First Midwest Bancorp, Inc. Announces 2021 Second Quarter Results – EPS Up 156% From a Year Ago

Chicago, Illinois, UNITED STATES


CHICAGO, July 20, 2021 (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 second quarter of 2021. Net income applicable to common shares for the second quarter of 2021 was $47 million, or $0.41 per diluted common share, compared to $41 million, or $0.36 per diluted common share, for the first quarter of 2021, and $18 million, or $0.16 per diluted common share, for the second quarter of 2020.

Comparative results for the second and first quarters of 2021 and the second quarter of 2020 were, in certain cases, impacted by the timing of costs related to acquisitions and branch consolidation. Such results were also impacted by the Company’s response to the COVID-19 pandemic (the "pandemic"), as well as governments' responses to the pandemic. To facilitate comparison between periods, adjustments to reported results have been made to reflect these impacts. For additional detail on these adjustments, see the "Non-GAAP Financial Information" section presented later in this release.

SELECT SECOND QUARTER HIGHLIGHTS

  • Improved diluted EPS to $0.41, up 14% and 156% from the first quarter of 2021 and second quarter of 2020, respectively.
  • Grew total loans to $15 billion, up 7% annualized from March 31, 2021 and 4% from June 30, 2020, excluding PPP.
  • Generated total revenue of $191 million, up 2% from the linked quarter and 7% over the prior year.
    • Net interest income totaled $144 million at a net margin of 2.96% compared to 3.03% and 3.13% last quarter and a year ago, respectively. Overall, average interest-earning assets increased 14% annualized and 5% from the same periods.
    • Noninterest income improved to $46 million, up 1% and 40% from the first quarter of 2021 and second quarter of 2020, respectively, with record wealth management fees and increases across all categories compared to last year.
  • Improved our efficiency ratio(1) to 59% compared to 62% for the first quarter of 2021 and 64% for the second quarter of 2020.
  • Established the allowance for credit losses ("ACL") at $223 million, or 1.56% of total loans, excluding PPP loans, compared to 1.73% at March 31, 2021 and 1.80% at June 30, 2020.
    • Incurred net loan charge-offs ("NCOs") of $16 million, compared to $8 million and $9 million in the first quarter of 2021 and second quarter of 2020, respectively, excluding purchased credit deteriorated ("PCD") loans, absorbing specific allowances for loan losses previously established.
    • Reduced non-performing assets by 14%, performing loans classified as substandard and special mention by 4%, and loans past due 30-89 days by 32% from the first quarter of 2021.
  • Increased Tier 1 capital to 11.7% of risk-weighted assets, up 4 bps linked quarter and 52 bps from a year ago.

"We are very pleased with our performance for the quarter," said Michael L. Scudder, Chairman of the Board and Chief Executive Officer of the Company. "Operating performance once again profited from increasing business momentum, sales production and tight control of our operating costs. The quarter was also aided by lower provisioning for loan losses reflective of both the strengthening economy and proactive credit remediation."

Mr. Scudder concluded, "We are very encouraged and excited about what lies ahead for our Company. Economic recovery will provide continuing opportunities for business growth across our footprint. At the same time, our announced business combination with Old National will see us become one of the Midwest’s largest commercial banks, leaving us in an even stronger position to invest, grow and innovate in talent, capabilities, and services – all of which will meaningfully accrue to the benefit of our clients, colleagues, communities and stockholders."

PENDING MERGER OF EQUALS

Old National Bancorp and First Midwest

On June 1, 2021, Old National Bancorp ("Old National"), the holding company for Old National Bank, and First Midwest, jointly announced they have entered into a definitive merger agreement to combine in an all-stock merger of equals transaction to create a premier Midwestern bank with $45 billion in combined assets. The merger agreement, which has been unanimously approved by the boards of directors of both companies, provides for a fixed exchange ratio whereby First Midwest stockholders will receive 1.1336 shares of Old National common stock for each share of First Midwest common stock they own. The new organization will operate under the Old National Bancorp and Old National Bank names, with dual headquarters in Evansville, Indiana and Chicago, Illinois. Upon completion of the transaction, Michael Scudder, Chairman and CEO of First Midwest, will serve as the Executive Chairman of the Board, and Jim Ryan, Chairman and CEO of Old National Bancorp, will maintain his role as CEO. As of the date of announcement, the overall transaction was valued at approximately $6.5 billion. The transaction is subject to customary regulatory and shareholder approvals and the completion of various closing conditions and is anticipated to close in late 2021 or early 2022.

(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
 June 30, 2021  March 31, 2021  June 30, 2020
 Average
Balance
 Interest Yield/
Rate
(%)
  Average
Balance
 Interest Yield/
Rate
(%)
  Average
Balance
 Interest Yield/
Rate
(%)
Assets                   
Other interest-earning assets        $1,185,187    $745    0.25    $760,302    $680    0.36    $646,887    $471    0.29  
Securities(1)        3,226,974    16,752    2.08    3,131,096    16,264    2.08    3,357,984    21,040    2.51  
Federal Home Loan Bank ("FHLB") and        
Federal Reserve Bank ("FRB") stock        
106,330    934    3.51    107,595    989    3.68    154,678    368    0.95  
Loans, excluding PPP loans(1)        14,095,989    125,264    3.56    13,993,303    125,308    3.63    13,729,250    135,952    3.98  
PPP loans(1)        1,035,386    11,258    4.36    1,014,798    8,892    3.55    887,997    5,368    2.43  
Total loans(1)        15,131,375    136,522    3.62    15,008,101    134,200    3.63    14,617,247    141,320    3.89  
Total interest-earning assets(1)        19,649,866    154,953    3.16    19,007,094    152,133    3.24    18,776,796    163,199    3.49  
Cash and due from banks        268,450         236,944         275,696       
Allowance for loan losses        (235,770)       (239,802)       (224,519)     
Other assets        1,850,663         1,914,804         2,040,133       
Total assets        $21,533,209         $20,919,040         $20,868,106       
Liabilities and Stockholders' Equity                   
Savings deposits        $2,740,893    121    0.02    $2,573,495    113    0.02    $2,246,643    99    0.02  
NOW accounts        3,048,990    261    0.03    2,802,568    251    0.04    2,549,088    637    0.10  
Money market deposits        3,055,420    559    0.07    3,008,597    634    0.09    2,663,622    1,157    0.17  
Time deposits        1,876,216    2,190    0.47    1,978,986    2,459    0.50    2,539,996    8,184    1.30  
Borrowed funds        1,288,107    3,112    0.97    1,329,394    3,107    0.95    2,466,300    3,156    0.51  
Senior and subordinated debt        235,080    3,469    5.92    234,873    3,471    5.99    234,259    3,577    6.14  
Total interest-bearing liabilities        12,244,706    9,712    0.32    11,927,913    10,035    0.34    12,699,908    16,810    0.53  
Demand deposits        6,254,791         5,917,978         5,305,109       
Total funding sources        18,499,497      0.21    17,845,891      0.23    18,005,017      0.38  
Other liabilities        347,178         389,396         361,311       
Stockholders' equity        2,686,534         2,683,753         2,501,778       
Total liabilities and        
stockholders' equity        
$21,533,209         $20,919,040         $20,868,106       
Tax-equivalent net interest         
income/margin(1)        
  145,241    2.96      142,098    3.03      146,389    3.13  
Tax-equivalent adjustment          (953)       (983)       (1,155)   
Net interest income (GAAP)(1)          $144,288         $141,115         $145,234     
Impact of acquired loan accretion(1)          $5,975    0.12      $7,165    0.15      $6,999    0.15  
Tax-equivalent net interest income/        
margin, adjusted(1)        
  $139,266    2.84      $134,933    2.88      $139,390    2.98  

(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 second quarter of 2021 was up 2.2% from the first quarter of 2021 and down 0.7% from the second quarter of 2020. The increase in net interest income compared to the first quarter of 2021 resulted primarily from higher fees on PPP loans and an increase in the number of days, partially offset by lower acquired loan accretion. Compared to the second quarter of 2020, net interest income was impacted by lower interest rates, partially offset by an increase in interest income and fees on PPP loans, lower cost of funds, and growth in loans.

