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First Midwest Bancorp, Inc. Announces 2013 Fourth Quarter and Full Year Results

Increased Earnings - Strong Loan Growth - Improved Asset Quality

ITASCA, IL -- (Marketwired) -- 01/21/14 -- Today, First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), reported results of operations and financial condition for the fourth quarter of 2013. Net income applicable to common shares for the fourth quarter of 2013 was $18.9 million, or $0.26 per share, compared to net income applicable to common shares of $28.9 million, or $0.39 per share, for the third quarter of 2013 and $13.0 million, or $0.18 per share, for the fourth quarter of 2012.

For the full year of 2013, the Company reported net income applicable to common shares of $78.2 million, or $1.06 per share, compared to a net loss applicable to common shares of $20.7 million, or $0.28 per share, for the year ended December 31, 2012.

"First Midwest had a strong 2013, evidenced by significantly improved earnings, robust loan and fee growth as well as a dramatically enhanced credit profile," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Our lending and fee-based businesses performed extremely well throughout the year. Targeted investment in these businesses helped diversify our revenues and, when combined with substantially lower credit costs and tight expense control, offset the challenges of a difficult rate environment."

Mr. Scudder went on to say, "Loans outstanding increased by 8% over 2012, led by double digit growth in both commercial and agricultural lending. Notably, our fee-based revenues grew by some 10% on the strength of wealth management, mortgage, and commercial sales performance. As we closed 2013, both our agricultural lending and trust platforms now rank among the largest of Illinois-based financial institutions."

Mr. Scudder concluded, "Our business momentum remains solid and, when combined with our strong capital foundation and an improving economic outlook, leaves us well placed to grow and enhance shareholder value."

SELECT HIGHLIGHTS

Business Momentum

  • Increased earnings per share by 44% compared to the fourth quarter of 2012 and almost 500% compared to the year ended December 31, 2012.

  • Grew total loans, excluding covered loans, by 10% annualized from September 30, 2013 and 8% from December 31, 2012.

  • Maintained noninterest expense consistent with the third quarter and decreased by 12% from the fourth quarter of 2012.

  • Maintained net interest margin of 3.62% achieved in the third quarter.

  • Increased dividends per share to $0.07, up 75% from the third quarter and 600% from the fourth quarter of 2012.

Improving Credit and Strengthening Capital

  • Recorded 21% lower net loan charge-offs, excluding net covered loan charge-offs, compared to the third quarter, representing one of the lowest levels in over five years.

  • Decreased non-performing loans by $10 million, or 14%, from September 30, 2013 and $30 million, or 32%, from December 31, 2012.

  • Reduced performing potential problem loans by $31 million, or 17%, from September 30, 2013 and $63 million, or 29%, from December 31, 2012.

  • Grew Tier 1 common capital to risk-weighted assets to 10.37%, a 14 basis point improvement from September 30, 2013 and 104 basis point improvement from December 31, 2012.

  • Retired $23.3 million of 6.95% junior subordinated debentures at a premium of 4%, resulting in a pre-tax loss of $1.0 million, while lowering future annual interest expense by nearly $2 million.

OPERATING PERFORMANCE



                Pre-Tax, Pre-Provision Operating Earnings (1)
                        (Dollar amounts in thousands)

                                   Quarters Ended            Years Ended
                           ----------------------------- -------------------
                            December September  December  December  December
                            31, 2013  30, 2013  31, 2012  31, 2013  31, 2012
                           --------- --------- --------- --------- ---------
Income (loss) before
 income tax expense        $ 28,673  $ 54,282  $ 19,410  $128,021  $(49,936)
Provision for loan and
 covered loan losses              -     4,770     5,593    16,257   158,052
                           --------  --------  --------  --------  --------
  Pre-tax, pre-provision
   earnings                  28,673    59,052    25,003   144,278   108,116
                           --------  --------  --------  --------  --------
Adjustments to Pre-Tax, Pre-
 Provision Earnings
Net securities (gains)
 losses                        (147)  (33,801)      (88)  (34,164)      921
Net losses on sales and
 valuation adjustments of
 OREO, excess properties,
 asset held-for sale, and
 other                        1,763     1,652     1,864     3,908     7,974
Losses on early
 extinguishment of debt       1,034         -       814     1,034       558
Severance-related costs         483       233         -     2,207     1,155
BOLI modification loss            -    13,312         -    13,312         -
Gain on termination of
 FHLB forward commitments         -    (7,829)        -    (7,829)        -
Gain, less related
 expenses, on bulk loan
 sales                            -         -    (2,639)        -    (2,639)
Adjusted amortization of
 FDIC indemnification
 asset                            -         -     2,705     1,500     6,705
Gains on acquisitions, net
 of integration costs             -         -       588         -    (2,486)
                           --------  --------  --------  --------  --------
  Total adjustments           3,133   (26,433)    3,244   (20,032)   12,188
                           --------  --------  --------  --------  --------
  Pre-tax, pre-provision
   operating earnings      $ 31,806  $ 32,619  $ 28,247  $124,246  $120,304
                           ========  ========  ========  ========  ========

(1) 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
    provided this non-GAAP performance result, which the Company believes is
    useful because it assists investors in assessing the Company's operating
    performance. This non-GAAP financial measure should not be considered an
    alternative to GAAP.


