-----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, OdMbzGskXvYOq7ckOSF6thJbMg1vxNlwurpFna+aFq3vCAId0z3rOO4/c7OfwEIx z/glr+RfTuubAX7/WWVK2A== 0000914317-03-002416.txt : 20030814 0000914317-03-002416.hdr.sgml : 20030814 20030813182754 ACCESSION NUMBER: 0000914317-03-002416 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST MIDWEST FINANCIAL INC CENTRAL INDEX KEY: 0000907471 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 421406262 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22140 FILM NUMBER: 03842866 BUSINESS ADDRESS: STREET 1: FIFTH AT ERIE STREET 2: P O BOX 1307 CITY: STORM LAKE STATE: IA ZIP: 50588 BUSINESS PHONE: 7127324117 MAIL ADDRESS: STREET 1: FIFTH AT ERIE STREET 2: P O BOX 1307 CITY: STORM LAKE STATE: IA ZIP: 50588 10-Q 1 form10q-53549_firstmid.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003 |_| TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transaction period from __________ to __________ Commission File Number: 0-22140 FIRST MIDWEST FINANCIAL, INC. (Exact name of registrant as specified in its charter) Delaware 42-1406262 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) Fifth at Erie, Storm Lake, Iowa 50588 (Address of principal executive offices) (712) 732-4117 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) 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 |_| Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X| Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class: Outstanding at August 12, 2003: Common Stock, $.01 par value 2,493,949 Common Shares Transitional Small Business Disclosure Format: Yes |_|; No |X| FIRST MIDWEST FINANCIAL, INC. FORM 10-Q INDEX Page No. -------- Part I. Financial Information Item 1. Financial Statements (unaudited): Consolidated Balance Sheets at June 30, 2003 and September 30, 2002 3 Consolidated Statements of Income for the Three Months and Nine Months Ended June 30, 2003 and 2002 4 Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended June 30, 2003 and 2002 5 Consolidated Statement of Changes in Shareholders' Equity for the Nine Months Ended June 30, 2003 6 Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2003 and 2002 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosure About Market Risk 18 Item 4. Disclosure Controls and Procedures 20 Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 21 Signatures 22 2 Part I. Financial Information Item 1. Financial Statements FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)
June 30, 2003 September 30, 2002 ------------- ------------------ Assets Cash and due from banks $ 1,522,235 $ 1,325,139 Interest-bearing deposits in other financial institutions - short-term (cost approximates market value) 13,232,791 6,051,295 ------------- ------------ Total cash and cash equivalents 14,755,026 7,376,434 Securities available for sale, amortized cost of $368,662,853 at June 30, 2003 and $217,460,796 at September 30, 2002 366,903,764 218,247,310 Loans held for sale 1,028,861 1,254,962 Loans receivable - net of allowance for loan losses of $4,967,078 at June 30, 2003 and $4,692,988 at September 30, 2002 346,134,038 341,937,408 Foreclosed real estate, net 1,332,250 1,327,802 Accrued interest receivable 3,722,994 4,320,514 Federal Home Loan Bank stock, at cost 12,287,200 6,842,600 Premises and equipment, net 11,523,389 11,054,243 Other assets 17,188,809 15,287,187 ------------- ------------ Total Assets $ 774,876,331 $607,648,460 ============= ============ Liabilities and Shareholders' Equity Liabilities Deposits $ 432,927,511 $355,779,753 Advances from Federal Home Loan Bank 219,666,771 125,089,999 Securities sold under agreements to repurchase 66,103,325 70,176,228 Company Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely Subordinated Debentures 10,000,000 10,000,000 Advances from borrowers for taxes and insurance 339,049 355,884 Accrued interest payable 488,256 671,033 Other liabilities 881,263 987,797 ------------- ------------ Total Liabilities 730,406,175 563,060,694 ------------- ------------ Shareholders' Equity Preferred stock, 800,000 shares authorized, no shares issued or outstanding -- -- Common stock, $.01 par value, 5,200,000 shares authorized, 2,957,999 shares issued and 2,493,949 shares outstanding at June 30, 2003; 2,957,999 shares issued and 2,468,804 shares outstanding at September 30, 2002 29,580 29,580 Additional paid-in capital 20,501,606 20,593,768 Retained earnings - substantially restricted 33,623,126 31,940,648 Accumulated other comprehensive income (loss) (1,103,552) 494,834 Unearned Employee Stock Ownership Plan shares (415,641) (46,142) Treasury stock, 464,050 and 489,195 common shares, at cost, at June 30, 2003 and September 30, 2002, respectively (8,164,963) (8,424,922) ------------- ------------ Total Shareholders' Equity 44,470,156 44,587,766 ------------- ------------ Total Liabilities and Shareholders' Equity $ 774,876,331 $607,648,460 ============= ============
The accompanying notes are an integral part of these consolidated financial statements. 3 FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30, 2003 2002 2003 2002 ----------- ----------- ------------ ------------ Interest and Dividend Income: Loans receivable, including fees $ 5,936,930 $ 6,228,454 $ 18,212,692 $ 19,098,240 Securities available for sale 2,734,611 2,625,429 8,313,157 7,258,842 Dividends on Federal Home Loan Bank stock 101,656 50,541 201,780 172,028 ----------- ----------- ------------ ------------ Total interest and dividend income 8,773,197 8,904,424 26,727,629 26,529,110 Interest Expense: Deposits 2,582,015 3,260,747 8,004,583 10,469,284 FHLB advances and other borrowings 2,259,715 2,032,761 6,719,069 6,181,455 ----------- ----------- ------------ ------------ Total interest expense 4,841,730 5,293,508 14,723,652 16,650,739 ----------- ----------- ------------ ------------ Net interest income 3,931,467 3,610,916 12,003,977 9,878,371 Provision for loan losses 67,000 280,000 350,000 715,000 ----------- ----------- ------------ ------------ Net interest income after provision for loan losses 3,864,467 3,330,916 11,653,977 9,163,371 Noninterest income: Deposit service charges and other fees 351,065 284,982 962,928 834,953 Loan fees on sold loans 235,483 48,445 745,667 383,184 Gain on sales of securities available for sale, net 46,180 46,762 242,570 86,193 Gain (loss) on sales of foreclosed real estate, net (2,601) (27,371) (3,181) (37,177) Brokerage commissions 48,150 31,874 92,423 151,037 Other income 195,196 196,025 738,889 582,264 ----------- ----------- ------------ ------------ Total noninterest income 873,473 580,717 2,779,296 2,000,454 Noninterest expense: Employee compensation and benefits 2,171,665 1,954,142 6,291,439 5,724,929 Occupancy and equipment expense 517,705 530,663 1,604,641 1,474,089 Federal deposit insurance premium 15,386 15,147 45,688 46,201 Data processing expense 159,297 148,307 466,334 427,764 Prepayment fee on FHLB advances -- -- 500,674 -- Other expense 534,640 535,333 1,570,254 1,473,502 ----------- ----------- ------------ ------------ Total noninterest expense 3,398,693 3,183,592 10,479,030 9,146,485 ----------- ----------- ------------ ------------ Income before income taxes 1,339,247 728,041 3,954,243 2,017,340 Income tax expense 446,840 199,583 1,302,395 603,974 ----------- ----------- ------------ ------------ Net income $ 892,407 $ 528,458 $ 2,651,848 $ 1,413,366 =========== =========== ============ ============ Earnings per common share: Basic $ 0.36 $ 0.22 $ 1.07 $ 0.58 ----------- ----------- ------------ ------------ Diluted $ 0.36 $ 0.21 $ 1.06 $ 0.57 ----------- ----------- ------------ ------------