Acquired loan accretion contributed $6.0 million, $7.2 million, and $7.0 million to net interest income for the second quarter of 2021, first quarter of 2021, and second quarter of 2020, respectively.

Tax-equivalent net interest margin for the current quarter was 2.96%, decreasing 7 and 17 basis points from the first quarter of 2021 and second quarter of 2020, respectively. Excluding the impact of acquired loan accretion, tax-equivalent net interest margin was 2.84%, down 4 and 14 basis points from the first quarter of 2021 and second quarter of 2020, respectively. Compared to the first quarter of 2021, tax-equivalent net interest margin decreased due primarily to a higher balance of other interest-earning assets from seasonal municipal deposits and higher demand deposits as a result of PPP loan funds and other government stimuli, partially offset by higher accelerated income on the forgiveness of PPP loans. Tax-equivalent net interest margin decreased compared to the second quarter of 2020 as a result of lower interest rates on loans and securities, 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 and PPP loan income.

For the second quarter of 2021, total average interest-earning assets rose by $642.8 million and $873.1 million from the first quarter of 2021 and second quarter of 2020, respectively. The increase compared to both prior periods resulted primarily from a higher balance of other interest-earning assets due to higher demand deposits as a result of PPP loan funds and other government stimuli, as well as loan growth. In addition, the rise in other interest-earning assets was impacted by the normal seasonal increase in municipal deposits compared to the first quarter of 2021.

Total average funding sources for the second quarter of 2021 increased by $653.6 million from the first quarter of 2021 and $494.5 million from second quarter of 2020. 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, partially offset by a decrease in FHLB advances. In addition, seasonal municipal deposits contributed to the increase compared to the first quarter of 2021.

Noninterest Income Analysis
(Dollar amounts in thousands)

  Quarters Ended June 30, 2021
Percent Change From
  June 30,
2021
 March 31, 
 2021
 June 30,
2020
 March 31, 
 2021
 June 30,
2020
Wealth management fees         $14,555   $14,149   $11,942   2.9    21.9  
Service charges on deposit accounts         10,778   9,980   9,125   8.0    18.1  
Mortgage banking income         6,749   10,187   3,477   (33.7)  94.1  
Card-based fees, net         4,764   4,556   3,180   4.6    49.8  
Capital market products income         1,954   2,089   694   (6.5)  181.6  
Other service charges, commissions, and fees         2,823   2,761   2,078   2.2    35.9  
Total fee-based revenues          41,623   43,722   30,496   (4.8)  36.5  
Other income          4,647   2,081   2,495   123.3    86.3  
Total noninterest income         $46,270   $45,803   $32,991   1.0    40.3  

Total noninterest income of $46.3 million was up 1.0% from the first quarter of 2021 and 40.3% from the second quarter of 2020. Record wealth management fees resulted from a higher market environment and continued sales of fiduciary and investment advisory services to new and existing customers compared to both prior periods. The increase in service charges on deposit accounts, net card-based fees, and other service charges, commissions and fees compared to the first quarter of 2021 was due primarily to seasonality, whereas the increase from the second quarter of 2020 resulted from the impact of higher transaction volumes due to economic recovery since the onset of the pandemic. Capital market products income resulted from levels of sales to corporate clients in light of market conditions that were higher than the second quarter of 2020.

Mortgage banking income for the second quarter of 2021 resulted from sales of $207.8 million of 1-4 family mortgage loans in the secondary market compared to a record $283.9 million in the first quarter of 2021 and $168.7 million in the second quarter of 2020. In addition, mortgage banking income in the first quarter of 2021 was impacted by an increase in the fair value of mortgage servicing rights.

Other income increased compared to both prior periods as a result of fair value adjustments on equity securities.

Noninterest Expense Analysis
(Dollar amounts in thousands)

  Quarters Ended June 30, 2021
Percent Change From
  June 30,
2021
 March 31, 
 2021
 June 30,
2020
 March 31, 
 2021
 June 30,
2020
Salaries and employee benefits:          
Salaries and wages          $51,887    $53,693    $52,592    (3.4)  (1.3) 
Retirement and other employee benefits         12,324    12,708    11,080    (3.0)  11.2   
Total salaries and employee benefits         64,211    66,401    63,672    (3.3)  0.8   
Net occupancy and equipment expense         13,654    14,752    15,116    (7.4)  (9.7) 
Technology and related costs         10,453    10,284    9,853    1.6    6.1   
Professional services         7,568    8,059    8,880    (6.1)  (14.8) 
Advertising and promotions          2,899    1,835    2,810    58.0    3.2   
Net other real estate owned ("OREO") expense         160    589    126    (72.8)  27.0   
Other expenses         14,670    14,735    14,624    (0.4)  0.3   
Acquisition and integration related expenses         7,773    245    5,249    3,072.7    48.1   
Optimization costs         31    1,525    —    (98.0)  N/M  
Total noninterest expense         $121,419    $118,425    $120,330    2.5    0.9   
Acquisition and integration related expenses (7,773)  (245)  (5,249)  3,072.7    48.1   
Optimization costs         (31)  (1,525)  —    (98.0)  N/M  
Total noninterest expense, adjusted(1)         $113,615    $116,655    $115,081    (2.6)  (1.3) 

N/M – Not meaningful.
(1) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.

Total noninterest expense was up 2.5% from the first quarter of 2021 and up 0.9% from the second quarter of 2020. Noninterest expense for all periods presented was impacted by acquisition and integration related expenses. In addition, the second and first quarters of 2021 were impacted by optimization costs. Excluding these items, noninterest expense for the second quarter of 2021 was $113.6 million, down 2.6% from the first quarter of 2021 and 1.3% from the second quarter of 2020. Overall, noninterest expense, adjusted, to average assets, excluding PPP loans, was 2.22% for the second quarter of 2021, down 16 basis points and 10 basis points from the first quarter of 2021 and second quarter of 2020, respectively.

Salaries and employee benefits decreased compared to the first quarter of 2021 driven primarily by lower equity compensation valuations and payroll tax timing, partially offset by the distribution of higher pension plan lump-sum payments to retired employees. Compared to the second quarter of 2020, salaries and employee benefits increased due mainly to higher compensation accruals and pension plan lump-sum payments to retired employees, as well as merit increases, partially offset by ongoing benefits of optimization strategies. Net occupancy and equipment expense in the first quarter of 2021 was impacted by higher costs related to winter weather conditions. Compared to the second quarter of 2020, net occupancy and equipment expenses decreased due to ongoing benefits of optimization strategies and lower levels of expense associated with the pandemic. Professional services expenses were elevated for the second quarter of 2020 due to pandemic related expenses. Advertising and promotions expense increased compared to the first quarter of 2021 due to the timing of certain costs related to marketing campaigns.

Optimization costs primarily include advisory fees, employee severance, and other expenses associated with locations identified for closure.

