First Midwest Bancorp, Inc. Announces 2012 Second Quarter Results
Improved Operating Earnings -- Strong Loan Growth -- Reduced Noninterest Expense -- Solid Capital
(firmenpresse) - ITASCA, IL -- (Marketwire) -- 07/25/12 -- First Midwest Bancorp, Inc. (NASDAQ: FMBI)
Today First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), reported results of operations and financial condition for second quarter 2012. Net income for the quarter was $6.4 million, before adjustments for non-vested restricted shares, with net income applicable to common shares of $6.3 million, or $0.09 per share. This compares to net income applicable to common shares of $7.8 million, or $0.11 per share, for first quarter 2012 and $8.0 million, or $0.11 per share, for second quarter 2011.
"The quarter reflected continued, solid improvement in our underlying business, offset, in part, by higher provision for loan losses," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Operating earnings improved significantly from last quarter, benefitting from broad-based sales momentum as well as controlled spending. Prior investments in our business platforms, combined with realignment of our resources, helped drive meaningful growth in both lending and fee-based revenues in addition to lower operating costs."
Mr. Scudder continued, "Increases in both charge-offs and the provision for loan losses are indicative of our ongoing evaluation of our existing and potential problem loans and our remediation strategies consistent with our previously stated intention to make greater progress in reducing problem credits. Given the challenges these credits pose, we continue to evaluate all of our remediation strategies with a sharpened focus on the accelerated reduction of both existing and potential problem credits, thereby minimizing future credit costs over the longer term."
Mr. Scudder concluded, "The strength of our capital and operating earnings leaves us well positioned to meet the needs of our clients as we pursue opportunities for growth, react to evolving regulatory expectations, and transition to improved credit performance."
Pre-tax, pre-provision operating earnings for second quarter 2012 increased $3.4 million from first quarter 2012 and decreased $2.1 million from second quarter 2011. The increase from first quarter 2012 resulted from an increase in net interest income and fee-based revenues and lower noninterest expense, excluding losses on sales and write-downs of OREO, primarily from lower salaries and employee benefits.
The decline in pre-tax, pre-provision operating earnings from second quarter 2011 is primarily attributed to a reduction in net interest income, reflecting the continued decline in covered interest-earning assets, lower yields earned on loans and investments, and the cost of additional senior debt, partially mitigated by the decline in rates paid on other interest-bearing liabilities.
Further discussion of net interest income and noninterest income and expense is presented in later sections of this release.
Average interest-earning assets for second quarter 2012 increased $156.6 million, or 2.2%, from first quarter 2012 and declined $76.2 million, or 1.0%, compared to second quarter 2011. Loan growth across several categories, particularly commercial and industrial ("C&I"), resulted in higher average loans, excluding covered loans, and drove the rise in interest-earning assets from first quarter 2012. The decrease from second quarter 2011 was due primarily to the continuing decline in covered interest-earning assets.
Average funding sources for second quarter 2012 were $159.2 million higher than first quarter 2012 and up $99.9 million from second quarter 2011. For second quarter 2012 compared to both prior periods, growth in demand deposits offset the decline in interest-bearing liabilities, which resulted in a more favorable product mix. In addition, the increase from first quarter 2012 also reflected seasonal growth in public fund balances.
The growth in average senior and subordinated debt for second quarter 2012 compared to second quarter 2011 is attributed to the issuance of $115.0 million in senior debt during the fourth quarter of 2011. Interest paid on the senior debt reduced net interest margin by 10 basis points for first and second quarter 2012.
Tax-equivalent net interest margin for second quarter 2012 was stable at 3.88% compared to first quarter 2012 and 22 basis points lower than second quarter 2011. The decrease from second quarter 2011 primarily reflects the impact of lower yields earned on investment securities and loans, resulting from a decline in market interest rates, and the cost of additional senior debt, partially offset by lower rates paid for other interest-bearing deposits.
Interest earned on covered loans is generally recognized through the accretion of the discount taken on expected future cash flows. The increase in the yield on covered interest-earning assets from first quarter 2012 was driven by adjustments for revised estimates of future cash flows. The yield decreased from second quarter 2011 due to adjustments in the prior period related to actual cash realized in excess of estimates upon final settlement of certain covered loans that were not experienced in the current quarter.
Fee-based revenues for second quarter 2012 grew 4.7% compared to first quarter 2012 and declined 2.3% compared to second quarter 2011. The increase in fee-based revenues from first quarter 2012 to second quarter 2012 was due to higher service charges on business accounts (included in service charges on deposit accounts) resulting from price increases and successful cross-selling initiatives. In addition, increased transaction volumes contributed to a rise in merchant fees (included in other service charges, commissions, and fees) and card-based fees.
The variance in fee-based revenues from second quarter 2011 to second quarter 2012 resulted from lower non-sufficient funds ("NSF") fees (included in service charges on deposit accounts) and was mitigated by increases in service charges on business accounts as discussed above and higher card-based fees from growth in the number of outstanding cards.
Total noninterest expense for second quarter 2012 declined 2.3% compared to first quarter 2012 and 6.9% compared to second quarter 2011.