Pre-tax, pre-provision operating earnings of $31.8 million for the fourth quarter of 2013 decreased 2.5% from the third quarter of 2013 driven mainly by comparatively lower fee-based revenues. Compared to the fourth quarter of 2012, pre-tax, pre-provision operating earnings increased $3.6 million, or 12.6%, resulting primarily from lower noninterest expense, which was partially offset by a decrease in net interest income and noninterest income.

For the full year of 2013, pre-tax, pre-provision operating earnings rose $3.9 million compared to 2012 as a result of higher levels of wealth management fees, gains on mortgage loan sales, and fees from sales of capital market products to commercial clients, which more than offset a decrease in net interest income.

Further discussion of net interest income and noninterest income and expense is presented in later sections of this release.



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

                                          Quarters Ended
                           December 31, 2013          September 30, 2013
                      --------------------------- --------------------------
                                                                       Yield
                                  Interest Yield/             Interest   /
                        Average    Earned/  Rate    Average    Earned/  Rate
                        Balance     Paid     (%)    Balance     Paid    (%)
                      ----------- -------- ------ ----------- -------- -----
Assets:
Other interest-
 earning assets       $  610,792  $    448   0.29 $  661,779  $    469  0.28
Trading securities        16,569        72   1.74     15,543        29  0.75
Investment securities
 (1)                   1,211,868    10,582   3.49  1,250,158    10,199  3.26
Federal Home Loan
 Bank and Federal
 Reserve Bank stock       35,161       332   3.78     35,162       333  3.79
Loans (1)(2)           5,675,293    63,728   4.45  5,559,932    64,326  4.59
                      ----------  -------- ------ ----------  -------- -----
  Total interest-
   earning assets (1)  7,549,683    75,162   3.95  7,522,574    75,356  3.98
                                  -------- ------             -------- -----
Cash and due from
 banks                   123,128                     127,847
Allowance for loan
 and covered loan
 losses                  (91,860)                    (93,940)
Other assets             793,359                     847,304
                      ----------                  ----------
Total assets          $8,374,310                  $8,403,785
                      ==========                  ==========

Liabilities and
 Stockholders'
 Equity:
Interest-bearing
 transaction deposits $3,678,591       788   0.08 $3,647,159       765  0.08
Time deposits          1,234,517     1,953   0.63  1,288,746     2,072  0.64
Borrowed funds           213,761       390   0.72    203,613       390  0.76
Senior and
 subordinated debt       207,162     3,301   6.32    214,860     3,436  6.34
                      ----------  -------- ------ ----------  -------- -----
Total interest-
 bearing liabilities   5,334,031     6,432   0.48  5,354,378     6,663  0.49
                                  -------- ------             -------- -----
Demand deposits        1,956,570                   1,975,797
                      ----------                  ----------
Total funding sources  7,290,601                   7,330,175
Other liabilities         87,250                      90,154
Stockholders' equity
 - common                996,459                     983,456
                      ----------
  Total liabilities
   and stockholders'
   equity             $8,374,310                  $8,403,785
                      ==========                  ==========
Net interest
 income/margin (1)                $ 68,730   3.62             $ 68,693  3.63
                                  ======== ======             ======== =====





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

                                         Quarters Ended
                                        December 31, 2012
                                   ---------------------------
                                               Interest Yield/
                                     Average    Earned/  Rate
                                     Balance     Paid     (%)
                                   ----------- -------- ------
             Assets:
             Other interest-
              earning assets       $  562,288  $    345   0.24
             Trading securities        15,597        94   2.41
             Investment securities
              (1)                   1,144,997    10,154   3.55
             Federal Home Loan
              Bank and Federal
              Reserve Bank stock       47,232       349   2.96
             Loans (1)(2)           5,463,355    66,490   4.84
                                   ----------  -------- ------
               Total interest-
                earning assets (1)  7,233,469    77,432   4.26
                                               -------- ------
             Cash and due from
              banks                   122,328
             Allowance for loan
              and covered loan
              losses                 (103,302)
             Other assets             886,748
                                   ----------
             Total assets          $8,139,243
                                   ==========

             Liabilities and
              Stockholders'
              Equity:
             Interest-bearing
              transaction deposits $3,468,397       903   0.10
             Time deposits          1,447,918     2,832   0.78
             Borrowed funds           185,390       497   1.07
             Senior and
              subordinated debt       214,764     3,445   6.38
                                   ----------  -------- ------
             Total interest-
              bearing liabilities   5,316,469     7,677   0.57
                                               -------- ------
             Demand deposits        1,808,522
                                   ----------
             Total funding sources  7,124,991
             Other liabilities         73,077
             Stockholders' equity
              - common                941,175

               Total liabilities
                and stockholders'
                equity             $8,139,243
                                   ==========
             Net interest
              income/margin (1)                $ 69,755   3.84
                                               ======== ======


(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 35%. This non-GAAP financial measure assists management in comparing
    revenue from both taxable and tax-exempt sources. The corresponding
    income tax impact related to tax-exempt items is recorded within income
    tax expense. These adjustments have no impact on net income.

