-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BTxrrGf/E6kI36Uj48vBVHaqjBijI5bILtzzd3g5YqAQjkuVLSAP/q7mmzdLsfl/ B5OqT3u2dZzll8gQ7Ht0Bg== 0000950131-97-006796.txt : 19971117 0000950131-97-006796.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950131-97-006796 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MIDWEST BANCORP INC CENTRAL INDEX KEY: 0000702325 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 363161078 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10967 FILM NUMBER: 97717691 BUSINESS ADDRESS: STREET 1: 300 PARK BLVD SUITE 405 STREET 2: P O BOX 459 CITY: ITASCA STATE: IL ZIP: 60143-0459 BUSINESS PHONE: 7088757450 MAIL ADDRESS: STREET 1: 300 PARK BLVD SUITE 405 STREET 2: P O BOOX 459 CITY: ITASCA STATE: IL ZIP: 60143-0459 10-Q 1 FORM 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION FORM 10-Q Washington, D.C. 20549 (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarter ended September 30, 1997, or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from __________to __________ Commission File Number 0-10967 - -------------------------------------------------------------------------------- FIRST MIDWEST BANCORP, INC. (Exact name of Registrant as specified in its charter) Delaware 36-3161078 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 300 Park Blvd., Suite 405, P.O. Box 459 Itasca, Illinois 60143-0459 (Address of principal executive offices) (zip code) (630) 875-7450 (Registrant's telephone number, including area code) Common Stock, $.01 Par Value Preferred Share Purchase Rights Securities Registered Pursuant to Section 12(g) of the Act Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of November 12, 1997, 20,064,938 shares of the Registrant's $.01 par value common stock were outstanding, excluding treasury shares. Exhibit Index is located on page 18. FIRST MIDWEST BANCORP, INC. FORM 10-Q TABLE OF CONTENTS
Part I. FINANCIAL INFORMATION Page ---- Item 1. Financial Statements Consolidated Statements of Condition........................................................ 3 Consolidated Statements of Income........................................................... 4 Consolidated Statements of Cash Flows....................................................... 5 Notes to Consolidated Financial Statements.................................................. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K....................................................... 17
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRST MIDWEST BANCORP, INC. CONSOLIDATED STATEMENTS OF CONDITION (Dollar amounts in thousands except per share data)
September 30, December 31, 1997 /(1)/ 1996 /(2)/ ------------- ------------ Assets Cash and due from banks.................................................... $ 138,346 $ 107,595 Funds sold and other short term investments................................ 3,091 23,076 Mortgages held for sale.................................................... 16,732 13,492 Securities available for sale, at market value............................. 801,311 770,256 Securities held to maturity, at amortized cost............................. 19,498 21,336 Loans...................................................................... 2,080,729 2,085,277 Reserve for loan losses.................................................... (33,841) (30,148) ---------- ---------- Net loans................................................................ 2,046,888 2,055,129 Premises, furniture and equipment.......................................... 51,385 49,354 Accrued interest receivable................................................ 23,466 22,634 Other assets............................................................... 67,076 56,366 ---------- ---------- Total assets............................................................... $3,167,793 $3,119,238 ========== ========== Liabilities Demand deposits............................................................ $ 395,146 $ 349,759 Savings deposits........................................................... 277,470 284,317 NOW accounts............................................................... 306,081 282,016 Money market deposits...................................................... 224,583 239,027 Time deposits.............................................................. 1,209,962 1,105,548 ---------- ---------- Total deposits........................................................... 2,413,242 2,260,667 Short-term borrowings...................................................... 427,143 493,142 Accrued interest payable................................................... 11,164 10,430 Other liabilities.......................................................... 34,808 92,859 ---------- ---------- Total liabilities.......................................................... 2,886,357 2,857,098 ---------- ---------- Stockholders' equity Preferred stock, no par value: 1,000,000 shares authorized, none issued.... --- --- Common stock, $.01 par value: 30,000,000 shares authorized; 17,506,385 and 17,509,114 shares issued at September 30, 1997 and December 31, 1996, respectively; 16,814,105 and 16,906,540 outstanding at September 30, 1997 and December 31, 1996, respectively........................................ 168 169 Additional paid-in capital................................................. 56,699 57,084 Retained earnings.......................................................... 234,748 217,522 Unrealized net appreciation/(depreciation) on securities, net of tax....... 4,769 (540) Treasury stock, at cost; 692,280 and 602,574 shares at September 30, 1997 and December 31, 1996, respectively...................................... (14,948) (12,095) ---------- ---------- Total stockholders' equity................................................. 281,436 262,140 ---------- ---------- Total liabilities and stockholders' equity................................. $3,167,793 $3,119,238 ========== ==========
- ------------------------- See notes to consolidated financial statements. /(1)/ Unaudited /(2)/ Audited - See December 31, 1996 Form 10-K for Auditors' Report. 1 FIRST MIDWEST BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollar amounts in thousands, except per share data)
Quarters ended Nine months ended September 30, /(1)/ September 30, /(1)/ ------------------------ ------------------------ 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Interest Income Loans.................................................. $ 47,721 $ 44,968 $ 139,325 $ 135,138 Securities available for sale.......................... 13,082 13,252 36,439 38,635 Securities held to maturity............................ 305 538 934 1,377 Funds sold and other short-term investments............ 583 807 1,362 2,469 ----------- ----------- ----------- ----------- Total interest income................................ 61,691 59,565 178,060 177,619 ----------- ----------- ----------- ----------- Interest Expense Deposits............................................... 21,892 21,556 62,509 64,087 Short-term borrowings.................................. 6,732 6,638 19,164 22,234 ----------- ----------- ----------- ----------- Total interest expense............................... 28,624 28,194 81,673 86,321 ----------- ----------- ----------- ----------- Net Interest Income.................................. 33,067 31,371 96,387 91,298 Provision for Loan Losses.............................. 2,196 1,561 5,466 4,188 ----------- ----------- ----------- ----------- Net interest income after provision for loan losses.. 30,871 29,810 90,921 87,110 ----------- ----------- ----------- ----------- Noninterest Income Service charges on deposit accounts.................... 2,803 2,887 8,172 7,862 Trust and investment management fees................... 1,709 1,602 5,072 4,830 Other service charges, commissions and fees............ 1,441 1,629 4,575 4,485 Mortgage banking revenues.............................. 1,407 1,013 3,863 2,731 Security gains, net.................................... 616 14 829 558 Other income........................................... 782 496 2,487 1,576 ----------- ----------- ----------- ----------- Total noninterest income............................. 8,758 7,641 24,998 22,042 ----------- ----------- ----------- ----------- Noninterest Expense Salaries and wages..................................... 