Quarterly Highlights: Improved Capital Ratios -- Increased Loan Loss Reserves and Lower Delinquencies -- Solid Operating Leverage

ITASCA, IL -- (Marketwire) -- 07/22/09 -- First Midwest Bancorp, Inc. (NASDAQ: FMBI)

Second Quarter 2009 Operating Performance

--  After-tax earnings of $2.7 million compared to $5.7 million for first
    quarter 2009 and $27.0 million for second quarter 2008.
--  Pre-tax earnings of $29.4 million, excluding provision expense, net
    securities gains, and special Federal Deposit Insurance Corporation
    ("FDIC") deposit insurance assessment, compared to $36.4 million for first
    quarter 2009 and $37.4 million for second quarter 2008.
--  Average core transactional deposits up 8.7% from first quarter 2009
    and 2.4% from second quarter 2008.
--  Net interest margin of 3.53% compared to 3.67% for first quarter 2009
    and 3.58% for second quarter 2008.
--  Net securities gains realized of $6.6 million for second quarter 2009.
    

Capital and Credit

--  Increased tangible common equity, Tier 1 regulatory capital, and Tier
    1 common ratios to 5.56%, 12.38%, and 7.36%, respectively, from first
    quarter 2009.
--  Increased loan loss reserves to 2.40% of total loans compared to 2.15%
    at March 31, 2009, with second quarter 2009 provision exceeding net charge-
    offs by $11.5 million.
--  Decreased non-accrual loans plus loans past due 90 days or more and
    still accruing interest to 4.60% of total loans compared to 4.78% at March
    31, 2009.
    

First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank, today reported results of operations and financial condition for second quarter 2009. Net income was $2.7 million, before adjustment for preferred dividends and non-vested restricted shares, with $63,000 available to common shareholders after such adjustments. This compares to $5.7 million and $3.2 million, respectively, for first quarter 2009, or $0.07 per share, and net income of $27.0 million, or $0.55 per share, for second quarter 2008. Return on average assets was 0.13% for second quarter 2009 compared to 0.28% and 1.33% for first quarter 2009 and second quarter 2008, respectively. Return on average common equity was 0.04% for second quarter 2009 compared to 1.78% and 14.53% for first quarter 2009 and second quarter 2008, respectively.

"Performance for the quarter reflects the execution of a number of planned steps taken to strengthen the overall Company and navigate what remains a very difficult operating environment," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Our core operating performance remains solid as we continue to benefit from strong net interest margins, an efficient operating model, an increasing core deposit base, and a flexible balance sheet. This performance has enabled us to absorb a significant increase in loan loss provisioning and higher credit remediation costs and, at the same time, strengthen our overall capital position."

Scudder further commented, "Additionally, our efforts to address early stage delinquencies are producing benefits. These efforts have resulted in higher restructured loan and foreclosed real estate levels which, when combined with declines in comparative delinquency levels, better position us to reduce our level of non-performing assets."

Operating Performance

The Company generated income before taxes, credit losses, securities gains, and special FDIC deposit insurance assessment of $29.4 million for second quarter 2009 compared to $36.4 million for first quarter 2009. The decline was due primarily to an increase in operating expenses of $2.8 million incurred to remediate loans and maintain other real estate owned and a $2.6 million reversal of year to date interest accrued on loans placed on non-accrual.

Total loans as of June 30, 2009 were $5.32 billion, down $64.6 million from March 31, 2009, with $54.6 million of the decrease due to either charge-offs or transfer of loans to other real estate owned.

Average core transactional deposits for second quarter 2009 were $3.74 billion, an increase of $297.7 million, or 8.7%, from first quarter 2009 due largely to normal seasonality in public fund deposits. The year-over-year increase was $87.4 million, or 2.4%, and is due largely to growth in money market account balances.

Tax-equivalent net interest margin was 3.53% for second quarter 2009, down from 3.67% for first quarter 2009. During second quarter 2009, the Company placed loans on non-accrual status and accordingly reversed interest accrued to date of $2.6 million. Excluding this adjustment, second quarter net margin would have been approximately 3.67%.

Fee-based revenues were $21.2 million for second quarter 2009, an increase of approximately $1.1 million compared to first quarter 2009. All major fee categories increased relative to the previous quarter with such increases primarily due to seasonality.

Other income, excluding fee-based revenues, increased from the previous quarter by $3.1 million, principally due to recording a market adjustment related to certain assets held under a non-qualified deferred compensation plan. Such increase is substantially offset by a corresponding increase in compensation expense.

For second quarter 2009, noninterest expense increased $10.8 million compared to the previous quarter. The increase was primarily due to $3.5 million in expense resulting from an industry-wide special deposit insurance assessment by the FDIC, a charge to compensation related to the market value adjustment of certain non-qualified deferred compensation plan assets (referred to above) of $2.8 million, increases in other real estate owned expenses and loan remediation costs of $2.8 million, and certain other expenses due to seasonality. The second quarter 2009 efficiency ratio of 61.5% is elevated due to these items. Excluding the impact of the special FDIC assessment and the market value adjustment the efficiency ratio would be reduced to 56.2%.

