interest margin (3)3.89% 3.44% 3.60% 3.72% 3.66%
Yield on average interest-earning assets (3)4.17% 3.76% 3.87% 3.99% 3.96%
Cost of funds0.42% 0.47% 0.39% 0.39% 0.44%
Net noninterest expense to average assets2.27% 1.86% 1.50% 1.61% 1.90%
Effective income tax rate31.95% 30.38% 35.36% 34.14% 32.11%
Capital Ratios
Total capital to risk-weighted assets (1)11.48% 12.23% 12.25% 10.68% 10.64%
Tier 1 capital to risk-weighted assets (1)9.53% 9.90% 9.89% 9.83% 9.81%
CET1 to risk-weighted assets (1)9.11% 9.39% 9.38% 9.32% 9.30%
Tier 1 capital to average assets (1)8.89% 8.99% 8.90% 8.94% 9.56%
Tangible common equity to tangible assets (1)8.07% 8.05% 8.04% 8.29% 8.25%
Tangible common equity, excluding AOCI, to tangible assets (1)8.38% 8.42% 8.16% 8.37% 8.39%
Tangible common equity to risk-weighted assets (1)8.68% 8.88% 9.13% 9.14% 9.04%
Note: Selected Financial Information footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Asset Quality Performance Data
Non-performing assets
Commercial and industrial$21,514 $29,938 $13,823 $6,303 $5,364
Agricultural1,283 181 184 475 295
Commercial real estate:
Office, retail, and industrial19,505 17,277 17,670 16,815 10,910
Multi-family163 311 316 321 410
Construction198 286 287 360 778
Other commercial real estate3,858 2,892 3,361 4,797 5,555
Consumer7,773 8,404 8,648 8,241 8,578
Total non-accrual loans54,294 59,289 44,289 37,312 31,890
90 days or more past due loans, still accruing interest2,633 5,009 4,318 5,406 5,835
Total non-performing loans56,927 64,298 48,607 42,718 37,725
Accruing TDRs2,112 2,291 2,368 2,491 2,702
OREO29,140 26,083 28,049 29,990 29,649
Total non-performing assets$88,179 $92,672 $79,024 $75,199 $70,076
30-89 days past due loans$23,641 $21,043 $26,140 $23,380 $30,142
Allowance for credit losses
Allowance for loan losses$88,163 $86,083 $85,308 $80,105 $77,150
Reserve for unfunded commitments1,000 1,000 1,000 1,400 1,225
Total allowance for credit losses$89,163 $87,083 $86,308 $81,505 $78,375
Provision for loan losses$4,918 $5,307 $9,998 $8,085 $7,593
Net charge-offs by category
Commercial and industrial$1,894 $3,540 $1,145 $1,450 $1,396
Agricultural514
Commercial real estate:
Office, retail, and industrial(848) 165 2,151 1,633 421
Multi-family(28) 17 (69) 83 179
Construction(222) (12) (9) (12) 111
Other commercial real estate307 (111) 415 810 1,294
Consumer1,221 933 1,162 1,166 672
Total net charge-offs$2,838 $4,532 $4,795 $5,130 $4,073
Total recoveries included above$3,440 $1,489 $1,155 $1,003 $1,116
Note: Selected Financial Information footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Asset Quality ratios
Non-accrual loans to total loans 0.54% 0.72% 0.54% 0.47% 0.41%
Non-performing loans to total loans 0.57% 0.78% 0.59% 0.54% 0.48%
Non-performing assets to total loans plus OREO 0.87% 1.12% 0.96% 0.94% 0.89%
Non-performing assets to tangible common equity plus allowance
for credit losses
7.74% 9.48% 8.00% 7.81% 7.51%
Non-accrual loans to total assets 0.39% 0.52% 0.38% 0.34% 0.30%
Allowance for credit losses and net charge-off ratios
Allowance for credit losses to total loans (4) 0.89% 1.06% 1.06% 1.02% 1.00%
Allowance for credit losses to loans, excluding acquired loans 1.11% 1.11% 1.13% 1.11% 1.11%
Allowance for credit losses to non-accrual loans 164.22% 146.88% 194.87% 218.44% 245.77%
Allowance for credit losses to non-performing loans 156.63% 135.44% 177.56% 190.80% 207.75%
Net charge-offs to average loans (2) 0.12% 0.22% 0.24% 0.26% 0.22%
Footnotes to Selected Financial Information
(1) See the Non-GAAP Reconciliations section for the detailed calculation.
(2) Annualized based on the actual number of days for each period presented.
(3) Presented on a tax-equivalent basis, which reflects federal and state tax benefits.
