Note 18 - Regulatory and Capital Matters

12 Months Ended

Dec. 31, 2011

Regulatory Capital Requirements under Banking Regulations [Text Block]

18.   REGULATORY AND CAPITAL MATTERS

The Company and its subsidiaries are subject to various regulatory requirements that impose restrictions on cash, loans or advances, and dividends. The Bank is also required to maintain reserves against deposits. Reserves are held either in the form of vault cash or noninterest-bearing balances maintained with the Federal Reserve Bank and are based on the average daily balances and statutory reserve ratios prescribed by the type of deposit account. Reserve balances totaling $18.3 million at December 31, 2011 and $19.3 million at December 31, 2010 were maintained in fulfillment of these requirements.

Under current Federal Reserve regulations, the Bank is limited in the amount it may loan or advance to the Parent Company and its non-bank subsidiaries. Loans or advances to a single subsidiary may not exceed 10% and loans to all subsidiaries may not exceed 20% of the Bank’s capital stock and surplus, as defined. Loans from subsidiary banks to non-bank subsidiaries, including the Parent Company, are also required to be collateralized.

The principal source of cash flow for the Parent Company is dividends from the Bank. Various federal and state banking regulations and capital guidelines limit the amount of dividends that may be paid to the Parent Company by the Bank. Without prior regulatory approval, the Bank can initiate aggregate dividend payments in 2012 of $48.8 million plus an additional amount equal to its net profits for 2012, as defined by statute, up to the date of any such dividend declaration. Future payment of dividends by the Bank is dependent upon individual regulatory capital requirements and levels of profitability.

The Company and the Bank are also subject to various capital requirements set up and administered by federal banking agencies. Under capital adequacy guidelines, the Company and the Bank must meet specific guidelines that involve quantitative measures given the risk levels of assets and certain off-balance sheet items calculated under regulatory accounting practices (“risk-weighted assets”). The capital amounts and classification are also subject to qualitative judgments by the regulators regarding components of capital and assets, risk weightings, and other factors.

The Federal Reserve, the primary regulator of the Company and the Bank, establishes minimum capital requirements that must be met by member institutions. As defined in the regulations, quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to adjusted average assets. Failure to meet minimum capital requirements could result in actions by regulators that could have a material effect on the Company’s financial statements.

As of December 31, 2011, the Company and the Bank met all capital adequacy requirements to which they are subject. As of December 31, 2011, the most recent regulatory notification classified the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes would change the Bank’s classification.

The following table outlines the Company’s and the Bank’s measures of capital as of the dates presented and the capital guidelines established by the Federal Reserve to be categorized as adequately capitalized and as “well-capitalized.”

Summary of Capital Ratios

(Dollar amounts in thousands)

	Actual					Adequately Capitalized					“Well-Capitalized” for FDICIA
	Capital		Ratio			Capital		Ratio			Capital		Ratio
As of December 31, 2011:
Total capital (to risk-weighted assets):
First Midwest Bancorp, Inc.	$	853,961		13.68	%	$	499,295		8.00	%	$	624,119		10.00	%
First Midwest Bank		880,223		14.37			489,968		8.00			612,459		10.00
Tier 1 capital (to risk-weighted assets):
First Midwest Bancorp, Inc.		724,863		11.61			249,648		4.00			374,471		6.00
First Midwest Bank		803,054		13.11			244,984		4.00			367,476		6.00
Tier 1 leverage (to average assets):
First Midwest Bancorp, Inc.		724,863		9.28			234,409		3.00			390,682		5.00
First Midwest Bank		803,054		10.37			232,370		3.00			387,284		5.00
As of December 31, 2010:
Total capital (to risk-weighted assets):
First Midwest Bancorp, Inc.	$	1,027,761		16.27	%	$	505,420		8.00	%	$	631,774		10.00	%
First Midwest Bank		856,027		13.87			493,622		8.00			617,027		10.00
Tier 1 capital (to risk-weighted assets):
First Midwest Bancorp, Inc.		897,410		14.20			252,710		4.00			379,065		6.00
First Midwest Bank		778,008		12.61			246,811		4.00			370,216		6.00
Tier 1 leverage (to average assets):
First Midwest Bancorp, Inc.		897,410		11.21			240,066		3.00			400,107		5.00
First Midwest Bank		778,008		9.88			236,253		3.00			393,755		5.00