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

CHICAGO, Jan. 26, 2021 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest"), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the fourth quarter and full year of 2020. Net income applicable to common shares for the fourth quarter of 2020 was $37.2 million, or $0.33 per diluted common share, compared to $23.4 million, or $0.21 per diluted common share, for the third quarter of 2020, and $51.7 million, or $0.47 per diluted common share, for the fourth quarter of 2019. For the full year of 2020, the Company reported net income applicable to common shares of $97.8 million, or $0.87 per diluted common share, compared to $198.1 million, or $1.82 per diluted common share, for the year ended December 31, 2019.

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

SELECT FOURTH QUARTER HIGHLIGHTS

  • Generated EPS of $0.33, up 57% compared to the third quarter of 2020, reflective of lower credit costs, higher revenues, and income tax benefits; down 30% from the fourth quarter of 2019 due to the impact of the pandemic and optimization costs.
    • EPS, adjusted(1) of $0.43, up 30% from the third quarter of 2020 and down 16% from the fourth quarter of 2019.
  • Reported pre-tax, pre-provision earnings, adjusted(1) of $79 million, up 10% compared to third quarter 2020 due to:
    • Net interest income of $148 million at a net margin of 3.14%, up 4% and 19 basis points ("bps"), respectively, reflective of Paycheck Protection Program ("PPP") loan forgiveness.
    • Fee-based revenues up 10% due to record wealth management fees and record mortgage banking income.
  • Stable credit performance compared to the third quarter of 2020, risk rating migration as expected:
    • Net loan charge-offs ("NCOs") of 0.12%, down 14 bps excluding purchased credit deteriorated ("PCD") and PPP loans.
    • Allowance for credit losses ("ACL") of 1.67% of total loans, consistent with the prior quarter.
    • Non-performing assets ("NPAs") to total loans plus foreclosed assets of 1.11%, consistent with the prior quarter.
  • Grew loans to nearly $14 billion, up 4% and 9% from the prior quarter and prior year, excluding PPP.
  • Generated 118 basis points of total capital during 2020, ending the year at 14.14% of risk-weighted assets, benefiting from the issuance of $230.5 million of 7.0% fixed rate preferred stock.

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

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

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

OPTIMIZATION STRATEGIES

During the third quarter of 2020, the Company initiated certain actions that include optimizing its retail branch network and delivery model through the consolidation of 17 branches, or approximately 15% of its branch network, in early 2021. These actions reflect First Midwest's commitment to best meet the evolving needs and preferences of its clients and resulted in pre-tax costs of $18.4 million and $1.5 million for the third and fourth quarters of 2020, respectively. These costs are associated with valuation adjustments related to locations identified for closure due to their close proximity to another branch, modernization of our ATM network, advisory fees, employee severance, and other expenses associated with locations identified for closure. These costs are recorded within optimization costs within noninterest expense and are expected to be earned back in approximately 2 years.

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

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

OPERATING PERFORMANCE

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

 Quarters Ended
 December 31, 2020  September 30, 2020  December 31, 2019
 Average Balance Interest
Earned/
Paid
 Yield/
Rate
(%)
  Average
Balance
 Interest
Earned/
Paid
 Yield/
Rate
(%)
  Average
Balance
 Interest
Earned/
Paid
 Yield/
Rate
(%)
Assets                   
Other interest-earning assets$1,244,999   $930   0.30   $1,234,948   $799   0.26   $204,001   $1,223   2.38 
Securities(1)3,164,310   17,051   2.16   3,291,724   19,721   2.40   2,893,856   19,989   2.76 
Federal Home Loan Bank ("FHLB") and        
Federal Reserve Bank ("FRB") stock
123,287   1,342   4.35   150,033   976   2.60   117,994   881   2.99 
Loans, excluding PPP loans(1)13,335,154   126,474   3.77   13,558,857   131,680   3.86   12,753,436   155,863   4.85 
PPP loans(1)1,013,511   15,195   5.96   1,194,808   7,001   2.33          
Total Loans(1)14,348,665   141,669   3.93   14,753,665   138,681   3.74   12,753,436   155,863   4.85 
Total interest-earning assets(1)18,881,261   160,992   3.39   19,430,370   160,177   3.28   15,969,287   177,956   4.43 
Cash and due from banks252,268        284,730        241,616      
Allowance for loan losses(246,278)       (243,667)       (112,623)     
Other assets1,995,074        2,055,262        1,790,878      
Total assets$20,882,325        $21,526,695        $17,889,158      

Liabilities and Stockholders' Equity
                   
Savings deposits$2,436,930   109   0.02   $2,342,355   104   0.02   $2,044,386   220   0.04 
NOW accounts2,774,989   277   0.04   2,744,034   307   0.04   2,291,667   2,172   0.38 
Money market deposits2,923,881   694   0.09   2,781,666   724   0.10   2,178,518   3,980   0.72 
Time deposits2,047,260   3,131   0.61   2,302,019   5,702   0.99   3,033,903   13,554   1.77 
Borrowed funds1,661,731   4,158   1.00   2,436,922   6,021   0.98   1,559,326   4,579   1.17 
Senior and subordinated debt234,669   3,482   5.90   234,464   3,498   5.94   233,848   3,740   6.35 
Total interest-bearing liabilities12,079,460   11,851   0.39   12,841,460   16,356   0.51   11,341,648   28,245   0.99 
Demand deposits5,753,600        5,631,355        3,862,157      
Total funding sources17,833,060     0.26   18,472,815     0.35   15,203,805     0.74 
Other liabilities373,854        378,786        326,156      
Stockholders' equity2,675,411        2,675,094        2,359,197      
Total liabilities and        
stockholders' equity
$20,882,325        $21,526,695        $17,889,158      
Tax-equivalent net interest
income/margin(1)
  149,141   3.14     143,821   2.95     149,711   3.72 
Tax-equivalent adjustment  (1,030)       (1,092)       (1,352)   
Net interest income (GAAP)(1)  $148,111        $142,729        $148,359    
Impact of acquired loan accretion(1)  $7,603   0.16     $7,960   0.16     $9,657   0.24 
Tax-equivalent net interest income/        
margin, adjusted(1)
  $141,538   2.98     $135,861   2.79     $140,054   3.48 


(1)Interest income and yields on tax-exempt securities and loans are presented on a tax-equivalent basis, assuming a federal income tax of 21%. The corresponding income tax impact related to tax-exempt items is recorded in income tax expense. These adjustments have no impact on net income. See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

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

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

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

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

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

Noninterest Income Analysis
(Dollar amounts in thousands)

  Quarters Ended December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Wealth management fees $13,548   $12,837   $12,484  5.5   8.5  
Service charges on deposit accounts 10,811   10,342   12,664  4.5   (14.6) 
Mortgage banking income 9,191   6,659   4,134  38.0   122.3  
Card-based fees, net 4,530   4,472   4,512  1.3   0.4  
Capital market products income 659   886   6,337  (25.6)  (89.6) 
Other service charges, commissions, and fees 2,993   2,823   2,946  6.0   1.6  
Total fee-based revenues 41,732   38,019   43,077  9.8   (3.1) 
Other income 3,550   2,523   3,419  40.7   3.8  
Swap termination costs (17,567)  (14,285)    23.0   N/M  
Net securities gains    14,328     (100.0)  N/M  
Total noninterest income $27,715    $40,585    $46,496   (31.7)  (40.4) 

N/M – Not meaningful.

