First Midwest Bancorp, Inc. Announces 2020 Third Quarter Results

| Source: First Midwest Bancorp, Inc. First Midwest Bancorp, Inc.

CHICAGO, Oct. 20, 2020 (GLOBE NEWSWIRE) -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest"), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the third quarter of 2020. Net income applicable to common shares for the third quarter of 2020 was $23.4 million, or $0.21 per share, compared to $17.8 million, or $0.16 per share, for the second quarter of 2020, and $54.1 million, or $0.49 per share, for the third quarter of 2019.

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

SELECT THIRD QUARTER VS. SECOND QUARTER HIGHLIGHTS

  • Generated EPS of $0.21, compared to $0.16 for the prior quarter, impacted by:
    • $0.12 per share, or $18 million, for retail and balance sheet optimization costs in the third quarter of 2020.
    • $0.07 per share, or $10 million, for the third quarter of 2020 and $0.17 per share, or $25 million, for the prior quarter, for the estimated impact of the pandemic on the allowance for credit losses ("ACL").
    • $0.01 per share, or $1 million, of other pandemic related expenses compared to $0.02 in the prior quarter.
  • Reported pre-tax, pre-provision earnings, adjusted(1) of $71 million, up 13% from the prior quarter due primarily to:
    • Higher fee-based revenues of $38 million, up 25% from the prior quarter, reflective of record mortgage banking income and higher transaction volumes.
    • Controlled noninterest expense, adjusted(1), to $112 million, down 3% from the prior quarter.
  • Produced net interest income of $143 million at a net margin of 2.95%, down 18 basis points from the prior quarter, reflective of lower interest rates and the full quarter impact of Paycheck Protection Program ("PPP") loans.
  • Credit performance stable with risk rating migration as expected:
    • ACL of 1.68% of total loans, 1.83% excluding PPP loans, consistent with 1.80% as of June 30, 2020.
    • Non-performing assets ("NPAs") to total loans plus foreclosed assets of 1.11%, consistent with 1.09% at June 30, 2020.
    • Net loan charge-offs ("NCOs") of 0.26% of average loans excluding purchased credit deteriorated ("PCD") and PPP loans, consistent with 0.27% for the prior quarter.
    • Adverse rated performing loan migration to $707 million, increasing from $450 million in the prior quarter, concentrated in elevated risk sectors.
  • Total loans of $15 billion, down 2% from the prior quarter reflecting lower customer demand and higher customer liquidity levels.
  • Increased total average deposits to $16 billion, up 3% from the prior quarter reflecting higher customer balances resulting from PPP funds, other government stimuli, and seasonal inflows of municipal deposits.

"Operating performance for the quarter benefited from improved fee-based revenues and tightened cost management," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "Encouragingly, business activity showed signs of recovery after widespread shutdowns, even as the lag in demand and low interest rates weighed on the quarter's production. Against a backdrop of uncertainty, we prudently maintained our credit reserves, strengthened capital and took steps to better position our balance sheet for today's lower rate environment. We also took steps to further optimize our retail distribution to better align with client preferences and needs. Combined, these actions position our Company for both improved performance and future investment."

Mr. Scudder concluded, "As we look ahead, our collective drive remains centered on helping our clients achieve financial success. While times such as these present challenges, they also provide opportunities to leverage our financial strength to serve the needs of our clients, grow and enhance the value of our franchise."

RETAIL OPTIMIZATION

First Midwest continues its commitment to best meet the evolving needs and preferences of its clients. During the third quarter of 2020, the Company initiated certain actions that include optimizing its retail branch network and delivery model through the consolidation of 17 branches, or approximately 15% of its branch network, in early 2021. These actions resulted in pre-tax costs of $18 million associated with valuation adjustments related to locations identified for closure, modernization of our ATM network, and advisory fees and are recorded within optimization costs within noninterest expense.

BALANCE SHEET OPTIMIZATION

During the third quarter of 2020, the Company terminated longer term interest rate swaps with a notional amount of $1.1 billion, as well as reduced a portion of the borrowed funds related to the terminated swaps. At the same time, the Company liquidated $160 million of securities. As a result of these transactions, $14 million of pre-tax securities gains was fully offset by $14 million of pre-tax loss on swap terminations, with both items recorded within noninterest income. These actions are expected to positively impact future net interest income along with reducing high levels of excess liquidity as the remaining borrowed funds hedged by the terminated swaps mature in the fourth quarter of 2020.

(1) This metric is a non-GAAP financial measure. For details on the calculation of this metric, see the sections titled "Non-GAAP Financial Information" and "Non-GAAP Reconciliations" presented later in this release.

OPERATING PERFORMANCE

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

 Quarters Ended
 September 30, 2020  June 30, 2020  September 30, 2019
 Average
Balance		 Interest Yield/
Rate
(%)		  Average
Balance		 Interest Yield/
Rate
(%)		  Average
Balance		 Interest Yield/
Rate
(%)
Assets                   
Other interest-earning assets$1,234,948  $799  0.26   $646,887  $471   0.29   $283,178  $1,702  2.38 
Securities(1)3,291,724  19,721  2.40   3,357,984  21,040   2.51   2,869,461  19,906  2.77 
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") stock150,033  976  2.60   154,678  368   0.95   108,735  831  3.06 
Loans, excluding PPP loans(1)13,558,857  131,680  3.86   13,729,250  135,952   3.98   12,539,541  160,756  5.09 
PPP loans(1)1,194,808  7,001  2.33   887,997  5,368   2.43   —  —  — 
Total loans(1)14,753,665  138,681  3.74   14,617,247  141,320   3.89   12,539,541  160,756  5.09 
Total interest-earning assets(1)19,430,370  160,177  3.28   18,776,796  163,199   3.49   15,800,915  183,195  4.60 
Cash and due from banks284,730       275,696       224,127     
Allowance for loan losses(243,667)      (224,519)      (110,616)    
Other assets2,055,262       2,040,133       1,784,754     
Total assets$21,526,695       $20,868,106       $17,699,180     
Liabilities and Stockholders' Equity                   
Savings deposits$2,342,355  104  0.02   $2,246,643  99   0.02   $2,056,128  308  0.06 
NOW accounts2,744,034  307  0.04   2,549,088  637   0.10   2,483,176  3,462  0.55 
Money market deposits2,781,666  724  0.10   2,663,622  1,157   0.17   2,080,274  4,111  0.78 
Time deposits2,302,019  5,702  0.99   2,539,996  8,184   1.30   3,026,423  13,873  1.82 
Borrowed funds2,436,922  6,021  0.98   2,466,300  3,156   0.51   1,369,079  5,639  1.63 
Senior and subordinated debt234,464  3,498  5.94   234,259  3,577   6.14   233,642  3,783  6.42 
Total interest-bearing liabilities12,841,460  16,356  0.51   12,699,908  16,810   0.53   11,248,722  31,176  1.10 
Demand deposits5,631,355       5,305,109       3,800,569     
Total funding sources18,472,815    0.35   18,005,017    0.38   15,049,291    0.82 
Other liabilities378,786       361,311       322,610     
Stockholders' equity2,675,094       2,501,778       2,327,279     
Total liabilities and
stockholders' equity		$21,526,695       $20,868,106       $17,699,180     
Tax-equivalent net interest         
income/margin(1)		  143,821  2.95     146,389   3.13     152,019  3.82 
Tax-equivalent adjustment  (1,092)      (1,155)       (1,232)  
Net interest income (GAAP)(1)  $142,729       $145,234        $150,787   
Impact of acquired loan accretion(1)  $7,960  0.16     $6,999   0.15     $9,244  0.23 
Tax-equivalent net interest income/        
margin, adjusted(1)		  $135,861  2.79     $139,390   2.98     $142,775  3.59 


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

Net interest income for the third quarter of 2020 was down 1.7% from the second quarter of 2020 and 5.3% from the third quarter of 2019. The decrease in net interest income compared to both prior periods resulted primarily from lower interest rates, partially offset by lower costs of funds and an increase in interest income and fees on PPP loans. Compared to the second quarter of 2020, net interest income was also impacted by a decrease in average loans, excluding PPP loans, and securities, partially offset by the number of days in the quarter. Net interest income compared to the third quarter of 2019 was impacted by growth in loans and securities as well as the acquisition of interest-earning assets from the Park transaction in the first quarter of 2020.