10,635 10,476 31,185 30,665 Retirement and other employee benefits................. 2,872 2,461 7,460 7,385 Occupancy expense of premises.......................... 1,955 1,900 5,866 5,079 Equipment expense...................................... 1,563 1,365 4,565 4,194 Computer processing expense............................ 1,857 1,483 5,272 4,746 Advertising and promotions............................. 720 569 2,377 1,976 Professional services.................................. 1,246 1,378 3,913 4,155 Acquisition credit..................................... --- (992) --- (1,316) Special assessment for SAIF............................ --- 1,603 --- 1,603 Other expenses......................................... 4,264 4,354 13,298 12,463 ----------- ----------- ----------- ----------- Total noninterest expense............................ 25,112 24,597 73,936 70,950 ----------- ----------- ----------- ----------- Income before income tax expense....................... 14,517 12,854 41,983 38,202 Income tax expense..................................... 4,964 4,252 14,702 13,458 ----------- ----------- ----------- ----------- Net Income........................................... $ 9,553 $ 8,602 $ 27,281 $ 24,744 =========== =========== =========== =========== Net Income per share................................. $ 0.57 $ 0.50 $ 1.63 $ 1.44 Cash dividends declared per share.................... $ 0.20 $ 0.17 $ 0.60 $ 0.50 Weighted average shares outstanding.................. 16,759,306 17,076,234 16,729,733 17,104,478 =========== =========== =========== ===========
- ----------------------------- See notes to consolidated financial statements. /(1)/ Unaudited 2 FIRST MIDWEST BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands)
Nine months ended September 30, /(1)/ ----------------------- 1997 1996 --------- ----------- Operating Activities Net income.............................................................................. $ 27,281 $ 24,744 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses............................................................. 5,466 4,188 Provision for depreciation............................................................ 4,663 4,963 Net amortization (accretion) of securities available for sale premiums and discounts.. 1,985 (1,599) Net amortization (accretion) of securities held to maturity premiums and discounts.... 1 (30) Net (gains) on securities available for sale transactions............................. (830) (534) Net (gains) on sales of premises, furniture and equipment............................. (262) (87) Net (decrease) increase in deferred income taxes...................................... (764) 3,287 Net amortization of purchase accounting adjustments, goodwill, and other intangibles.................................................................... 1,792 894 Changes in operating assets and liabilities: Net decrease (increase) in loans held for sale....................................... (3,240) 5,358 Net (increase) decrease in accrued interest receivable............................... (832) 2,865 Net (increase) decrease in other assets.............................................. (19,393) (3,349) Net (decrease) in accrued interest payable........................................... 734 (1,920) Net (decrease) in other liabilities.................................................. (58,051) (1,644) --------- ----------- Net cash (used) provided by operating activities................................... (41,450) 37,136 --------- ----------- Investing Activities Securities available for sale: Proceeds from sales..................................................................... 282,434 1,037,138 Proceeds from maturities, calls and paydowns............................................ 427,611 266,752 Purchases............................................................................... (733,552) (1,195,030) Securities held to maturity: Proceeds from maturities, calls and paydowns............................................ 3,714 6,985 Purchases............................................................................... (1,876) (2,435) Loans made to customers, net of principal collected...................................... 4,671 (58,732) Proceeds from sales of foreclosed real estate............................................ 2,401 2,843 Proceeds from sales of premises, furniture and equipment................................. 1,695 161 Purchases of premises, furniture and equipment........................................... (8,162) (4,828) --------- ----------- Net cash provided by investing activities............................................... (21,064) 52,854 --------- ----------- Financing Activities Net increase in deposit accounts......................................................... 152,575 25,700 Net (decrease) in short-term borrowings.................................................. (65,999) (107,460) Purchases of treasury stock.............................................................. (10,047) (3,947) Sale of treasury stock................................................................... 5,205 --- Cash dividends........................................................................... (10,058) (8,648) Exercise of stock options................................................................ 1,604 1,508 --------- ----------- Net cash used by financing activities................................................... 73,280 (92,847) --------- ----------- Net increase (decrease) in cash and cash equivalents.................................... 10,766 (2,857) Cash and cash equivalents at beginning of period........................................ 130,671 149,263 --------- ----------- Cash and cash equivalents at end of period.............................................. $ 141,437 $ 146,406 ========= =========== Supplemental disclosures: Interest paid to depositors and creditors............................................... $ 80,939 $ 88,241 Income taxes paid....................................................................... 19,443 13,202 Non-cash transfers to foreclosed real estate from loans................................. (1,896) 3,995 Non-cash transfers to securities available for sale from loans.......................... --- 141,164 ========= ===========
- ------------------------------ See notes to consolidated financial statements. /(1)/ Unaudited 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except per share data) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim consolidated financial statements of First Midwest Bancorp, Inc. ("First Midwest") have been prepared in accordance with generally accepted accounting principles and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all normal and recurring adjustments which are necessary to fairly present the results for the interim periods presented have been included. The preparation of financial statements requires Management to make estimates and assumptions that affect the recorded amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. In addition, certain reclassifications have been made to the 1996 data to conform to the 1997 presentation. All common stock and per share data have been adjusted to reflect the 5-for-4 stock split affected in the form of a stock dividend which was paid in December, 1996. For further information with respect to significant accounting policies followed by First Midwest in the preparation of its consolidated financial statements, refer to First Midwest's Annual Report on Form 10-K for the year ended December 31, 1996. Earnings Per Share - In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement No. 128 ("FASB No. 128"), "Earnings Per Share" which provides new accounting guidelines governing the computation of earnings per share effective for financial statement periods ending after December 15, 1997. At that time, all publicly-held companies will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements of FASB No. 128, the primary ("basic") earnings per share calculation will exclude the dilutive effect of all common stock equivalents. Further, FASB No. 128 requires additional disclosures including dual presentation of basic and diluted earnings per share on the face of the Statement of Income. Under FASB No. 128, First Midwest's calculation of basic earnings per share for the quarters and nine months ending September 30, 1997 and 1996 was $.57 and $.50 per share, and $1.63 and $1.44 per share respectively, reflecting no change from the current accounting guidelines. FASB No. 128 is not anticipated to have a material effect on First Midwest's calculation of diluted earnings per share for these periods. 