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

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

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

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

Noninterest Expense Analysis
(Dollar amounts in thousands)

  Quarters Ended December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Salaries and employee benefits:          
Salaries and wages $55,950   $53,385   $53,043   4.8   5.5  
Retirement and other employee benefits 10,430   11,349   9,930   (8.1)  5.0  
Total salaries and employee benefits 66,380   64,734   62,973   2.5   5.4  
Net occupancy and equipment expense(1) 14,002   13,736   12,940   1.9   8.2  
Technology and related costs(1) 11,005   10,416   7,429   5.7   48.1  
Professional services(1) 8,424   7,325   10,949   15.0   (23.1) 
Advertising and promotions 1,850   2,688   2,896   (31.2)  (36.1) 
Net other real estate owned ("OREO") expense 106   544   1,080   (80.5)  (90.2) 
Other expenses 12,851   12,374   13,000   3.9   (1.1) 
Optimization costs 1,493   18,376      (91.9)  100.0  
Acquisition and integration related expenses 1,860   881   5,258   111.1   (64.6) 
Delivering Excellence implementation costs       223      (100.0) 
Total noninterest expense $117,971    $131,074    $116,748    (10.0)  1.0   
Optimization costs (1,493)  (18,376)     (91.9)  (100.0) 
Acquisition and integration related expenses (1,860)  (881)  (5,258)  111.1   (64.6) 
Delivering Excellence implementation costs       (223)     (100.0) 
Total noninterest expense, adjusted(2) $114,618   $111,817   $111,267   2.5   3.0  


(1)Certain reclassifications were made to prior year amounts to conform to the current year presentation.
  
(2)See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

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

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

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

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

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

INCOME TAXES

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

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

  As of December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Commercial and industrial $4,578,254  $4,635,571  $4,481,525  (1.2)  2.2  
Agricultural 364,038  377,466  405,616  (3.6)  (10.3) 
Commercial real estate:          
Office, retail, and industrial 1,861,768  1,950,406  1,848,718  (4.5)  0.7  
Multi-family 872,813  868,293  856,553  0.5   1.9  
Construction 612,611  631,607  593,093  (3.0)  3.3  
Other commercial real estate 1,481,976  1,452,994  1,383,708  2.0   7.1  
Total commercial real estate 4,829,168  4,903,300  4,682,072  (1.5)  3.1  
Total corporate loans, excluding PPP 
loans
 9,771,460  9,916,337  9,569,213  (1.5)  2.1  
PPP loans 785,563  1,196,538    (34.3)  N/M  
Total corporate loans 10,557,023  11,112,875  9,569,213  (5.0)  10.3  
Home equity 761,725  827,746  851,454  (8.0)  (10.5) 
1-4 family mortgages 3,022,413  2,287,555  1,927,078  32.1   56.8  
Installment 410,071  425,012  492,585  (3.5)  (16.8) 
Total consumer loans 4,194,209  3,540,313  3,271,117  18.5   28.2  
Total loans $14,751,232  $14,653,188  $12,840,330  0.7   14.9  

N/M – Not meaningful.

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

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

Allowance for Credit Losses
(Dollar amounts in thousands)

  As of December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Allowance for credit losses          
ACL, excluding PCD loans $215,915  $209,988  $109,222  2.8   97.7 
PCD loan ACL 31,127  36,885    (15.6)  100.0 
Total ACL $247,042  $246,873  $109,222  0.1   126.2 
Provision for credit losses $10,507  $15,927  $9,594  (34.0)  9.5 
ACL to total loans(1) 1.67% 1.68% 0.85%    
ACL to total loans, excluding PPP loans(1)(2) 1.77% 1.83% 0.85%    
ACL to non-accrual loans 173.33% 171.95% 132.76%    


(1)Prior to the adoption of the current expected credit losses accounting standard ("CECL") on January 1, 2020, this ratio included acquired loans that were recorded at fair value through an acquisition adjustment netted in loans. Subsequent to adoption, an ACL on acquired loans is established as of the acquisition date and the acquired loans are no longer recorded net of a credit-related acquisition adjustment.
  
(2)This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans. See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

The Company adopted CECL on January 1, 2020, which impacted both the level of ACL as well as other asset quality metrics due to the change in accounting for acquired PCD loans. In addition, the Company participated in the PPP program, resulting in $1.2 billion of loans originated in the second and third quarters of 2020 with a total outstanding balance of $785.6 million as of December 31, 2020 that are expected to be forgiven by the Small Business Administration ("SBA"). As a result, certain metrics are presented excluding PCD and PPP loans to provide comparability to prior periods.

The ACL was $247.0 million or 1.67% of total loans as of December 31, 2020, consistent with September 30, 2020 and increasing $137.8 million compared to December 31, 2019. Excluding the impact of PPP loans, ACL to total loans was 1.77% as of December 31, 2020, down from 1.83% and up from 0.85% as of September 30, 2020 and December 31, 2019, respectively. The decrease from September 30, 2020 reflects net charge-offs on PCD loans that previously had an ACL established upon acquisition. Compared to December 31, 2019, the increase in ACL is a result of the adoption of the CECL accounting standard, the Park Bank acquisition, as well as additional ACL established as a result of the pandemic.

Asset Quality
(Dollar amounts in thousands)

  As of December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Asset quality          
Non-accrual loans, excluding PCD loans(1)(2) $109,957  $103,582  $82,269  6.2   33.7  
Non-accrual PCD loans(1) 32,568  39,990    (18.6)  N/M  
Non-accrual loans 142,525  143,572  82,269  (0.7)  73.2  
90 days or more past due loans, still accruing        
interest(1)
 4,395  3,781  5,001  16.2   (12.1) 
Total non-performing loans, ("NPLs") 146,920  147,353  87,270  (0.3)  68.4  
Accruing troubled debt restructurings        
("TDRs")
 813  841  1,233  (3.3)  (34.1) 
Foreclosed assets(3) 16,671  15,299  20,458  9.0   (18.5) 
Total NPAs $164,404  $163,493  $108,961  0.6   50.9  
30-89 days past due loans(1) $40,656  $21,551  $31,958  88.7   27.2  
Special mention loans(4) $409,083  $395,295  $188,703  3.5   116.8  
Substandard loans(4) 357,219  311,430  188,811  14.7   89.2  
Total performing loans classified as 
substandard and special mention(4)
 $766,302  $706,725  $377,514  8.4   103.0  
Non-accrual loans to total loans:          
Non-accrual loans to total loans 0.97% 0.98% 0.64%    
Non-accrual loans to total loans, excluding 
PPP loans(1)(2)(5)
 1.02% 1.07% 0.64%    
Non-accrual loans to total loans, excluding 
PCD and PPP loans(1)(2)(5)
 0.80% 0.78% 0.64%    
Non-performing loans to total loans:          
NPLs to total loans 1.00% 1.01% 0.68%    
NPLs to total loans, excluding PPP loans(1)(2)(5) 1.05% 1.10% 0.68%    
NPLs to total loans, excluding PCD and PPP
loans(1)(2)(5)
 0.83% 0.81% 0.68%    
Non-performing assets to total loans plus foreclosed assets:        
NPAs to total loans plus foreclosed assets 1.11% 1.11% 0.85%    
NPAs to total loans plus foreclosed assets,         
excluding PPP loans(1)(2)(5)
 1.18% 1.21% 0.85%    
NPAs to total loans plus foreclosed assets,         
excluding PCD and PPP loans(1)(2)(5)
 0.96% 0.93% 0.85%    
Performing loans classified as substandard and special mention to corporate loans:
Performing loans classified as substandard and        
special mention to corporate loans(4)
 7.26% 6.36% 3.95%    
Performing loans classified as substandard and        
special mention to corporate loans, excluding        
PPP loans(4)(5)
 7.84% 7.13% 3.95%    

N/M – Not meaningful.