Acquisition and integration related expenses for the second quarter of 2021 resulted from the pending merger with Old National and for the first quarter of 2021 and second quarter of 2020 resulted from the acquisition of Park Bank.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio Composition
(Dollar amounts in thousands)

  As of June 30, 2021
Percent Change From
  June 30, 
 2021
 March 31, 
 2021
 June 30, 
 2020
 March 31, 
 2021
 June 30, 
 2020
Commercial and industrial         $4,608,148   $4,546,317   $4,789,556   1.4    (3.8) 
Agricultural         342,834   355,883   381,124   (3.7)  (10.0) 
Commercial real estate:          
Office, retail, and industrial         1,807,428   1,827,116   2,020,318   (1.1)  (10.5) 
Multi-family         1,012,722   906,124   874,861   11.8    15.8   
Construction         577,338   614,021   687,063   (6.0)  (16.0) 
Other commercial real estate         1,461,370   1,463,582   1,475,937   (0.2)  (1.0) 
Total commercial real estate         4,858,858   4,810,843   5,058,179   1.0    (3.9) 
Total corporate loans, excluding PPP        
loans        
 9,809,840   9,713,043   10,228,859   1.0    (4.1) 
PPP loans         705,915   1,109,442   1,179,403   (36.4)  (40.1) 
Total corporate loans         10,515,755   10,822,485   11,408,262   (2.8)  (7.8) 
Home equity         629,367   690,030   892,867   (8.8)  (29.5) 
1-4 family mortgages         3,287,773   3,187,066   2,175,322   3.2    51.1   
Installment         602,324   483,945   457,207   24.5    31.7   
Total consumer loans         4,519,464   4,361,041   3,525,396   3.6    28.2   
Total loans         $15,035,219   $15,183,526   $14,933,658   (1.0)  0.7   
           

Total loans includes loans originated under the PPP loan programs beginning in the second quarter of 2020, which totaled $705.9 million, $1.1 billion, and $1.2 billion as of June 30, 2021, March 31, 2021, and June 30, 2020, respectively. Excluding these loans, total loans were up 7% annualized from March 31, 2021 and 4% from June 30, 2020. Strong production and line usage within our middle market and sector-based lending businesses drove the 4.0% annualized total corporate loan growth, excluding PPP loans compared to the first quarter of 2021. Compared to the second quarter of 2020, corporate loans, excluding PPP loans, decreased 4.1%, reflective of the pandemics impact on economic conditions resulting in higher paydowns, as well as lower production and line usage.

Growth in consumer loans compared to both prior periods resulted primarily from purchases of 1-4 family mortgages and installment loans, as well as strong production in the 1-4 family mortgages portfolio, which more than offset higher prepayments.

Allowance for Credit Losses
(Dollar amounts in thousands)

  As of or for the Quarters Ended June 30, 2021
Percent Change From
  June 30,
2021
 March 31, 
 2021
 June 30,
2020
 March 31, 
 2021
 June 30,
2020
ACL, excluding PCD loans         $200,640   $215,305   $203,243   (6.8)  (1.3) 
PCD loan ACL         22,586   28,079   44,434   (19.6)  (49.2) 
Total ACL         $223,226   $243,384   $247,677   (8.3)  (9.9) 
Provision for credit losses         $—   $6,098   $32,649   (100.0)  (100.0) 
ACL to total loans         1.48 % 1.60 % 1.66 %    
ACL to total loans, excluding PPP loans(1)         1.56 % 1.73 % 1.80 %    
ACL to non-accrual loans         179.32 % 153.67 % 177.98 %    

(1) This ratio excludes PPP loans that are fully guaranteed by the Small Business Administration ("SBA"). 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 ACL was $223.2 million or 1.48% of total loans as of June 30, 2021, decreasing $20.2 million from March 31, 2021 and $24.5 million compared to June 30, 2020. Excluding the impact of PPP loans, ACL to total loans was 1.56% as of June 30, 2021, compared to 1.73% and 1.80% as of March 31, 2021 and June 30, 2020, respectively. The decrease from both prior periods reflects net charge-offs on PCD loans that previously had an ACL established upon acquisition, net charge-offs on loans that previously had specific allowance for loan losses established, and an improving credit environment.

Asset Quality
(Dollar amounts in thousands)

  As of June 30, 2021
Percent Change From
  June 30,
2021
 March 31, 
 2021
 June 30,
2020
 March 31, 
 2021
 June 30,
2020
Non-accrual loans, excluding PCD loans(1)         $101,381   $128,650   $94,044   (21.2)  7.8   
Non-accrual PCD loans         23,101   29,734   45,116   (22.3)  (48.8) 
Total non-accrual loans         124,482   158,384   139,160   (21.4)  (10.5) 
90 days or more past due loans, still accruing        
interest(1)        
 878   5,354   3,241   (83.6)  (72.9) 
Total non-performing loans, ("NPLs")         125,360   163,738   142,401   (23.4)  (12.0) 
Accruing troubled debt restructurings        
("TDRs")        
 782   798   1,201   (2.0)  (34.9) 
Foreclosed assets(2)         26,732   13,228   19,024   102.1    40.5   
Total non-performing assets ("NPAs")         $152,874   $177,764   $162,626   (14.0)  (6.0) 
30-89 days past due loans         $21,051   $30,973   $36,342   (32.0)  (42.1) 
Special mention loans(3)         $343,547   $355,563   $256,373   (3.4)  34.0   
Substandard loans(3)         325,727   342,600   193,337   (4.9)  68.5   
Total performing loans classified as        
substandard and special mention(3)        
 $669,274   $698,163   $449,710   (4.1)  48.8   
Non-accrual loans to total loans:          
Non-accrual loans to total loans         0.83 % 1.04 % 0.93 %    
Non-accrual loans to total loans, excluding        
PPP loans(1)(4)        
 0.87 % 1.13 % 1.01 %    
Non-accrual loans to total loans, excluding        
PCD and PPP loans(1)(4)        
 0.72 % 0.93 % 0.70 %    
Non-performing loans to total loans:          
NPLs to total loans         0.83 % 1.08 % 0.95 %    
NPLs to total loans, excluding PPP loans(1)(4)         0.87 % 1.16 % 1.04 %    
NPLs to total loans, excluding PCD and PPP         
loans(1)(4)        
 0.72 % 0.97 % 0.72 %    
Non-performing assets to total loans plus foreclosed assets:        
NPAs to total loans plus foreclosed assets         1.01 % 1.17 % 1.09 %    
NPAs to total loans plus foreclosed assets,         
excluding PPP loans(1)(4)        
 1.06 % 1.26 % 1.18 %    
NPAs to total loans plus foreclosed assets,         
excluding PCD and PPP loans(1)(4)        
 0.92 % 1.07 % 0.87 %    
Performing loans classified as substandard and special mention to corporate loans:   
Performing loans classified as substandard and        
special mention to corporate loans(3)        
 6.36 % 6.45 % 3.94 %    
Performing loans classified as substandard and        
special mention to corporate loans, excluding        
PPP loans(3)        
 6.82 % 7.19 % 4.40 %    

(1) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
(2) 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.
(3) Performing loans classified as substandard and special mention excludes accruing TDRs.
(4) This ratio excludes PPP loans that are fully guaranteed by the SBA. As a result, no allowance for credit losses is associated with these loans.

NPAs represented 1.01% of total loans and foreclosed assets at June 30, 2021 compared to 1.17% and 1.09% at March 31, 2021 and June 30, 2020, respectively. Excluding the impact of PCD and PPP loans, NPAs to total loans plus foreclosed assets was 0.92% at June 30, 2021, compared to 1.07% at March 31, 2021 and 0.87% at June 30, 2020, reflective of the final resolution of certain corporate credits and normal fluctuations that occur on a quarterly basis. In addition, one corporate loan relationship was transferred from non-accrual loans to foreclosed assets during the second quarter of 2021.