2. PENDING ACQUISITION On June 20, 1997 First Midwest announced that it had entered into a definitive agreement to acquire SparBank, Incorporated, ("SparBank"). SparBank is the holding company of McHenry State Bank ("MSB"), a 4-branch bank headquartered in McHenry, Illinois. SparBank had total assets and stockholders' equity of approximately $437 million and $52 million, respectively, as of September 30, 1997. For the nine months ended September 30, 1997, SparBank recorded net income of $4,897 resulting in return on average assets and stockholder's equity of 1.47% and 12.66%, respectively. Pursuant to the agreement, the transaction was structured as a tax-free exchange and accounted for as a pooling-of-interests. Each outstanding share of SparBank's common stock, no par value, will be converted to 21.7234 shares of First Midwest common stock, $.01 par value, resulting in the issuance of 3,230,764 shares of First Midwest common stock. The acquisition was consummated on October 1, 1997. A pre-tax merger related charge of approximately $6.5 - $7.0 million will be recognized in the fourth quarter in conjunction with the transaction closing which includes costs related to system conversions, elimination of excess operating capacity, professional fees, and a one-time provision to bring MSB's loan loss reserves to First Midwest's required levels. First Midwest anticipates merging MSB into its principal banking subsidiary, First Midwest Bank, N.A., in late first quarter 1998. Refer to Exhibit 99 on page 18 for proforma Statements of Income and Condition of First Midwest and SparBank for the quarter and nine months ended September 30, 1997. 4 3. SECURITIES Securities Available for Sale - The amortized cost and market value of securities available for sale at September 30, 1997 and December 31, 1996 are as follows:
Securities Held to Maturity ----------------------------------------------------------------------------------------------- September 30, 1997 December 31, 1996 ------------------------------------------------ ------------------------------------------- Gross Gross Gross Gross Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market Cost Gains Losses Value Cost Gains Losses Value --------- ---------- ---------- -------- --------- ---------- ---------- -------- U.S. Treasury securities......... $ 65,464 $ 210 $ --- $ 65,674 $ 65,592 $ 314 $ (2) $ 65,904 U.S. Agency securities........... 77,187 88 --- 77,275 356,491 607 (1,527) 355,571 Mortgage-backed securities....... 582,641 4,775 (413) 587,003 347,287 1,454 (1,731) 347,010 State and municipal securities... 66,631 3,137 --- 69,768 --- --- --- --- Other securities................. 1,573 18 --- 1,591 1,771 --- --- 1,771 -------- ------ ---------- -------- -------- ------ ------- -------- Total.......................... $793,496 $8,228 $(413) $801,311 $771,141 $2,375 $(3,260) $770,256 ======== ====== ========== ======== ======== ====== ======= ========
Securities Held to Maturity - The amortized cost and market value of securities held to maturity at September 30, 1997 and December 31, 1997 are as follows:
Securities Held to Maturity ----------------------------------------------------------------------------------------------- September 30, 1997 December 31, 1996 ------------------------------------------------ ------------------------------------------- Gross Gross Gross Gross Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market Cost Gains Losses Value Cost Gains Losses Value --------- ---------- ---------- ------ --------- ---------- ---------- ------ U.S. Treasury securities......... $ 900 $ 3 --- $ 903 $ 929 $ ___ $ ___ $ 929 State and municipal securities 6,299 263 --- 6,561 9,135 132 (28) 9,239 Other securities................. 12,299 20 (1) 12,318 11,272 16 ___ 11,288 ------- ---- --- ------- ------- ---- ---- ------- Total.......................... $19,498 $286 $(1) $19,782 $21,336 $148 $(28) $21,456 ======= ==== === ======= ======= ==== ==== =======
4. LOANS The following table provides the book value of loans, by major classification, as of the dates indicated:
September 30, December 31, 1997 1996 ------------- ------------ Commercial and industrial........................................................... $ 580,993 $ 571,181 Agricultural........................................................................ 47,015 48,461 Direct home equity.................................................................. 167,918 157,174 Other direct installment............................................................ 75,689 78,402 Indirect installment................................................................ 394,368 413,680 Real estate - 1-4 family............................................................ 137,163 189,000 Real estate - commercial............................................................ 558,859 507,135 Real estate - construction.......................................................... 108,597 110,204 Other............................................................................... 10,127 10,040 ---------- ---------- Total............................................................................... $2,080,729 $2,085,277 ========== ==========
During the second quarter of 1997, First Midwest sold approximately $47,000 in 1-4 family real estate loans while retaining the mortgage servicing rights on such loans. 5 5. RESERVE FOR LOAN LOSSES/IMPAIRED LOANS Transactions in the reserve for loan losses for the nine months ended September 30, 1997 and 1996 are summarized below:
Quarters ended Nine months ended September 30, September 30, -------------------- -------------------- 1997 1996 1997 1996 Balance at beginning of period................................................ $33,292 $ 28,597 $30,148 $29,194 Provision for loan losses..................................................... 2,196 1,561 5,466 4,188 Loans charged-off........................................................... (2,635) (2,025) (8,269) (6,468) Recoveries of loans previously charged-off.................................. 988 724 6,496 1,943 ------- ------- ------- ------- Net loans charged-off..................................................... (1,647) (1,301) (1,773) (4,525) ------- ------- ------- ------- Balance at end of period...................................................... $33,841 $28,857 $33,841 $28,857 ======= ======= ======= =======
Information with respect to impaired loans at September 30, 1997 and 1996 is provided below:
September 30, ----------------- 1997 1996 ----------------- Recorded Investment in Impaired Loans: Recorded investment requiring specific loan loss reserves /(1)/............................. $1,958 $ 5,568 Recorded investment not requiring specific loan loss........................................ 5,088 11,618 ------ ------- Total recorded investment in impaired loans................................................ $7,046 $17,186 ====== ======= Specific loan loss reserve related to impaired loans......................................... $ 894 $ 1,238 ====== =======