(1)Prior to the adoption of CECL on January 1, 2020, purchased credit impaired ("PCI") loans with an accretable yield were considered current and were not included in past due loan totals. In addition, PCI loans with an accretable yield were excluded from non-accrual loans. Subsequent to adoption, PCD loans, including those previously classified as PCI, are included in past due and non-accrual loan totals. In addition, an ACL is established as of the acquisition date or upon the adoption of CECL for loans previously classified as PCI, as PCD loans are no longer recorded net of a credit-related acquisition adjustment.
  
(2)See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
  
(3)Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
  
(4)Performing loans classified as substandard and special mention excludes accruing TDRs.
  
(5)This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans.

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

Performing loans classified as substandard and special mention increased to $766.3 million for the fourth quarter of 2020 up from $706.7 million and $377.5 million at September 30, 2020 and December 31, 2019, respectively. This increase is a result of the pandemic's impact on certain borrowers primarily focused in elevated risk sectors that the Company has determined require additional monitoring. These loans exhibit potential or well-defined weaknesses but continue to accrue interest because they are well secured, and collection of principal and interest is expected.

Charge-Off Data
(Dollar amounts in thousands)

  Quarters Ended
  December 31,
2020
 % of
Total
 September 30,
2020
 % of
Total
 December 31,
2019
 % of
Total
Net loan charge-offs(1)            
Commercial and industrial $3,536  33.6  $5,470  34.7  $6,799  64.2  
Agricultural 1,779  16.9  265  1.7  15  0.1  
Commercial real estate:            
Office, retail, and industrial 1,701  16.1  1,339  8.5  256  2.4  
Multi-family 19  0.2      (439) (4.1) 
Construction 140  1.3  4,889  31.1  3    
Other commercial real estate 916  8.7  1,753  11.1  13  0.1  
Consumer 2,448  23.2  2,027  12.9  3,953  37.3  
Total net loan charge-offs $10,539  100.0  $15,743  100.0  $10,600  100.0  
Less: NCOs on PCD loans(2)(3) (6,488) 61.6  (6,923) 44.0    N/A  
Total NCOs, excluding PCD 
loans(2)(3)
 $4,051    $8,820    $10,600   
Total recoveries included above $2,588    $1,795    $2,135   
Quarter-to-Date(1)(4):            
Net charge-offs to average loans 0.29%   0.42%   0.33%  
Net charge-offs to average loans, 
excluding PPP loans(3)(5)
 0.31%   0.46%   0.33%  
Net charge-offs to average loans,  
excluding PCD and PPP loans(3)(5)
 0.12%   0.26%   0.33%  
Year-to-Date(1)(4):            
Net charge-offs to average loans 0.36%   0.38%   0.31%  
Net charge-offs to average loans, 
excluding PPP loans(3)(5)
 0.38%   0.40%   0.31%  
Net charge-offs to average loans,        
excluding PCD and PPP loans(3)(5)
 0.24%   0.29%   0.31%  

N/A – Not applicable.

(1)Amounts represent charge-offs, net of recoveries.
  
(2)Prior to the adoption of CECL on January 1, 2020, the portion of PCI loans deemed to be uncollectible was recorded as a reduction of the credit-related acquisition adjustment, which was netted within loans. Subsequent to adoption, an ACL on PCD loans, including those previously identified as PCI, is established as of the acquisition date and the PCD loans are no longer recorded net of a credit-related acquisition adjustment. PCD loans deemed to be uncollectible are recorded as a charge-off through the ACL.
  
(3)See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
  
(4)Annualized based on the actual number of days for each period presented.
  
(5)This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans.

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

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

  Average for Quarters Ended December 31, 2020
Percent Change From
  December 31,
2020
 September 30,
2020
 December 31,
2019
 September 30,
2020
 December 31,
2019
Demand deposits         $5,753,600   $5,631,355   $3,862,157   2.2    49.0   
Savings deposits         2,436,930   2,342,355   2,044,386   4.0    19.2   
NOW accounts         2,774,989   2,744,034   2,291,667   1.1    21.1   
Money market accounts         2,923,881   2,781,666   2,178,518   5.1    34.2   
Core deposits         13,889,400   13,499,410   10,376,728   2.9    33.9   
Time deposits         2,047,260   2,302,019   3,033,903   (11.1)  (32.5) 
Total deposits         $15,936,660   $15,801,429   $13,410,631   0.9    18.8   

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

CAPITAL MANAGEMENT

Capital Ratios

  As of
  December 31,
2020
 September 30,
2020
 December 31,
2019
Company regulatory capital ratios:
Total capital to risk-weighted assets 14.14% 14.06% 12.96%
Tier 1 capital to risk-weighted assets 11.55% 11.48% 10.52%
Common equity Tier 1 ("CET1") to risk-weighted assets 10.06% 9.97% 10.52%
Tier 1 capital to average assets 8.91% 8.50% 8.81%
Company tangible common equity ratios(1)(2):    
Tangible common equity to tangible assets 7.67% 7.43% 8.81%
Tangible common equity to tangible assets, excluding PPP loans 7.98% 7.90% 8.81%
Tangible common equity, excluding accumulated other comprehensive        
income ("AOCI"), to tangible assets
 7.54% 7.30% 8.82%
Tangible common equity, excluding AOCI, to tangible assets, excluding        
PPP loans
 7.85% 7.77% 8.82%
Tangible common equity to risk-weighted assets 9.93% 9.84% 10.51%


(1) 
These ratios are not subject to formal Federal Reserve regulatory guidance.
  