The accompanying notes are an integral part of these consolidated financial statements. 4 FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Three Months Ended Nine Months Ended June 30, June 30, 2003 2002 2003 2002 ----------- ---------- ----------- ---------- Net income $ 892,407 $ 528,458 $ 2,651,848 $1,413,366 Other comprehensive income (loss): Net change in net unrealized gains and losses on securities available for sale (1,835,840) 2,497,893 (2,545,603) 172,463 Deferred income tax expense (benefit) (683,115) 923,805 (947,217) 60,751 ----------- ---------- ----------- ---------- Total other comprehensive income (loss) (1,152,725) 1,574,088 (1,598,386) 111,712 ----------- ---------- ----------- ---------- Total comprehensive income (loss) $ (260,318) $2,102,546 $ 1,053,462 $1,525,078 =========== ========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 5 FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statement of Changes in Shareholders' Equity (Unaudited) For the Nine Months Ended June 30, 2003
Accumulated Unearned Other Employee Additional Comprehensive Stock Common Paid-In Retained Income (Loss), Ownership Stock Capital Earnings Net of Tax Plan Shares --------- ------------ ------------ ----------- ----------- Balance at September 30, 2002 $29,580 $ 20,593,768 $ 31,940,648 $ 494,834 $ (46,142) Cash dividends declared on common stock ($0.39 per share) -- -- (969,370) -- -- Purchase of 10,147 shares of treasury stock -- -- -- -- -- Purchase of 35,574 common shares for ESOP -- -- -- -- (608,584) 15,450 common shares committed to be released under the ESOP -- 10,060 -- -- 239,085 Issuance of 35,292 common shares from treasury stock due to exercise of stock options -- (189,770) -- -- -- Tax benefit from exercise of stock options -- 87,548 -- -- -- Net change in net unrealized losses on securities available for sale, net of effect of income taxes of $(947,217) -- -- -- (1,598,386) -- Net income for the nine months ended June 30, 2003 -- -- 2,651,848 -- -- ------- ------------ ------------ ----------- --------- Balance at June 30, 2003 $29,580 $ 20,501,606 $ 33,623,126 $(1,103,552) $(415,641) ======= ============ ============ =========== ========= Total Treasury Shareholders' Stock Capital ----------- ------------ Balance at September 30, 2002 $(8,424,922) $ 44,587,766 Cash dividends declared on common stock ($0.39 per share) -- (969,370) Purchase of 10,147 shares of treasury stock (165,092) (165,092) Purchase of 35,574 common shares for ESOP -- (608,584) 15,450 common shares committed to be released under the ESOP -- 249,145 Issuance of 35,292 common shares from treasury stock due to exercise of stock options 425,051 235,281 Tax benefit from exercise of stock options -- 87,548 Net change in net unrealized losses on securities available for sale, net of effect of income taxes of $(947,217) -- (1,598,386) Net income for the nine months ended June 30, 2003 -- 2,651,848 ----------- ------------ Balance at June 30, 2003 $(8,164,963) $ 44,470,156 =========== ============
The accompanying notes are an integral part of these consolidated financial statements. 6 FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended June 30, 2003 2002 ------------- ------------- Cash flows from operating activities: Net income $ 2,651,848 $ 1,413,366 Adjustments to reconcile net income to net cash from operating activities: Depreciation, amoritization and accretion, net 1,428,046 1,323,279 Provision for loan losses 350,000 715,000 (Gain)/loss on sales of foreclosed real estate, net 3,181 (86,193) (Gain)/loss on sales of securities available for sale, net (242,570) 37,177 (Gain)/loss on sales of office property, net (134,700) -- Prepayment fee on FHLB advances 500,674 -- Proceeds from sales of loans held for sale 59,244,469 40,283,062 Originations of loans held for sale (59,018,368) (40,283,062) Net change in accrued interest receivable 597,520 851,037 Net change in other assets (954,404) (696,340) Net change in accrued interest payable (182,777) (206,509) Net change in accrued expenses and other liabilities (106,534) 866,849 ------------- ------------- Net cash from operating activities 4,136,385 4,217,666 Cash flows from investing activities: Purchase of securities available for sale (372,599,726) (98,405,484) Proceeds from sale of securities available for sale 90,455,195 12,442,021 Proceeds from maturities and principal repayments of securities available for sale 130,620,985 28,912,815 Net change in loans receivable 15,024,297 11,153,142 Loans purchased (19,926,142) (19,095,455) Proceeds from sales of foreclosed real estate 388,139 301,041 Proceeds from sales of office building 197,169 -- Purchase of shares by ESOP (608,584) -- Purchase of FHLB stock (5,444,600) (443,700) Purchase of premises and equipment, net (1,187,010) (1,276,574) ------------- ------------- Net cash from investing activities (163,080,277) (66,412,194) Cash flows from financing activities: Net change in noninterest-bearing demand, savings, NOW, and money market demand deposits 31,473,882 12,730,609 Net change in other time deposits 45,673,876 10,598,360 Proceeds from advances from Federal Home Loan Bank 778,925,000 214,920,000 Repayments of advances from Federal Home Loan Bank (684,848,902) (229,385,603) Net change in securities sold under agreements to repurchase (4,072,903) 53,537,830 Net change in advances from borrowers for taxes and insurance (16,835) (66,642) Cash dividends paid (969,371) (961,939) Proceeds from the exercise of stock options 322,829 418,542 Purchase of treasury stock (165,092) (741,365) ------------- ------------- Net cash from financing activities 166,322,484 61,049,792 ------------- ------------- Net change in cash and cash equivalents 7,378,592 (1,144,736) Cash and cash equivalents at beginning of period 7,376,434 8,766,305 ------------- ------------- Cash and cash equivalents at end of period $ 14,755,026 $ 7,621,569 ============= ============= Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 14,906,429 $ 16,857,248 Income taxes 1,086,788 520,693 Supplemental schedule of non-cash investing and financing activities: Loans transferred to foreclosed real estate $ 395,768 $ 316,517