/(1)/ These impaired loans require a specific reserve allocation because the value of the loans are less than the recorded investments in the loans. For the nine months ended September 30, 1997 and 1996, the average recorded investment in impaired loans was approximately $9,389 and $17,470 respectively. 6. CONTINGENT LIABILITIES AND OTHER MATTERS There are certain legal proceedings pending against First Midwest and its Subsidiaries in the ordinary course of business at September 30, 1997. In assessing these proceedings, including the advice of counsel, First Midwest believes that liabilities arising from these proceedings, if any, would not have a material adverse effect on the consolidated financial condition of First Midwest. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion presented below presents an analysis of First Midwest's results of operations and financial condition for the quarter and nine months ended September 30, 1997 as compared to the same periods in 1996. Management's discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes presented elsewhere in this report as well as First Midwest's 1996 Annual Report on Form 10-K. Results of operations for the quarters and nine months ended September 30, 1997 are not necessarily indicative of results to be expected for the full year of 1997. Summary of Performance Net Income Net income for the third quarter of 1997 increased to $9,553 or $.57 per share from $8,602, or $.50 per share in the same quarter of 1996, representing an increase of 14% on a per share basis. Net income for the nine months ended September 30, 1997, totaled $27,281, or $1.63 per share from $24,744, or $1.44 per share for the same period in 1996, representing a 13% increase per share. Return on Average Assets and Stockholders' Equity Return on average assets was 1.20% for the third quarter of 1997 as compared to 1.11% for the same quarter in 1996. Return on average assets was 1.19% for the nine months ended September 30, 1997, as compared to 1.06% for the same period in 1996. Return on average stockholders' equity was 13.74% for the third quarter of 1997, as compared to 13.39% for the same quarter in 1996. Return on average stockholders equity was 13.72% for the nine months ended September 30, 1997, as compared to 13.03% for the same period in 1996. Net Interest Income Net interest income on a tax equivalent basis totaled $33,856 for the third quarter of 1997, representing an increase of $1,954 or 6% over the year-ago quarter totaling $31,902. As shown in the Volume/Rate Analysis on page 10, the improvement in net interest income is comprised of $2,383 in interest income net of $429 in interest expense. The net interest margin for the third quarter of 1997 increased to 4.59% as compared to 4.43% for the same period in 1996. The improvement in net interest margin is primarily due to a more profitable asset mix with the yield on interest earning assets improving by 14 basis points offset in part by an increase in cost of funds with the rates paid on interest bearing liabilities advancing by 8 basis points. As shown in the Volume/Rate Analysis, the $2,383 increase in interest income for the quarter is largely attributable to volume and rate variances in the loan portfolio, which contributed a total of $2,745 to the third quarters increase in interest income. Loans increased by $81 million and represented 71% of total earning assets for the current quarter as compared to 69% for the 1996 quarter. Such volume growth contributed $1,865 of the $2,745 in interest income with the remaining $880 being due to higher average interest rates earned on the portfolio. Factoring out the 1997 second quarter $47,000 1-4 family residential loan sale, the current quarter would have reflected an increase in average loan levels of approximately $128,000, reflecting growth in core lending. Offsetting the loan growth is a decline in volumes and rates in the securities portfolio. Such decreases in the held to maturity and available for sale portfolios totaled to a net decline of $137 in interest income as a result of maturities, a re- deployment of securities funding into higher yielding loans and reductions of more expensive short term borrowings. The $429 increase in interest expense for the third quarter of 1997 is primarily a result of increased rates on interest bearing liabilities, predominately short term borrowings with an increase on rates paid by 23 basis points. Such rate increases were commensurate with short-term market interest rates. Additionally, time deposits volumes rose by $17,529 for the current quarter, adding $247 to the increased interest expense. The increase in the time deposits category is primarily due to a higher level of more priced competitive public funds as compared to short term borrowings. In part offsetting the above mentioned increases are volume decreases in short-term borrowings, primarily wholesale repurchase agreements, as a result of a shift in funding sources to lower cost deposits. For the nine month period ended September 30, 1997, net interest margin increased to 4.62% from 4.27% for 1996. The Volume/Rate Analysis for the nine months ended September 30, 1997 as compared to the like 1996 period is presented on page 11. 7 Volume/Rate Analysis The table below summarizes the changes in average interest-earning assets and interest-bearing liabilities as well as the average rates earned and paid on these assets and liabilities, respectively, for the quarters ended September 30, 1997 and 1996. The table also details the increase and decrease in income and expense for each major category of assets and liabilities and analyzes the extent to which such variances are attributable to volume and rate changes.
Quarters Ended September 30, 1997 and 1996 ------------------------------------------------------------------------------------------ Average Intesest Interest Average Balances Rates Earned/Paid Income/Expense -------------------------------- ------------------------ --------------------------- Basis Increase Points Increase 1997 1996 (Decrease) 1997 1996 Inc/(Dec) 1997 1996 (Decrease) ---- ---- ---------- ---- ---- --------- ---- ---- ---------- Federal funds sold and other short-term investments................. $ 21,684 19,674 2,010 5.65% 5.62% 0.03% $ 309 $ 278 $ 31 Mortgages held for sale.................. 14,340 17,541 (3,201) 7.58% 12.02% (4.44) 274 530 (256) Securities available for sale (1)........ 806,919 825,017 (18,098) 6.77% 6.57 0.20 13,761 13,630 131 Securities held to maturity (1).......... 18,653 22,488 (3,835) 7.40% 10.90 (3.50) 348 616 (268) Loans, net of unearned discount (1)..... 2,062,290 1,981,306 80,984 9.19% 9.04 0.15 47,788 45,043 2,745 ---------- --------- -------- ---- ----- ------ ------- ------- ------ Total interest-earning assets (1)..... $2,923,886 2,866,026 57,860 8.48% 8.34% 0.14% $62,480 $60,097 2,383 ========== ========= ======== ==== ===== ====== ======= ======= ====== Savings deposits......................... $ 285,881 290,489 (4,608) 2.53% 2.40% 0.13 $ 1,824 1,75 68 NOW accounts............................. 322,288 322,331 (43) 2.45 2.34 0.11 1,991 1,894 97 Money market deposits.................... 228,329 237,248 (8,919) 3.57 3.56 0.01 2,057 2,124 (67) Time deposits............................ 1,139,775 1,122,246 17,529 5.58 5.59 (0.01) 16,020 15,783 237 Short-term borrowings.................... 476,883 491,779 (14,896) 5.60 5.37 0.23 6,732 6,638 94 ---------- --------- -------- ---- ----- ------ ------- ------- ------ Total interest-bearing liabilities.... $2,453,156 2,464,093 (10,937) 4.63% 4.55% 0.08% $28,624 $28,195 $ 429 ========== ========= ======== ==== ===== ====== ======= ======= ====== Net interest margin/income /(1)/...... 4.59% 4.43% 0.16% $33,856 $31,902 $1,954 ==== ===== ====== ======= ======= ======
Quarters Ended September 30, 1997 and 1996 ------------------------------------------ Increase/(Decrease) in Interest Income/Expense Due to: ------------------------------- Volume Rate Total ------ ---- ----- Federal funds sold and other short-term investments................. $ 28 3 31 Mortgages held for sale.................. (85) (171) (256) Securities available for sale (1)........ (278) 409 131 Securities held to maturity (1).......... (93) (175) (268) Loans, net of unearned discount (1)..... 1,865 880 2,745 ------ ---- ------ Total interest-earning assets (1) $1,437 $946 $2,383 Savings deposits......................... ====== ==== ====== NOW accounts Money market deposits.................... (27) 95 68 Time deposits............................ 0 97 97 Short-term borrowings.................... (80) 13 (67) 247 (10) 237 Total interest-bearing liabilities.... (183) 277 94 ------ ---- ------ Net interest margin/income /(1)/...... $(43) $472 $ 429 ====== ==== ====== $1,480 $474 $1,954 ====== ==== ======
(1) Interest income and yields are presented on a tax-equivalent basis. 8 Volume/Rate Analysis The table below summarizes the changes in average interest-earning assets and interest-bearing liabilities as well as the average rates earned and paid on these assets and liabilities, respectively, for the nine months ended September 30, 1997 and 1996. The table also details the increase and decrease in income and expense for each major category of assets and liabilities and analyzes the extent to which such variances are attributable to volume and rate changes.