(2)Tangible common equity ("TCE") is a non-GAAP measure that represents common stockholders' equity less goodwill and identifiable intangible assets. For details of the calculation of these ratios, see the sections titled, "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

Total and Tier 1 capital to risk-weighted assets ratios increased compared to all prior periods primarily as a result of retained earnings and the mix of risk-weighted assets. Compared to December 31, 2019, total and Tier 1 capital ratios also benefited from the issuance of preferred stock. In addition, compared to December 31, 2019, all capital ratios were impacted by the approximately 50 basis point decrease due to the Park Bank acquisition, 15 basis point decrease due to stock repurchases, and the impact of loan growth and securities purchases on risk-weighted and average assets. The Company elected the five year CECL transition relief for regulatory capital, which retained approximately 30 basis points of CET1 and tier 1 capital at December 31, 2020.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the fourth quarter of 2020, which is consistent with third quarter of 2020 and the fourth quarter of 2019. This dividend represents the 152nd consecutive cash dividend paid by the Company since its inception in 1983.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, January 27, 2021 at 11:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, investor.firstmidwest.com. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10151130 beginning one hour after completion of the live call until 8:00 A.M. (ET) on April 20, 2021. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

Press Release, Presentation Materials, and Additional Information Available on Website

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

Forward-Looking Statements

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

Forward-looking statements may be deemed to include, among other things, statements relating to First Midwest's future financial performance, including the related outlook for 2021, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit allowances or charge-offs, corporate strategies or objectives, including the impact of certain actions and initiatives, anticipated trends in First Midwest's business, regulatory developments, acquisition transactions, estimated synergies, cost savings and financial benefits of announced or completed transactions, growth strategies, including possible future acquisitions, and the continued effects of the pandemic on our business, financial condition, liquidity, capital, loans, asset quality and results of operations. These statements are subject to certain risks, uncertainties and assumptions, including the duration, extent and severity of the pandemic, and the pandemic's continued effects on our business, operations and employees, as well as on our clients and service providers, and on economies and markets more generally and other risks, uncertainties and assumptions that are discussed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in First Midwest's Annual Report on Form 10-K for the year ended December 31, 2019, and in First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). These risks and uncertainties are not exhaustive, and other sections of these reports describe additional factors that could adversely impact First Midwest's business and financial performance.

Non-GAAP Financial Information

The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include EPS, adjusted, the efficiency ratio, return on average assets, adjusted, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, adjusted, noninterest expense, adjusted, tangible common equity to tangible assets, tangible common equity, excluding AOCI, to tangible assets, tangible common equity to risk-weighted assets, return on average common equity, adjusted, return on average tangible common equity, return on average tangible common equity, adjusted, non-accrual loans, excluding PCD loans, non-accrual loans to total loans, excluding PPP loans, non-accrual loans to total loans, excluding PCD and PPP loans, NPLs to total loans, excluding PPP loans, NPLs to total loans, excluding PCD and PPP loans, NPAs to total loans plus foreclosed assets, excluding PPP loans, NPAs to total loans plus foreclosed assets, excluding PCD and PPP loans, performing loans classified as substandard and special mention to corporate loans, excluding PPP loans, NCOs, excluding PCD loans, NCOs to average loans, excluding PPP loans, NCOs to average loans, excluding PCD and PPP loans, and pre-tax, pre-provision earnings, adjusted.

The Company presents EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity, all adjusted for certain significant transactions. These transactions include swap termination costs (fourth and third quarters of 2020), income tax benefits (fourth quarter of 2020), optimization costs (fourth and third quarters of 2020), acquisition and integration related expenses associated with completed and pending acquisitions (all periods), net securities gains (losses) (third and first quarters of 2020), and Delivering Excellence implementation costs (all periods in 2019). In addition, net OREO expense is excluded from the calculation of the efficiency ratio. Management believes excluding these transactions from EPS, the efficiency ratio, return on average assets, return on average common equity, and return on average tangible common equity may be useful in assessing the Company's underlying operational performance since these transactions do not pertain to its core business operations and their exclusion may facilitate better comparability between periods. Management believes that excluding acquisition and integration related expenses from these metrics may be useful to the Company, as well as analysts and investors, since these expenses can vary significantly based on the size, type, and structure of each acquisition. Additionally, management believes excluding these transactions from these metrics may enhance comparability for peer comparison purposes.

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

The Company presents noninterest expense, adjusted, which excludes optimization costs, acquisition and integration related expenses, and Delivering Excellence implementation costs. Management believes that excluding these items from noninterest expense may be useful in assessing the Company’s underlying operational performance as these items either do not pertain to its core business operations or their exclusion may facilitate better comparability between periods and for peer comparison purposes.

The tax-equivalent adjustment to net interest income and net interest margin recognizes the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. In addition, management believes that presenting tax-equivalent net interest margin, adjusted, may enhance comparability for peer comparison purposes and is useful to the Company, as well as analysts and investors, since acquired loan accretion income may fluctuate based on the size of each acquisition, as well as from period to period.

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

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

Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance. See the previously provided tables and the following reconciliations in the "Non-GAAP Reconciliations" section for details on the calculation of these measures to the extent presented herein.

About the Company

First Midwest (NASDAQ: FMBI) is a relationship-focused financial institution and one of the largest independent publicly traded bank holding companies based on assets headquartered in Chicago and the Midwest, with approximately $21 billion of assets and an additional $14 billion of assets under management. First Midwest Bank and First Midwest's other affiliates provide a full range of commercial, treasury management, equipment leasing, consumer, wealth management, trust and private banking products and services. First Midwest operates branches and other locations throughout metropolitan Chicago, southeast Wisconsin, northwest Indiana, eastern Iowa and other markets in the Midwest. Visit First Midwest at www.firstmidwest.com.

CONTACTS:

Investors
Patrick S. Barrett
EVP, Chief Financial Officer
(708) 831-7231
pat.barrett@firstmidwest.com
Media
Maurissa Kanter
SVP, Director of Corporate Communications
(708) 831-7345
maurissa.kanter@firstmidwest.com

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
  
 As of
 December 31, September 30, June 30, March 31, December 31,
 2020 2020 2020 2020 2019
Period-End Balance Sheet         
Assets         
Cash and due from banks$196,364   $254,212   $304,445   $252,138   $214,894  
Interest-bearing deposits in other banks920,880   936,528   637,856   229,474   84,327  
Equity securities, at fair value76,404   55,021   43,954   40,098   42,136  
Securities available-for-sale, at fair value3,096,408   3,279,884   3,435,862   3,382,865   2,873,386  
Securities held-to-maturity, at amortized cost12,071   22,193   19,628   19,825   21,997  
FHLB and FRB stock117,420   138,120   148,512   154,357   115,409  
Loans:         
Commercial and industrial4,578,254   4,635,571   4,789,556   5,064,295   4,481,525  
Agricultural364,038   377,466   381,124   393,063   405,616  
Commercial real estate:         
Office, retail, and industrial1,861,768   1,950,406   2,020,318   2,092,097   1,848,718  
Multi-family872,813   868,293   874,861   918,944   856,553  
Construction612,611   631,607   687,063   661,363   593,093  
Other commercial real estate1,481,976   1,452,994   1,475,937   1,415,892   1,383,708  
PPP loans785,563   1,196,538   1,179,403        
Home equity761,725   827,746   892,867   973,658   851,454  
1-4 family mortgages3,022,413   2,287,555   2,175,322   1,957,037   1,927,078  
Installment410,071   425,012   457,207   488,668   492,585  
Total loans14,751,232   14,653,188   14,933,658   13,965,017   12,840,330  
Allowance for loan losses(239,017)  (239,048)  (240,052)  (219,948)  (108,022) 
Net loans14,512,215   14,414,140   14,693,606   13,745,069   12,732,308  
OREO8,253   6,552   9,947   9,814   8,750  
Premises, furniture, and equipment, net132,045   132,267   143,001   145,844   147,996  
Investment in bank-owned life insurance ("BOLI")301,101   300,429   299,649   298,827   296,351  
Goodwill and other intangible assets932,764   935,801   940,182   935,241   875,262  
Accrued interest receivable and other assets532,753   612,996   568,239   539,748   437,581  
Total assets$20,838,678   $21,088,143   $21,244,881   $19,753,300   $17,850,397  
Liabilities and Stockholders' Equity         
Noninterest-bearing deposits$5,797,899   $5,555,735   $5,602,016   $4,222,523   $3,802,422  
Interest-bearing deposits10,214,565   10,215,838   10,055,640   9,876,427   9,448,856  
Total deposits16,012,464   15,771,573   15,657,656   14,098,950   13,251,278  
Borrowed funds1,546,414   1,957,180   2,305,195   2,648,210   1,658,758  
Senior and subordinated debt234,768   234,563   234,358   234,153   233,948  
Accrued interest payable and other liabilities355,026   460,656   391,461   336,280   335,620  
Stockholders' equity2,690,006   2,664,171   2,656,211   2,435,707   2,370,793  
Total liabilities and stockholders' equity$20,838,678   $21,088,143   $21,244,881   $19,753,300   $17,850,397  
Stockholders' equity, excluding AOCI$2,663,627   $2,638,422   $2,627,484   $2,400,384   $2,372,747  
Stockholders' equity, common2,459,506   2,433,671   2,425,711   2,435,707   2,370,793  