(2) This item includes covered interest-earning assets consisting of loans
    acquired through the Company's Federal Deposit Insurance Corporation
    ("FDIC")-assisted transactions subject to loss sharing agreements and
    the related FDIC indemnification asset.


For the fourth quarter of 2013, average interest-earning assets rose $27.1 million from the third quarter of 2013 driven by growth in the loan portfolio, which was funded through other interest-earning assets and cash flows from maturing investment securities. Compared to December 31, 2012, average interest-earning assets grew $316.2 million from an increase in loans, investment securities, and other interest-earning assets.

Average funding sources for the fourth quarter of 2013 were $39.6 million lower than the third quarter of 2013 and $165.6 million higher than the fourth quarter of 2012. A reduction in time deposits and seasonal declines in public fund deposits, partially offset by higher levels of interest-bearing transaction deposits, accounted for the decrease in average funding sources from the third quarter of 2013. Compared to the fourth quarter of 2012, a 6.8% increase in average demand and interest-bearing transaction deposits more than offset lower levels of time deposits.

Tax-equivalent net interest margin for the current quarter was 3.62%, remaining stable compared to the third quarter of 2013 and declining 22 basis points compared to the fourth quarter of 2012. Loan yields declined on new and renewing loans compared to both prior periods presented as a result of greater customer preference for floating rate loans given the current low interest rate environment. The decrease in the loan yield during the fourth quarter was mitigated by a higher rate earned on certain investment securities. Additionally, an improved funding mix and lower rates paid on time deposits offset the decline in the loan yield compared to both prior periods presented.



                         Noninterest Income Analysis
                        (Dollar amounts in thousands)

                                                          December 31, 2013
                                 Quarters Ended          Percent Change From
                        -------------------------------- -------------------
                         December   September  December  September  December
                         31, 2013   30, 2013   31, 2012   30, 2013  31, 2012
                        ---------- ---------- ---------- --------- ---------
Service charges on
 deposit accounts       $   9,259  $   9,472  $   9,689      (2.2)     (4.4)
Card-based fees             5,517      5,509      5,274       0.1       4.6
Wealth management fees      6,202      6,018      5,590       3.1      10.9
Mortgage banking income     1,055      1,273      2,329     (17.1)    (54.7)
Merchant servicing fees     2,585      2,915      2,727     (11.3)     (5.2)
Other service charges,
 commissions, and fees      2,094      2,617      1,121     (20.0)     86.8
                        ---------- ---------- ---------- --------- ---------
  Total fee-based
   revenues                26,712     27,804     26,730      (3.9)     (0.1)
Net securities gains          147     33,801         88     (99.6)     67.0
BOLI income (loss)            584    (13,028)       355        N/M     64.5
Net trading gains (1)       1,057        882        116      19.8        N/M
Losses on early
 extinguishment of debt    (1,034)         -       (814)       N/M     27.0
Other income                  313        800        460     (60.9)    (32.0)
Gain on termination of
 FHLB forward
 commitments                    -      7,829          -        N/M        -
Gain on bulk loan sales         -          -      5,153        N/M       N/M
                        ---------- ---------- ---------- --------- ---------
  Total noninterest
   income               $  27,779  $  58,088  $  32,088     (52.2)    (13.4)
                        ========== ========== ========== ========= =========

N/M - Not meaningful.

(1) Net trading gains result from changes in the fair value of diversified
    investment securities held in a grantor trust under deferred
    compensation agreements and are substantially offset by nonqualified
    plan expense for each period presented.


Total fee-based revenues declined 3.9% from the third quarter of 2013 primarily from decreases in fee income generated by sales of capital market products to commercial clients, gains on sales of mortgage loans, and merchant servicing fees. The reduction in merchant servicing fees was substantially offset by lower merchant card expense, reflecting the high volume, low margin nature of this service. These declines were partially mitigated by continued growth in wealth management fees.

Compared to the fourth quarter of 2012, total fee-based revenues remained stable. Growth in fee income generated by sales of capital market products to commercial clients and wealth management fees resulting from new customer relationships and improved market performance were offset by lower levels of mortgage banking income.