Nine Months Ended September 30, 1997 and 1996 ------------------------------------------------------------------------------------------------------ Average Interest Interest Average Balances Rates Earned/Paid Income/Expense ------------------------------------ ------------------------ -------------------------------- Basis Increase Points Increase 1997 1996 (Decrease) 1997 1996 Inc/(Dec) 1997 1996 (Decrease) ---------- --------- ---------- ----- ----- --------- -------- ------- ---------- Federal funds sold and other short-term investments............... $ 17,127 17,995 (868) 5.68% 5.78% (0.10)% $ 727 779 (52) Mortgages held for sale.... 10,934 21,752 (10,818) 7.76 10.38 (2.62)% 635 1,690 (1,055) Securities available for sale (1).................. 750,325 827,451 (77,126) 6.81 6.43 0.38 38,220 39,836 (1,616) Securities held to maturity (1).............. 18,579 23,206 (4,627) 7.70 9.53 (1.83) 1,070 1,655 585 Loans, net of unearned discount (1).............. 2,052,394 2,016,556 35,838 9.09 8.97 0.12% 139,526 135,369 4,157 ---------- --------- --------- ------- ----- -------- ------- ------- -------- Total interest-earning assets (1)............... $2,849,359 2,906,960 (57,601) 8.45% 8.24% 0.21% $180,178 179,329 849 ========== ========= ========= ======= ===== ======== ======== ======= ======== Savings deposits........... $ 285,892 267,865 18,027 2.52% 2.23% 0.29% $ 5,379 $ 4,469 $ 910 NOW accounts............... 300,494 300,146 348 2.37 2.33 0.04 5,318 5,234 84 Money market deposits...... 230,119 264,930 (34,811) 3.52 3.55 (0.03) 6,067 7,032 (965) Time deposits.............. 1,103,191 1,122,009 (18,818) 5.54 5.64 (0.10) 45,746 47,352 (1,606) Short-term borrowings...... 466,159 549,629 83,470 5.50 5.40% 0.10% 19,163 $22,234 $(3,071) ---------- --------- --------- ------- ----- -------- ------- ------- -------- Total interest-bearing liabilities.............. $2,385,855 2,504,579 (118,724) 4.58% 4.60% (0.02)% $ 81,673 $86,321 $(4,648) ========== ========= ========= ======= ===== ======== ======== ======= ======== Net interest margin/income /(1)/...... 4.62% 4.27% 0.35% $98,505 93,008 5,497 ======= ===== ======== ======== ======= ========
Nine Months Ended September 30, 1997 and 1996 ---------------------------------------------- Increase/(Decrease) in Interest Income/Expense Due to: ---------------------------------------------- Volume Rate Total ------ ---- ----- Federal funds sold and other short-term investments.... $ (37) (15) (52) Mortgages held for sale.... (699) (356) (1,055) Securities available for sale (1).................. (4,289) 2,673 (1,616) Securities held to maturity (1).............. 297 (288) (585) Loans, net of unearned discount (1).............. 2,425 1,733 4,157 -------- ----- ------- Total interest-earning assets (1)............... $(2,897) 3,746 849 ======== ===== ======= Savings deposits........... $ 314 596 910 NOW accounts............... 6 78 84 Money market deposits...... (918) (47) (965) Time deposits.............. (787) (819) (1,606) Short-term borrowings...... (3,439) 368 (3,072) -------- ----- ------- Total interest-bearing liabilities.............. $(4,824) 176 (4,648) ======== ===== ======= Net interest margin/income /(1)/...... $ 1,927 3,570 5,497 ======== ===== =======
(1) Interest income and yields are presented on a tax-equivalent basis. 9 Noninterest Income Noninterest income totaled $8,758 for the quarter ended September 30, 1997, as compared to $7,641 for the same quarter in 1996. Exclusive of net security gains which totaled $616 in the 1997 quarter as compared to $14 for the like period in 1996, noninterest income increased by $515 or 6.8%. The largest component of this increase was $394 in mortgage banking revenues resulting from growth in real estate loan originations and their subsequent sale into the secondary market of which originations totaled $52,000 in the 1997 quarter as compared to $36,000 for the same quarter in 1996. Increased ATM revenues contributed $286 in other income for the third quarter ending September 30, 1997. Growth in trust business resulted in an increase of trust and investment management fees of $107, while decreases between quarters were realized in service charges on deposit accounts and other service charges, commissions and fees totalling $84 and $188 respectively. The decrease in the latter category was mostly attributable to reduced annuity sales income and credit life insurance premiums. Noninterest income totaled $24,998 for the nine months ended September 30, 1997, as compared to $22,042 for the same period in 1996. Factoring out net securities gains totaling $829 for the 1997 nine month period as compared to $558 for the 1996 period, noninterest income increased by $2,685, or 12.5%. The reasons for the increase in noninterest income for the nine month period generally followed those described above for the third quarter. Additionally, service charges on deposit accounts increased $310 for the nine months ended September 30, 1997 as compared to the like period in 1996 as a result of higher volumes in NSF fees and fees on business checking. Noninterest Expense Noninterest expense totaled $25,112 for the quarter ended September 30, 1997, increasing by $515, or 2.1% from $24,597 for the same quarter in 1996. For the nine months ended September 30, 1997, noninterest expense totaled $73,936 as compared to $70,950 for the same period in 1996, increasing $2,986, or 4.2%. Noninterest expense totaled $25,112 for the third quarter of 1997, increasing by $1,126 or 4.6% from $23,986 for the same quarter in 1996, exclusive of certain special nonrecurring items recorded during the third quarter of 1996, which are described later in this section. Likewise, noninterest expense totaled $73,936 for the first nine months of 1997, increasing by $3,273 or 4.6% from $70,663 for the same nine months in 1996, exclusive of the 1996 special nonrecurring items. Salary and wage increases for the quarter and nine months ending September 30, 1997 are primarily attributable to general merit raises. Retirement and other employee benefits increased by $411, or 16.7% for the current quarter as a result of adjustments to profit sharing and pension expense to more closely approximate anticipated 1997 employee contributions and costs. Such costs for the first nine months of 1997 increased $75, or 1% reflecting a stabilization of employee benefit costs. Occupancy costs increased $55 for the third quarter of 1997 as compared to the like period in 1996 and increased by $787, or 15.5% for the first nine months of 1997 which reflects the operational costs of four additional branches established in the latter half of 1996, as well as two additional branches in the third quarter of 1997. Equipment expense for the current quarter and nine months ending September 30, 1997 increased by $198, or 15% and, $371, or 9% respectively. Such increases are primarily attributable to higher equipment depreciation expense on computer related upgrades and capitalized purchases of furniture and equipment for the additional branches. As a result of increased processing volumes and implementation of a wide area network, computer processing costs have increased by $374 for the current quarter and by $526 for the first nine months of 1997 as compared to the like periods in 1996. Offsetting this higher level of technology related costs is the stabilization referred to above in both salaries and wages and employee benefits. Advertising and promotions increased $151 and $401 for the current quarter and nine months ending September 30, 1997, respectively as a result of grand opening marketing costs for the 1997 branch expansion. Professional services declined in both the third quarter of 1997 by $132 as compared to the like period in 1996 and by $242 for the first nine months of 1997 as compared to the year ago period. Such reductions are related to less professional and legal services incurred related to the resolution of litigation in the first quarter of 1997. 