First Midwest Bancorp, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
               
 Quarters Ended  Years Ended
 December 31, September 30, June 30, March 31, December 31,  December 31, December 31,
 2020 2020 2020 2020 2019  2020 2019
Income Statement              
Interest income$159,962   $159,085   $162,044   $170,227   $176,604    $651,318   $698,739  
Interest expense11,851   16,356   16,810   26,652   28,245    71,669   110,257  
Net interest income148,111   142,729   145,234   143,575   148,359    579,649   588,482  
Provision for loan losses10,507   15,927   32,649   39,532   9,594    98,615   44,027  
Net interest income after        
provision for loan losses
137,604   126,802   112,585   104,043   138,765    481,034   544,455  
Noninterest Income              
Wealth management fees13,548   12,837   11,942   12,361   12,484    50,688   48,337  
Service charges on deposit        
accounts
10,811   10,342   9,125   11,781   12,664    42,059   49,424  
Mortgage banking income9,191   6,659   3,477   1,788   4,134    21,115   10,105  
Card-based fees, net4,530   4,472   3,180   3,968   4,512    16,150   18,133  
Capital market products        
income
659   886   694   4,722   6,337    6,961   13,931  
Other service charges,        
commissions, and fees
2,993   2,823   2,078   2,682   2,946    10,576   11,363  
Total fee-based revenues41,732   38,019   30,496   37,302   43,077    147,549   151,293  
Other income3,550   2,523   2,495   3,065   3,419    11,633   11,586  
Swap termination costs(17,567)  (14,285)            (31,852)    
Net securities gains (losses)   14,328      (1,005)      13,323     
Total noninterest        
income
27,715   40,585   32,991   39,362   46,496    140,653   162,879  
Noninterest Expense              
Salaries and employee benefits:             
Salaries and wages55,950   53,385   52,592   49,990   53,043    211,917   197,640  
Retirement and other        
employee benefits
10,430   11,349   11,080   12,869   9,930    45,728   42,879  
Total salaries and        
employee benefits
66,380   64,734   63,672   62,859   62,973    257,645   240,519  
Net occupancy and        
equipment expense
14,002   13,736   15,116   14,227   12,940    57,081   51,818  
Technology and related costs11,005   10,416   9,853   8,548   7,429    39,822   27,787  
Professional services8,424   7,325   8,880   10,390   10,949    35,019   36,428  
Advertising and promotions1,850   2,688   2,810   2,761   2,896    10,109   11,561  
Net OREO expense106   544   126   420   1,080    1,196   2,436  
Other expenses12,851   12,374   14,624   12,654   13,000    52,503   47,829  
Optimization costs1,493   18,376             19,869     
Acquisition and integration related expenses1,860   881   5,249   5,472   5,258    13,462   21,860  
Delivering Excellence        
implementation costs
            223       1,157  
Total noninterest expense117,971   131,074   120,330   117,331   116,748    486,706   441,395  
Income before income        
tax expense
47,348   36,313   25,246   26,074   68,513    134,981   265,939  
Income tax expense5,743   8,690   6,182   6,468   16,392    27,083   66,201  
Net income$41,605   $27,623   $19,064   $19,606   $52,121    $107,898   $199,738  
Preferred dividends(4,034)  (4,033)  (1,037)         (9,104)    
Net income applicable to non-vested restricted shares(369)  (236)  (187)  (192)  (424)   (984)  (1,681) 
Net income applicable to        
common shares
$37,202   $23,354   $17,840   $19,414   $51,697    $97,810   $198,057  
Net income applicable to        
common shares, adjusted(1)
49,253   37,765   21,777   24,272   55,807    133,067   215,317  

Footnotes to Condensed Consolidated Statements of Income
(1)   See the "Non-GAAP Reconciliations" section for the detailed calculation. 