Performing loans classified as substandard and special mention were $669 million for the second quarter of 2021 compared to $698 million and $450 million at March 31, 2021 and June 30, 2020, respectively. The decrease from the first quarter of 2021 was due primarily to the payoff of certain corporate credits in addition to upgrade and downgrade activity. The increase from the second quarter of 2020, is 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
  June 30,
2021
 % of
Total
 March 31, 
 2021
 % of
Total
 June 30,
2020
 % of
Total
Net loan charge-offs(1)            
Commercial and industrial         $14,733    71.0   $1,740    17.8    $4,735    36.6  
Agricultural         —    —   363    3.7    118    0.9  
Commercial real estate:            
Office, retail, and industrial         3,878    18.7   4,377    44.9    3,086    23.9  
Multi-family            —   (5)  (0.1)     0.1  
Construction         208    1.0   —    —    798    6.2  
Other commercial real estate         459    2.2   371    3.9    19    0.1  
Consumer         1,478    7.1   2,910    29.8    4,158    32.2  
Total NCOs         $20,758    100.0   $9,756    100.0    $12,923    100.0  
Less: NCOs on PCD loans(2)         (4,337)  20.9   (2,107)  21.6    (3,833)  29.7  
Total NCOs, excluding PCD loans(2)         $16,421      $7,649      $9,090     
Recoveries included above         $2,869      $1,561      $1,311     
Quarter-to-date(1)(3):            
Net loan charge-offs to average loans         0.55  %   0.26  %   0.36  %  
Net loan charge-offs to average loans,        
excluding PPP loans(2)(4)        
 0.59  %   0.28  %   0.38  %  
Net loan charge-offs to average loans,        
excluding PCD and PPP loans(2)(4)        
 0.47  %   0.22  %   0.27  %  
Year-to-date(1)(3):            
Net loan charge-offs to average loans         0.41  %   0.26  %   0.38  %  
Net loan charge-offs to average loans,        
excluding PPP loans(2)(4)        
 0.44  %   0.28  %   0.38  %  
Net loan charge-offs to average loans,        
excluding PCD and PPP loans(2)(4)        
 0.35  %   0.22  %   0.30  %  

(1) Amounts represent charge-offs, net of recoveries.
(2) See the "Non-GAAP Financial Information" section presented later in this release for a discussion of this non-GAAP financial measure.
(3) Annualized based on the actual number of days for each period presented.
(4) This ratio excludes PPP loans that are fully guaranteed by the SBA. As a result, no allowance for credit losses is associated with these loans.

NCOs to average loans, annualized was 0.55%, up from 0.26% and 0.36% for the first quarter of 2021 and second quarter of 2020, respectively. Excluding charge-offs on PCD loans and the impact of PPP loans, NCOs to average loans was 0.47% for the second quarter of 2021, compared to 0.22% and 0.27% for the first quarter of 2021 and second quarter of 2020, respectively. The increase in net loan charge-offs compared to both prior periods resulted largely from expected losses for which specific allowance for loan losses were established on certain corporate relationships based upon circumstances unique to these borrowers.

DEPOSIT PORTFOLIO

Deposit Composition
(Dollar amounts in thousands)

  Average for the Quarters Ended June 30, 2021
Percent Change From
  June 30,
2021
 March 31, 
 2021
 June 30,
2020
 March 31, 
 2021
 June 30,
2020
Demand deposits         $6,254,791   $5,917,978   $5,305,109   5.7    17.9   
Savings deposits         2,740,893   2,573,495   2,246,643   6.5    22.0   
NOW accounts         3,048,990   2,802,568   2,549,088   8.8    19.6   
Money market accounts         3,055,420   3,008,597   2,663,622   1.6    14.7   
Core deposits         15,100,094   14,302,638   12,764,462   5.6    18.3   
Time deposits         1,876,216   1,978,986   2,539,996   (5.2)  (26.1) 
Total deposits         $16,976,310   $16,281,624   $15,304,458   4.3    10.9   

Total average deposits were $17.0 billion for the second quarter of 2021, up 4.3% from the first quarter of 2021 and 10.9% from the second quarter of 2020. The increase in total average deposits compared to both prior periods 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 first quarter of 2021 was impacted by the normal seasonal increase in municipal deposits.

CAPITAL MANAGEMENT

Capital Ratios

  As of
  June 30,
2021
 March 31, 
 2021
 December 31,
2020
 June 30,
2020
Company regulatory capital ratios:        
Total capital to risk-weighted assets         14.19% 14.26% 14.14% 13.70%
Tier 1 capital to risk-weighted assets         11.71% 11.67% 11.55% 11.19%
Common equity Tier 1 ("CET1") to risk-weighted assets         10.23% 10.17% 10.06% 9.70%
Tier 1 capital to average assets         8.85% 8.96% 8.91% 8.70%
Company tangible common equity ratios(1)(2):      
Tangible common equity to tangible assets         7.48% 7.37% 7.67% 7.32%
Tangible common equity to tangible assets, excluding PPP loans         7.74% 7.79% 7.98% 7.77%
Tangible common equity, excluding accumulated other comprehensive        
income ("AOCI"), to tangible assets        
 7.50% 7.48% 7.54% 7.17%
Tangible common equity, excluding AOCI, to tangible assets,        
excluding PPP loans        
 7.77% 7.91% 7.85% 7.62%
Tangible common equity to risk-weighted assets         9.92% 9.73% 9.93% 9.61%

(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.

Risk-weighted regulatory capital ratios compared to all prior periods were impacted by retained earnings and the mix of risk-weighted assets. The Company elected the five-year current expected credit losses ("CECL") transition relief for regulatory capital, which retained approximately 30 basis points of CET1 and Tier 1 capital at June 30, 2021.

During the first quarter of 2021, the Company announced that it would restart repurchases of its outstanding shares of common stock under its stock repurchase program after suspending repurchases in March 2020 as it shifted its capital deployment strategy in response to the COVID-19 pandemic. The Company did not repurchase any shares of its common stock during the second quarter of 2021 and repurchased approximately 715,000 shares of its common stock at a total cost of $14.9 million during the first quarter of 2021.

The Board of Directors approved a quarterly cash dividend of $0.14 per common share during the second quarter of 2021, which is consistent with the first quarter of 2021 and second quarter of 2020. This dividend represents the 154th 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 Tuesday, July 20, 2021 at 10 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. 10158514 beginning one hour after completion of the live call until 8:00 A.M. (ET) on October 19 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 communication may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and future performance of First Midwest. 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," "forecast,"   "predict," "project," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Because forward-looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict.   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 the performance of First Midwest's loan or securities portfolio, the expected amount of future credit allowances or charge-offs, delays in completing the pending merger of First Midwest and Old National, the failure to obtain necessary regulatory approvals and shareholder approvals or to satisfy any of the other conditions to the merger on a timely basis or at all, the possibility that the anticipated benefits of the merger are not realized when expected or at all, corporate strategies or objectives, including the impact of certain actions and initiatives, anticipated trends in First Midwest's business, regulatory developments, estimated synergies, cost savings and financial benefits of completed transactions, growth strategies, the inability to realize cost savings or improved revenues or to implement integration plans and other consequences associated with the proposed merger and the continued or potential effects of the COVID-19 pandemic and related variants and mutations on First Midwest's 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 COVID-19 pandemic and related variants and mutations, including the continued effects on First Midwest's business, operations and employees, as well as on First Midwest's 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, 2020, 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.

Additional Information and Where to Find It

In connection with the proposed transaction, Old National filed a registration statement on Form S‑4 with the SEC on June 30, 2021. The registration statement includes a joint proxy statement/prospectus of First Midwest and Old National. The registration statement has not yet become effective. After the Form S-4 is effective, a definitive joint proxy statement/prospectus will be sent to First Midwest's and Old National's shareholders seeking certain approvals related to the proposed transaction.