10 Other expenses for the third quarter 1997 decreased by $90 as compared to the same period in 1996, and increased by $805 for the first nine months of 1997 as compared to the same 1996 period. Quarterly decreases were attributed to $85 in reductions of FDIC insurance premiums while the nine month variance reflects $167 in higher repossession costs, $513 in freight/express, with the remaining $125 increase in other expense spread among various categories of miscellaneous expense. The increase in freight/expense is attributable to the outsourcing of this support function which previously had been staffed with full-time employees. Other considerations in the comparison of the quarterly and nine month period noninterest expenses are three special nonrecurring items recorded in 1996, two of which are a direct result from federal legislation enacted during the third quarter of 1996. Such legislation repealed the thrift bad debt recapture regulation and recapitalized the Savings Association Insurance Fund (SAIF). The bad debt recapture repeal permitted the reversal of a $992 nondeductible charge in the third quarter of 1996 which was originally recorded in the fourth quarter of 1995 related to the acquisition of Citizens Federal while the SAIF recapitalization required a one time charge of $1,603 also in the third quarter of 1996. During the nine months ended September 30, 1996, in addition to the two third quarter 1996 special nonrecurring items just discussed, a $324 acquisition credit was recorded in the first quarter of 1996 which related to the 1995 Citizens Federal acquisition. The efficiency ratio for the quarter ended September 30, 1997 was 59.21% as compared to the 1996 third quarter ratio of 60.45%, exclusive of the special nonrecurring items just described, while the efficiency ratio for the nine months ended September 30, 1997 was 59.67% as compared to the prior year's like period of 62.91%, also exclusive of the three 1996 special nonrecurring items. The decrease in the 1997 efficiency ratio reflects well-controlled noninterest expenses and the continued realization of cost benefits from the 1995 Companywide restructuring. 11 Income Tax Expense Income tax expense totaled $4,964 for the quarter ended September 30, 1997, increasing from $4,252 for the same period in 1996 and reflects effective income tax rates of 34.2% and 33.1% respectively. Income tax expense totaled $14,702 for the nine months ended September 30, 1997 increasing from $13,458 for the 1996 nine month period and reflects effective tax rates of 35.0% and 35.23%, respectively. The decrease in effective tax rate for the nine month period is primarily attributable to higher state tax exempt income in 1997. Nonperforming Assets and 90 Day Past Due Loans At September 30, 1997, nonperforming assets totaled $15,193 and loans past due 90 days or more and still accruing totaled $3,235. The following table summarizes nonperforming assets and loans past due 90 days or more and still accruing, as of the close of the last five calendar quarters:
Nonperforming Assets and 90 Day Past Due Loans 1997 1996 - ---------------------------------------------- ------------------------------------- --------------------- Sept. 30 June 30 March 31 Dec. 31 Sept. 30 -------- -------- -------- ------- -------- Nonaccrual loans....................................... $10,348 $10,723 $12,830 $10,448 $11,435 Renegotiated loans..................................... -- -- -- -- 7,876 ------- ------- ------- ------- ------- Total nonperforming loans.............................. 10,348 10,723 12,830 10,448 19,311 Foreclosed real estate................................. 4,845 5,485 6,801 5,811 5,587 ------- ------- ------- ------- ------- Total nonperforming assets............................. $15,193 $16,208 $19,631 $16,259 $24,898 ======= ======= ======= ======= ======= % of total loans plus foreclosed real estate........... 0.73% 0.79% 0.95% 0.78% 1.24% ======= ======= ======= ======= ======= 90 days past due loans accruing interest................. $ 3,235 $ 4,470 $ 3,720 $ 3,982 $ 4,998 ======= ======= ======= ======= =======
Nonaccrual loans, totaling $10,348 at September 30, 1997 are comprised of commercial and agricultural loans (52%), real estate loans (37%) and consumer loans (11%). Foreclosed real estate, totaling $4,845 at September 30, 1997, primarily represents commercial real estate properties. Information with respect to impaired loans is contained in Note 4 to the consolidated financial statements, located on page 7. Provision and Reserve for Loan Losses Transactions in the reserve for loan losses during the quarters and nine months ended September 30, 1997 and 1996 are summarized in the following table:
Quarters ended Nine months ended September 30, September 30, ---------------- ------------------ 1997 1996 1997 1996 ------- ------- ------- ------- Balance at beginning of period.................................................. $33,292 $28,597 $30,148 $29,194 Provision for loan losses..................................................... 2,196 1,561 5,466 4,188 Loans charged-off............................................................. (2,635) (2,025) (8,269) (6,468) Recoveries of loans previously charged-off.................................... 988 724 6,496 1,943 ------- ------- ------- ------- Net loans charged-off....................................................... (1,647) (1,301) (1,773) (4,525) ------- ------- ------- ------- Balance at end of period........................................................ $33,841 $28,857 $33,841 $28,857 ======= ======= ======= =======
The provision for loan losses charged to operating expense for the third quarter of 1997 totaled $2,196 as compared to $1,561 for the same quarter in 1996. The amount of the provision for loan losses in any given period is dependent upon many factors, including loan growth, changes in the composition of the loan portfolio, net charge-off levels, delinquencies, collateral values, and Management's assessment of current and prospective economic conditions. Net loan charge-offs for the quarter totaled $1,647, or .32% of average loans in 1997 as compared to net charge-offs of $1,301, or 0.26% recorded in 1996. 12 The reserve for loan losses at September 30, 1997 was comprised of three parts: allocated for specific impaired loans, $1,894; allocated for general segments of unimpaired loans, $8,034; and unallocated, $23,913. That part of the reserve allocated for specific impaired loans is discussed in Note 4 to the consolidated financial statements located on page 7. That part of the reserve allocated for unimpaired general loan segments represents First Midwest's best judgement as to potential loss exposure based upon both historical loss trends as well as loan ratings and qualitative evaluations of such segments. The unallocated portion of the reserve is that part not allocated to either a specific loan on which loss is anticipated or allocated to general segments of the unimpaired loan portfolio. The reserve for loan losses as a percentage of total loans outstanding increased to 1.63% at September 30, 1997 as compared to 1.36% at September 30, 1996. Such reserve level is considered adequate in relation to the estimated risk of future losses within the loan portfolio. The distribution of the loan portfolio is presented in Note 3 to the consolidated financial statement located on page 7. The loan portfolio consists dominantly of loans originated by First Midwest from its primary markets and generally represents credit extension to multi-relationship customers. Capital The table below compares First Midwest's capital structure to the minimum capital ratios required by its primary regulator, the Federal Reserve Board ("FRB"). Also provided is a comparison of capital ratios for First Midwest's national banking subsidiary, First Midwest Bank, N.A., to its primary regulator, the Office of the Comptroller of the Currency ("OCC)". Both First Midwest and ("FMB, N.A.") are subject to the minimum capital ratios defined by banking regulators pursuant to the FDIC Improvement Act ("FDICIA") and have capital measurements well in excess of the minimums required by their respective bank regulatory authorities to be considered "well-capitalized" which is the highest capital category established under the FDICIA.