Total noninterest income comparisons to the prior quarter and fourth quarter of 2012 are impacted by significant nonrecurring transactions during these periods. During the third quarter of 2013, the Company recognized a $34.0 million gain on the sale of an equity investment, a $7.8 million gain on the termination of two FHLB forward commitments, and a $13.3 million charge related to an adjustment of the cash surrender values of certain BOLI policies. A $5.2 million gain on bulk loan sales was recognized in the fourth quarter of 2012.

During the fourth quarter of 2013, the Company repurchased and retired $23.3 million of 6.95% junior subordinated debentures, which resulted in a pre-tax loss of $1.0 million. This action will reduce future annual interest expense by $1.6 million.



                        Noninterest Expense Analysis
                        (Dollar amounts in thousands)

                                                          December 31, 2013
                                   Quarters Ended        Percent Change From
                           ----------------------------- -------------------
                            December September  December September  December
                            31, 2013  30, 2013  31, 2012  30, 2013  31, 2012
                           --------- --------- --------- --------- ---------
Salaries and wages         $  27,286 $  27,254 $  27,036      0.1       0.9
Nonqualified plan expense
 (1)                           1,305     1,003       205     30.1        N/M
Retirement and other
 employee benefits             6,399     6,013     6,787      6.4      (5.7)
                           --------- --------- --------- --------- ---------
  Total compensation
   expense                    34,990    34,270    34,028      2.1       2.8
Net OREO expense               2,815     2,849     1,325     (1.2)       N/M
Professional services          5,592     5,517    10,415      1.4     (46.3)
Net occupancy and
 equipment expense             7,910     7,982     8,747     (0.9)     (9.6)
Technology and related
 costs                         2,984     2,984     3,231        -      (7.6)
FDIC premiums                  1,258     1,734     1,763    (27.5)    (28.6)
Advertising and promotions     2,144     2,167     1,744     (1.1)     22.9
Merchant card expense          2,076     2,339     2,192    (11.2)     (5.3)
Cardholder expenses            1,019     1,030       935     (1.1)      9.0
Other expenses                 4,006     3,830     6,522      4.6     (38.6)
Adjusted amortization of
 FDIC indemnification
 asset                             -         -     2,705       N/M       N/M
                           --------- --------- --------- --------- ---------
  Total noninterest
   expense                 $  64,794 $  64,702 $  73,607      0.1     (12.0)
                           ========= ========= ========= ========= =========

N/M - Not meaningful.

(1) Nonqualified plan expense results from changes in the Company's
    obligation to participants under deferred compensation agreements and is
    substantially offset by earnings on related assets included in
    noninterest income.


Total noninterest expense for the fourth quarter of 2013 was consistent with the third quarter of 2013 and decreased 12.0% compared to the fourth quarter of 2012.

The increase in retirement and other employee benefits from the quarter ended September 30, 2013 was driven by the timing of certain pension expense accruals. Compared to the fourth quarter of 2012, the decrease in retirement and other employee benefits resulted primarily from changes to the Company's defined benefit pension plan and a decrease in other employee benefit accruals.

The fourth quarter of 2012 reflects higher gains on sales of OREO properties compared to the fourth quarter of 2013, driving higher net OREO expense.

During the fourth quarter of 2012, professional services were elevated due primarily to expenses related to the completion of the bulk loan sales, higher personnel recruitment expenses, and the accelerated recognition of certain capitalized consulting costs.

The decline in net occupancy and equipment expense resulted from a decrease in real estate taxes compared to the fourth quarter of 2012.

FDIC premiums decreased compared to both prior periods presented from a lower assessment rate.

The increase in advertising and promotions expense from the fourth quarter of 2012 was driven by the launch of our "Bank with Momentum" branding campaign during the second quarter of 2013, and reflects the return to a more normalized level of expense.

The decline in other expenses from the fourth quarter of 2012 reflects a $770,000 reduction in the reserve for unfunded commitments in the fourth quarter of 2013. In addition, the fourth quarter of 2012 was elevated as a result of a $1.3 million valuation adjustment on a former banking office.

Based on management's current estimates of future cash flows on covered loans and OREO and expected reimbursements from the FDIC for covered losses, no adjusted amortization of the FDIC indemnification asset was required for the third and fourth quarters of 2013.