Acquired loan accretion contributed $8.0 million, $7.0 million, and $9.2 million to net interest income for the third quarter of 2020, second quarter of 2020, and third quarter of 2019, respectively.

Tax-equivalent net interest margin for the current quarter was 2.95%, decreasing 18 and 87 basis points from the second quarter of 2020 and third quarter of 2019, respectively. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 2.79%, down 19 and 80 basis points from the second quarter of 2020 and third quarter of 2019, respectively. Compared to both prior periods, tax-equivalent net interest margin decreased as a result of lower interest rates on loans and securities, lower yields on PPP loans, as well as a higher balance of other interest-earning assets due to higher demand deposits as a result of PPP loan funds and other government stimuli, partially offset by lower cost of funds. In addition, tax-equivalent net interest margin compared to the second quarter of 2020 was impacted by higher interest rate swap expense on borrowed funds.

For the third quarter of 2020, total average interest-earning assets rose by $653.6 million and $3.6 billion from the second quarter of 2020 and third quarter of 2019, respectively. The increase compared to both prior periods resulted primarily from PPP loans and a higher balance of other interest-earning assets. In addition, the increase in average interest-earning assets compared to the third quarter of 2019 was impacted by the assets acquired in the Park Bank transaction, loan growth, and securities purchases.

Total average funding sources for the third quarter of 2020 increased by $467.8 million and $3.4 billion from the second quarter of 2020 and third quarter of 2019, respectively. The increase compared to both prior periods was driven primarily by deposit growth due to higher customer balances resulting from PPP funds and other government stimuli. In addition, the increase compared to the second quarter of 2020 was impacted by seasonal inflows of municipal deposits and compared to the third quarter of 2019 was impacted by deposits assumed in the Park Bank transaction and a higher balance of FHLB advances.

Noninterest Income Analysis
(Dollar amounts in thousands)

  Quarters Ended September 30, 2020
Percent Change From
  September 30,
2020		 June 30, 
 2020		 September 30,
2019		 June 30, 
 2020		 September 30,
2019
Wealth management fees $12,837  $11,942  $12,063  7.5  6.4  
Service charges on deposit accounts 10,342  9,125  13,024  13.3  (20.6) 
Mortgage banking income 6,659  3,477  3,066  91.5  117.2  
Card-based fees, net 4,472  3,180  4,694  40.6  (4.7) 
Capital market products income 886  694  4,161  27.7  (78.7) 
Other service charges, commissions, and fees 2,823  2,078  3,023  35.9  (6.6) 
Total fee-based revenues 38,019  30,496  40,031  24.7  (5.0) 
Other income 2,523  2,495  2,920  1.1  (13.6) 
Swap termination costs (14,285) —  —  N/M  N/M  
Net securities gains 14,328  —  —  N/M  N/M  
Total noninterest income $40,585   $32,991   $42,951   23.0   (5.5) 
                    

N/M – Not meaningful.

Total noninterest income of $40.6 million was up 23.0% from the second quarter of 2020 and down 5.5% from the third quarter of 2019. Compared to both prior periods, the increase in wealth management fees was driven primarily by continued sales of fiduciary and investment advisory services to existing customers and a recovering market environment. The increase in service charges on deposit accounts, net card-based fees, and other service charges, commissions, and fees from the second quarter of 2020 was due to higher transaction volumes, whereas the decrease from the third quarter of 2019 resulted from the impact of lower transaction volumes as a result of the pandemic.

Record mortgage banking income for the third quarter of 2020 resulted from sales of $251.8 million of 1-4 family mortgage loans in the secondary market, compared to $168.7 million and $141.0 million in the second quarter of 2020 and third quarter of 2019, respectively.

Capital market products income decreased compared to the third quarter of 2019 as a result of lower levels of sales to corporate clients in light of market conditions.

During the third quarter of 2020, the Company terminated longer term interest rate swaps with a notional amount of $1.1 billion as a result of excess liquidity and in response to current market conditions. At the same time, the Company liquidated $160 million of securities.

As a result of these transactions, $14 million of pre-tax securities gains was fully offset by $14 million of pre-tax loss on swap terminations.

Noninterest Expense Analysis
(Dollar amounts in thousands)

  Quarters Ended September 30, 2020
Percent Change From
  September 30,
2020		 June 30, 
 2020		 September 30,
2019		 June 30, 
 2020		 September 30,
2019
Salaries and employee benefits:          
Salaries and wages $53,385  $52,592  $50,686   1.5  5.3  
Retirement and other employee benefits 11,349  11,080  10,795   2.4  5.1  
Total salaries and employee benefits 64,734  63,672  61,481   1.7  5.3  
Net occupancy and equipment expense(1) 13,736  15,116  12,787   (9.1) 7.4  
Technology and related costs(1) 10,416  9,853  6,960   5.7  49.7  
Professional services(1) 7,325  8,880  8,768   (17.5) (16.5) 
Advertising and promotions 2,688  2,810  2,955   (4.3) (9.0) 
Net other real estate owned ("OREO") expense 544  126  381   331.7  42.8  
Other expenses 12,374  14,624  11,432   (15.4) 8.2  
Optimization costs 18,376  —  —   100.0  100.0  
Acquisition and integration related expenses 881  5,249  3,397   (83.2) (74.1) 
Delivering Excellence implementation costs —  —  234   —  (100.0) 
Total noninterest expense $131,074   $120,330   $108,395    8.9   20.9   
Optimization costs (18,376) —  —   (100.0) (100.0) 
Acquisition and integration related expenses (881) (5,249) (3,397)  (83.2) (74.1) 
Delivering Excellence implementation costs —  —  (234)  —  (100.0) 
Total noninterest expense, adjusted(2) $111,817  $115,081  $104,764   (2.8) 6.7  
                     


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

Total noninterest expense increased 8.9% from the second quarter of 2020 and 20.9% from the third quarter of 2019. Noninterest expense for all periods presented was impacted by acquisition and integration related expenses. The third quarter of 2020 was impacted by optimization costs associated with retail optimization strategies, and the third quarter of 2019 was impacted by costs related to our Delivering Excellence initiative. Excluding these items, noninterest expense for the third quarter of 2020 was $111.8 million, down 2.8% from the second quarter of 2020 and up 6.7% from the third quarter of 2019. Overall, noninterest expense, adjusted, to average assets, excluding PPP loans decreased to 2.19% for the third quarter of 2020, down 6% and 7% from the second quarter of 2020 and third quarter of 2019, respectively.

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

Compared to the second quarter of 2020, salaries and employee benefits increased primarily due to lower levels of deferred loan salaries. The increase from the third quarter of 2019 was also impacted by merit increases and higher commissions resulting from sales of 1-4 family mortgage loans in the secondary market, partially offset by lower incentive compensation expenses. Occupancy and equipment costs for the second quarter of 2020 were elevated by expenses resulting from the pandemic. Technology and related costs compared to the third quarter of 2019 was impacted by investments in technology, including the origination of PPP loans. Professional services expenses were lower compared to both prior periods due to elevated prior period expenses associated with process enhancements and organizational growth. Other expenses for the second quarter of 2020 was impacted by a valuation adjustment on a foreclosed asset.

Optimization costs of $18.4 million for the third quarter of 2020 primarily include valuation adjustments related to locations identified for closure, modernization of our ATM network, and advisory fees.