Credit Remediation

Non-accrual loans plus 90 days past due and still accruing loans as of June 30, 2009 were $245.1 million compared to $257.5 million at March 31, 2009, with residential construction loans comprising approximately 50% of the June 30, 2009 total. Non-accrual loans at June 30, 2009 totaled $219.0 million compared to $183.5 million at March 31, 2009, while loans 90 days past due and still accruing totaled $26.1 million, a decline of $47.9 million from March 31, 2009.

At June 30, 2009, the Company had total restructured loans of $30.1 million. Restructured loans for which interest is accruing totaled $18.9 million at June 30, 2009, up from $1.1 million at March 31, 2009. Included in the non-accrual loan total are additional restructured loans totaling $11.2 million, which will not accrue interest until the borrowers demonstrate a period of performance under the restructured terms. At such time, the Company will again accrue interest on these loans.

As of June 30, 2009, loans 30-89 days past due totaled $38.1 million, a decline of $16.2 million from March 31, 2009. The decline reflects the benefits derived from expanded resources focused on the early remediation of potential problem loans as well as the migration of certain loans to other problem categories.

Other real estate owned was $68.9 million as of June 30, 2009 compared to $39.0 million as of March 31, 2009. All properties are recorded at estimated fair values, less estimated selling costs. The increase from first quarter 2009 is due primarily to real estate collateral obtained through deeds-in-lieu of foreclosure in an effort to accelerate control and facilitate sales.

During second quarter 2009, the Company increased its reserve for loan losses to $127.5 million, up $11.5 million from March 31, 2009. The reserve for loan losses represented 2.40% of total loans outstanding at June 30, 2009, compared to 2.15% at March 31, 2009. Net charge-offs totaled $24.7 million, or 1.85% of total average loans, during second quarter 2009, compared to $26.3 million, or 1.98% of total average loans in first quarter 2009. The provision for loan losses for second quarter 2009 was $36.3 million, compared to $48.4 million for first quarter 2009. The reserve for loan losses to non-accrual loans plus 90 days past due loans was 52.03% at June 30, 2009 versus 45.05% at March 31, 2009 and 105.35% at June 30, 2008.

Securities Portfolio

Net securities gains were $6.6 million for second quarter 2009. During second quarter 2009, the Company took advantage of opportunities in the market to sell $388.8 million of mortgage-backed and municipal securities for a gain of $10.7 million. This was partially offset by impairment charges totaling $4.1 million associated with four trust-preferred collateralized debt obligations.

Capital Management

Regulatory and tangible common equity ratios were improved in comparison to March 31, 2009, with such improvement driven by a redeployment of assets which reduced total risk-based assets and a decline in total assets, with the decline primarily due to a reduction in the size of the investment securities portfolio. As reflected in the following table, all regulatory mandated ratios for characterization as "well capitalized" were significantly exceeded as of June 30, 2009.

                                                    Minimum
                                                     Well-   Excess Over
                                     June   March  Capital-    Required
                                      30,     31,    ized    Minimums at
                                     2009    2009    Level  June 30, 2009
                                    ------  ------  ------  --------------
                                                              (Amounts in
                                                                millions)
Regulatory Capital Ratios:
  Total capital to risk-weighted
   assets                            15.21%  14.62%  10.00%    52%  $ 330
  Tier 1 capital to risk-weighted
   assets                            12.38%  11.85%   6.00%   106%  $ 404
  Tier 1 leverage to average assets   9.87%   9.60%   5.00%    97%  $ 387
Regulatory capital ratios,
 excluding preferred stock:
  Total capital to risk-weighted
   assets                            12.17%  11.70%  10.00%    22%  $ 137
  Tier 1 capital to risk-weighted
   assets                             9.33%   8.93%   6.00%    55%  $ 211
  Tier 1 leverage to average assets   7.44%   7.23%   5.00%    49%  $ 194
Tier 1 common capital to
 risk-weighted assets                 7.36%   7.04%    N/A
Tangible equity ratios:
  Tangible common equity to
   tangible assets                    5.56%   5.36%    N/A
  Tangible common equity, excluding
   other comprehensive loss, to
   tangible assets                    6.23%   5.83%    N/A
  Tangible common equity to
   risk-weighted assets               6.57%   6.47%    N/A

The Board of Directors reviews the Company's capital plan each quarter, giving consideration to the current and expected operating environment as well as an evaluation of various capital alternatives.

About the Company

First Midwest is the premier relationship-based banking franchise in the growing Chicagoland banking market. As one of the Chicago metropolitan area's largest independent bank holding companies, First Midwest provides the full range of both business and retail banking and trust and investment management services through some 100 offices located in 62 communities, primarily in metropolitan Chicago. First Midwest was recently recognized by the Alfred P. Sloan awards for Business Excellence in Workforce Flexibility in the greater Chicago Area.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical facts but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that actual results and the Company's financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company's future results, see "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and other reports filed with the Securities and Exchange Commission. Forward-looking statements represent management's best judgment as of the date hereof based on currently available information.