LOAN PORTFOLIO AND ASSET QUALITY



                         Loan Portfolio Composition
                        (Dollar amounts in thousands)

                                                         December 31, 2013
                                    As Of               Percent Change From
                      -------------------------------- ---------------------
                       December   September  December   September  December
                       31, 2013   30, 2013   31, 2012   30, 2013   31, 2012
                      ---------- ---------- ---------- ---------- ----------
Corporate
Commercial and
 industrial           $1,830,638 $1,792,561 $1,631,474       2.1       12.2
Agricultural             321,702    318,659    268,618       1.0       19.8
Commercial real
 estate:
  Office                 459,202    449,067    474,717       2.3       (3.3)
  Retail                 392,576    384,787    368,796       2.0        6.4
  Industrial             501,907    503,010    489,678      (0.2)       2.5
  Multi-family           332,873    332,749    285,481         -       16.6
  Construction           186,197    175,172    186,416       6.3       (0.1)
  Other commercial
   real estate           807,071    790,114    773,121       2.1        4.4
                      ---------- ---------- ---------- ---------- ---------
    Total commercial
     real estate       2,679,826  2,634,899  2,578,209       1.7        3.9
                      ---------- ---------- ---------- ---------  ---------
    Total corporate
     loans             4,832,166  4,746,119  4,478,301       1.8        7.9
                      ---------- ---------- ---------- ---------  ---------
Consumer
Home equity              427,020    377,015    390,033      13.3        9.5
1-4 family mortgages     275,992    286,333    282,948      (3.6)      (2.5)
Installment               44,827     39,462     38,394      13.6       16.8
                      ---------- ---------- ---------- ---------  ---------
  Total consumer
   loans                 747,839    702,810    711,375       6.4        5.1
                      ---------- ---------- ---------- ---------- ---------
  Total loans,
   excluding covered
   loans               5,580,005  5,448,929  5,189,676       2.4        7.5
Covered loans            134,355    153,305    197,894     (12.4)     (32.1)
                      ---------- ---------- ---------- ---------  ---------
  Total loans         $5,714,360 $5,602,234 $5,387,570       2.0        6.1
                      ========== ========== ========== =========  =========


Total loans, excluding covered loans, of $5.6 billion grew by $131.1 million from September 30, 2013. During the fourth quarter of 2013, the Company experienced strong annualized growth of nearly 10% across most corporate categories. In response to market conditions, the Company purchased $51.9 million of high-quality, shorter duration home equity loans and elected to sell $29.3 million of longer-term 1-4 family mortgages.

Compared to December 31, 2012, total loans, excluding covered loans, increased significantly by 7.5%, or $390.3 million. Year-over-year, the loan portfolio benefited from well-balanced growth reflecting credits of varying size and diverse geographic locations within our markets. The Company experienced strong growth in the commercial and industrial and agricultural loan categories, reflecting the impact of greater resource investments and expansion into specialized lending areas.



                                Asset Quality
                        (Dollar amounts in thousands)

                                                          December 31, 2013
                                                            Percent Change
                                        As Of                    From
                           ------------------------------ ------------------
                            December  September  December September December
                            31, 2013  30, 2013   31, 2012  30, 2013 31, 2012
                           --------- ---------- --------- --------- --------
Asset quality, excluding
 covered
loans and covered OREO
Non-accrual loans          $ 59,798  $  68,170  $ 84,534     (12.3)   (29.3)
90 days or more past due
 loans                        3,708      5,642     8,689     (34.3)   (57.3)
                           --------  ---------  --------  --------  -------
  Total non-performing
   loans                     63,506     73,812    93,223     (14.0)   (31.9)
Accruing troubled debt
 restructurings ("TDRs")     23,770     24,329     6,867      (2.3)      N/M
OREO                         32,473     35,616    39,953      (8.8)   (18.7)
                           --------  ---------  --------  --------  -------
  Total non-performing
   assets                  $119,749  $ 133,757  $140,043     (10.5)   (14.5)
                           ========  =========  ========  ========  =======
30-89 days past due loans  $ 20,742  $  15,111  $ 22,666      37.3     (8.5)
Performing potential
 problem loans:
  Special mention          $ 77,564  $ 114,788  $137,622     (32.4)   (43.6)
  Substandard                78,390     72,439    80,977       8.2     (3.2)
                           --------  ---------  --------  --------- -------
  Total performing
   potential problem loans
   (1)                     $155,954  $ 187,227  $218,599     (16.7)   (28.7)
                           ========  =========  ========  ========  =======

Non-accrual loans to total
 loans                         1.07%      1.25%     1.63%
Non-performing loans to
 total loans                   1.14%      1.35%     1.80%
Non-performing assets to
 loans plus OREO               2.13%      2.44%     2.68%
Performing potential
 problem loans to total
 loans (1)                     2.79%      3.44%     4.22%

Allowance for Credit
 Losses
Allowance for loan losses  $ 72,946  $  77,772  $ 87,384      (6.2)   (16.5)
Allowance for covered loan
 losses                      12,559     13,056    12,062      (3.8)     4.1
                           --------  ---------  --------  --------  -------
  Total allowance for loan
   and covered loan losses   85,505     90,828    99,446      (5.9)   (14.0)
Reserve for unfunded
 commitments                  1,616      2,386     3,366     (32.3)   (52.0)
                           --------  ---------  --------  --------  -------
  Total allowance for
   credit losses           $ 87,121  $  93,214  $102,812      (6.5)   (15.3)
                           ========  =========  ========  ========  =======
Allowance for credit
 losses to loans,
 including covered loans       1.52%      1.66%     1.91%
Allowance for credit
 losses to non-accrual
 loans, excluding covered
 loans                       124.69%    117.59%   107.35%

N/M - Not meaningful.