Acquisition and integration related expenses for the third quarter of 2020 and second quarter of 2020 resulted primarily from the acquisition of Park Bank. In addition, acquisition and integration related expenses for the second quarter of 2020 and third quarter of 2019 resulted from the acquisition of Bridgeview Bank.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

  As of September 30, 2020
Percent Change From
  September 30, 
 2020		 June 30, 
 2020		 September 30, 
 2019		 June 30, 
 2020		 September 30, 
 2019
Commercial and industrial $4,635,571  $4,789,556  $4,570,361  (3.2)  1.4  
Agricultural 377,466  381,124  417,740  (1.0)  (9.6) 
Commercial real estate:          
Office, retail, and industrial 1,950,406  2,020,318  1,892,877  (3.5)  3.0  
Multi-family 868,293  874,861  817,444  (0.8)  6.2  
Construction 631,607  687,063  637,256  (8.1)  (0.9) 
Other commercial real estate 1,452,994  1,475,937  1,425,292  (1.6)  1.9  
Total commercial real estate 4,903,300  5,058,179  4,772,869  (3.1)  2.7  
Total corporate loans, excluding PPP        
loans		 9,916,337  10,228,859  9,760,970  (3.1)  1.6  
PPP loans 1,196,538  1,179,403  —  1.5   N/M  
Total corporate loans 11,112,875  11,408,262  9,760,970  (2.6)  13.9  
Home equity 827,746  892,867  833,955  (7.3)  (0.7) 
1-4 family mortgages 2,287,555  2,175,322  1,686,967  5.2   35.6  
Installment 425,012  457,207  491,427  (7.0)  (13.5) 
Total consumer loans 3,540,313  3,525,396  3,012,349  0.4   17.5  
Total loans $14,653,188  $14,933,658  $12,773,319  (1.9)  14.7  
           

N/M – Not meaningful.

Total loans includes loans originated under the PPP loan program in the second and third quarters of 2020, which totaled $1.2 billion as of September 30, 2020. Excluding these loans, total loans decreased 2.2% from June 30, 2020. Excluding PPP loans and the loans acquired in the Park Bank acquisition in the first quarter of 2020, total loans decreased 0.8% from September 30, 2019. Compared to both prior periods, corporate loans, excluding PPP loans were impacted by lower production and line usage and higher paydowns due to current economic conditions as a result of the ongoing pandemic.

Growth in consumer loans compared to both prior periods resulted primarily from strong production and purchases of 1-4 family mortgages, which more than offset higher prepayments. In addition, compared to the third quarter of 2019, purchases of home equity loans contributed to the increase.

Allowance for Credit Losses
(Dollar amounts in thousands)

  As of September 30, 2020
Percent Change From
  September 30,
2020		 June 30, 
 2020		 September 30,
2019		 June 30, 
 2020		 September 30,
2019
Allowance for credit losses          
ACL, excluding PCD loans $209,988  $203,243  $110,228  3.3  90.5 
PCD loan ACL 36,885  44,434  —  (17.0) 100.0 
Total ACL $246,873  $247,677  $110,228  (0.3) 124.0 
Provision for credit losses $15,927  $32,649  $12,498  (51.2) 27.4 
ACL to total loans(1) 1.68% 1.66% 0.86%    
ACL to total loans, excluding PPP loans(1)(2) 1.83% 1.80% 0.86%    
ACL to non-accrual loans 171.95% 177.98% 141.88%    


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

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

The ACL was $246.9 million or 1.68% of total loans as of September 30, 2020, consistent with June 30, 2020 and increasing $136.6 million compared to September 30, 2019. Excluding the impact of PPP loans, ACL to total loans was 1.83% as of September 30, 2020, consistent with 1.80% and up from 0.86% as of June 30, 2020 and September 30, 2019, respectively. Compared to September 30, 2019, the increase in ACL is a result of the adoption of the CECL accounting standard, the Park Bank acquisition, as well as additional ACL established as a result of the pandemic.

Asset Quality
(Dollar amounts in thousands)

  As of September 30, 2020
Percent Change From
  September 30,
2020		 June 30, 
 2020		 September 30,
2019		 June 30, 
 2020		 September 30,
2019
Asset quality          
Non-accrual loans, excluding PCD loans(1)(2) $103,582  $94,044  $77,692  10.1  33.3  
Non-accrual PCD loans(1) 39,990  45,116  —  (11.4) N/M  
Total non-accrual loans 143,572  139,160  77,692  3.2  84.8  
90 days or more past due loans, still accruing        
interest(1)		 3,781  3,241  4,657  16.7  (18.8) 
Total non-performing loans, ("NPLs") 147,353  142,401  82,349  3.5  78.9  
Accruing troubled debt restructurings        
("TDRs")		 841  1,201  1,422  (30.0) (40.9) 
Foreclosed assets(3) 15,299  19,024  25,266  (19.6) (39.4) 
Total NPAs $163,493  $162,626  $109,037  0.5  49.9  
30-89 days past due loans(1) $21,551  $36,342  $46,171  (40.7) (53.3) 
30-89 days past due loans, excluding PCD        
loans(1)(2)		 $19,042  $34,872  $46,171  (45.4) (58.8) 
Special mention loans(4) $395,295  $256,373  $185,369  54.2  113.2  
Substandard loans(4) 311,430  193,337  171,731  61.1  81.3  
Total adverse rated performing loans(4) $706,725  $449,710  $357,100  57.2  97.9  
Non-accrual loans to total loans:          
Non-accrual loans to total loans 0.98% 0.93% 0.61%    
Non-accrual loans to total loans, excluding        
PPP loans(1)(2)(5)		 1.07% 1.01% 0.61%    
Non-accrual loans to total loans, excluding        
PCD and PPP loans(1)(2)(5)		 0.78% 0.70% 0.61%    
Non-performing loans to total loans:          
NPLs to total loans 1.01% 0.95% 0.64%    
NPLs to total loans, excluding PPP loans(1)(2)(5) 1.10% 1.04% 0.64%    
NPLs to total loans, excluding PCD and PPP         
loans(1)(2)(5)		 0.81% 0.72% 0.64%    
Non-performing assets to total loans plus foreclosed assets:        
NPAs to total loans plus foreclosed assets 1.11% 1.09% 0.85%    
NPAs to total loans plus foreclosed assets,         
excluding PPP loans(1)(2)(5)		 1.21% 1.18% 0.85%    
NPAs to total loans plus foreclosed assets,         
excluding PCD and PPP loans(1)(2)(5)		 0.93% 0.87% 0.85%    
Adverse rated performing loans to total loans:        
Adverse rated performing loans to corporate        
loans		 6.36% 3.94% 3.66%    
Adverse rated performing loans, excluding PPP        
loans to corporate loans		 7.13% 4.40% 3.66%    


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

NPAs represented 1.11% of total loans and foreclosed assets at September 30, 2020 compared to 1.09% and 0.85% at June 30, 2020 and September 30, 2019, respectively. Excluding the impact of PCD and PPP loans, NPAs to total loans plus foreclosed assets was 0.93% at September 30, 2020, compared to 0.87% at June 30, 2020 and 0.85% at September 30, 2019, reflective of normal fluctuations that occur on a quarterly basis.

Adverse rated performing loans increased to $707 million for the third quarter of 2020 from $450 million and $357 million at June 30, 2020 and September 30, 2019, respectively. This increase is as a result of the pandemic's impact on certain borrowers primarily focused in elevated risk sectors that the Company has determined require additional monitoring. These loans exhibit potential or well-defined weaknesses but continue to accrue interest because they are well secured, and collection of principal and interest is expected.