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. INVESTORS AND SECURITY HOLDERS OF FIRST MIDWEST AND OLD NATIONAL AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ, WHEN AVAILABLE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FIRST MIDWEST, OLD NATIONAL AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed with the SEC containing information about First Midwest and Old National, without charge, at the SEC's website (http://www.sec.gov). Copies of documents filed with the SEC by First Midwest will be made available free of charge in the "Investor Relations" section of First Midwest's website, https://firstmidwest.com/, under the heading "SEC Filings." Copies of documents filed with the SEC by Old National will be made available free of charge in the "Investor Relations" section of Old National's website, https://www.oldnational.com/, under the heading "Financial Information."

Participants in Solicitation

First Midwest, Old National, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding First Midwest's directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 13, 2021, and certain other documents filed by First Midwest with the SEC. Information regarding Old National"s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 8, 2021, and certain other documents filed by Old National with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

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, 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, performing loans classified as substandard and special mention to corporate loans, excluding 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 (first quarter 2021 and fourth and third quarter of 2020), acquisition and integration related expenses associated with completed and pending acquisitions (all periods), swap termination costs (fourth and third quarters of 2020), income tax benefits (fourth quarter of 2020), and net securities gains (losses) (third quarter of 2020 and first six months of 2021). In addition, net OREO expense is excluded from the calculation of the efficiency ratio. 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 and acquisition and integration related expenses. 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, non-accrual loans to total loans, NPLs to total loans, NPAs to total loans plus foreclosed assets, performing loans classified as substandard and special mention to corporate loans, excluding PPP loans, 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 fully guaranteed by the SBA and are expected to be forgiven 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 $22 billion of assets and an additional $15 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. The primary footprint of First Midwest's branch network and other locations is in metropolitan Chicago, southeast Wisconsin, northwest Indiana, central and western Illinois, and eastern Iowa. 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
 June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
Period-End Balance Sheet         
Assets         
Cash and due from banks        $232,989   $223,713   $196,364   $254,212   $304,445  
Interest-bearing deposits in other banks        1,312,412   786,814   920,880   936,528   637,856  
Equity securities, at fair value        112,977   96,983   76,404   55,021   43,954  
Securities available-for-sale, at fair value        3,156,194   3,195,405   3,096,408   3,279,884   3,435,862  
Securities held-to-maturity, at amortized cost        11,593   11,711   12,071   22,193   19,628  
FHLB and FRB stock        106,890   106,170   117,420   138,120   148,512  
Loans:         
Commercial and industrial        4,608,148   4,546,317   4,578,254   4,635,571   4,789,556  
Agricultural        342,834   355,883   364,038   377,466   381,124  
Commercial real estate:         
Office, retail, and industrial        1,807,428   1,827,116   1,861,768   1,950,406   2,020,318  
Multi-family        1,012,722   906,124   872,813   868,293   874,861  
Construction        577,338   614,021   612,611   631,607   687,063  
Other commercial real estate        1,461,370   1,463,582   1,481,976   1,452,994   1,475,937  
PPP loans        705,915   1,109,442   785,563   1,196,538   1,179,403  
Home equity        629,367   690,030   761,725   827,746   892,867  
1-4 family mortgages        3,287,773   3,187,066   3,022,413   2,287,555   2,175,322  
Installment        602,324   483,945   410,071   425,012   457,207  
Total loans        15,035,219   15,183,526   14,751,232   14,653,188   14,933,658  
Allowance for loan losses        (214,601)  (235,359)  (239,017)  (239,048)  (240,052) 
Net loans        14,820,618   14,948,167   14,512,215   14,414,140   14,693,606  
OREO        5,289   6,273   8,253   6,552   9,947  
Premises, furniture, and equipment, net        125,837   129,514   132,045   132,267   143,001  
Investment in bank-owned life insurance ("BOLI")        300,537   301,365   301,101   300,429   299,649  
Goodwill and other intangible assets        926,176   928,974   932,764   935,801   940,182  
Accrued interest receivable and other assets         513,912   473,502   532,753   612,996   568,239  
Total assets        $21,625,424   $21,208,591   $20,838,678   $21,088,143   $21,244,881  
Liabilities and Stockholders' Equity         
Noninterest-bearing deposits        $6,187,478   $6,156,145   $5,797,899   $5,555,735   $5,602,016  
Interest-bearing deposits        10,845,405   10,455,309   10,214,565   10,215,838   10,055,640  
Total deposits        17,032,883   16,611,454   16,012,464   15,771,573   15,657,656  
Borrowed funds        1,299,424   1,295,737   1,546,414   1,957,180   2,305,195  
Senior and subordinated debt        235,178   234,973   234,768   234,563   234,358  
Accrued interest payable and other liabilities        353,791   413,112   355,026   460,656   391,461  
Stockholders' equity        2,704,148   2,653,315   2,690,006   2,664,171   2,656,211  
Total liabilities and stockholders' equity        $21,625,424   $21,208,591   $20,838,678   $21,088,143   $21,244,881  
Stockholders' equity, excluding AOCI        $2,710,089   $2,675,411   $2,663,627   $2,638,422   $2,627,484  
Stockholders' equity, common        2,473,648   2,422,815   2,459,506   2,433,671   2,425,711  


First Midwest Bancorp, Inc.       
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
     
               
 Quarters Ended  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
Income Statement              
Interest income        $154,000   $151,150   $159,962   $159,085   $162,044    $305,150   $332,271  
Interest expense        9,712   10,035   11,851   16,356   16,810    19,747   43,462  
Net interest income        144,288   141,115   148,111   142,729   145,234    285,403   288,809  
Provision for loan losses           6,098   10,507   15,927   32,649    6,098   72,181  
Net interest income after        
provision for loan losses         
144,288   135,017   137,604   126,802   112,585    279,305   216,628  
Noninterest Income              
Wealth management fees        14,555   14,149   13,548   12,837   11,942    28,704   24,303  
Service charges on deposit        
accounts        
10,778   9,980   10,811   10,342   9,125    20,758   20,906  
Mortgage banking income        6,749   10,187   9,191   6,659   3,477    16,936   5,265  
Card-based fees, net        4,764   4,556   4,530   4,472   3,180    9,320   7,148  
Capital market products        
income        
1,954   2,089   659   886   694    4,043   5,416  
Other service charges,        
commissions, and fees        
2,823   2,761   2,993   2,823   2,078    5,584   4,760  
Total fee-based revenues         41,623   43,722   41,732   38,019   30,496    85,345   67,798  
Other income        4,647   2,081   3,550   2,523   2,495    6,728   5,560  
Swap termination costs              (17,567)  (14,285)           
Net securities gains (losses)                 14,328          (1,005) 
Total noninterest        
income        
46,270   45,803   27,715   40,585   32,991    92,073   72,353  
Noninterest Expense              
Salaries and employee benefits:             
Salaries and wages         51,887   53,693   55,950   53,385   52,592    105,580   102,582  
Retirement and other        
employee benefits        
12,324   12,708   10,430   11,349   11,080    25,032   23,949  
Total salaries and        
employee benefits        
64,211   66,401   66,380   64,734   63,672    130,612   126,531  
Net occupancy and        
equipment expense        
13,654   14,752   14,002   13,736   15,116    28,406   29,343  
Technology and related costs        10,453   10,284   11,005   10,416   9,853    20,737   18,401  
Professional services        7,568   8,059   8,424   7,325   8,880    15,627   19,270  
Advertising and promotions        2,899   1,835   1,850   2,688   2,810    4,734   5,571  
Net OREO expense        160   589   106   544   126    749   546  
Other expenses        14,670   14,735   12,851   12,374   14,624    29,405   27,278  
Acquisition and integration        
related expenses        
7,773   245   1,860   881   5,249    8,018   10,721  
Optimization costs        31   1,525   1,493   18,376       1,556     
Total noninterest expense        121,419   118,425   117,971   131,074   120,330    239,844   237,661  
Income before income tax        
expense         
69,139   62,395   47,348   36,313   25,246    131,534   51,320  
Income tax expense        18,018   17,372   5,743   8,690   6,182    35,390   12,650  
Net income        $51,121   $45,023   $41,605   $27,623   $19,064    $96,144   $38,670  
Preferred dividends        (4,034)  (4,034)  (4,049)  (4,033)  (1,037)   (8,068)  (1,037) 
Net income applicable to        
non-vested restricted shares        
(521)  (486)  (369)  (236)  (187)   (1,007)  (379) 
Net income applicable        
to common shares        
$46,566   $40,503   $37,187   $23,354   $17,840    $87,069   $37,254  
Net income applicable to        
   common shares, adjusted(1)        
52,419   41,831   49,238   37,765   21,777    94,250   46,049  