(1) Total performing potential problem loans excludes accruing TDRs of $2.8
    million as of December 31, 2013, $18.6 million as of September 30, 2013,
    and $448,000 as of December 31, 2012.


Non-performing loans, excluding covered loans, were $63.5 million at December 31, 2013, decreasing 14.0% from September 30, 2013 and 31.9% from December 31, 2012. The reclassification of two corporate loan relationships totaling $19.3 million from non-accrual to accruing TDR status accounted for the majority of the year-over-year improvement. These loans continue to perform in accordance with their modified terms, which are at market rates, and are expected to move to the performing loan portfolio by the end of the first quarter of 2014.

Performing potential problem loans decreased 16.7% from September 30, 2013 and 28.7% from December 31, 2012 and are now at pre-recession levels.



                               Charge-Off Data
                        (Dollar amounts in thousands)

                                             Quarters Ended
                            ------------------------------------------------
                            December  % of  September   % of December  % of
                            31, 2013  Total  30, 2013  Total 31, 2012  Total
                            -------- ------ --------- ------ -------- ------
Net loan charge-offs (1):
  Commercial and industrial $ 2,528   50.0  $  2,057    32.0 $ 1,778   28.4
  Agricultural                  (58)  (1.1)      141     2.2    (177)  (2.8)
  Office, retail, and
   industrial                   882   17.4       956    14.9      95    1.5
  Multi-family                  (10)  (0.2)      112     1.7       9    0.1
  Construction                 (934) (18.5)      410     6.4     234    3.7
  Other commercial real
   estate                       776   15.4       639    10.0   1,786   28.5
  Consumer                    1,868   37.0     2,108    32.8   2,536   40.6
                            -------  -----  --------  ------ -------  -----
    Net loan charge-offs,
     excluding covered
     loans                    5,052  100.0     6,423   100.0   6,261  100.0
                                     =====             =====          =====
Net covered loan charge-
 offs (1)                       271            1,629           1,465
                            -------         --------         -------
    Total net loan charge-
     offs                   $ 5,323         $  8,052         $ 7,726
                            =======         ========         =======
Net loan charge-offs to
 average loans, excluding
 covered loans, annualized:
Quarter-to-date                0.36%            0.47%           0.48%
Year-to-date                   0.48%            0.53%           3.32%

(1) Amounts represent charge-offs, net of recoveries.


Excluding net covered loan charge-offs, net loan charge-offs for the fourth quarter of 2013 decreased 21.3% compared to the third quarter of 2013, representing one of the lowest levels of charge-offs in over five years.

CAPITAL MANAGEMENT



                               Capital Ratios
                        (Dollar amounts in thousands)

                                                September December September
                                       December    30,       31,      30,
                                       31, 2013    2013     2012      2012
                                       -------- --------- -------- ---------
Regulatory capital ratios:
  Total capital to risk-weighted
   assets                                12.39%    12.60%   11.90%    11.65%
  Tier 1 capital to risk-weighted
   assets                                10.91%    11.12%   10.28%     9.92%
  Tier 1 leverage to average assets       9.18%     9.21%    8.40%     8.13%
Tier 1 common capital to risk-weighted
 assets (1)                              10.37%    10.23%    9.33%     8.93%
Tangible common equity ratios (2):
  Tangible common equity to tangible
   assets                                 9.09%     8.61%    8.44%     8.26%
  Tangible common equity, excluding
   other comprehensive loss, to
   tangible assets                        9.43%     8.93%    8.64%     8.38%
  Tangible common equity to risk-
   weighted assets                       10.67%    10.60%   10.39%    10.12%
Non-performing assets to tangible
 common equity and allowance for
 credit losses                           14.74%    16.66%   18.36%    20.50%



                               Capital Ratios
                        (Dollar amounts in thousands)

                                          Regulatory
                                           Minimum
                                             For            Excess Over
                                            "Well-       Required Minimums
                                         Capitalized"   at December 31, 2013
                                       --------------- ---------------------
Regulatory capital ratios:
  Total capital to risk-weighted
   assets                                       10.00%        24% $  162,321
  Tier 1 capital to risk-weighted
   assets                                        6.00%        82% $  333,734
  Tier 1 leverage to average assets              5.00%        84% $  337,620
Tier 1 common capital to risk-weighted
 assets (1)                                        N/A        N/A        N/A
Tangible common equity ratios (2):
  Tangible common equity to tangible
   assets                                          N/A        N/A        N/A
  Tangible common equity, excluding
   other comprehensive loss, to
   tangible assets                                 N/A        N/A        N/A
  Tangible common equity to risk-
   weighted assets                                 N/A        N/A        N/A
Non-performing assets to tangible
 common equity and allowance for
 credit losses                                     N/A        N/A        N/A


N/A - Ratio is not subject to formal Federal Reserve regulatory guidance.