Charge-Off Data
(Dollar amounts in thousands)

  Quarters Ended
  September 30,
2020		 % of
Total		 June 30, 
 2020		 % of
Total		 September 30,
2019		 % of
Total
Net loan charge-offs(1)            
Commercial and industrial $5,470   34.7  $4,735   36.6  $5,532   60.1  
Agricultural 265   1.7  118   0.9  439   4.8  
Commercial real estate:            
Office, retail, and industrial 1,339   8.5  3,086   23.9  219   2.4  
Multi-family —   —  9   0.1  (38)  (0.4) 
Construction 4,889   31.1  798   6.2  (2)  —  
Other commercial real estate 1,753   11.1  19   0.1  (43)  (0.5) 
Consumer 2,027   12.9  4,158   32.2  3,092   33.6  
Total NCOs $15,743    100.0   $12,923    100.0   $9,199    100.0   
Less: NCOs on PCD loans(2)(3) (6,923)  44.0  (3,833)  29.7  —   N/A
Total NCOs, excluding PCD loans(2)(3) $8,820     $9,090     $9,199    
Recoveries included in total NCOs $1,795     $1,311     $2,073    
Quarter-to-date(1)(4):            
Net loan charge-offs to average loans 0.42%    0.36%    0.29%   
Net loan charge-offs to average loans,        
excluding PPP loans(3)(5)		 0.46%    0.38%    0.29%   
Net loan charge-offs to average loans,        
excluding PCD and PPP loans(3)(5)		 0.26%    0.27%    0.29%   
Year-to-date(1)(4):            
Net loan charge-offs to average loans 0.38%    0.36%    0.31%   
Net loan charge-offs to average loans,        
excluding PPP loans(3)(5)		 0.40%    0.38%    0.31%   
Net loan charge-offs to average loans,        
excluding PCD and PPP loans(3)(5)		 0.29%    0.30%    0.31%   


N/A – Not applicable.
(1)Amounts represent charge-offs, net of recoveries.
(2)Prior to the adoption of CECL on January 1, 2020, the portion of PCI loans deemed to be uncollectible was recorded as a reduction of the credit-related acquisition adjustment, which was netted within loans. Subsequent to adoption, an ACL on PCD loans, including those previously identified as PCI, is established as of the acquisition date and the PCD loans are no longer recorded net of a credit-related acquisition adjustment. PCD loans deemed to be uncollectible are recorded as a charge-off through the ACL.
(3)See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
(4)Annualized based on the actual number of days for each period presented.
(5)This ratio excludes PPP loans that are expected to be forgiven if employee retention criteria are met and funds are used for eligible expenses. As a result, no allowance for credit losses is associated with these loans.
  

NCOs to average loans, annualized was 0.42%, compared to 0.36% for the second quarter of 2020 and 0.29% for the third quarter of 2019. Excluding charge-offs on PCD and the impact of PPP loans on this metric, NCOs to average loans was 0.26% for the third quarter of 2020, down from 0.27% for the second quarter of 2020 and 0.29% for the third quarter of 2019.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

  Average for the Quarters Ended September 30, 2020
Percent Change From
  September 30,
2020		 June 30, 
 2020		 September 30,
2019		 June 30, 
 2020		 September 30,
2019
Demand deposits $5,631,355  $5,305,109  $3,800,569  6.1  48.2  
Savings deposits 2,342,355  2,246,643  2,056,128  4.3  13.9  
NOW accounts 2,744,034  2,549,088  2,483,176  7.6  10.5  
Money market accounts 2,781,666  2,663,622  2,080,274  4.4  33.7  
Core deposits 13,499,410  12,764,462  10,420,147  5.8  29.6  
Time deposits 2,302,019  2,539,996  3,026,423  (9.4) (23.9) 
Total deposits $15,801,429  $15,304,458  $13,446,570  3.2  17.5  
                    

Total average deposits were $15.8 billion for the third quarter of 2020, up 3.2% from the second quarter of 2020 and 17.5% from the third quarter of 2019. Compared to both prior periods, the rise in total average deposits was impacted by higher customer balances resulting from PPP funds and other government stimuli. In addition, the increase in total average deposits compared to the second quarter of 2020 was impacted by seasonal inflows of municipal deposits and compared to the third quarter of 2019 was impacted by the deposits assumed in the Park Bank transaction in March 2020.

CAPITAL MANAGEMENT

Capital Ratios

  As of
  September 30,
2020		 June 30, 
 2020		 December 31,
2019		 September 30,
2019
Company regulatory capital ratios:        
Total capital to risk-weighted assets 14.06% 13.70% 12.96% 12.62%
Tier 1 capital to risk-weighted assets 11.48% 11.19% 10.52% 10.18%
Common equity Tier 1 ("CET1") to risk-weighted assets 9.97% 9.70% 10.52% 10.18%
Tier 1 capital to average assets 8.50% 8.70% 8.81% 8.67%
Company tangible common equity ratios(1)(2):      
Tangible common equity to tangible assets 7.43% 7.32% 8.81% 8.54%
Tangible common equity to tangible assets, excluding PPP loans 7.90% 7.77% 8.81% 8.54%
Tangible common equity, excluding accumulated other comprehensive        
income ("AOCI"), to tangible assets		 7.30% 7.17% 8.82% 8.50%
Tangible common equity, excluding accumulated other comprehensive        
income ("AOCI"), to tangible assets, excluding PPP loans		 7.77% 7.62% 8.82% 8.50%
Tangible common equity to risk-weighted assets 9.84% 9.61% 10.51% 10.24%


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

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

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the third quarter of 2020, which is consistent with the second quarter of 2020 and the third quarter of 2019. This dividend represents the 151st consecutive cash dividend paid by the Company since its inception in 1983.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, October 21, 2020 at 11 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, investor.firstmidwest.com. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10148585 beginning one hour after completion of the live call until 9:00 A.M. (ET) on January 20, 2021. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.

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

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

Forward-Looking Statements

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

Forward-looking statements may be deemed to include, among other things, statements relating to First Midwest's future financial performance, including the related outlook for 2020, the performance of First Midwest's loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, including the impact of certain actions and initiatives, anticipated trends in First Midwest's business, regulatory developments, acquisition transactions, estimated synergies, cost savings and financial benefits of announced and completed transactions, growth strategies, including possible future acquisitions, and the continued or potential effects of the pandemic on our business, financial condition, liquidity, loans, asset quality and results of operations. These statements are subject to certain risks, uncertainties and assumptions, including the duration, extent and severity of the pandemic, including the continued effects on our business, operations and employees, as well as on our customers and service providers, and on economies and markets more generally and other risks, uncertainties and assumptions that are discussed under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in First Midwest's Annual Report on Form 10-K for the year ended December 31, 2019, and in First Midwest's subsequent filings made with the Securities and Exchange Commission ("SEC"). These risks and uncertainties are not exhaustive, and other sections of these reports describe additional factors that could adversely impact First Midwest's business and financial performance.

Non-GAAP Financial Information

The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. These non-GAAP financial measures include EPS, adjusted, the efficiency ratio, return on average assets, adjusted, tax-equivalent net interest income (including its individual components), tax-equivalent net interest margin, tax-equivalent net interest margin, adjusted, noninterest expense, adjusted, tangible common equity to tangible assets, tangible common equity, excluding AOCI, to tangible assets, tangible common equity to risk-weighted assets, return on average common equity, adjusted, return on average tangible common equity, return on average tangible common equity, adjusted, non-accrual loans, excluding PCD loans, 30-89 days past due loans, excluding PCD loans, non-accrual loans to total loans, excluding PPP loans, non-accrual loans to total loans, excluding PCD and PPP loans, NPLs to total loans, excluding PPP loans, NPLs to total loans, excluding PCD and PPP loans, NPAs to total loans plus foreclosed assets, excluding PPP loans, NPAs to total loans plus foreclosed assets, excluding PCD and PPP loans, NCOs, excluding PCD loans, NCOs to average loans, excluding PPP loans, NCOs to average loans, excluding PCD and PPP loans, and pre-tax, pre-provision earnings, adjusted.

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

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

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

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

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

The Company presents non-accrual loans, 30-89 days past due loans, non-accrual loans to total loans, NPLs to total loans, NPAs to total loans plus foreclosed assets, NCOs, and NCOs to average loans, all excluding PCD and/or PPP loans. Management believes excluding PCD and PPP loans is useful as it facilitates better comparability between periods. Prior to the adoption of CECL on January 1, 2020, PCI loans with an accretable yield were considered current and were not included in past due and non-accrual loan totals and the portion of PCI loans deemed to be uncollectible was recorded as a reduction of the credit-related acquisition adjustment, which was netted within loans. Subsequent to adoption, PCD loans, including those previously classified as PCI, are included in past due and non-accrual loan totals and an ACL on PCD loans is established as of the acquisition date and the PCD loans are no longer recorded net of a credit-related acquisition adjustment. PCD loans deemed to be uncollectible are recorded as a charge-off through the ACL. The Company began originating PPP loans during the second quarter of 2020 and the loans are expected to be forgiven by the SBA if the applicable criteria are met. Additionally, management believes excluding PCD and PPP loans from these metrics may enhance comparability for peer comparison purposes.