The accompanying notes are an integral part of these consolidated financial statements. 7 FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed by First Midwest Financial, Inc. ("First Midwest" or the "Company") and its consolidated subsidiaries, First Federal Savings Bank of the Midwest ("First Federal"), Security State Bank ("Security"), First Services Trust Company, First Services Financial Limited and Brookings Service Corporation, for interim reporting are consistent with the accounting policies followed for annual financial reporting. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results for the periods reported have been included in the accompanying unaudited consolidated financial statements, and all such adjustments are of a normal recurring nature. The accompanying financial statements do not purport to contain all the necessary financial disclosures required by generally accepted accounting principles that might otherwise be necessary in the circumstances and should be read in conjunction with the Company's consolidated financial statements, and notes thereto, for the year ended September 30, 2002. 2. EARNINGS PER SHARE Basic earnings per share is based on net income divided by the weighted average number of shares outstanding during the period. Diluted earnings per share shows the dilutive effect of additional common shares issuable under stock options. A reconciliation of the numerators and denominators used in the basic earnings per common share and the diluted earnings per common share computations for the three months and nine months ended June 30, 2003 and 2002 is presented below.
Three Months Ended Nine Months Ended June 30, June 30, -------- -------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Basic Earnings Per Common Share: Numerator: Net Income $ 892,407 $ 528,458 $ 2,651,848 $ 1,413,366 =========== =========== =========== =========== Denominator: Weighted average common shares outstanding 2,493,949 2,457,262 2,482,101 2,460,294 Less: Weighted average unallocated ESOP shares (16,061) (6,250) (10,421) (10,014) ----------- ----------- ----------- ----------- Weighted average common shares outstanding for basic earnings per share 2,477,888 2,451,012 2,471,680 2,450,280 =========== =========== =========== =========== Basic earnings per common share $ 0.36 $ 0.22 $ 1.07 $ 0.58 =========== =========== =========== ===========
8
Three Months Ended Nine Months Ended June 30, June 30, -------- -------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Diluted Earnings Per Common Share: Numerator: Net Income $ 892,407 $ 528,458 $2,651,848 $1,413,366 ========== ========== ========== ========== Denominator: Weighted average common shares outstanding for basic earnings per common share 2,477,888 2,451,012 2,471,680 2,450,280 Add: Dilutive effects of assumed exercise of stock options, net of tax benefits 31,992 27,257 28,495 34,783 ---------- ---------- ---------- ---------- Weighted average common and dilutive potential common shares outstanding 2,509,880 2,478,269 2,500,175 2,485,063 ========== ========== ========== ========== Diluted earnings per common share $ 0.36 $ 0.21 $ 1.06 $ 0.57 ========== ========== ========== ==========
3. COMMITMENTS At June 30, 2003 and September 30, 2002, the Company had outstanding commitments to originate and purchase loans totaling $53.4 million and $35.6 million, respectively, excluding undisbursed portions of loans in process. It is expected that outstanding loan commitments will be funded with existing liquid assets. 4. INTANGIBLE ASSETS As of June 30, 2003 and September 30, 2002 the Company had intangible assets of $3,403,019, all of which has been determined to be goodwill. There was no goodwill impairment loss or amortization related to goodwill during the three-month and nine-month periods ended June 30, 2003 and 2002. 5. CURRENT ACCOUNTING DEVELOPMENTS In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46 ("FIN 46)", "Consolidated Variable Interest Entities." The objective of this Interpretation is to provide guidance on how to identify a variable interest entity and determine when the assets, liabilities, non-controlling interests, and results of operations of a variable interest in an entity need to be included in a company's consolidated financial statements. A company that holds variable interests in an entity will need to consolidate the entity if the company's interest in the variable interest entity is such that the company will absorb a majority of the variable interest entity's losses and/or receive a majority of the entity's expected residual returns, if they occur. FIN 46 also requires additional disclosures by primary beneficiaries and other significant variable interest holders. The provisions of this interpretation are effective upon issuance. The Company does not expect the provisions of FIN 46 to have material impact on its financial position or results of operations. In December 2002, the FASB issued SFAS No, 148, "Accounting for Stock-Based Compensation - Transition and Disclosures - an amendment of SFAS 123" ("SFAS 148"). SFAS 148 permits two 9 additional transition methods for entities that adopt the fair value based method of accounting for stock-based employee compensation. The disclosure provisions of this Statement are effective for this quarter ended June 30, 2003 and are included herein. The Company does not currently use the provisions of Statement No. 123 and therefore SFAS No. 148 does not effect the Company's financial position or results of operations. In April 2003, the FASB issued Statement No. 149, "Amendment of Statement No. 133, Accounting for Derivative Instruments and Hedging Activities." This statement clarifies the definition of a derivative and incorporates certain decisions made by the Board as part of the Derivatives Implementation Group process. This statement is effective for contracts entered into or modified, and for hedging relationships designated after June 30, 2003 and should be applied prospectively. Adoption of this standard is not expected to have a significant impact on the Corporation's financial condition or results of operations. 6. STOCK OPTION PLAN FASB Statement No. 123, Accounting for Stock-Based Compensation, establishes a fair value based method for financial accounting and reporting for stock-based employee compensation plans and for transactions in which an entity issues its equity instruments to acquire goods and services from nonemployees. However, the standard allows compensation to continue to be measured by using the intrinsic value based method of accounting prescribed by APB No. 25, Accounting for Stock Issued to Employees, but requires expanded disclosures. The Company has elected to apply the intrinsic value based method of accounting for stock options issued to employees. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company stock at the date of grant over the amount an employee must pay to acquire the stock. Had compensation cost for the Plan been determined based on the grant date fair values of awards (the method described in FASB Statement No. 123), the approximate reported income and earnings per common share would have been decreased to the pro forma amounts shown below:
Three Months Ended Nine Months Ended June 30, June 30, -------- -------- 2003 2002 2003 2002 ----------- ----------- ------------- ------------- Net income, as reported $ 892,407 $ 528,458 $ 2,651,848 $ 1,413,366 Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects (3,394) (5,103) (9,955) (12,580) ----------- ----------- ------------- ------------- Pro forma net income $ 889,013 $ 523,355 $ 2,641,893 $ 1,400,786 =========== =========== ============= ============= Earnings per common share - basic: As reported $ .36 $ .22 $ 1.07 $ .58 Pro forma $ .36 $ .21 $ 1.07 $ .57 Earnings per common share - diluted: As reported $ .36 $ .21 $ 1.06 $ .57 Pro forma $ .35 $ .21 $ 1.06 $ .56
10 Part I. Financial Information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FIRST MIDWEST FINANCIAL, INC. AND SUBSIDIARIES GENERAL First Midwest Financial, Inc. ("First Midwest" or the "Company") is a bank holding company whose primary assets are First Federal Savings Bank of the Midwest ("First Federal") and Security State Bank ("Security"). The Company was incorporated in 1993 as a unitary non-diversified savings and loan holding company and, on September 20, 1993, acquired all of the capital stock of First Federal in connection with First Federal's conversion from mutual to stock form of ownership. On September 30, 1996, the Company became a bank holding company in conjunction with the acquisition of Security. The following discussion focuses on the consolidated financial condition of the Company and its subsidiaries, at June 30, 2003, compared to September 30, 2002, and the consolidated results of operations for the three months and nine months ended June 30, 2003, compared to the same periods in 2002. This discussion should be read in conjunction with the Company's consolidated financial statements, and notes thereto, for the year ended September 30, 2002. FINANCIAL CONDITION Total assets increased by $167.3 million, or 27.5%, to $774.9 million at June 30, 2003, from $607.6 million at September 30, 2002. As described below, the increase was due to increases in total cash and cash equivalents, securities available for sale, loans receivable, and Federal Home Loan Bank of Des Moines (FHLB) stock. Total cash and cash equivalents increased by $7.4 million, rising to $14.8 million at June 30, 2003 from $7.4 million at September 30, 2002. The increase was almost entirely due to an increase in interest-bearing deposits in other financial institutions. The portfolio of securities available for sale increased $148.7 million, or 68.1%, to $366.9 million at June 30, 2003, from $218.2 million at September 30, 2002. The increase reflects the purchase of mortgage-backed securities, primarily with balloon maturities, which have relatively short expected average lives and limited maturity extension. The portfolio of net loans receivable increased by $4.2 million, or 1.2%, to $346.1 million at June 30, 2003, from $341.9 million at September 30, 2002. The increase reflects increased origination of commercial and multi-family real estate loans on existing and newly constructed properties and the increased origination of commercial business loans. These increases were partially offset by a reduction in one to four family residential mortgage loans as existing originated and purchased loans were repaid in amounts greater than new originations retained in portfolio during the period. The Company's investment in FHLB stock increased by $5.5 million, increasing to $12.3 million at June 30, 2003 from $6.8 million at September 30, 2002. The increase reflects the increased level of borrowings from the FHLB during the period and the related increase in the required level of stock investment. The increases in cash and cash equivalents, securities available for sale, loans receivable, and Federal Home Loan Bank stock were funded primarily by increases in deposits and advances from the FHLB. 11 Deposit balances increased by $77.1 million, or 21.7%, to $432.9 million at June 30, 2003, from $355.8 million at September 30, 2002. The increase in deposit balances resulted from increases in checking accounts, money market demand accounts, savings accounts and certificates of deposit in the amounts of $10.3 million, $18.5 million, $2.6 million, and $45.7 million, respectively. The majority of the increase in certificates of deposit is the result of increased deposits by state and local governmental entities. The balance in advances from the FHLB increased by $94.6 million, or 75.6%, to $219.7 million at June 30, 2003, from $125.1 million at September 30, 2002. The balance in securities sold under agreements to repurchase decreased by $4.1 million, or 5.8%, to $66.1 million at June 30, 2003, from $70.2 million at September 30, 2002. The increase in FHLB advances, net of the decrease in securities sold under agreements to repurchase, was used to fund balance sheet growth during the period. Total shareholders' equity decreased $100,000 to $44.5 million at June 30, 2003, from $44.6 million at September 30, 2002. The decrease in shareholders' equity reflects earnings during the period, which were partially offset by the payment of cash dividends to shareholders and an increase in unrealized loss on securities available for sale in accordance with SFAS 115. NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES Generally, when a loan becomes delinquent 90 days or more, or when the collection of principal or interest becomes doubtful, the Company will place the loan on non-accrual status and, as a result of this action, previously accrued interest income on the loan is taken out of current income. The loan will remain on non-accrual status until the loan has been brought current, or until other circumstances occur that provide adequate assurance of full repayment of interest and principal. At June 30, 2003, the Company had loans delinquent 30 days and over totaling $2.7 million, or 0.76% of total loans compared to $6.7 million, or 1.93% of total loans at September 30, 2002. The decrease is due primarily to three commercial and multi-family real estate loans totaling $3.5 million that were brought current during the period. At June 30, 2003, commercial and multi-family real estate loans delinquent 30 days and over totaled $513,000, or 0.15% of the total loan portfolio as