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  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
EPS              
Basic EPS        $0.41  $0.36  $0.33  $0.21  $0.16   $0.77  $0.33 
Diluted EPS        $0.41  $0.36  $0.33  $0.21  $0.16   $0.77  $0.33 
Diluted EPS, adjusted(1)        $0.46  $0.37  $0.43  $0.33  $0.19   $0.83  $0.41 
Common Stock and Related Per Common Share Data     
Book value        $21.67  $21.22  $21.52  $21.29  $21.23   $21.67  $21.23 
Tangible book value        $13.55  $13.08  $13.36  $13.11  $13.00   $13.55  $13.00 
Dividends declared per share        $0.14  $0.14  $0.14  $0.14  $0.14   $0.28  $0.28 
Closing price at period end        $19.83  $21.91  $15.92  $10.78  $13.35   $19.83  $13.35 
Closing price to book value        0.9  1.0  0.7  0.5  0.6   0.9  0.6 
Period end shares outstanding        114,177  114,196  114,296  114,293  114,276   114,177  114,276 
Period end treasury shares        11,199  11,176  11,071  11,067  11,079   11,199  11,079 
Common dividends        $15,979  $15,997  $16,017  $16,011  $16,015   $31,976  $32,017 
Dividend payout ratio        34.15% 38.89% 42.42% 66.67% 87.50%  36.36% 84.85%
Dividend payout ratio, adjusted(1)        30.43% 37.84% 32.56% 42.42% 73.68%  33.73% 68.29%
Key Ratios/Data              
Return on average common        
   equity(2)        
7.60% 6.70% 6.05% 3.80% 2.94%  7.15% 3.08%
Return on average common        
   equity, adjusted(1)(2)        
8.56% 6.92% 8.01% 6.15% 3.58%  7.74% 3.81%
Return on average tangible        
   common equity(2)        
12.77% 11.35% 10.35% 6.73% 5.32%  12.07% 5.49%
Return on average tangible        
   common equity, adjusted(1)(2)        
14.31% 11.71% 13.53% 10.53% 6.37%  13.02% 6.65%
Return on average assets(2)        0.95% 0.87% 0.79% 0.51% 0.37%  0.91% 0.40%
Return on average assets,        
   adjusted(1)(2)        
1.06% 0.90% 1.02% 0.78% 0.44%  0.98% 0.49%
Loans to deposits        88.27% 91.40% 92.12% 92.91% 95.38%  88.27% 95.38%
Efficiency ratio(1)        59.24% 61.77% 58.90% 60.36% 64.08%  60.49% 62.12%
Net interest margin(2)(3)        2.96% 3.03% 3.14% 2.95% 3.13%  2.99% 3.32%
Yield on average interest-earning        
   assets(2)(3)        
3.16% 3.24% 3.39% 3.28% 3.49%  3.20% 3.82%
Cost of funds(2)(4)        0.21% 0.23% 0.26% 0.35% 0.38%  0.22% 0.52%
Noninterest expense to average        
   assets(2)        
2.26% 2.30% 2.25% 2.42% 2.32%  2.28% 2.43%
Noninterest expense, adjusted to        
   average assets,excluding PPP        
   loans(1)(2)        
2.22% 2.38% 2.29% 2.19% 2.32%  2.30% 2.38%
Effective income tax rate        26.06% 27.84% 12.13% 23.93% 24.49%  26.91% 24.65%
Capital Ratios              
Total capital to risk-weighted        
   assets(1)        
14.19% 14.26% 14.14% 14.06% 13.70%  14.19% 13.70%
Tier 1 capital to risk-weighted        
   assets(1)        
11.71% 11.67% 11.55% 11.48% 11.19%  11.71% 11.19%
CET1 to risk-weighted assets(1)        10.23% 10.17% 10.06% 9.97% 9.70%  10.23% 9.70%
Tier 1 capital to average assets(1)        8.85% 8.96% 8.91% 8.50% 8.70%  8.85% 8.70%
Tangible common equity to        
   tangible assets(1)        
7.48% 7.37% 7.67% 7.43% 7.32%  7.48% 7.32%
Tangible common equity,        
   excluding AOCI, to tangible        
   assets(1)        
7.50% 7.48% 7.54% 7.30% 7.17%  7.50% 7.17%
Tangible common equity to risk-        
   weighted assets(1)        
9.92% 9.73% 9.93% 9.84% 9.61%  9.92% 9.61%
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  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
Asset Quality Performance Data             
Non-performing assets               
Commercial and industrial        $42,036   $59,723   $38,314   $40,781   $19,475    $42,036   $19,475  
Agricultural        7,135   8,684   10,719   13,293   8,494    7,135   8,494  
Commercial real estate:              
Office, retail, and industrial        17,367   23,339   27,382   26,406   26,342    17,367   26,342  
Multi-family        2,622   3,701   1,670   1,547   2,132    2,622   2,132  
Construction        1,154   1,154   1,155   2,977   18,640    1,154   18,640  
Other commercial real estate        14,200   15,406   15,219   4,690   5,304    14,200   5,304  
Consumer        16,867   16,643   15,498   13,888   13,657    16,867   13,657  
Non-accrual, excluding PCD        
loans        
101,381   128,650   109,957   103,582   94,044    101,381   94,044  
Non-accrual PCD loans        23,101   29,734   32,568   39,990   45,116    23,101   45,116  
Total non-accrual loans        124,482   158,384   142,525   143,572   139,160    124,482   139,160  
90 days or more past due loans,        
still accruing interest        
878   5,354   4,395   3,781   3,241    878   3,241  
Total NPLs        125,360   163,738   146,920   147,353   142,401    125,360   142,401  
Accruing TDRs        782   798   813   841   1,201    782   1,201  
Foreclosed assets(5)        26,732   13,228   16,671   15,299   19,024    26,732   19,024  
Total NPAs        $152,874   $177,764   $164,404   $163,493   $162,626    $152,874   $162,626  
30-89 days past due loans         $21,051   $30,973   $40,656   $21,551   $36,342    $21,051   $36,342  
Allowance for credit losses              
Allowance for loan losses        $214,601   $235,359   $239,017   $239,048   $240,052    $214,601   $240,052  
Allowance for unfunded        
commitments        
8,625   8,025   8,025   7,825   7,625    8,625   7,625  
Total ACL        $223,226   $243,384   $247,042   $246,873   $247,677    $223,226   $247,677  
Provision for loan losses        $   $6,098   $10,507   $15,927   $32,649    $6,098   $72,181  
Net charge-offs by category              
Commercial and industrial        $14,733   $1,740   $3,536   $5,470   $4,735    $16,473   $9,415  
Agricultural           363   1,779   265   118    363   1,345  
Commercial real estate:              
Office, retail, and industrial        3,878   4,377   1,701   1,339   3,086    8,255   3,415  
Multi-family        2   (5)  19      9    (3)  14  
Construction        208      140   4,889   798    208   2,606  
Other commercial real estate        459   371   916   1,753   19    830   183  
Consumer        1,478   2,910   2,448   2,027   4,158    4,388   8,059  
Total NCOs        $20,758   $9,756   $10,539   $15,743   $12,923    $30,514   $25,037  
Less: NCOs on PCD loans        (4,337)  (2,107)  (6,488)  (6,923)  (3,833)   (6,444)  (5,553) 
Total NCOs, excluding        
PCD loans        
$16,421   $7,649   $4,051   $8,820   $9,090    $24,070   $19,484  
Total recoveries included above        $2,869   $1,561   $2,588   $1,795   $1,311    $4,430   $3,127  
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  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
Performing loans classified as substandard and special mention           
Special mention loans(7)        $343,547  $355,563  $409,083  $395,295  $256,373   $343,547  $256,373 
Substandard loans(7)        325,727  342,600  357,219  311,430  193,337   325,727  193,337 
Total performing loans        
   classified as substandard and        
special mention(7)        
$669,274  $698,163  $766,302  $706,725  $449,710   $669,274  $449,710 
Asset quality ratios               
Non-accrual loans to total loans        0.83% 1.04% 0.97% 0.98% 0.93%  0.83% 0.93%
Non-accrual loans to total loans,        
   excluding PPP loans(6)        
0.87% 1.13% 1.02% 1.07% 1.01%  0.87% 1.01%
Non-accrual loans to total loans,        
   excluding PCD and PPP loans(6)        
0.72% 0.93% 0.80% 0.78% 0.70%  0.72% 0.70%
NPLs to total loans        0.83% 1.08% 1.00% 1.01% 0.95%  0.83% 0.95%
NPLs to total loans, excluding        
   PPP loans(6)        
0.87% 1.16% 1.05% 1.10% 1.04%  0.87% 1.04%
NPLs to total loans, excluding        
   PCD and PPP loans(6)        
0.72% 0.97% 0.83% 0.81% 0.72%  0.72% 0.72%
NPAs to total loans plus        
foreclosed assets        
1.01% 1.17% 1.11% 1.11% 1.09%  1.01% 1.09%
NPAs to total loans plus        
   foreclosed assets, excluding        
   PPP loans(6)        
1.06% 1.26% 1.18% 1.21% 1.18%  1.06% 1.18%
NPAs to total loans plus        
   foreclosed assets, excluding        
   PCD and PPP loans(6)        
0.92% 1.07% 0.96% 0.93% 0.87%  0.92% 0.87%
NPAs to tangible common equity        
plus ACL        
8.63% 10.23% 9.27% 9.37% 9.38%  8.63% 9.38%
Non-accrual loans to total assets        0.58% 0.75% 0.68% 0.68% 0.66%  0.58% 0.66%
Performing loans classified as        
   substandard and special        
   mention to corporate loans(6)(7)        
6.36% 6.45% 7.26% 6.36% 3.94%  6.36% 3.94%
Performing loans classified as        
   substandard and special        
   mention to corporate loans,        
   excluding PPP loans(6)(7)        
6.82% 7.19% 7.84% 7.13% 4.40%  6.82% 4.40%
Allowance for credit losses and net charge-off ratios     
ACL to total loans        1.48% 1.60% 1.67% 1.68% 1.66%  1.48% 1.66%
ACL to non-accrual loans         179.32% 153.67% 173.33% 171.95% 177.98%  179.32% 177.98%
ACL to NPLs        178.07% 148.64% 168.15% 167.54% 173.93%  178.07% 173.93%
NCOs to average loans(2)        0.55% 0.26% 0.29% 0.42% 0.36%  0.41% 0.38%
NCOs to average loans,        
   excluding PPP loans(2)        
0.59% 0.28% 0.31% 0.46% 0.38%  0.44% 0.38%
NCOs to average loans,        
   excluding PCD and PPP loans(2)        
0.47% 0.22% 0.12% 0.26% 0.27%  0.35% 0.30%