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

About First Midwest

First Midwest (NASDAQ: FMBI) is a relationship-focused financial institution and one of the largest independent publicly traded bank holding companies based on assets headquartered in Chicago and the Midwest, with approximately $21 billion of assets and an additional $13 billion of assets under management. First Midwest Bank and First Midwest's other affiliates provide a full range of commercial, treasury management, equipment leasing, consumer, wealth management, trust and private banking products and services. First Midwest operates branches and other locations throughout metropolitan Chicago, southeast Wisconsin, northwest Indiana, eastern Iowa and other markets in the Midwest. Visit First Midwest at www.firstmidwest.com.

CONTACTS:

Investors
Patrick S. Barrett
EVP, Chief Financial Officer
708.831.7231
pat.barrett@firstmidwest.com		Media
Maurissa Kanter
SVP, Director of Corporate Communications
708.831.7345
maurissa.kanter@firstmidwest.com

Accompanying Unaudited Selected Financial Information

First Midwest Bancorp, Inc.
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
  
 As of
 September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
Period-End Balance Sheet         
Assets         
Cash and due from banks$254,212   $304,445   $252,138   $214,894   $273,613  
Interest-bearing deposits in other banks936,528   637,856   229,474   84,327   202,054  
Equity securities, at fair value55,021   43,954   40,098   42,136   40,723  
Securities available-for-sale, at fair value3,279,884   3,435,862   3,382,865   2,873,386   2,905,738  
Securities held-to-maturity, at amortized cost22,193   19,628   19,825   21,997   22,566  
FHLB and FRB stock138,120   148,512   154,357   115,409   112,845  
Loans:         
Commercial and industrial4,635,571   4,789,556   5,064,295   4,481,525   4,570,361  
Agricultural377,466   381,124   393,063   405,616   417,740  
Commercial real estate:         
Office, retail, and industrial1,950,406   2,020,318   2,092,097   1,848,718   1,892,877  
Multi-family868,293   874,861   918,944   856,553   817,444  
Construction631,607   687,063   661,363   593,093   637,256  
Other commercial real estate1,452,994   1,475,937   1,415,892   1,383,708   1,425,292  
PPP loans1,196,538   1,179,403   —   —   —  
Home equity827,746   892,867   973,658   851,454   833,955  
1-4 family mortgages2,287,555   2,175,322   1,957,037   1,927,078   1,686,967  
Installment425,012   457,207   488,668   492,585   491,427  
Total loans14,653,188   14,933,658   13,965,017   12,840,330   12,773,319  
Allowance for loan losses(239,048)  (240,052)  (219,948)  (108,022)  (109,028) 
Net loans14,414,140   14,693,606   13,745,069   12,732,308   12,664,291  
OREO6,552   9,947   9,814   8,750   12,428  
Premises, furniture, and equipment, net132,267   143,001   145,844   147,996   147,064  
Investment in bank-owned life insurance ("BOLI")300,429   299,649   298,827   296,351   297,610  
Goodwill and other intangible assets935,801   940,182   935,241   875,262   876,219  
Accrued interest receivable and other assets612,996   568,239   539,748   437,581   458,303  
Total assets$21,088,143   $21,244,881   $19,753,300   $17,850,397   $18,013,454  
Liabilities and Stockholders' Equity         
Noninterest-bearing deposits$5,555,735   $5,602,016   $4,222,523   $3,802,422   $3,832,744  
Interest-bearing deposits10,215,838   10,055,640   9,876,427   9,448,856   9,608,183  
Total deposits15,771,573   15,657,656   14,098,950   13,251,278   13,440,927  
Borrowed funds1,957,180   2,305,195   2,648,210   1,658,758   1,653,490  
Senior and subordinated debt234,563   234,358   234,153   233,948   233,743  
Accrued interest payable and other liabilities460,656   391,461   336,280   335,620   345,695  
Stockholders' equity2,664,171   2,656,211   2,435,707   2,370,793   2,339,599  
Total liabilities and stockholders' equity$21,088,143   $21,244,881   $19,753,300   $17,850,397   $18,013,454  
Stockholders' equity, excluding AOCI$2,638,422   $2,627,484   $2,400,384   $2,372,747   $2,332,861  
Stockholders' equity, common2,433,671   2,425,711   2,435,707   2,370,793   2,339,599  


First Midwest Bancorp, Inc.     
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)		     
               
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
Income Statement              
Interest income$159,085   $162,044   $170,227   $176,604   $181,963    $491,356   $522,135  
Interest expense16,356   16,810   26,652   28,245   31,176    59,818   82,012  
Net interest income142,729   145,234   143,575   148,359   150,787    431,538   440,123  
Provision for loan losses15,927   32,649   39,532   9,594   12,498    88,108   34,433  
Net interest income after        
provision for credit losses		126,802   112,585   104,043   138,765   138,289    343,430   405,690  
Noninterest Income              
Service charges on deposit        
accounts		10,342   9,125   11,781   12,664   13,024    31,248   36,760  
Wealth management fees12,837   11,942   12,361   12,484   12,063    37,140   35,853  
Card-based fees, net4,472   3,180   3,968   4,512   4,694    11,620   13,621  
Capital market products        
income		886   694   4,722   6,337   4,161    6,302   7,594  
Mortgage banking income6,659   3,477   1,788   4,134   3,066    11,924   5,971  
Other service charges,        
commissions, and fees		2,823   2,078   2,682   2,946   3,023    7,583   8,417  
Total fee-based revenues38,019   30,496   37,302   43,077   40,031    105,817   108,216  
Other income2,523   2,495   3,065   3,419   2,920    8,083   8,167  
Swap termination costs(14,285)  —   —   —   —    (14,285)  —  
Net securities gains (losses)14,328   —   (1,005)  —   —    13,323   —  
Total noninterest        
income		40,585   32,991   39,362   46,496   42,951    112,938   116,383  
Noninterest Expense              
Salaries and employee benefits:             
Salaries and wages53,385   52,592   49,990   53,043   50,686    155,967   144,597  
Retirement and other        
employee benefits		11,349   11,080   12,869   9,930   10,795    35,298   32,949  
Total salaries and        
employee benefits		64,734   63,672   62,859   62,973   61,481    191,265   177,546  
Net occupancy and        
equipment expense		13,736   15,116   14,227   12,940   12,787    43,079   38,878  
Professional services7,325   8,880   10,390   10,949   8,768    26,595   25,479  
Technology and related costs10,416   9,853   8,548   7,429   6,960    28,817   20,358  
Advertising and promotions2,688   2,810   2,761   2,896   2,955    8,259   8,494  
Net OREO expense544   126   420   1,080   381    1,090   1,356  
Other expenses12,374   14,624   12,654   13,000   11,432    39,652   35,000  
Optimization costs18,376   —   —   —   —    18,376   —  
Acquisition and integration        
related expenses		881   5,249   5,472   5,258   3,397    11,602   16,602  
Delivering Excellence        
implementation costs		—   —   —   223   234    —   934  
Total noninterest expense131,074   120,330   117,331   116,748   108,395    368,735   324,647  
Income before income tax        
expense		36,313   25,246   26,074   68,513   72,845    87,633   197,426  
Income tax expense8,690   6,182   6,468   16,392   18,300    21,340   49,809  
Net income$27,623   $19,064   $19,606   $52,121   $54,545    $66,293   $147,617  
Preferred dividends(4,033)  (1,037)  —   —   —    (5,070)  —  
Net income applicable to        
non-vested restricted shares		(236)  (187)  (192)  (424)  (465)   (615)  (1,257) 
Net income applicable        
to common shares		$23,354   $17,840   $19,414   $51,697   $54,080    $60,608   $146,360  
Net income applicable to        
common shares, adjusted(1)		37,765   21,777   24,272   55,807   56,803    83,814   159,511  