Capital Measurements - FRB/OCC - ------------------------------- As of September 30, 1997 -------------------------------------------------------------- Bank Holding Company National Bank Minimum -------------------- ---------------------- ----------- Minimum Minimum Well- First Required Required Capitalized Midwest FRB FMB, N.A. OCC FDICIA ------- -------- --------- -------- ----------- Tier 1 capital to risk-based assets............... 10.93% 4.00% 9.06% 4.00% 6.00% Total capital to risk-based assets................ 12.18% 8.00% 10.32% 8.00% 10.00% Leverage ratio.................................... 8.43% 3.00% 7.00% 3.00% 5.00% ======= ======== ========= ======== ===========
Dividends First Midwest's strong capital position has allowed it to increase its quarterly dividend five times during the last four years including twice in 1996. The following table summarizes the dividend increases declared during the years 1994 through 1996:
Quarterly Rate Date Per Share* % Increase - ------------- -------------- ---------- November 1996 $.20 18% February 1996 $.17 13% February 1995 $.15 15% February 1994 $.13 13%
*Adjusted for the 5-for-4 stock split paid in December 1996 13 FORWARD LOOKING STATEMENTS The preceding "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of this Form 10-Q contain various "forward looking statements" within the meaning of Section 27 A of the Securities Act of 1933, as amended, and Section 21 E of the Securities Exchange Act of 1934, as amended, which represents First Midwest's expectations and beliefs concerning future events including, but not limited to, the following: the loan loss reserve levels going forward; the impact of the 1995 plan of restructuring on its financial performance and future growth; Management's assessment of its provision and reserve for loan loss levels based upon future changes in the composition of its loan portfolio, loan losses, collateral value and economic conditions. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those setforth in the forward looking statements due to market, economic and other business related risks and uncertainties effecting the realization of such statements. Certain of these risks and uncertainties included in such forward looking statements include, without limitations, the following: significant fluctuations in market interest rates; limitations on the Company's ability to increase fee- based income without negatively impacting customer relationships and related account balances; operational limitations and costs related to changing technologies; deviations from the assumptions used to evaluate the appropriate level of the reserve for loan losses as well as future purchases and sales of loans may affect the appropriate level of the reserve for loan losses and thereby affect the future levels of provisioning. Accordingly, results actually achieved may differ materially from expected results in these statements. First Midwest does not undertake, and specifically disclaims, any obligation to update any forward looking statements to reflect events or circumstances occurring after the date of such statements. 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - See Exhibit Index appearing on page 18. (b) Form 8-K - On October 2, 1997, First Midwest filed a report on Form 8-K announcing the consummation of the acquisition of SparBank, Incorporated, the holding company of McHenry State Bank located in McHenry, Illinois. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. First Midwest Bancorp, Inc. -------------------------------------- DONALD J. SWISTOWICZ -------------------------------------- Date: November 12, 1997 Donald J. Swistowicz Executive Vice President * * Duly authorized to sign on behalf of the Registrant. 15 EXHIBIT INDEX
Exhibit Sequential Number Description of Documents Page Number ------------ -------------------------------- ---------------- 27 Financial Data Schedule 19 99 Pro forma Financial Statements 21
EX-99 2 STATEMENTS OF CONDITIONS Exhibit 99 First Midwest Bancorp, Inc. and SparBank Incorporated Pro forma Statements of Condition and Pro forma Statements of Income (unaudited) for the periods ended September 30, 1997 ($ in thousands except per share data) ********** On October 1, 1997, First Midwest Bancorp, Inc. consummated the acquisition of SparBank Incorporated. The acquisition was accounted for as a pooling of interests. The accompanying financial information presents the statements of condition of First Midwest and SparBank on a stand alone basis as well as a pro forma basis as if the transition had been consummated on September 30, 1997, with all prior periods being re-stated. FIRST MIDWEST BANCORP, INC. AND SPARBANK, INC. Proforma Consolidated Statements of Condition (Unaudited) September 30, 1997 (dollars in thousands, except for per share data)
First Assets Midwest SparBank Proforma ----------- ---------- ----------- Cash and short-term investments...................... $ 158,169 $ 17,770 $ 175,939 Securities available for sale and held to maturity... 820,809 150,438 971,247 Loans, net of unearned discount...................... 2,080,729 258,334 2,339,063 Reserve for loan losses............................ (33,841) (2,085) (35,926) Goodwill............................................. 11,820 0 11,820 Mortgage servicing rights and other intangible assets 9,259 37 9,296 Premises and equipment............................... 51,385 8,702 60,087 Accrued interest receivable and other assets......... 69,463 4,020 73,483 ----------- ---------- ----------- Total Assets..................................... $ 3,167,793 $ 437,216 $ 3,605,009 =========== ========== =========== Liabilities and Stockholders' Equity Liabilities: Noninterest-bearing deposits....................... $ 395,146 $ 47,061 $ 442,207 Interest-bearing deposits.......................... 2,018,096 330,285 2,348,381 ----------- ---------- ----------- Total deposits................................... 2,413,242 377,346 2,790,588 Short-term borrowings.............................. 427,143 3,511 430,654 Accrued interest payable and other liabilities..... 45,972 4,523 50,495 ----------- ---------- ----------- Total liabilities................................ 2,886,357 385,380 3,271,737 ----------- ---------- ----------- Total stockholders' equity .......................... 281,436 51,836 333,272 ----------- ---------- ----------- Total Liabilities and Stockholders' Equity....... $ 3,167,793 $ 437,216 $ 3,605,009 =========== ========== =========== - -------------------------------------------------------------------------------------------------------------- Book value per share (Proforma for SparBank)......... $ 16.74 $ 16.04 $ 16.63 =========== ========== =========== Total shares outstanding (Proforma for SparBank) .... 16,814,105 3,230,764 20,044,869 =========== ========== =========== - -------------------------------------------------------------------------------------------------------------- First Statement of Condition Ratios at Period End Midwest SparBank Proforma - ----------------------------------------------------- ------- -------- -------- Loans to assets...................................... 65.68% 59.09% 64.88% Loans to deposits.................................... 86.22% 68.46% 83.82% Earning assets to total assets....................... 92.22% 95.32% 92.38% Capital Ratios at Period End - ----------------------------------------------------- Tier 1 capital to risk-adjusted assets............... 10.93% 20.97% 11.85% Total capital to risk-adjusted assets................ 12.18% 21.82% 13.10% Leverage ratio....................................... 8.43% 11.67% 8.83%