(1) Excludes the impact of trust-preferred securities.

(2) Tangible common equity ("TCE") represents common stockholders' equity
    less goodwill and identifiable intangible assets. In management's view,
    Tier 1 common and TCE measures are meaningful to the Company, as well as
    analysts and investors, in assessing the Company's use of equity and in
    facilitating comparisons with competitors.


The decline in the Company's regulatory capital ratios compared to the third quarter of 2013 resulted from loan growth and the repurchase and retirement of $23.3 million of 6.95% junior subordinated debentures, which qualify as Tier 1 capital. This decrease was partially mitigated by retained earnings. The Company's regulatory ratios exceeded all regulatory mandated ratios for characterization as "well-capitalized" as of December 31, 2013.

The Board of Directors approved an increase in the quarterly cash dividend from $0.04 to $0.07 per common share during the fourth quarter of 2013, which followed a dividend increase from $0.01 to $0.04 per common share in the second quarter of 2013.

About the Company

First Midwest is the premier relationship-based financial institution in the dynamic Chicagoland banking market. As one of Illinois' largest independent bank holding companies, First Midwest provides a full range of business and retail banking and wealth management services through approximately 90 banking offices located in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. The Company website is www.firstmidwest.com.

Forward-Looking Statements

This press release may contain "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that actual results and the Company's financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of certain of the risks and important factors that could affect the Company's future results, see "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management's judgment as of the date hereof based on currently available information. The Company undertakes no duty to update any forward-looking statements contained in this press release after the date hereof.

Conference Call

A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, January 22, 2014 at 10:00 AM (ET). Members of the public who would like to listen to the conference call should dial (888) 317-6016 (U.S. domestic) or (412) 317-6016 (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, www.firstmidwest.com/investorrelations. 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. 10039374 beginning one hour after completion of the live call until 9:00 A.M. (ET) on January 29, 2014. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at [email protected].

Accompanying Financial Statements and Tables

Accompanying this press release is the following unaudited financial information:

  • Condensed Consolidated Statements of Financial Condition
  • Condensed Consolidated Statements of Income

Press Release and Additional Information Available on Website

This press release, the accompanying financial statements and tables, and certain additional unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.



          Condensed Consolidated Statements of Financial Condition
                                  Unaudited
                           (Amounts in thousands)

                                           December   September    December
                                           31, 2013    30, 2013    31, 2012
                                         ----------- ----------- -----------
Assets
Cash and due from banks                  $  110,417  $  155,075  $  149,420
Interest-bearing deposits in other banks    476,824     744,163     566,846
Trading securities, at fair value            17,317      16,443      14,162
Securities available-for-sale, at fair
 value                                    1,112,725   1,162,911   1,082,403
Securities held-to-maturity, at
 amortized cost                              44,322      29,847      34,295
Federal Home Loan Bank and Federal
 Reserve Bank stock, at cost                 35,161      35,161      47,232
Loans, excluding covered loans            5,580,005   5,448,929   5,189,676
Covered loans                               134,355     153,305     197,894
Allowance for loan and covered loan
 losses                                     (85,505)    (90,828)    (99,446)
                                         ----------  ----------  ----------
  Net loans                               5,628,855   5,511,406   5,288,124
OREO, excluding covered OREO                 32,473      35,616      39,953
Covered OREO                                  8,863      10,477      13,123
FDIC indemnification asset                   16,585      18,078      37,051
Premises, furniture, and equipment          120,204     118,664     121,596
Investment in BOLI                          193,167     193,979     206,405
Goodwill and other intangible assets        276,366     277,187     281,059
Accrued interest receivable and other
 assets                                     180,128     208,906     218,170
                                         ----------  ----------  ----------
  Total assets                           $8,253,407  $8,517,913  $8,099,839
                                         ==========  ==========  ==========
Liabilities and Stockholders' Equity
Noninterest-bearing deposits             $1,911,602   2,020,956   1,762,903
Interest-bearing deposits                 4,854,499   4,982,252   4,909,352
                                         ----------  ----------  ----------
  Total deposits                          6,766,101   7,003,208   6,672,255
Borrowed funds                              224,342     212,058     185,984
Senior and subordinated debt                190,932     214,876     214,779
Accrued interest payable and other
 liabilities                                 70,590     101,046      85,928
                                         ----------  ----------  ----------
  Total liabilities                       7,251,965   7,531,188   7,158,946
                                         ----------  ----------  ----------
Common stock                                    858         858         858
Additional paid-in capital                  414,293     412,677     418,318
Retained earnings                           853,740     839,835     786,453
Accumulated other comprehensive loss,
 net of tax                                 (26,792)    (26,057)    (15,660)
Treasury stock, at cost                    (240,657)   (240,588)   (249,076)
                                         ----------  ----------  ----------
  Total stockholders' equity              1,001,442     986,725     940,893
                                         ----------  ----------  ----------
  Total liabilities and stockholders'
   equity                                $8,253,407  $8,517,913  $8,099,839
                                         ==========  ==========  ==========