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,
 2020 2020 2020 2020 2019  2020 2019
EPS              
Basic EPS        $0.33   $0.21   $0.16   $0.18   $0.47    $0.87   $1.83  
Diluted EPS        $0.33   $0.21   $0.16   $0.18   $0.47    $0.87   $1.82  
Diluted EPS, adjusted(1)        $0.43   $0.33   $0.19   $0.22   $0.51    $1.18   $1.98  
Common Stock and Related Per Common Share Data     
Book value        $21.52   $21.29   $21.23   $21.33   $21.56    $21.52   $21.56  
Tangible book value        $13.36   $13.11   $13.00   $13.14   $13.60    $13.36   $13.60  
Dividends declared per share        $0.14   $0.14   $0.14   $0.14   $0.14    $0.56   $0.54  
Closing price at period end        $15.92   $10.78   $13.35   $13.24   $23.06    $15.92   $23.06  
Closing price to book value        0.7   0.5   0.6   0.6   1.1    0.7   1.1  
Period end shares outstanding        114,296   114,293   114,276   114,213   109,972    114,296   109,972  
Period end treasury shares        11,071   11,067   11,079   11,136   10,443    11,071   10,443  
Common dividends        $16,017   $16,011   $16,015   $16,002   $15,404    $64,045   $59,150  
Dividend payout ratio        42.42 % 66.67 % 87.50 % 77.78 % 29.79 %  64.37 % 29.51 %
Dividend payout ratio, adjusted(1)        32.56 % 42.42 % 73.68 % 63.64 % 27.45 %  47.46 % 27.27 %
Key Ratios/Data              
Return on average common        
equity(2)        
6.05 % 3.80 % 2.94 % 3.23 % 8.69 %  4.01 % 8.74 %
Return on average common        
equity, adjusted(1)(2)        
8.01 % 6.15 % 3.58 % 4.04 % 9.38 %  5.46 % 9.50 %
Return on average tangible        
common equity(1)(2)        
10.35 % 6.73 % 5.32 % 5.66 % 14.37 %  7.02 % 14.50 %
Return on average tangible        
common equity, adjusted(1)(2)        
13.53 % 10.53 % 6.37 % 6.94 % 15.47 %  9.36 % 15.71 %
Return on average assets(2)        0.79 % 0.51 % 0.37 % 0.43 % 1.16 %  0.53 % 1.17 %
Return on average assets,        
adjusted(1)(2)        
1.02 % 0.78 % 0.44 % 0.53 % 1.25 %  0.70 % 1.28 %
Loans to deposits        92.12 % 92.91 % 95.38 % 99.05 % 96.90 %  92.12 % 96.90 %
Efficiency ratio(1)        58.90 % 60.36 % 64.08 % 60.21 % 56.16 %  60.84 % 55.00 %
Net interest margin(2)(3)        3.14 % 2.95 % 3.13 % 3.54 % 3.72 %  3.18 % 3.90 %
Yield on average interest-earning        
assets(2)(3)        
3.39 % 3.28 % 3.49 % 4.19 % 4.43 %  3.57 % 4.63 %
Cost of funds(2)(4)        0.26 % 0.35 % 0.38 % 0.69 % 0.74 %  0.41 % 0.76 %
Noninterest expense to average        
assets(2)        
2.25 % 2.42 % 2.32 % 2.56 % 2.59 %  2.38 % 2.60 %
Noninterest expense, adjusted to        
average assets, excluding PPP        
loans(1)(2)        
2.29 % 2.19 % 2.32 % 2.44 % 2.47 %  2.31 % 2.46 %
Effective income tax rate        12.13 % 23.93 % 24.49 % 24.81 % 23.93 %  20.06 % 24.89 %
Capital Ratios              
Total capital to risk-weighted        
assets(1)        
14.14 % 14.06 % 13.70 % 12.00 % 12.96 %  14.14 % 12.96 %
Tier 1 capital to risk-weighted        
assets(1)        
11.55 % 11.48 % 11.19 % 9.64 % 10.52 %  11.55 % 10.52 %
CET1 to risk-weighted assets(1)        10.06 % 9.97 % 9.70 % 9.64 % 10.52 %  10.06 % 10.52 %
Tier 1 capital to average assets(1)        8.91 % 8.50 % 8.70 % 8.60 % 8.81 %  8.91 % 8.81 %
Tangible common equity to        
tangible assets(1)        
7.67 % 7.43 % 7.32 % 7.97 % 8.81 %  7.67 % 8.81 %
Tangible common equity,        
excluding AOCI, to tangible        
assets(1)        
7.54 % 7.30 % 7.17 % 7.79 % 8.82 %  7.54 % 8.82 %
Tangible common equity to risk-        
weighted assets(1)        
9.93 % 9.84 % 9.61 % 9.63 % 10.51 %  9.93 % 10.51 %
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,
 2020 2020 2020 2020 2019  2020 2019
Asset quality Performance Data             
Non-performing assets               
Commercial and industrial$38,314   $40,781   $19,475   $24,944   $29,995    $38,314   $29,995  
Agricultural10,719   13,293   8,494   5,823   5,954    10,719   5,954  
Commercial real estate:              
Office, retail, and industrial27,382   26,406   26,342   26,107   25,857    27,382   25,857  
Multi-family1,670   1,547   2,132   2,688   2,697    1,670   2,697  
Construction1,155   2,977   18,640   18,764   152    1,155   152  
Other commercial real estate15,219   4,690   5,304   4,562   4,729    15,219   4,729  
Consumer15,498   13,888   13,657   14,761   12,885    15,498   12,885  
Non-accrual, excluding PCD        
loans
109,957   103,582   94,044   97,649   82,269    109,957   82,269  
Non-accrual PCD loans32,568   39,990   45,116   48,950       32,568     
Total non-accrual loans142,525   143,572   139,160   146,599   82,269    142,525   82,269  
90 days or more past due loans,        
still accruing interest
4,395   3,781   3,241   5,052   5,001    4,395   5,001  
Total NPLs146,920   147,353   142,401   151,651   87,270    146,920   87,270  
Accruing TDRs813   841   1,201   1,216   1,233    813   1,233  
Foreclosed assets(5)16,671   15,299   19,024   21,027   20,458    16,671   20,458  
Total NPAs$164,404   $163,493   $162,626   $173,894   $108,961    $164,404   $108,961  
30-89 days past due loans$40,656   $21,551   $36,342   $81,127   $31,958    $40,656   $31,958  
Allowance for credit losses              
Allowance for loan losses$239,017   $239,048   $240,052   $219,948   $108,022    $239,017   $108,022  
Reserve for unfunded        
commitments
8,025   7,825   7,625   6,753   1,200    8,025   1,200  
Total ACL$247,042   $246,873   $247,677   $226,701   $109,222    $247,042   $109,222  
Provision for loan losses$10,507   $15,927   $32,649   $39,532   $9,594    $98,615   $44,027  
Net charge-offs by category              
Commercial and industrial$3,536   $5,470   $4,735   $4,680   $6,799    $18,421   $21,992  
Agricultural1,779   265   118   1,227   15    3,389   1,201  
Commercial real estate:              
Office, retail, and industrial1,701   1,339   3,086   329   256    6,455   2,547  
Multi-family19      9   5   (439)   33   (138) 
Construction140   4,889   798   1,808   3    7,635   (9) 
Other commercial real estate916   1,753   19   164   13    2,852   443  
Consumer2,448   2,027   4,158   3,901   3,953    12,534   12,188  
Total NCOs$10,539   $15,743   $12,923   $12,114   $10,600    $51,319   $38,224  
Less: NCOs on PCD loans(6,488)  (6,923)  (3,833)  (1,720)      (18,964)    
Total NCOs, excluding PCD        
loans
$4,051   $8,820   $9,090   $10,394   $10,600    $32,355   $38,224  
Total recoveries included above$2,588   $1,795   $1,311   $1,816   $2,153    $7,510   $7,984  
Note: Selected Financial Information footnotes are located at the end of this section.