FIRST MIDWEST BANCORP, INC. AND SPARBANK, INC. Proforma Consolidated Statements of Income (Unaudited) Quarter ended September 30, 1997 (dollars in thousands, except per share data)
First Midwest SparBank Proforma ----------- ----------- ----------- Total interest income................................... $61,691 $7,721 $69,412 Total interest expense.................................. 28,624 3,818 32,442 ---------- ---------- ---------- Net interest income................................. 33,067 3,903 36,970 Provision for loan losses............................... 2,196 30 2,226 ---------- ---------- ---------- Net interest income after provision for loan losses......................... 30,871 3,873 34,744 ---------- ---------- ---------- Noninterest income - ------------------ Service charges on deposit accounts..................... 2,803 96 2,899 Trust and investment management fees.................... 1,709 250 1,959 Other service charges, commissions and fees............. 1,441 254 1,695 Mortgage banking revenues............................... 1,407 0 1,407 Other income............................................ 782 351 1,133 Security transactions, net.............................. 616 2 618 ---------- ---------- ---------- Total noninterest income........................ 8,758 953 9,711 ---------- ---------- ---------- Noninterest expense - ------------------- Employee-related costs.................................. 13,507 1,502 15,009 Occupancy and equipment................................. 3,518 384 3,902 Computer processing costs............................... 1,857 286 2,143 Advertising and promotions.............................. 720 45 765 Professional services................................... 1,246 126 1,372 All other costs......................................... 4,264 181 4,445 ---------- ---------- ---------- Total noninterest expense....................... 25,112 2,524 27,636 ---------- ---------- ---------- Income before income tax expense.................... 14,517 2,302 16,819 Income tax expense ..................................... 4,964 539 5,503 ---------- ---------- ---------- Net income.......................................... $9,553 $1,763 $11,316 ========== ========== ========== Net income per share (Proforma for SparBank)........ $0.57 $0.55 $0.57 ========== ========== ========== Weighted avg shares outstanding (Proforma for SparBank). 16,759,306 3,230,764 19,990,070 ========== ========== ==========
- --------------------------------------------------------------------------------
First Performance Ratios Midwest SparBank Proforma - ---------------------------------------------------------------------- ----------- ----------- Return on average assets ............................... 1.20% 1.60% 1.25% Return on average stockholders' equity ................. 13.74% 13.33% 13.67% Net interest margin - tax equivalent.................... 4.59% 4.55% 4.59% Efficiency ratio ....................................... 59.21% 44.12% 57.41%
FIRST MIDWEST BANCORP, INC. AND SPARBANK, INC. Proforma Consolidated Statements of Income (Unaudited) Nine Months Ended September 30, 1997 (dollars in thousands, except per share data)
First Midwest SparBank Proforma ---------- ---------- ---------- Total interest income.................................... $178,060 $23,303 $201,363 Total interest expense................................... 81,673 11,436 93,109 ---------- ---------- ---------- Net interest income.................................. 96,387 11,867 108,254 Provision for loan losses................................ 5,466 90 5,556 ---------- ---------- ---------- Net interest income after provision for loan losses.......................... 90,921 11,777 102,698 ---------- ---------- ---------- Noninterest income - ------------------ Service charges on deposit accounts...................... 8,172 382 8,554 Trust and investment management fees..................... 5,072 578 5,650 Other service charges, commissions and fees.............. 4,575 688 5,263 Mortgage banking revenues................................ 3,863 0 3,863 Other income............................................. 2,487 896 3,383 Security transactions, net............................... 829 2 831 ---------- ---------- ---------- Total noninterest income.......................... 24,998 2,546 27,544 ---------- ---------- ---------- Noninterest expense - ------------------- Employee-related costs................................... 38,645 4,568 43,213 Occupancy and equipment.................................. 10,431 1,165 11,596 Computer processing costs................................ 5,272 866 6,138 Advertising and promotions............................... 2,377 139 2,516 Professional services.................................... 3,913 473 4,386 All other costs.......................................... 13,298 635 13,933 ---------- ---------- ---------- Total noninterest expense......................... 73,936 7,846 81,782 ---------- ---------- ---------- Income before income tax expense..................... 41,983 6,477 48,460 Income tax expense ...................................... 14,702 1,580 16,282 ---------- ---------- ---------- Net income........................................... $27,281 $4,897 $32,178 ========== ========== ========== Net income per share (Proforma for SparBank)......... $1.63 $1.52 $1.61 ========== ========== ========== Weighted avg shares outstanding (Proforma for SparBank).. 16,729,733 3,230,764 19,960,497 ========== ========== ========== - -------------------------------------------------------------------------------------------------------
First Performance Ratios Midwest SparBank Proforma - ----------------------------------------------------------------------- -------- -------- Return on average assets ................................ 1.19% 1.47% 1.23% Return on average stockholders' equity .................. 13.72% 12.66% 13.55% Net interest margin - tax equivalent..................... 4.62% 4.42% 4.51% Efficiency ratio ........................................ 59.67% 47.35% 59.11%
EX-27 3 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 138,346 2,937 154 0 801,311 19,498 19,782 2,080,729 33,841 3,167,793 2,413,242 427,143 45,972 0 168 0 0 281,268 3,167,793 139,325 37,373 1,362 178,061 62,510 81,673 96,388 5,466 829 73,936 41,983 27,281 0 0 27,281 1.63 1.63 4.62 10,348 3,235 0 27,587 30,148 8,269 6,496 33,841 9,928 0 23,913
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