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

   

First Midwest Bancorp, Inc.     
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
               
 As of or for the
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
EPS              
Basic EPS$0.21  $0.16  $0.18  $0.47  $0.49   $0.54  $1.36 
Diluted EPS$0.21  $0.16  $0.18  $0.47  $0.49   $0.54  $1.35 
Diluted EPS, adjusted(1)$0.33  $0.19  $0.22  $0.51  $0.52   $0.75  $1.47 
Common Stock and Related Per Common Share Data     
Book value$21.29  $21.23  $21.33  $21.56  $21.27   $21.29  $21.27 
Tangible book value$13.11  $13.00  $13.14  $13.60  $13.31   $13.11  $13.31 
Dividends declared per share$0.14  $0.14  $0.14  $0.14  $0.14   $0.42  $0.40 
Closing price at period end$10.78  $13.35  $13.24  $23.06  $19.48   $10.78  $19.48 
Closing price to book value0.5  0.6  0.6  1.1  0.9   0.5  0.9 
Period end shares outstanding114,293  114,276  114,213  109,972  109,970   114,293  109,970 
Period end treasury shares11,067  11,079  11,136  10,443  10,441   11,067  10,441 
Common dividends$16,011  $16,015  $16,002  $15,404  $15,406   $48,028  $43,746 
Dividend payout ratio66.67% 87.50% 77.78% 29.79% 28.57%  77.78% 29.41%
Dividend payout ratio, adjusted(1)42.42% 73.68% 63.64% 27.45% 26.92%  56.00% 27.21%
Key Ratios/Data              
Return on average common        
equity(2)		3.80% 2.94% 3.23% 8.69% 9.22%  3.33% 8.75%
Return on average common        
equity, adjusted(1)(2)		6.15% 3.58% 4.04% 9.38% 9.68%  4.60% 9.54%
Return on average tangible        
common equity(2)		6.73% 5.32% 5.66% 14.37% 15.36%  5.90% 14.55%
Return on average tangible        
common equity, adjusted(1)(2)		10.53% 6.37% 6.94% 15.47% 16.10%  7.95% 15.80%
Return on average assets(2)0.51% 0.37% 0.43% 1.16% 1.22%  0.44% 1.18%
Return on average assets,        
adjusted(1)(2)		0.78% 0.44% 0.53% 1.25% 1.28%  0.59% 1.29%
Loans to deposits92.91% 95.38% 99.05% 96.90% 95.03%  92.91% 95.03%
Efficiency ratio(1)60.36% 64.08% 60.21% 56.16% 53.54%  61.52% 54.60%
Net interest margin(2)(3)2.95% 3.13% 3.54% 3.72% 3.82%  3.19% 3.97%
Yield on average interest-earning        
assets(2)(3)		3.28% 3.49% 4.19% 4.43% 4.60%  3.63% 4.70%
Cost of funds(2)(4)0.35% 0.38% 0.69% 0.74% 0.82%  0.46% 0.77%
Noninterest expense to average        
assets(2)		2.42% 2.32% 2.56% 2.59% 2.43%  2.43% 2.60%
Noninterest expense, adjusted to        
average assets, excluding PPP        
loans(1)(2)		2.19% 2.32% 2.44% 2.47% 2.35%  2.31% 2.46%
Effective income tax rate23.93% 24.49% 24.81% 23.93% 25.12%  24.35% 25.23%
Capital Ratios              
Total capital to risk-weighted        
assets(1)		14.06% 13.70% 12.00% 12.96% 12.62%  14.01% 12.62%
Tier 1 capital to risk-weighted        
assets(1)		11.48% 11.19% 9.64% 10.52% 10.18%  11.42% 10.18%
CET1 to risk-weighted assets(1)9.97% 9.70% 9.64% 10.52% 10.18%  9.91% 10.18%
Tier 1 capital to average assets(1)8.50% 8.70% 8.60% 8.81% 8.67%  8.46% 8.67%
Tangible common equity to        
tangible assets(1)		7.43% 7.32% 7.97% 8.81% 8.54%  7.43% 8.54%
Tangible common equity, excluding AOCI, to tangible        
assets(1)		7.30% 7.17% 7.79% 8.81% 8.50%  7.30% 8.50%
Tangible common equity to risk-        
weighted assets(1)		9.84% 9.61% 9.63% 10.51% 10.24%  9.84% 10.24%
Note: Selected Financial Information footnotes are located at the end of this section.     


First Midwest Bancorp, Inc.     
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
               
 As of or for the
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
Asset Quality Performance Data             
Non-performing assets               
Commercial and industrial$40,781   $19,475   $24,944   $29,995   $26,739    $40,781   $26,739  
Agricultural13,293   8,494   5,823   5,954   6,242    13,293   6,242  
Commercial real estate:              
Office, retail, and industrial26,406   26,342   26,107   25,857   26,812    26,406   26,812  
Multi-family1,547   2,132   2,688   2,697   2,152    1,547   2,152  
Construction2,977   18,640   18,764   152   152    2,977   152  
Other commercial real estate4,690   5,304   4,562   4,729   4,680    4,690   4,680  
Consumer13,888   13,657   14,761   12,885   10,915    13,888   10,915  
Non-accrual, excluding PCD        
loans		103,582   94,044   97,649   82,269   77,692    103,582   77,692  
Non-accrual PCD loans39,990   45,116   48,950   —   —    39,990   —  
Total non-accrual loans143,572   139,160   146,599   82,269   77,692    143,572   77,692  
90 days or more past due loans,        
still accruing interest		3,781   3,241   5,052   5,001   4,657    3,781   4,657  
Total NPLs147,353   142,401   151,651   87,270   82,349    147,353   82,349  
Accruing TDRs841   1,201   1,216   1,233   1,422    841   1,422  
Foreclosed assets(5)15,299   19,024   21,027   20,458   25,266    15,299   25,266  
Total NPAs$163,493   $162,626   $173,894   $108,961   $109,037    $163,493   $109,037  
30-89 days past due loans$21,551   $36,342   $81,127   $31,958   $46,171    $21,551   $46,171  
Allowance for credit losses              
Allowance for loan losses$239,048   $240,052   $219,948   $108,022   $109,028    $239,048   $109,028  
Reserve for unfunded        
commitments		7,825   7,625   6,753   1,200   1,200    7,825   1,200  
Total ACL$246,873   $247,677   $226,701   $109,222   $110,228    $246,873   $110,228  
Provision for loan losses$15,927   $32,649   $39,532   $9,594   $12,498    $88,108   $34,433  
Net charge-offs by category              
Commercial and industrial$5,470   $4,735   $4,680   $6,799   $5,532    $14,885   $15,193  
Agricultural265   118   1,227   15   439    1,610   1,186  
Commercial real estate:              
Office, retail, and industrial1,339   3,086   329   256   219    4,754   2,291  
Multi-family—   9   5   (439)  (38)   14   301  
Construction4,889   798   1,808   3   (2)   7,495   (12) 
Other commercial real estate1,753   19   164   13   (43)   1,936   430  
Consumer2,027   4,158   3,901   3,953   3,092    10,086   8,235  
Total NCOs$15,743   $12,923   $12,114   $10,600   $9,199    $40,780   $27,624  
Less: NCOs on PCD loans(6,923)  (3,833)  (1,720)  —   —    (12,476)  —  
Total NCOs, excluding        
PCD loans		$8,820   $9,090   $10,394   $10,600   $9,199    $28,304   $27,624  
Total recoveries included above$1,795   $1,311   $1,816   $2,153   $2,073    $4,922   $5,849  
Note: Selected Financial Information footnotes are located at the end of this section.     