(4) This ratio includes acquired loans that are recorded at fair value through an acquisition adjustment, which incorporates credit risk, as of the acquisition date with no allowance for credit losses being established at that time. As the acquisition adjustment is accreted into income over future periods, an allowance for credit losses is established on acquired loans as necessary to reflect credit deterioration.
(5) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Earnings Per Share
Net income$22,855 $20,718 $28,402 $25,267 $17,962
Net income applicable to non-vested restricted shares(234) (217) (324) (290) (212)
Net income applicable to common shares22,621 20,501 28,078 24,977 17,750
Acquisition and integration related expenses18,565 7,542 1,172 618 5,020
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee 950
Tax effect of lease cancellation fee (380)
Net gain on sale-leaseback transaction (5,509)
Tax effect of net gain on sale-leaseback transaction 2,204
Net income applicable to common shares, excluding certain
significant transactions (1)
$33,760 $25,596 $25,476 $25,348 $20,762
Weighted-average common shares outstanding:
Weighted-average common shares outstanding (basic)100,411 80,415 80,396 80,383 77,980
Dilutive effect of common stock equivalents21 15 13 13 12
Weighted-average diluted common shares outstanding100,432 80,430 80,409 80,396 77,992
Basic EPS$0.23 $0.25 $0.35 $0.31 $0.23
Diluted EPS$0.23 $0.25 $0.35 $0.31 $0.23
Diluted EPS, excluding certain significant transactions (1)$0.34 $0.32 $0.32 $0.32 $0.27
Anti-dilutive shares not included in the computation of diluted EPS343 445 454 469 608
Efficiency Ratio Calculation
Noninterest expense$116,642 $92,669 $82,888 $81,354 $82,589
Less:
Net OREO expense(1,700) (925) (313) (1,122) (664)
Acquisition and integration related expenses(18,565) (7,542) (1,172) (618) (5,020)
Lease cancellation fee (950)
Total$96,377 $83,252 $81,403 $79,614 $76,905
Tax-equivalent net interest income (2)$117,251 $90,088 $93,051 $92,174 $83,021
Fee-based revenues37,847 37,107 38,466 35,934 33,594
Add:
Other income, excluding BOLI income844 1,310 762 984 579
BOLI1,260 971 929 881 866
Tax-equivalent adjustment of BOLI840 647 619 587 577
Total$158,042 $130,123 $133,827 $130,560 $118,637
Efficiency ratio60.98% 63.98% 60.83% 60.98% 64.82%
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Tax-Equivalent Net Interest Income
Net interest income$115,197 $88,024 $90,972 $89,981 $80,714
Tax-equivalent adjustment2,054 2,064 2,079 2,193 2,307
Tax-equivalent net interest income (2)117,251 90,088 93,051 92,174 83,021
Less: acquired loan accretion(11,345) (2,663) (4,555) (4,927) (2,423)
Tax-equivalent net interest income, excluding the impact of
acquired loan accretion
$105,906 $87,425 $88,496 $87,247 $80,598
Average interest-earning assets$12,211,804 $10,425,691 $10,297,647 $9,949,093 $9,122,915
Net interest margin (GAAP)3.83% 3.36% 3.51% 3.64% 3.56%
Tax-equivalent net interest margin3.89% 3.44% 3.60% 3.72% 3.66%
Tax-equivalent net interest margin, excluding the impact of
acquired loan accretion
3.51% 3.34% 3.42% 3.53% 3.55%
Risk-Based Capital Data
Common stock$1,123 $913 $913 $913 $913
Additional paid-in capital1,022,417 498,937 496,918 495,159 493,153
Retained earnings1,030,403 1,016,674 1,003,271 982,277 964,250
Treasury stock, at cost(208,946) (218,534) (218,436) (218,657) (218,710)
Goodwill and other intangible assets, net of deferred tax liabilities(742,012) (356,477) (357,079) (358,582) (357,895)
Disallowed deferred tax assets(1,150) (198) (383) (2,263) (2,956)
CET1 capital1,101,835 941,315 925,204 898,847 878,755
Trust-preferred securities50,690 50,690 50,690 50,690 50,690
Other disallowed deferred tax assets(287) (132) (255) (1,508) (1,970)
Tier 1 capital1,152,238 991,873 975,639 948,029 927,475
Tier 2 capital235,825 233,656 232,792 81,505 78,375
Total capital$1,388,063 $1,225,529 $1,208,431 $1,029,534 $1,005,850
Risk-weighted assets$12,095,592 $10,019,434 $9,867,406 $9,641,953 $9,452,551
Adjusted average assets$12,965,450 $11,036,835 $10,959,119 $10,608,085 $9,700,671