Second quarter 2012 salaries and wages decreased by $1.3 million from first quarter 2012 and $1.0 million from second quarter 2011 due to the organizational realignment in fourth quarter 2011, resulting in the reduction of approximately 100 positions, and higher levels of deferred salaries from new loan growth, partially offset by annual merit increases. The decline in retirement and other employee benefits compared to first quarter 2012 and second quarter 2011 was impacted by the timing of certain benefit accruals.
The increase in OREO expenses from first quarter 2012 resulted from greater asset sales and write-downs related to the reappraisal of property values and alignment of underlying collateral values with remediation strategies.
Loan remediation costs were elevated in second quarter 2012 compared to both prior periods presented due to an increase in legal fees incurred to remediate problem credits and higher real estate taxes paid by the Company to preserve its rights to collateral associated with problems loans.
Compared to first quarter 2012, net occupancy expense decreased in the current period as a result of normal seasonal declines in certain maintenance and utilities costs. In addition, a decrease in real estate taxes contributed to lower net occupancy expense in second quarter 2012 compared to both prior periods presented.
Total loans, excluding covered loans, of $5.3 billion grew by $160.7 million from March 31, 2012 and $185.1 million from June 30, 2011, reflecting the impact of broader product offerings and expanded sales distribution within our markets. The Company experienced growth of 6.7% in C&I loans and 14.7% in agricultural lending from March 31, 2012. Continued efforts to reduce lending exposure to less favorable real estate categories contributed to the decline in the residential construction portfolio.
In addition to C&I loans and agricultural lending, the increase from June 30, 2011 to June 30, 2012 also benefitted from growth in the office, retail and industrial portfolio, and 1-4 family mortgages.
Non-performing assets, excluding covered loans and covered OREO, were $242.8 million at June 30, 2012, a reduction of $1.8 million from March 31, 2012. While non-accrual loans remained relatively consistent with the prior quarter, the mix of non-performing assets improved as TDRs increased $5.7 million.
During the quarter, management restructured $7.0 million of loans at market rates and terms incurring a loss of approximately $800,000. Management expects to reclassify these loans from restructured to performing in the first quarter of 2013, assuming continued performance. Also, during second quarter 2012, the Company sold $13.4 million of OREO with proceeds of approximately 94% of carrying value and recorded additional write-downs of $1.7 million related to updated appraisals and changes in strategies intended to accelerate disposition.
The Company increased the provision for loan losses from first quarter 2012 by $4.2 million, which maintained the allowance for credit losses at $118.7 million and supports management's ongoing assessment of credit quality.
Approximately one-third of the charge-offs, excluding covered charge-offs, for the quarter was comprised of three construction credits and reflects the alignment of underlying collateral values with current appraisals and planned remediation strategies.
Management periodically revises its estimates of future cash flows from covered loans. Increases in cash flows are recognized prospectively in interest income. The present value of any decreases in expected cash flows, net of reimbursement from the FDIC, is recorded in the current period through a charge-off in the allowance for loan losses.
The Company's regulatory ratios as of June 30, 2012 exceeded all regulatory mandated ratios for characterization as "well-capitalized."
In first quarter 2012, the Company repurchased and retired approximately $21 million out of a total of $84.7 million in 6.95% trust preferred junior subordinated debentures ("TRUPs") at a discount of 2.25%. This transaction resulted in the recognition of a pre-tax gain of $256,000. Although the TRUPs were included as a component of Tier 1 capital, the Company elected to retire them given the low interest rate environment.
The Board of Directors reviews the Company's capital plan each quarter, giving consideration to the current and expected operating environment as well as an evaluation of various capital alternatives.
First Midwest is the premier relationship-based banking franchise in the dynamic Chicagoland banking market. As one of the Chicago metropolitan area's largest independent bank holding companies, First Midwest provides the full range of business and retail banking and wealth management services through approximately 100 offices located in communities in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized by the Chicago Tribune for the second straight year as one of the top 20 best places to work in Chicago among large employers. Additionally, Forbes has recognized First Midwest as one of America's Most Trustworthy Companies for 2012.
This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that actual results and the Company's financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results, see "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management's best judgment as of the date hereof based on currently available information. Except as required by law, the Company undertakes no duty to update the contents of this press release after the date hereof.
A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, July 25, 2012 at 10:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 317-6789 (U.S. domestic) or (412) 317-6789 (international) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, . For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (international) conference I.D. 10015755 beginning one hour after completion of the live call until 9:00 A.M. (ET) on August 2, 2012. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at .
Accompanying this press release is the following unaudited financial information:
Condensed Consolidated Statements of Financial Condition
Condensed Consolidated Statements of Income
This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at .
(Investors)
EVP and Chief Financial Officer
(630) 875-7347
(Media)
SVP and Corporate Relations Officer
(630) 875-7533
First Midwest Bancorp, Inc.
One Pierce Place, Suite 1500
Itasca, Illinois 60143-9768
(630) 875-7450
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Datum: 25.07.2012 - 04:55 Uhr
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