compared to $3.9 million, or 1.12% of total loans at September 30, 2002. Multi-family and commercial real estate loans generally present a higher level of risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. These loans are being closely monitored by management, however, there can be no assurance that all loans will be fully collectible. At June 30, 2003, agricultural operating loans delinquent 30 days and over totaled $843,000, or 0.24% of the total loan portfolio as compared to $1.5 million, or 0.42% of total loans at September 30, 2002. Agricultural lending involves a greater degree of risk than one- to four-family residential mortgage loans because of the typically larger loan amounts. In addition, payments on loans are dependent on the successful operation or management of the farm property securing the loan or for which an operating loan is utilized. The success of the loan may also be affected by factors outside the control of the agricultural borrower, such as the weather and grain and livestock prices. Although management believes the Company's portfolio of agricultural real estate and operating loans is well structured and adequately secured, there can be no assurance that all loans will be fully collectible. 12 The table below sets forth the amounts and categories of non-performing assets in the Company's loan portfolio. The Company's restructured loans (which involved forgiving a portion of the interest or principal on the loan or making loans at a rate materially less than market rates) are included in the table and were performing as agreed at the date shown. Foreclosed assets include assets acquired in settlement of loans. June 30, 2003 September 30, 2002 ------------- ----------------- (Dollars in Thousands) Non-accruing loans: One-to four family $ 176 $ 51 Commercial and multi-family 417 417 Agricultural real estate -- 41 Consumer 32 -- Agricultural operating 293 394 Commercial business 128 408 ------ ------ Total non-accruing loans 1,046 1,311 Accruing loans delinquent 90 days or more 550 819 ------ ------ Total non-performing loans 1,596 2,130 ------ ------ Restructured loans: Agricultural operating 34 9 Commercial business 32 71 ------ ------ Total restructured loans 66 80 ------ ------ Foreclosed assets: One-to four family 213 -- Commercial real estate 912 1,310 Consumer 7 18 Agricultural operating 7 -- Commercial business 193 -- ------ ------ Total foreclosed assets 1,332 1,328 Less: Allowance for losses -- -- ------ ------ Total foreclosed assets, net 1,332 1,328 ------ ------ Total non-performing assets $2,994 $3,538 ====== ====== Total as a percentage of total assets 0.39% 0.58% ====== ====== Classified Assets. Federal regulations provide for the classification of loans and other assets as "substandard", "doubtful" or "loss", based on the level of weakness determined to be inherent in the collection of the principal and interest. When loans are classified as either substandard or doubtful, the Company may establish general allowances for loan losses in an amount deemed prudent by management. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem loans. When assets are classified as loss, the Company is required either to establish a specific allowance for loan losses equal to 100% of that portion of the loan so classified, or to charge-off such amount. The Company's determination as to the classification of its loans and the amount of its valuation allowances are subject to review by its regulatory authorities, whom may require the establishment of additional general or specific loss allowances. On the basis of management's review of its loans and other assets, at June 30, 2003, the Company had classified a total of $9.6 million of its assets as substandard, $62,000 as doubtful and none as loss as 13 compared to classifications at September 30, 2002 of $13.5 million substandard, $114,000 doubtful and none as loss. Allowance for Loan Losses. The Company establishes its provision for loan losses, and evaluates the adequacy of its allowance for loan losses based upon a systematic methodology consisting of a number of factors including, among others, historic loss experience, the overall level of non-performing loans, the composition of its loan portfolio and the general economic environment within which the Bank and its borrowers operate. Current economic conditions in the agricultural sector of the Company's market area are stable due to generally higher commodity prices. Price levels for grain crops and livestock have improved in recent months and are currently at levels that present minimal concern. The agricultural economy is accustomed to commodity price fluctuations and is generally able to handle such fluctuations without significant problem. Although the Company underwrites its agricultural loans based on normal expectations for commodity prices and yields, an extended period of low commodity prices or adverse growing conditions could result in weakness in the agricultural loan portfolio and could create a need for the Company to increase its allowance for loan losses through increased charges to the provision for loan losses. At June 30, 2003, the Company has established an allowance for loan losses totaling $5.0 million. The allowance represents approximately 311% of the total non-performing loans at June 30, 2003 as compared to approximately 220% of the total non-performing loans at September 30, 2002. The following table sets forth an analysis of the activity in the Company's allowance for loan losses for the nine-month periods ended June 30, 2003 and 2002: 2003 2002 --------- --------- (In Thousands) Balance, September 30, $ 4,693 $ 3,869 Charge-offs (106) (263) Recoveries 30 45 Additions charged to operations 350 715 --------- --------- Balance, June 30, $ 4,967 $ 4,366 ========= ========= The allowance for loan losses reflects management's best estimate of probable losses inherent in the portfolio based on currently available information. Future additions to the allowance for loan losses may become necessary based upon changing economic conditions, increased loan balances, changes in the underlying collateral of the loan portfolio, or regulatory comment. CRITICAL ACCOUNTING POLICY The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The financial information contained within these statements is, to a significant extent, financial information that is based on approximate measures of the financial effects of transactions and events that have already occurred. Based on its consideration of accounting policies that involve the most complex and subjective decisions and assessments, management has identified its most critical accounting policy to be that related to the allowance for loan losses. The Company's allowance for loan loss methodology incorporates a variety of risk considerations, both