First Midwest Bancorp, Inc.     
Selected Financial Information (Unaudited)
     
               
 As of or for the
 Quarters Ended  Years Ended
 December 31, September 30, June 30, March 31, December 31,  December 31, December 31,
 2020 2020 2020 2020 2019  2020 2019
Performing loans classified as substandard and special mention     
Special mention loans(8)$409,083  $395,295  $256,373  $240,826  $188,703   $409,083  $188,703 
Substandard loans(8)357,219  311,430  193,337  196,923  188,811   357,219  188,811 
Total performing loans        
classified as substandard and        
special mention(8)
$766,302  $706,725  $449,710  $437,749  $377,514   $766,302  $377,514 
Asset quality ratios               
Non-accrual loans to total loans0.97% 0.98% 0.93% 1.05% 0.64%  0.97% 0.64%
Non-accrual loans to total loans,        
excluding PPP loans(6)
1.02% 1.07% 1.01% 1.05% 0.64%  1.02% 0.64%
Non-accrual loans to total loans,        
excluding PCD and PPP loans(6)
0.80% 0.78% 0.70% 0.71% 0.64%  0.80% 0.64%
NPLs to total loans1.00% 1.01% 0.95% 1.09% 0.68%  1.00% 0.68%
NPLs to total loans, excluding        
PPP loans(6)
1.05% 1.10% 1.04% 1.09% 0.68%  1.05% 0.68%
NPLs to total loans, excluding        
PCD and PPP loans(6)
0.83% 0.81% 0.72% 0.75% 0.68%  0.83% 0.68%
NPAs to total loans plus        
foreclosed assets
1.11% 1.11% 1.09% 1.24% 0.85%  1.11% 0.85%
NPAs to total loans plus        
foreclosed assets, excluding        
PPP loans(6)
1.18% 1.21% 1.18% 1.24% 0.85%  1.18% 0.85%
NPAs to total loans plus        
foreclosed assets, excluding        
PCD and PPP loans(6)
0.96% 0.93% 0.87% 0.91% 0.85%  0.96% 0.85%
NPAs to tangible common equity        
plus ACL
9.27% 9.37% 9.38% 10.07% 6.79%  9.27% 6.79%
Non-accrual loans to total assets0.68% 0.68% 0.66% 0.74% 0.46%  0.68% 0.46%
Performing loans classified as        
substandard and special mention        
to corporate loans(8)
7.26% 6.36% 3.94% 4.15% 3.95%  7.26% 3.95%
Performing loans classified as        
substandard and special mention        
to corporate loans, excluding        
PPP loans(6)(8)
7.84% 7.13% 4.40% 4.15% 3.95%  7.84% 3.95%
Allowance for credit losses and net charge-off ratios     
ACL to total loans(7)1.67% 1.68% 1.66% 1.62% 0.85%  1.67% 0.85%
ACL to non-accrual loans173.33% 171.95% 177.98% 154.64% 132.76%  173.33% 132.76%
ACL to NPLs168.15% 167.54% 173.93% 149.49% 125.15%  168.15% 125.15%
NCOs to average loans(2)0.29% 0.42% 0.36% 0.37% 0.33%  0.36% 0.31%
NCOs to average loans,        
excluding PPP loans(2)(6)
0.31% 0.46% 0.38% 0.37% 0.33%  0.38% 0.31%
NCOs to average loans,        
excluding PCD and PPP        
loans(2)(6)
0.12% 0.26% 0.27% 0.32% 0.33%  0.24% 0.31%

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, assuming the applicable federal income tax rate of 21%.
  
(4)Cost of funds expresses total interest expense as a percentage of total average funding sources.
  
(5)Foreclosed assets consist of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statement of Financial Condition.
  
(6)This ratio excludes PPP loans that are expected to be forgiven. As a result, no allowance for credit losses is associated with these loans.
  
(7) Prior to the adoption of CECL on January 1, 2020, this ratio included acquired loans that were recorded at fair value through an acquisition adjustment netted in loans, which incorporated credit risk as of the acquisition date with no ACL being established at that time. As the acquisition adjustment was accreted into income over future periods, an ACL on acquired loans was established as necessary to reflect credit deterioration. Subsequent to adoption, an ACL on acquired loans is established as of the acquisition date and the acquired loans are no longer recorded net of a credit-related acquisition adjustment.
  
(8)Performing loans classified as substandard and special mention excludes accruing TDRs.


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,
 2020 2020 2020 2020 2019  2020 2019
EPS              
Net income$41,605  $27,623  $19,064  $19,606  $52,121   $107,898  $199,738 
Dividends and accretion on         
preferred stock
(4,034) (4,033) (1,037)      (9,104)  
Net income applicable to non-        
vested restricted shares
(369) (236) (187) (192) (424)  (984) (1,681)
Net income applicable to        
common shares
37,202  23,354  17,840  19,414  51,697   97,810  198,057 
Adjustments to net income:              
Swap termination costs17,567  14,285         31,852   
Tax effect of swap termination        
costs
(4,392) (3,571)        (7,963)  
Income tax benefits(3,639)          (3,639)  
Optimization costs1,493  18,376         19,869   
Tax effect of optimization        
costs
(373) (4,594)        (4,967)  
Acquisition and integration related expenses1,860  881  5,249  5,472  5,258   13,462  21,860 
Tax effect of acquisition and        
integration related expenses
(465) (220) (1,312) (1,368) (1,315)  (3,365) (5,466)
Net securities (gains) losses  (14,328)   1,005     (13,323)  
Tax effect of net securities        
(gains) losses
  3,582    (251)    3,331   
Delivering Excellence        
implementation costs
        223     1,157 
Tax effect of Delivering        
Excellence implementation        
costs
        (56)    (291)
Total adjustments to net        
income, net of tax
12,051  14,411  3,937  4,858  4,110   35,257  17,260 
Net income applicable to        
common shares,        
adjusted(1)
$49,253  $37,765  $21,777  $24,272  $55,807   $133,067  $215,317 
Weighted-average common shares outstanding:             
Weighted-average common        
shares outstanding (basic)
113,174  113,160  113,145  109,922  109,059   112,355  108,156 
Dilutive effect of common        
stock equivalents
430
  276  191  443  519   347
  428 
Weighted-average diluted        
common shares        
outstanding
113,604  113,436  113,336  110,365  109,578   112,702  108,584 
Basic EPS$0.33  $0.21  $0.16  $0.18  $0.47   $0.87  $1.83 
Diluted EPS$0.33  $0.21  $0.16  $0.18  $0.47   $0.87  $1.82 
Diluted EPS, adjusted(1)$0.43  $0.33  $0.19  $0.22  $0.51   $1.18  $1.98 
Anti-dilutive shares not included        
in the computation of diluted        
EPS
              
Dividend Payout Ratio              
Dividends declared per share$0.14  $0.14  $0.14  $0.14  $0.14   $0.56  $0.54 
Dividend payout ratio42.42% 66.67% 87.50% 77.78% 29.79%  64.37% 29.51%
Dividend payout ratio, adjusted(1)32.56% 42.42% 73.68% 63.64% 27.45%  47.46% 27.27%
               