                 Condensed Consolidated Statements of Income
                                  Unaudited
                (Amounts in thousands, except per share data)

                                  Quarters Ended             Years Ended
                          ------------------------------ -------------------
                                     September
                           December     30,     December  December  December
                           31, 2013    2013     31, 2012  31, 2013  31, 2012
                          --------- ---------- --------- --------- ---------
Interest Income
Loans, excluding covered
 loans                    $ 60,068  $  60,614  $ 61,596  $239,224  $248,752
Covered loans                3,062      3,142     3,975    13,804    15,873
Investment securities        8,138      7,742     7,517    30,893    32,923
Other short-term
 investments                   852        831     1,111     3,326     3,021
                          --------  ---------  --------  --------  --------
  Total interest income     72,120     72,329    74,199   287,247   300,569
                          --------  ---------  --------  --------  --------
Interest Expense
Deposits                     2,741      2,837     3,735    11,901    18,052
Borrowed funds                 390        390       497     1,607     2,009
Senior and subordinated
 debt                        3,301      3,436     3,445    13,607    14,840
                          --------  ---------  --------  --------  --------
  Total interest expense     6,432      6,663     7,677    27,115    34,901
                          --------  ---------  --------  --------  --------
  Net interest income       65,688     65,666    66,522   260,132   265,668
Provision for loan and
 covered loan losses             -      4,770     5,593    16,257   158,052
                          --------  ---------  --------  --------  --------
  Net interest income
   after provision for
   loan and covered loan
   losses                   65,688     60,896    60,929   243,875   107,616
                          --------  ---------  --------  --------  --------
Noninterest Income
Service charges on
 deposit accounts            9,259      9,472     9,689    36,526    36,699
Card-based fees              5,517      5,509     5,274    21,649    20,852
Wealth management fees       6,202      6,018     5,590    24,185    21,791
Mortgage banking income      1,055      1,273     2,329     5,306     2,689
Merchant servicing fees      2,585      2,915     2,727    10,953    10,806
Other service charges,
 commissions, and fees       2,094      2,617     1,121     7,663     4,486
Net securities gains
 (losses)                      147     33,801        88    34,164      (921)
BOLI income (loss)             584    (13,028)      355   (11,844)    1,307
Loss on early
 extinguishment of debt     (1,034)         -      (814)   (1,034)     (558)
Other income                 1,370      1,682       576     5,486     4,355
Gain on termination of
 FHLB forward commitments        -      7,829         -     7,829         -
Gain on bulk loan sales          -          -     5,153         -     5,153
Gain on FDIC-assisted
 acquisition                     -          -         -         -     3,289
                          --------  ---------  --------  --------  --------
  Total noninterest
   income                   27,779     58,088    32,088   140,883   109,948
                          --------  ---------  --------  --------  --------
Noninterest Expense
Salaries and employee
 benefits                   34,990     34,270    34,028   138,750   130,755
Net occupancy and
 equipment expense           7,910      7,982     8,747    31,832    32,699
Technology and related
 costs                       2,984      2,984     3,231    11,335    11,846
Professional services        5,592      5,517    10,415    21,922    29,614
Net OREO expense             2,815      2,849     1,325     8,547    10,521
FDIC premiums                1,258      1,734     1,763     6,438     6,926
Adjusted amortization of
 FDIC indemnification
 asset                           -          -     2,705     1,500     6,705
Other expenses               9,245      9,366    11,393    36,413    38,434
                          --------- ---------  --------  --------  --------
  Total noninterest
   expense                  64,794     64,702    73,607   256,737   267,500
                          --------  ---------  --------  --------  --------
  Income (loss) before
   income tax expense       28,673     54,282    19,410   128,021   (49,936)
  Income tax expense
   (benefit)                 9,508     24,959     6,194    48,715   (28,882)
                          --------  ---------  --------  --------  --------
  Net income (loss)         19,165     29,323    13,216    79,306   (21,054)
Net (income) loss
 applicable to non-
 vestedrestricted shares      (260)      (416)     (194)   (1,107)      306
                          --------  ---------  --------  --------  --------
  Net income (loss)
   applicable to common
   shares                 $ 18,905  $  28,907  $ 13,022  $ 78,199  $(20,748)
                          ========  =========  ========  ========  =========
Diluted earnings (loss)
 per common share         $   0.26  $    0.39  $   0.18  $   1.06  $  (0.28)
Dividends declared per
 common share             $   0.07  $    0.04  $   0.01  $   0.16  $   0.04
Weighted average diluted
 common shares
 outstanding                74,042     74,034    73,758    73,994    73,666

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