First Midwest Bancorp, Inc.     
Selected Financial Information (Unaudited)
               
 As of or for the
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
Adverse Rated Performing Loans             
Special mention loans(8)$395,295  $256,373  $240,826  $188,703  $185,369   $395,295  $185,369 
Substandard loans(8)311,430  193,337  196,923  188,711  171,731   311,430  171,731 
Total adverse rated        
performing loans(8)		$706,725  $449,710  $437,749  $377,414  $357,100   $706,725  $357,100 
Asset quality ratios               
Non-accrual loans to total loans0.98% 0.93% 1.05% 0.64% 0.61%  0.98% 0.61%
Non-accrual loans to total loans,        
excluding PPP loans(6)		1.07% 1.01% 1.05% 0.64% 0.61%  1.07% 0.61%
Non-accrual loans to total loans,        
excluding PCD and PPP loans(6)		0.78% 0.70% 0.71% 0.64% 0.61%  0.78% 0.61%
NPLs to total loans1.01% 0.95% 1.09% 0.68% 0.64%  1.01% 0.64%
NPLs to total loans, excluding        
PPP loans(6)		1.10% 1.04% 1.09% 0.68% 0.64%  1.10% 0.64%
NPLs to total loans, excluding        
PCD and PPP loans(6)		0.81% 0.72% 0.75% 0.68% 0.64%  0.81% 0.64%
NPAs to total loans plus        
foreclosed assets		1.11% 1.09% 1.24% 0.85% 0.85%  1.11% 0.85%
NPAs to total loans plus        
foreclosed assets, excluding        
PPP loans(6)		1.21% 1.18% 1.24% 0.85% 0.85%  1.21% 0.85%
NPAs to total loans plus        
foreclosed assets, excluding        
PCD and PPP loans(6)		0.93% 0.87% 0.91% 0.85% 0.85%  0.93% 0.85%
NPAs to tangible common equity        
plus ACL		9.37% 9.38% 10.07% 6.79% 6.93%  9.37% 6.93%
Non-accrual loans to total assets0.68% 0.66% 0.74% 0.46% 0.43%  0.68% 0.43%
Adverse rated performing loans        
to corporate loans		6.36% 3.94% 4.15% 3.95% 3.66%  6.36% 3.66%
Adverse rated performing loans,        
excluding PPP loans to        
corporate loans(6)		7.13% 4.40% 4.15% 3.95% 3.66%  7.13% 3.66%
Allowance for credit losses and net charge-off ratios     
ACL to total loans(7)1.68% 1.66% 1.62% 0.85% 0.86%  1.68% 0.86%
ACL to non-accrual loans171.95% 177.98% 154.64% 132.76% 141.88%  171.95% 141.88%
ACL to NPLs167.54% 173.93% 149.49% 125.15% 133.85%  167.54% 133.85%
NCOs to average loans(2)0.42% 0.36% 0.37% 0.33% 0.29%  0.38% 0.31%
NCOs to average loans,        
excluding PPP loans(2)		0.46% 0.38% 0.37% 0.33% 0.29%  0.40% 0.31%
NCOs to average loans,        
excluding PCD and PPP loans(2)		0.26% 0.27% 0.32% 0.33% 0.29%  0.29% 0.31%


Footnotes to Selected Financial Information
(1)See the "Non-GAAP Reconciliations" section for the detailed calculation.
(2)Annualized based on the actual number of days for each period presented.
(3)Presented on a tax-equivalent basis, assuming the applicable federal income tax rate of 21%. 
(4)Cost of funds expresses total interest expense as a percentage of total average funding sources.
(5)Foreclosed assets consists of OREO and other foreclosed assets acquired in partial or total satisfaction of defaulted loans. Other foreclosed assets are included in other assets in the Consolidated Statements of Financial Condition.
(6)This ratio excludes PPP loans that are expected to be forgiven if employee retention criteria are met and funds are used for eligible expenses. As a result, no allowance for credit losses is associated with these loans.
(7)Prior to the adoption of CECL on January 1, 2020, this ratio included acquired loans that were recorded at fair value through an acquisition adjustment netted in loans, which incorporated credit risk as of the acquisition date with no ACL being established at that time. As the acquisition adjustment was accreted into income over future periods, an ACL on acquired loans was established as necessary to reflect credit deterioration. Subsequent to adoption, an ACL on acquired loans is established as of the acquisition date and the acquired loans are no longer recorded net of a credit-related acquisition adjustment.
(8)Adverse rated performing loans excludes accruing TDRs.
  

 

First Midwest Bancorp, Inc.     
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)		     
               
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
EPS              
Net income$27,623   $19,064   $19,606   $52,121   $54,545    $66,293   $147,617  
Dividends and accretion on         
preferred stock		(4,033)  (1,037)  —   —   —    (5,070)  —  
Net income applicable to non-        
vested restricted shares		(236)  (187)  (192)  (424)  (465)   (615)  (1,257) 
Net income applicable to        
common shares		23,354   17,840   19,414   51,697   54,080    60,608   146,360  
Adjustments to net income:              
Optimization costs18,376   —   —   —   —    18,376   —  
Tax effect of optimization        
costs		(4,594)  —   —   —   —    (4,594)  —  
Swap termination costs14,285   —   —   —   —    14,285   —  
Tax effect of swap termination        
costs		(3,571)  —   —   —   —    (3,571)  —  
Acquisition and integration        
related expenses		881   5,249   5,472   5,258   3,397    11,602   16,602  
Tax effect of acquisition and        
integration related expenses		(220)  (1,312)  (1,368)  (1,315)  (849)   (2,900)  (4,151) 
Net securities (gains) losses(14,328)  —   1,005   —   —    (13,323)  —  
Tax effect of net securities        
(gains) losses		3,582   —   (251)  —   —    3,331   —  
Delivering Excellence        
implementation costs		—   —   —   223   234    —   934  
Tax effect of Delivering        
Excellence implementation        
costs		—   —   —   (56)  (59)   —   (234) 
Total adjustments to net        
income, net of tax		14,411   3,937   4,858   4,110   2,723    23,206   13,151  
Net income applicable to        
common shares,        
adjusted(1)		$37,765   $21,777   $24,272   $55,807   $56,803    $83,814   $159,511  
Weighted-average common shares outstanding:             
Weighted-average common        
shares outstanding (basic)		113,160   113,145   109,922   109,059   109,281    112,079   107,852  
Dilutive effect of common        
stock equivalents		276   191   443   519   381    322   394  
Weighted-average diluted        
common shares        
outstanding		113,436   113,336   110,365   109,578   109,662    112,401   108,246  
Basic EPS$0.21   $0.16   $0.18   $0.47   $0.49    $0.54   $1.36  
Diluted EPS$0.21   $0.16   $0.18   $0.47   $0.49    $0.54   $1.35  
Diluted EPS, adjusted(1)$0.33   $0.19   $0.22   $0.51   $0.52    $0.75   $1.47  
Anti-dilutive shares not included        
in the computation of diluted        
EPS		—   —   —   —   —    —   —  
Dividend Payout Ratio              
Dividends declared per share$0.14   $0.14   $0.14   $0.14   $0.14    $0.42   $0.40  
Dividend payout ratio66.67%  87.50%  77.78%  29.79%  28.57%   77.78%  29.41% 
Dividend payout ratio, adjusted(1)42.42%  73.68%  63.64%  27.45%  26.92%   56.00%  27.21% 
               
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.     