Total capital to risk-weighted assets11.48% 12.23% 12.25% 10.68% 10.64%
Tier 1 capital to risk-weighted assets9.53% 9.90% 9.89% 9.83% 9.81%
CET1 to risk-weighted assets9.11% 9.39% 9.38% 9.32% 9.30%
Tier 1 capital to average assets8.89% 8.99% 8.90% 8.94% 9.56%
Tangible Common Equity
Stockholders' equity$1,804,733 $1,257,080 $1,269,264 $1,250,889 $1,224,565
Less: goodwill and other intangible assets(754,621) (366,876) (367,961) (369,962) (369,979)
Tangible common equity1,050,112 890,204 901,303 880,927 854,586
Less: AOCI40,264 40,910 13,402 8,803 15,041
Tangible common equity, excluding AOCI$1,090,376 $931,114 $914,705 $889,730 $869,627
Total assets$13,773,471 $11,422,555 $11,578,197 $10,995,810 $10,728,922
Less: goodwill and other intangible assets(754,621) (366,876) (367,961) (369,962) (369,979)
Tangible assets$13,018,850 $11,055,679 $11,210,236 $10,625,848 $10,358,943
Tangible common equity to tangible assets8.07% 8.05% 8.04% 8.29% 8.25%
Tangible common equity, excluding AOCI, to tangible assets8.38% 8.42% 8.16% 8.37% 8.39%
Tangible common equity to risk-weighted assets8.68% 8.88% 9.13% 9.14% 9.04%
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
2017 2016 2016 2016 2016
Return on Average Common and Tangible Common Equity
Net income applicable to common shares$22,621 $20,501 $28,078 $24,977 $17,750
Intangibles amortization1,965 1,207 1,245 1,245 985
Tax effect of intangibles amortization(786) (483) (498) (498) (394)
Net income applicable to common shares, excluding intangibles
amortization
23,800 21,225 28,825 25,724 18,341
Acquisition and integration related expenses18,565 7,542 1,172 618 5,020
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee 950
Tax effect of lease cancellation fee (380)
Net gain on sale-leaseback transaction (5,509)
Tax effect of net gain on sale-leaseback transaction 2,204
Net income applicable to common shares, excluding intangibles
amortization and certain significant transactions (1)
$34,939 $26,320 $26,223 $26,095 $21,353
Average stockholders' equity$1,763,538 $1,269,993 $1,261,702 $1,235,497 $1,178,588
Less: average intangible assets(415,521) (367,328) (369,281) (369,177) (346,549)
Average tangible common equity$1,348,017 $902,665 $892,421 $866,320 $832,039
Return on average common equity (3)5.20% 6.42% 8.85% 8.13% 6.06%
Return on average tangible common equity (3)7.16% 9.35% 12.85% 11.94% 8.87%
Return on average tangible common equity, excluding certain
significant transactions (1) (3)
10.51% 11.60% 11.69% 12.11% 10.32%
Return on Average Assets
Net income$22,855 $20,718 $28,402 $25,267 $17,962
Acquisition and integration related expenses18,565 7,542 1,172 618 5,020
Tax effect of acquisition and integration related expenses(7,426) (3,017) (469) (247) (2,008)
Lease cancellation fee 950
Tax effect of lease cancellation fee (380)
Net gain on sale-leaseback transaction (5,509)
Tax effect of net gain on sale-leaseback transaction 2,204
Net income, excluding certain significant transactions (1)$33,994 $25,813 $25,800 $25,638 $20,974
Average assets$13,673,125 $11,380,108 $11,322,325 $10,968,516 $10,056,845
Return on average assets (3)0.68% 0.72% 1.00% 0.93% 0.72%
Return on average assets, excluding certain significant
transactions (1) (3)
1.01% 0.90% 0.91% 0.94% 0.84%
Footnotes to Non-GAAP Reconciliations
(1) Certain significant transactions include acquisition and integration related expenses associated with completed and pending acquisitions, the lease cancellation fee recognized as a result of the Company's planned 2018 corporate headquarters relocation, and a net gain on a sale-leaseback transaction.
(2) Presented on a tax-equivalent basis, which reflects federal and state tax benefits.
(3) Annualized based on the actual number of days for each period presented.


Contact Information Investors: Patrick S. Barrett EVP, Chief Financial Officer (630) 875-7273 pat.barrett@firstmidwest.com Media: James M. Roolf SVP, Corporate Relations Officer (630) 875-7533 jim.roolf@firstmidwest.com

Source:First Midwest Bancorp, Inc.