quantitative and qualitative in establishing an allowance for loan loss that management believes is appropriate at each reporting date. Quantitative factors include the Company's historical loss experience, delinquency and charge-off trends, collateral values, changes in nonperforming loans, and other factors. Quantitative factors also incorporate 14 known information about individual loans, including borrowers' sensitivity to interest rate movements. Qualitative factors include the general economic environment in the Company's markets, including economic conditions throughout the Midwest and in particular, the state of certain industries. Size and complexity of individual credits in relation to loan structure, existing loan policies and pace of portfolio growth are other qualitative factors that are considered in the methodology. As the Company adds new products and increases the complexity of its loan portfolio, it will enhance its methodology accordingly. Management may report a materially different amount for the provision for loan losses in the statement of operations to change the allowance for loan losses if its assessment of the above factors were different. This discussion and analysis should be read in conjunction with the Company's financial statements and the accompanying notes presented elsewhere herein, as well as the portion of this Management's Discussion and Analysis section entitled "Nonperforming Assets and Allowance for Loan Losses." Although management believes the levels of the allowance as of both June 30, 2003 and September 30, 2002 were adequate to absorb losses inherent in the loan portfolio, a decline in local economic conditions, or other factors, could result in increasing losses. RESULTS OF OPERATIONS General. For the three months ended June 30, 2003, the Company recorded net income of $892,000 compared to net income of $528,000 for the same period in 2002. For the nine months ended June 30, 2003, net income was $2,652,000 compared to $1,413,000 for the same period in 2002. Both periods reflect increases in net interest income and noninterest income, and a decrease in provision for loan losses, offset in part by increases in noninterest expense and tax expense. Net Interest Income. Net interest income increased by $320,000, or 8.9%, to $3,931,000 for the three months ended June 30, 2003 from $3,611,000 for the same period in 2002. For the nine months ended June 30, 2003, net interest income increased $2,126,000, or 21.5%, to $12,004,000 from $9,878,000 for the same period in 2002. The increase in net interest income is due primarily to increases in the average balance of interest-earning assets of $174.6 million and $140.5 million for the three-month and nine-month periods, respectively. Net interest income reflects a decrease in the net yield on average earning assets between the comparable periods. For the three months ended June 30, 2003, the net yield on average earning assets was 2.17% compared to 2.63% for the same period in 2002. For the nine months ended June 30, 2003, the net yield on average earning assets was 2.38% compared to 2.48% for the same period in 2002. The decrease is due primarily to the overall increase in net earning assets between the comparable periods through the purchase of mortgage-backed securities with short expected average lives at relatively lower spreads to funding costs. Provision for Loan Losses. For the three months ended June 30, 2003, the provision for loan losses was $67,000 compared to $280,000 for the same period in 2002. For the nine months ended June 30, 2003, the provision for loan losses was $350,000 compared to $715,000 for the same period in 2002. Management believes that, based on a detail review of the loan portfolio, historic loan losses, current economic conditions, and other factors, the current level of provision for loan losses, and the resulting level of the allowance for loan losses, reflects an adequate allowance against probable losses from the loan portfolio. See "Non-Performing Assets and Allowance for Loan Losses." Noninterest Income. Noninterest income increased $292,000, or 50.3%, to $873,000 for the three months ended June 30, 2003 from $581,000 for the same period in 2002. For the nine months ended June 30, 2003, noninterest income increased $779,000, or 39.0%, to $2,779,000 from $2,000,000 for the same period in 2002. The increase in noninterest income for both periods reflects increases in service charges collected on deposit accounts and loan fees on sold loans. In addition, non-interest income for the nine month period increased due to a $134,000 gain on the sale of a drive-up branch facility and gain on sales of securities 15 available for sale, which were partially offset by a decrease in commissions received through the Company's brokerage subsidiary. Noninterest Expense. Noninterest expense increased $215,000, or 6.8%, to $3,399,000 for the three months ended June 30, 2003, from $3,184,000 for the same period in 2002. For the nine months ended June 30, 2003, noninterest expense increased $1,333,000, or 14.6%, to $10,479,000 from $9,146,000 for the same period in 2002. The increase in noninterest expense reflects the costs associated with opening new offices during the period. In November 2001, the Company opened its third Des Moines, Iowa, location and in November 2002, the Company opened its newly constructed facility in Urbandale, Iowa, which serves as the Company's Des Moines area main office. Noninterest expense also increased $501,000 for the nine-month period due to prepayment fees associated with the early extinguishment of FHLB advances, which were repaid in conjunction with the sale of securities available for sale and early repayments received on loans. Income Tax Expense. Income tax expense was $447,000 for the three months ended June 30, 2003 compared to $200,000 for the same period in 2002. For the nine months ended June 30, 2003, income tax expense was $1,302,000 compared to $604,000 for the same period in 2002. The increase for both periods reflects the increase in the level of taxable income between the comparable periods. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds are deposits, borrowings, principal and interest payments on loans, investments and mortgage-backed securities, and funds provided by operations. While scheduled payments on loans, mortgage-backed securities and short-term investments are relatively predictable sources of funds, deposit flows and early loan repayments are greatly influenced by general interest rates, economic conditions and competition. The Company relies on competitive pricing policies, advertising and customer service to attract and retain its deposits and only solicits these deposits from its primary market area. Based on its experience, the Company believes that its passbook savings, money market savings accounts, NOW and regular checking accounts are relatively stable sources of deposits. The Company's ability to attract and retain time deposits has been, and will continue to be, significantly affected by market conditions. However, the Company does not foresee significant funding issues resulting from disintermediation of its portfolio of time deposits. The Company uses its capital resources principally to meet ongoing commitments to fund maturing certificates of deposits and loan commitments, to maintain liquidity, and to meet operating expenses. At June 30, 2003, the Company had commitments to originate and purchase loans totaling $53.4 million. The Company believes that loan repayment and other sources of funds will be adequate to meet its foreseeable short- and long-term liquidity needs. Regulations require First Federal and Security to maintain minimum amounts and ratios of total risk-based capital and Tier 1 capital to risk-weighted assets, and a leverage ratio consisting of Tier 1 capital to average assets. The following table sets forth First Federal's and Security's actual capital and required capital amounts and ratios at June 30, 2003 which, at that date, exceeded the capital adequacy requirements: 16
Minimum Requirement To Be Well Minimum Requirement Capitalized Under For Capital Adequacy Prompt Corrective Actual Purposes Action Provisions ------ -------- ----------------- At June 30, 2003 Amount Ratio Amount Ratio Amount Ratio - ---------------- -------- ----- ------- ----- -------- ----- (Dollars in Thousands) Total Capital (to risk weighted assets): First Federal $50,606 12.2% $33,321 8.0% $41,651 10.0% Security 4,602 15.4 2,391 8.0 2,988 10.0 Tier 1 (Core) Capital (to risk weighted assets): First Federal 45,900 11.0 16,660 4.0 24,990 6.0 Security 4,289 14.4 1,195 4.0 1,793 6.0 Tier 1 (Core) Capital (to adjusted total assets): First Federal 45,900 6.5 28,125 4.0 35,157 5.0 Security 4,289 6.6 2,586 4.0 3,233 5.0 Tier 1 (Core) Capital (to average assets): First Federal 45,900 7.2 25,447 4.0 31,809 5.0
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) established five regulatory capital categories and authorized the banking regulators to take prompt corrective action with respect to institutions in an undercapitalized category. At June 30, 2003, First Federal and Security exceeded minimum requirements for the well-capitalized category, and are considered to be "well capitalized." Forward-Looking Statements The Company, and its wholly-owned subsidiaries, First Federal and Security, may from time to time make written or oral "forward-looking statements," including statements contained in its filings with the Securities and Exchange Commission, in its reports to shareholders, and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to the Company's beliefs, expectations, estimates, and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company's control. Such statements address the following subjects: future operating results; customer growth and retention; loan and other product demand; earnings growth and expectations; new products and services; credit quality and adequacy of reserves; technology; and our employees. The following factors, among others, could cause the Company's financial performance to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; inflation, interest rate, market, and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users; the impact of changes in financial services' laws and regulations; technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing. The foregoing list of factors is not exclusive. Additional discussion of factors affecting the Company's business and prospects is contained in the Company's periodic filings with the SEC. The Company does not undertake, and expressly disclaims any intent or obligation, to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. 17 Part I. Financial Information Item 3. Quantitative and Qualitative Disclosure About Market Risk Market Risk The Company is exposed to the impact of interest rate changes and changes in the market value of its investments. The Company currently focuses lending efforts toward originating and purchasing competitively priced adjustable-rate loan products and fixed-rate loan products with relatively short terms to maturity. This allows the Company to maintain a portfolio of loans that will be sensitive to changes in the level of interest rates while providing a reasonable spread to the cost of liabilities used to fund the loans. The Company's primary objective for its investment portfolio is to provide the liquidity necessary to meet loan funding needs. This portfolio is used in the ongoing management of changes to the Company's asset/liability mix, while contributing to profitability through earnings flow. The investment policy generally calls for funds to be invested among various categories of security types and maturities based upon the Company's need for liquidity, desire to achieve a proper balance between risk and yield, the need to provide collateral for borrowings, and to fulfill the Company's asset/liability management goals. The Company's cost of funds responds to changes in interest rates due to the relatively short-term nature of its deposit portfolio. Consequently, the results of operations are generally influenced by the level of short-term interest rates. The Company offers a range of maturities on its deposit products at competitive rates and monitors the maturities on an ongoing basis. The Company emphasizes and promotes its savings, money market, demand and NOW accounts and, subject to market conditions, certificates of deposit with maturities of six months through five years, principally from its primary market area. The savings and NOW accounts tend to be less susceptible to rapid changes in interest rates. In managing its asset/liability mix, the Company, at times, depending on the relationship between long- and short-term interest rates, market conditions and consumer preference, may place somewhat greater emphasis on maximizing its net interest margin than on strictly matching the interest rate sensitivity of its assets and liabilities. Management believes that the increased net income which may result from an acceptable mismatch in the actual maturity or repricing of its asset and liability portfolios can, during periods of declining or stable interest rates, provide sufficient returns to justify the increased exposure to sudden and unexpected increases in interest rates which may result from such a mismatch. The Company has established limits, which may change from time to time, on the level of acceptable interest rate risk. There can be no assurance, however, that in the event of an adverse change in interest rates the Company's efforts to limit interest rate risk will