First Midwest Bancorp, Inc.     
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)		     
               
 As of or for the
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
Return on Average Common and Tangible Common Equity           
Net income applicable to         
common shares		$23,354   $17,840   $19,414   $51,697   $54,080    $60,608   $146,360  
Intangibles amortization2,810   2,820   2,770   2,744   2,750    8,400   7,737  
Tax effect of intangibles        
amortization		(703)  (705)  (693)  (686)  (688)   (2,100)  (1,934) 
Net income applicable to        
common shares, excluding        
intangibles amortization		25,461   19,955   21,491   53,755   56,142    66,908   152,163  
Total adjustments to net income,        
net of tax(1)		14,411   3,937   4,858   4,110   2,723    23,206   13,151  
Net income applicable to        
common shares, adjusted(1)		$39,872   $23,892   $26,349   $57,865   $58,865    $90,114   $165,314  
Average stockholders' common        
equity		$2,444,594   $2,443,212   $2,415,157   $2,359,197   $2,327,279    $2,434,358   $2,236,402  
Less: average intangible assets(938,712)  (934,022)  (887,600)  (874,829)  (877,069)   (920,180)  (837,850) 
Average tangible common        
equity		$1,505,882   $1,509,190   $1,527,557   $1,484,368   $1,450,210    $1,514,178   $1,398,552  
Return on average common        
equity(2)		3.80%  2.94%  3.23%  8.69%  9.22%   3.33%  8.75% 
Return on average common        
equity, adjusted(1)(2)		6.15%  3.58%  4.04%  9.38%  9.68%   4.60%  9.54% 
Return on average tangible        
common equity(2)		6.73%  5.32%  5.66%  14.37%  15.36%   5.90%  14.55% 
Return on average tangible        
common equity, adjusted(1)(2)		10.53%  6.37%  6.94%  15.47%  16.10%   7.95%  15.80% 
Return on Average Assets           
Net income$27,623   $19,064   $19,606   $52,121   $54,545    $66,293   $147,617  
Total adjustments to net income,        
net of tax(1)		14,411   3,937   4,858   4,110   2,723    23,206   13,151  
Net income, adjusted(1)$42,034   $23,001   $24,464   $56,231   $57,268    $89,499   $160,768  
Average assets$21,526,695   $20,868,106   $18,404,821   $17,889,158   $17,699,180    $20,271,140   $16,709,797  
Return on average assets(2)0.51%  0.37%  0.43%  1.16%  1.22%   0.44%  1.18% 
Return on average assets,        
adjusted(1)(2)		0.78%  0.44%  0.53%  1.25%  1.28%   0.59%  1.29% 
Noninterest Expense to Average Assets           
Noninterest expense$131,074   $120,330   $117,331   $116,748   $108,395    $368,735   $324,647  
Less:              
Optimization costs(18,376)  —   —   —   —    (18,376)  —  
Acquisition and integration        
related expenses		(881)  (5,249)  (5,472)  (5,258)  (3,397)   (11,602)  (16,602) 
Delivering Excellence        
implementation costs		—   —   —   (223)  (234)   —   (934) 
Total$111,817   $115,081   $111,859   $111,267   $104,764    $338,757   $307,111  
Average assets$21,526,695   $20,868,106   $18,404,821   $17,889,158   $17,699,180    $20,271,140   $16,709,797  
Less: average PPP loans(1,194,808)  (887,977)  —   —   —    (696,095)  —  
Average assets, excluding PPP        
loans		$20,331,887   $19,980,129   $18,404,821   $17,889,158   $17,699,180    $19,575,045   $16,709,797  
Noninterest expense to average        
assets(2)		2.42%  2.32%  2.56%  2.59%  2.43%   2.43%  2.60% 
Noninterest expense, adjusted to        
average assets, excluding PPP        
loans(2)		2.19%  2.32%  2.44%  2.47%  2.35%   2.31%  2.46% 
               
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.     


First Midwest Bancorp, Inc.     
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)		     
               
 As of or for the
 Quarters Ended  Nine Months Ended
 September 30, June 30, March 31, December 31, September 30,  September 30, September 30,
 2020 2020 2020 2019 2019  2020 2019
Efficiency Ratio Calculation             
Noninterest expense$131,074   $120,330   $117,331   $116,748   $108,395    $368,735   $324,647  
Less:              
Optimization costs(18,376)  —   —   —   —    (18,376)  —  
Acquisition and integration        
related expenses		(881)  (5,249)  (5,472)  (5,258)  (3,397)   (11,602)  (16,602) 
Net OREO expense(544)  (126)  (420)  (1,080)  (381)   (1,090)  (1,356) 
Delivering Excellence        
implementation costs		—   —   —   (223)  (234)   —   (934) 
Total$111,273   $114,955   $111,439   $110,187   $104,383    $337,667   $305,755  
Tax-equivalent net interest        
income(3)		$143,821   $146,389   $144,728   $149,711   $152,019    $434,938   $443,643  
Noninterest income40,585   32,991   39,362   46,496   42,951    112,938   116,383  
Less:              
Swap termination costs14,285   —   —   —   —    14,285   —  
Net securities (gains) losses(14,328)  —   1,005   —   —    (13,323)  —  
Total$184,363   $179,380   $185,095   $196,207   $194,970    $548,838   $560,026  
Efficiency ratio60.36%  64.08%  60.21%  56.16%  53.54%   61.52%  54.60% 
Pre-Tax, Pre-Provision Earnings             
Net Income$27,623   $19,064   $19,606   $52,121   $54,545    $66,293   $147,617  
Income tax expense8,690   6,182   6,468   16,392   18,300    21,340   49,809  
Provision for credit losses15,927   32,649   39,532   9,594   12,498    88,108   34,433  
Pre-Tax, Pre-Provision        
Earnings		$52,240   $57,895   $65,606   $78,107   $85,343    $175,741   $231,859  
Adjustments to pre-tax, pre-
provision earnings:		              
Optimization costs18,376   —   —   —   —    18,376   —  
Swap termination costs14,285   —   —   —   —    14,285   —  
Acquisition and integration        
related expenses		881   5,249   5,472   5,258   3,397    11,602   16,602  
Net securities (gains) losses(14,328)  —   1,005   —   —    (13,323)  —  
Delivering Excellence        
implementation costs		—   —   —   223   234    —   934  
Total adjustments19,214   5,249   6,477   5,481   3,631    30,940   17,536  
Pre-Tax, Pre-Provision        
Earnings, adjusted		$71,454   $63,144   $72,083   $83,588   $88,974    $206,681   $249,395  
               
Note: Non-GAAP Reconciliations footnotes are located at the end of this section.     


First Midwest Bancorp, Inc.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
          
 As of or for the
 Quarters Ended
 September 30, June 30, March 31, December 31, September 30,
 2020 2020 2020 2019 2019
Tangible Common Equity         
Stockholders' equity, common$2,433,671   $2,425,711   $2,435,707   $2,370,793   $2,339,599  
Less: goodwill and other intangible assets(935,801)  (940,182)  (935,241)  (875,262)  (876,219) 
Tangible common equity1,497,870   1,485,529   1,500,466   1,495,531   1,463,380  
Less: AOCI(25,749)  (28,727)  (35,323)  1,954   (6,738) 
Tangible common equity, excluding AOCI$1,472,121   $1,456,802   $1,465,143   $1,497,485   $1,456,642  
Total assets$21,088,143   $21,244,881   $19,753,300   $17,850,397   $18,013,454  
Less: goodwill and other intangible assets(935,801)  (940,182)  (935,241)  (875,262)  (876,219) 
Tangible assets$20,152,342   $20,304,699   $18,818,059   $16,975,135   $17,137,235  
Less: PPP loans(1,196,538)  (1,179,403)  —   —   —  
Tangible assets, excluding PPP loans$18,955,804   $19,125,296   $18,818,059   $16,975,135   $17,137,235  
Risk-weighted assets$15,216,075   $15,458,361   $15,573,684   $14,225,444   $14,294,011  
Tangible common equity to tangible assets7.43%  7.32%  7.97%  8.81%  8.54% 
Tangible common equity to tangible assets, excluding PPP loans7.90%  7.77%  7.97%  8.81%  8.54% 
Tangible common equity, excluding AOCI, to tangible assets7.30%  7.17%  7.79%  8.82%  8.50% 
Tangible common equity, excluding AOCI, to tangible assets,        
excluding PPP loans		7.77%  7.62%  7.79%  8.82%  8.50% 
Tangible common equity to risk-weighted assets9.84%  9.61%  9.63%  10.51%  10.24% 
          


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

 


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