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 fully guaranteed by the SBA. As a result, no allowance for credit losses is associated with these loans.
(7)   Performing loans classified as substandard and special mention excludes accruing TDRs.

First Midwest Bancorp, Inc.       
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
     
               
 Quarters Ended  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
EPS              
Net income        $51,121   $45,023   $41,605   $27,623   $19,064    $96,144   $38,670  
Dividends and accretion on        
preferred stock        
(4,034)  (4,034)  (4,049)  (4,033)  (1,037)   (8,068)  (1,037) 
Net income applicable to non-        
vested restricted shares        
(521)  (486)  (369)  (236)  (187)   (1,007)  (379) 
Net income applicable to        
common shares        
46,566   40,503   37,187   23,354   17,840    87,069   37,254  
Adjustments to net income:              
Acquisition and integration        
related expenses        
7,773   245   1,860   881   5,249    8,018   10,721  
Tax effect of acquisition and        
integration related expenses        
(1,943)  (61)  (465)  (220)  (1,312)   (2,004)  (2,680) 
Optimization costs        31   1,525   1,493   18,376       1,556     
Tax effect of optimization        
costs        
(8)  (381)  (373)  (4,594)      (389)    
Swap termination costs              17,567   14,285            
Tax effect of swap termination        
costs        
      (4,392)  (3,571)           
Income tax benefits              (3,639)              
Net securities (gains) losses                 (14,328)         1,005  
Tax effect of net securities        
(gains) losses        
         3,582          (251) 
Total adjustments to net        
income, net of tax         
5,853   1,328   12,051   14,411   3,937    7,181   8,795  
Net income applicable to        
   common shares,        
   adjusted(1)        
$52,419   $41,831   $49,238   $37,765   $21,777    $94,250   $46,049  
Weighted-average common shares outstanding:             
Weighted-average common        
shares outstanding (basic)        
112,865   113,098   113,174   113,160   113,145    112,980   111,533  
Dilutive effect of common        
stock equivalents        
775   773   430   276   191    757   339  
Weighted-average diluted        
common shares        
outstanding        
113,640   113,871   113,604   113,436   113,336    113,737   111,872  
Basic EPS        $0.41   $0.36   $0.33   $0.21   $0.16    $0.77   $0.33  
Diluted EPS        $0.41   $0.36   $0.33   $0.21   $0.16    $0.77   $0.33  
Diluted EPS, adjusted(1)        $0.46   $0.37   $0.43   $0.33   $0.19    $0.83   $0.41  
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    $0.28   $0.28  
Dividend payout ratio        34.15 % 38.89 % 42.42 % 66.67 % 87.50 %  36.36 % 84.85 %
Dividend payout ratio, adjusted(1)        30.43 % 37.84 % 32.56 % 42.42 % 73.68 %  33.73 % 68.29 %
               