be successful. Net Portfolio Value The Company uses a Net Portfolio Value ("NPV") approach to the quantification of interest rate risk. This approach calculates the difference between the present value of expected cash flows from assets and the present value of expected cash flows from liabilities, as well as cash flows from off-balance-sheet contracts. Management of the Company's assets and liabilities is performed within the context of the marketplace, but also within limits established by the Board of Directors on the amount of change in NPV that is acceptable given certain interest rate changes. Presented below, as of June 30, 2003 and September 30, 2002, is an analysis of the Company's interest rate 18 risk as measured by changes in NPV for an instantaneous and sustained parallel shift in the yield curve, in 100 basis point increments, up and down 200 basis points. As illustrated in the table, the Company's NPV at June 30, 2003 and September 30, 2002 was more sensitive to declining interest rates than to increasing interest rates. This reflects management's effort to manage the Company's interest rate sensitivity in light of the significant decline in interest rates during the periods. With interest rates at historically low levels, management believes there is less risk from interest rates declining substantially from current levels than from the potential increase in interest rates. The Company's sensitivity to declining interest rates exceeded the established limits at September 30, 2002; however, the Board considered this to be acceptable given the interest rate environment.
At June 30, 2003 At September 30, 2002 Change in Interest Rates Board Limit ---------------------- ------------------------ (Basis Points) % Change $ Change % Change $ Change % Change -------------- ---------- -------- -------- -------- -------- (Dollars in Thousands) +200 bp (40)% $ 1,139 3% $ 1,543 4% +100 bp (25) 1,372 4 1,898 5 0 bp -- -- -- -- -- -100 bp (10) (2,756) (8) (4,362) (12) -200 bp (15) (3,975) (12) (8,873) (25)
Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets such as adjustable-rate mortgage loans, have features which restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayments and early withdrawal levels would likely deviate from those assumed in calculating the tables. Finally, the ability of some borrowers to service their debt may decrease in the event of an interest rate increase. The Company considers all of these factors in monitoring its exposure to interest rate risk. 19 Part I. Financial Information Item 4. Disclosure Controls and Procedures Disclosure Controls and Procedures With the participation and under the supervision of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, and as of the end of the period covered by this quarterly report, the Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and, based on their evaluation, have concluded that the disclosure controls and procedures are effective. There were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective action with regard to significant deficiencies and material weaknesses. 20 FIRST MIDWEST FINANCIAL, INC. PART II - OTHER INFORMATION FORM 10-Q Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 31.1 Section 302 certification of Chief Executive Officer. 31.2 Section 302 certification of Chief Financial Officer. 32.1 Section 906 certification of Chief Executive Officer. 32.2 Section 906 certification of Chief Financial Officer. (b) Reports on Form 8-K: During the three month period ended June 30, 2003, the Registrant filed current reports on Form 8-K as follows: 1. Form 8-K dated April 18, 2003 to report the issuance of a press release announcing earnings for the three-month and six-month periods ended March 31, 2003. 2. Form 8-K dated June 25, 2003 to report the issuance of a press release announcing the completion of the purchase of shares by the Trustee of the Company's Employee Stock Ownership Plan. All other items have been omitted as not required or not applicable under the instructions. 21 FIRST MIDWEST FINANCIAL, INC. 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 FINANCIAL, INC. Date: August 14, 2003 By: /s/ James S. Haahr ------------------------------------------ James S. Haahr, Chairman of the Board, President and Chief Executive Officer Date: August 14, 2003 By: /s/ Donald J. Winchell ------------------------------------------ Donald J. Winchell, Senior Vice President, Treasurer and Chief Financial Officer 22 EX-31.1 3 exhibit31-1.txt Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, James S. Haahr, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Midwest Financial, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter [the registrant's fourth fiscal quarter in the case of an annual report], that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2003 /s/ James S. Haahr ------------------------- Chief Executive Officer 23 EX-31.2 4 exhibit31-2.txt Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Donald J. Winchell, certify that: 1. I have reviewed this quarterly report on Form 10-Q of First Midwest Financial, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter [the registrant's fourth fiscal quarter in the case of an annual report], that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 14, 2003 /s/ Donald J. Winchell ----------------------------- Chief Financial Officer 24 EX-32.1 5 exhibit32-1.txt Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of First Midwest Financial, Inc. (the "Company") for the quarterly period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James S. Haahr, Chief Executive Officer of the Company, certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ James S. Haahr ------------------------ Name: James S. Haahr Chief Executive Officer August 14, 2003 A signed original of this written statement required by Section 906, or another document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to First Midwest Financial, Inc. and will be retained by First Midwest Financial, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 25 EX-32.2 6 exhibit32-2.txt Exhibit 32.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of First Midwest Financial, Inc. (the "Company") for the quarterly period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Donald J. Winchell, Chief Financial Officer of the Company, certify, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Donald J. Winchell ------------------------- Name: Donald J. Winchell Chief Financial Officer August 14, 2003 A signed original of this written statement required by Section 906, or another document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to First Midwest Financial, Inc. and will be retained by First Midwest Financial, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. 26 -----END PRIVACY-ENHANCED MESSAGE-----