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,
 2020 2020 2020 2020 2019  2020 2019
Return on Average Common and Tangible Common Equity           
Net income applicable to        
common shares
$37,202  $23,354  $17,840  $19,414  $51,697   $97,810  $198,057 
Intangibles amortization2,807  2,810  2,820  2,770  2,744   11,207  10,481 
Tax effect of intangibles        
amortization
(702) (703) (705) (693) (686)  (2,803) (2,621)
Net income applicable to        
common shares, excluding        
intangibles amortization
39,307  25,461  19,955  21,491  53,755   106,214  205,917 
Total adjustments to net        
income, net of tax(1)
12,051  14,411  3,937  4,858  4,110   35,257  17,260 
Net income applicable to        
common shares, adjusted(1)
$51,358  $39,872  $23,892  $26,349  $57,865   $141,471  $223,177 
Average stockholders' common        
equity
$2,444,911  $2,444,594  $2,443,212  $2,415,157  $2,359,197   $2,437,011  $2,267,353 
Less: average intangible assets(934,347) (938,712) (934,022) (887,600) (874,829)  (923,741) (847,171)
Average tangible common        
equity
$1,510,564  $1,505,882  $1,509,190  $1,527,557  $1,484,368   $1,513,270  $1,420,182 
Return on average common        
equity(2)
6.05% 3.80% 2.94% 3.23% 8.69%  4.01% 8.74%
Return on average common        
equity, adjusted(1)(2)
8.01% 6.15% 3.58% 4.04% 9.38%  5.46% 9.50%
Return on average tangible        
common equity(2)
10.35% 6.73% 5.32% 5.66% 14.37%  7.02% 14.50%
Return on average tangible        
common equity, adjusted(1)(2)
13.53% 10.53% 6.37% 6.94% 15.47%  9.36% 15.71%
Return on Average Assets           
Net income$41,605  $27,623  $19,064  $19,606  $52,121   $107,898  $199,738 
Total adjustments to net        
income, net of tax(1)
12,051  14,411  3,937  4,858  4,110   35,257  17,260 
Net income, adjusted(1)$53,656  $42,034  $23,001  $24,464  $56,231   $143,155  $216,998 
Average assets$20,882,325  $21,526,695  $20,868,106  $18,404,821  $17,889,158   $20,424,771  $17,007,061 
Return on average assets(2)0.79% 0.51% 0.37% 0.43% 1.16%  0.53% 1.17%
Return on average assets,        
adjusted(1)(2)
1.02% 0.78% 0.44% 0.53% 1.25%  0.70% 1.28%
Noninterest Expense to Average Assets           
Noninterest expense$117,971  $131,074  $120,330  $117,331  $116,748   $486,706  $441,395 
Less:              
Optimization costs(1,493) (18,376)        (19,869)  
Acquisition and integration        
related expenses
(1,860) (881) (5,249) (5,472) (5,258)  (13,462) (21,860)
Delivering Excellence        
implementation costs
        (223)    (1,157)
Total$114,618  $111,817  $115,081  $111,859  $111,267   $453,375  $418,378 
Average assets$20,882,325  $21,526,695  $20,868,106  $18,404,821  $17,889,158   $20,424,771  $17,007,061 
Less: average PPP loans(1,013,511) (1,194,808) (887,977)      (775,883)  
Average assets, excluding PPP        
loans
$19,868,814  $20,331,887  $19,980,129  $18,404,821  $17,889,158   $19,648,888  $17,007,061 
Noninterest expense to average        
assets(2)
2.25% 2.42% 2.32% 2.56% 2.59%  2.38% 2.60%
Noninterest expense, adjusted to        
average assets, excluding PPP        
loans(2)
2.29% 2.19% 2.32% 2.44% 2.47%  2.31% 2.46%
               
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,
 2020 2020 2020 2020 2019  2020 2019
Efficiency Ratio Calculation              
Noninterest expense$117,971  $131,074  $120,330  $117,331  $116,748   $486,706  $441,395 
Less:              
Optimization costs(1,493) (18,376)        (19,869)  
Acquisition and integration        
related expenses
(1,860) (881) (5,249) (5,472) (5,258)  (13,462) (21,860)
Net OREO expense(106) (544) (126) (420) (1,080)  (1,196) (2,436)
Delivering Excellence        
implementation costs
        (223)    (1,157)
Total$114,512  $111,273  $114,955  $111,439  $110,187   $452,179  $415,942 
Tax-equivalent net interest income(3)$149,141  $143,821  $146,389  $144,728  $149,711   $584,079  $593,354 
Noninterest income27,715  40,585  32,991  39,362  46,496   140,653  162,879 
Less:              
Swap termination costs17,567  14,285         31,852   
Net securities (gains) losses  (14,328)   1,005     (13,323)  
Total$194,423  $184,363  $179,380  $185,095  $196,207   $743,261  $756,233 
Efficiency ratio58.90% 60.36% 64.08% 60.21% 56.16%  60.84% 55.00%
Pre-Tax, Pre-Provision Earnings             
Net Income$41,605  $27,623  $19,064  $19,606  $52,121   $107,898  $199,738 
Income tax expense5,743  8,690  6,182  6,468  16,392   27,083  66,201 
Provision for credit losses10,507  15,927  32,649  39,532  9,594   98,615  44,027 
Pre-Tax, Pre-Provision        
Earnings
$57,855  $52,240  $57,895  $65,606  $78,107   $233,596  $309,966 
Adjustments to pre-tax, pre-
provision earnings:
              
Swap termination costs$17,567  $14,285  $  $  $   $31,852  $ 
Optimization costs1,493  18,376         19,869   
Acquisition and integration        
related expenses
1,860  881  5,249  5,472  5,258   13,462  21,860 
Net securities (gains) losses  (14,328)   1,005     (13,323)  
Delivering Excellence        
implementation costs
        223     1,157 
Total adjustments20,920  19,214  5,249  6,477  5,481   51,860  23,017 
Pre-Tax, Pre-Provision        
Earnings, adjusted
$78,775  $71,454  $63,144  $72,083  $83,588   $285,456  $332,983 
               
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
  December 31, September 30, June 30, March 31, December 31,
  2020 2020 2020 2020 2019
Tangible Common Equity          
Stockholders' equity, common $2,459,506  $2,433,671  $2,425,711  $2,435,707  $2,370,793 
Less: goodwill and other intangible assets (932,764) (935,801) (940,182) (935,241) (875,262)
Tangible common equity 1,526,742  1,497,870  1,485,529  1,500,466  1,495,531 
Less: AOCI (26,379) (25,749) (28,727) (35,323) 1,954 
Tangible common equity, excluding AOCI $1,500,363  $1,472,121  $1,456,802  $1,465,143  $1,497,485 
Total assets $20,838,678  $21,088,143  $21,244,881  $19,753,300  $17,850,397 
Less: goodwill and other intangible assets (932,764) (935,801) (940,182) (935,241) (875,262)
Tangible assets 19,905,914  20,152,342  20,304,699  18,818,059  16,975,135 
Less: PPP loans (785,563) (1,196,538) (1,179,403)    
Tangible assets, excluding PPP loans $19,120,351  $18,955,804  $19,125,296  $18,818,059  $16,975,135 
Tangible common equity to tangible assets 7.67% 7.43% 7.32% 7.97% 8.81%
Tangible common equity to tangible assets, excluding PPP loans 7.98% 7.90% 7.77% 7.97% 8.81%
Tangible common equity, excluding AOCI, to tangible        
assets
 7.54% 7.30% 7.17% 7.79% 8.82%
Tangible common equity, excluding AOCI, to tangible        
assets, excluding PPP loans
 7.85% 7.77% 7.62% 7.79% 8.82%
Tangible common equity to risk-weighted assets 9.93% 9.84% 9.61% 9.63% 10.51%
           
 

Footnotes to Non-GAAP Reconciliations

(1)Adjustments to net income for each period presented are detailed in the EPS non-GAAP reconciliation above. For additional discussion of adjustments, see the "Non-GAAP Financial Information" section.
  
(2) Annualized based on the actual number of days for each period presented. 
  
(3)Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%. 

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