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  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
Return on Average Common and Tangible Common Equity           
Net income applicable to        
common shares        
$46,566   $40,503   $37,187   $23,354   $17,840    $87,069   $37,254  
Intangibles amortization        2,798   2,807   2,807   2,810   2,820    5,605   5,590  
Tax effect of intangibles        
amortization        
(700)  (702)  (702)  (703)  (705)   (1,401)  (1,398) 
Net income applicable to        
common shares, excluding        
intangibles amortization        
48,664   42,608   39,292   25,461   19,955    91,273   41,446  
Total adjustments to net income,        
   net of tax(1)        
5,853   1,328   12,051   14,411   3,937    7,181   8,795  
Net income applicable to        
   common shares, adjusted(1)        
$54,517   $43,936   $51,343   $39,872   $23,892    $98,454   $50,241  
Average stockholders' common        
equity        
$2,456,034   $2,453,253   $2,444,911   $2,444,594   $2,443,212    $2,454,651   $2,429,184  
Less: average intangible assets        (927,522)  (931,322)  (934,347)  (938,712)  (934,022)   (929,411)  (910,811) 
Average tangible common        
equity        
$1,528,512   $1,521,931   $1,510,564   $1,505,882   $1,509,190    $1,525,240   $1,518,373  
Return on average common        
   equity(2)        
7.60 % 6.70 % 6.05 % 3.80 % 2.94 %  7.15 % 3.08 %
Return on average common        
   equity, adjusted(1)(2)        
8.56 % 6.92 % 8.01 % 6.15 % 3.58 %  7.74 % 3.81 %
Return on average tangible common equity(2)        12.77 % 11.35 % 10.35 % 6.73 % 5.32 %  12.07 % 5.49 %
Return on average tangible        
   common equity, adjusted(1)(2)        
14.31 % 11.71 % 13.53 % 10.53 % 6.37 %  13.02 % 6.65 %
Return on Average Assets           
Net income        $51,121   $45,023   $41,605   $27,623   $19,064    $96,144   $38,670  
Total adjustments to net income,        
   net of tax(1)        
5,853   1,328   12,051   14,411   3,937    7,181   8,795  
Net income, adjusted(1)        $56,974   $46,351   $53,656   $42,034   $23,001    $103,325   $47,465  
Average assets        $21,533,209   $20,919,040   $20,882,325   $21,526,695   $20,868,106    $21,227,821   $19,636,463  
Return on average assets(2)        0.95 % 0.87 % 0.79 % 0.51 % 0.37 %  0.91 % 0.40 %
Return on average assets,        
   adjusted(1)(2)        
1.06 % 0.90 % 1.02 % 0.78 % 0.44 %  0.98 % 0.49 %
Noninterest Expense to Average Assets           
Noninterest expense        $121,419   $118,425   $117,971   $131,074   $120,330    $239,844   $237,661  
Less:              
Acquisition and integration        
related expenses        
(7,773)  (245)  (1,860)  (881)  (5,249)   (8,018)  (10,721) 
Optimization costs        (31)  (1,525)  (1,493)  (18,376)      (1,556)    
Total        $113,615   $116,655   $114,618   $111,817   $115,081    $230,270   $226,940  
Average assets        $21,533,209   $20,919,040   $20,882,325   $21,526,695   $20,868,106    $21,227,821   $19,636,463  
Less: average PPP loans        (1,035,386)  (1,014,798)  (1,013,511)  (1,194,808)  (887,977)   (1,025,149)  (443,999) 
Average assets, excluding PPP        
loans        
$20,497,823   $19,904,242   $19,868,814   $20,331,887   $19,980,129    $20,202,672   $19,192,464  
Noninterest expense to average        
   assets(2)        
2.26 % 2.30 % 2.25 % 2.42 % 2.32 %  2.28 % 2.43 %
Noninterest expense, adjusted to        
   average assets, excluding PPP        
   loans(2)        
2.22 % 2.38 % 2.29 % 2.19 % 2.32 %  2.30 % 2.38 %
               
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  Six Months Ended
 June 30, March 31, December 31, September 30, June 30,  June 30, June 30,
 2021 2021 2020 2020 2020  2021 2020
Efficiency Ratio Calculation             
Noninterest expense        $121,419   $118,425   $117,971   $131,074   $120,330    $239,844   $237,661  
Less:              
Acquisition and integration        
related expenses        
(7,773)  (245)  (1,860)  (881)  (5,249)   (8,018)  (10,721) 
Net OREO expense        (160)  (589)  (106)  (544)  (126)   (749)  (546) 
Optimization costs        (31)  (1,525)  (1,493)  (18,376)      (1,556)    
Total        $113,455   $116,066   $114,512   $111,273   $114,955    $229,521   $226,394  
Tax-equivalent net interest        
   income(3)        
$145,241   $142,098   $149,141   $143,821   $146,389    $287,339   $291,117  
Noninterest income        46,270   45,803   27,715   40,585   32,991    92,073   72,353  
Less:              
Swap termination costs              17,567   14,285            
Net securities (gains) losses                 (14,328)         1,005  
Total        $191,511   $187,901   $194,423   $184,363   $179,380    $379,412   $364,475  
Efficiency ratio        59.24 % 61.77 % 58.90 % 60.36 % 64.08 %  60.49 % 62.12 %
Pre-Tax, Pre-Provision Earnings             
Net Income        $51,121   $45,023   $41,605   $27,623   $19,064    $96,144   $38,670  
Income tax expense        18,018   17,372   5,743   8,690   6,182    35,390   12,650  
Provision for credit losses           6,098   10,507   15,927   32,649    6,098   72,181  
Pre-Tax, Pre-Provision        
Earnings        
$69,139   $68,493   $57,855   $52,240   $57,895    $137,632   $123,501  
Adjustments to pre-tax, pre-provision earnings:             
Acquisition and integration        
related expenses        
$7,773   $245   $1,860   $881   $5,249    $8,018   $10,721  
Optimization costs        31   1,525   1,493   18,376       1,556     
Swap termination costs              17,567   14,285            
Net securities (gains) losses                 (14,328)         1,005  
Total adjustments        7,804   1,770   20,920   19,214   5,249    9,574   11,726  
Pre-Tax, Pre-Provision        
Earnings, adjusted        
$76,943   $70,263   $78,775   $71,454   $63,144    $147,206   $135,227  
               
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
 June 30, March 31, December 31, September 30, June 30,
 2021 2021 2020 2020 2020
Tangible Common Equity         
Stockholders' equity, common        $2,473,648   $2,422,815   $2,459,506   $2,433,671   $2,425,711  
Less: goodwill and other intangible assets        (926,176)  (928,974)  (932,764)  (935,801)  (940,182) 
Tangible common equity        1,547,472   1,493,841   1,526,742   1,497,870   1,485,529  
Less: AOCI        5,941   22,096   (26,379)  (25,749)  (28,727) 
Tangible common equity, excluding AOCI        $1,553,413   $1,515,937   $1,500,363   $1,472,121   $1,456,802  
Total assets        $21,625,424   $21,208,591   $20,838,678   $21,088,143   $21,244,881  
Less: goodwill and other intangible assets        (926,176)  (928,974)  (932,764)  (935,801)  (940,182) 
Tangible assets        20,699,248   20,279,617   19,905,914   20,152,342   20,304,699  
Less: PPP loans        (705,915)  (1,109,442)  (785,563)  (1,196,538)  (1,179,403) 
Tangible assets, excluding PPP loans        $19,993,333   $19,170,175   $19,120,351   $18,955,804   $19,125,296  
Tangible common equity to tangible assets        7.48 % 7.37 % 7.67 % 7.43 % 7.32 %
Tangible common equity to tangible assets, excluding PPP loans        7.74 % 7.79 % 7.98 % 7.90 % 7.77 %
Tangible common equity, excluding AOCI, to tangible assets        7.50 % 7.48 % 7.54 % 7.30 % 7.17 %
Tangible common equity, excluding AOCI, to tangible assets,        
excluding PPP loans        
7.77 % 7.91 % 7.85 % 7.77 % 7.62 %
Tangible common equity to risk-weighted assets        9.92 % 9.73 % 9.93 % 9.84 % 9.61 %
          

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%.