ITASCA, IL, Oct. 21, 2009 (Marketwire) --

ITASCA, IL -- (Marketwire) -- 10/21/09 -- First Midwest Bancorp, Inc. (NASDAQ: FMBI)

Third Quarter 2009 Operating Performance

--  After-tax earnings of $3.4 million compared to $2.7 million for second
    quarter 2009 and $24.2 million for third quarter 2008.
--  Pre-tax earnings of $28.4 million, excluding provision expense and net
    securities and debt extinguishment gains/losses, compared to $25.9 million
    for second quarter 2009 and $39.8 million for third quarter 2008.
--  Average core transactional deposits up 3.4% from second quarter 2009
    and 7.6% from third quarter 2008.
--  Net interest margin of 3.66% compared to 3.53% for second quarter 2009
    and 3.63% for third quarter 2008.
--  Net securities losses realized of $7.0 million for third quarter 2009.
    

Capital and Credit

--  Increased tangible common equity 132 basis points to 6.88% from second
    quarter 2009.
--  Increased Tier 1 regulatory capital and Tier 1 common ratios to 12.88%
    and 8.43%, respectively, up 50 and 107 basis points, respectively, from
    second quarter 2009.
--  Exchanged $68.8 million of debt for 5.6 million shares of common stock
    at a pre-tax gain of approximately $14.0 million.
--  Non-accrual plus 90 days past due loans totaled $262.8 million, which
    approximates the level at June 30, 2009.
--  Increased loan loss reserves to 2.53% of total loans compared to 2.39%
    at June 30, 2009, with third quarter 2009 provision exceeding net charge-
    offs of $31.3 million by $6.7 million.
    

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 third quarter 2009. Net income was $3.4 million, before adjustment for preferred dividends and non-vested restricted shares, with $773,000, or $0.02 per share available to common shareholders after such adjustments. This compares to $2.7 million and $63,000, respectively, for second quarter 2009, and net income available to common shareholders of $24.1 million, or $0.50 per share, for third quarter 2008. Return on average assets was 0.17% for third quarter 2009 compared to 0.13% and 1.16% for second quarter 2009 and third quarter 2008, respectively. Return on average common equity was 0.43% for third quarter 2009 compared to 0.04% and 13.07% for second quarter 2009 and third quarter 2008, respectively.

In making the announcement, Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. said, "Despite the continuing economic challenges during the quarter, we again generated solid core performance, as evidenced by commercial and industrial loan growth, core transactional deposit growth, and improved net interest margins. Concurrently, we increased our loan loss reserve and continued to proactively remediate problem credits."

Mr. Scudder continued, "During the quarter, we also notably improved the quality of our capital composition by increasing our level of tangible common equity. We did so through the successful exchange of $68.8 million of the Company's subordinated and trust preferred debt for common stock at a discount from the par value of the debt securities."

Operating Performance

The Company generated income before taxes, credit losses, and net securities gains of $28.4 million for third quarter 2009, compared to $25.9 million for second quarter 2009. The increase was due primarily to a decrease in the deposit premium assessment by the Federal Deposit Insurance Corporation.

Total loans as of September 30, 2009 were $5.31 billion, a decrease of $34.7 million from June 30, 2009 and an increase of $82.5 million from September 30, 2008. During third quarter 2009, the Company securitized $25.7 million of real estate 1-4 family loans, which are now included in the securities available-for-sale portfolio, thereby accounting for the decline in consumer loans from June 30, 2009. Commercial and industrial loans increased from June 30, 2009, as did multifamily and commercial real estate office and retail categories. These increases, totaling $97.5 million, were substantially offset by reductions in construction and commercial land categories.

Average core transactional deposits for third quarter 2009 were $3.86 billion, an increase of $127.5 million, or 3.4%, from second quarter 2009 and $271.5 million, or 7.6% from third quarter 2008. The increases from both prior periods were due primarily to growth in money market account balances.

Tax-equivalent net interest margin was 3.66% for third quarter 2009, an increase from 3.53% for second quarter 2009 and 3.63% for third quarter 2008. The yield on earning assets for third quarter 2009 improved 2 basis points compared to second quarter 2009, while the Company's cost of funds declined 13 basis points compared to second quarter 2009.

Fee-based revenues were $21.8 million for third quarter 2009, compared to $21.2 million for second quarter 2009 and $24.8 million for third quarter 2008. All major fee categories decreased from third quarter 2008, reflecting the impact of reduced consumer spending and lower trust advisory fees.

Other income, excluding fee-based revenues, for third quarter 2009 decreased from the previous quarter by $1.3 million, principally due to recording a negative market adjustment related to certain assets held under a non-qualified deferred compensation plan. Such decrease is substantially offset by a corresponding decrease in compensation expense.

For third quarter 2009, noninterest expense decreased $2.6 million compared to the previous quarter and increased $8.2 million from third quarter 2008. If the special industry-wide FDIC assessment incurred in second quarter 2009 is excluded from the second quarter total, noninterest expense increased by $1.0 million, with the increase primarily due to the timing of marketing expenses. The increase from third quarter 2008 is due to higher loan remediation costs, including costs associated with maintaining foreclosed real estate, and higher FDIC insurance premiums.

Credit Remediation

Non-accrual loans plus 90 days past due and still accruing loans as of September 30, 2009 were $262.8 million compared to $263.3 million at June 30, 2009, with residential construction loans comprising approximately half of the September 30, 2009 total.

At September 30, 2009, the Company had total restructured loans of $41.0 million. Restructured loans for which interest is accruing totaled $26.7 million at September 30, 2009, up from $18.9 million at June 30, 2009. Included in the non-accrual loan total are additional restructured loans totaling $14.3 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 September 30, 2009, loans 30-89 days past due totaled $44.3 million compared to $38.1 million at June 30, 2009.

Other real estate owned was $57.9 million as of September 30, 2009 compared to $50.6 million as of June 30, 2009. All properties are recorded at estimated fair values, less estimated selling costs.

During third quarter 2009, the Company increased its reserve for loan losses to $134.3 million, up $6.7 million from June 30, 2009. The reserve for loan losses represented 2.53% of total loans outstanding at September 30, 2009, compared to 2.39% at June 30, 2009. Net charge-offs totaled $31.3 million, or 2.32% of total average loans, during third quarter 2009, compared to $24.7 million, or 1.85% of total average loans in second quarter 2009. The provision for loan losses for third quarter 2009 was $38.0 million, compared to $36.3 million for second quarter 2009. The reserve for loan losses to non-accrual loans plus 90 days past due loans was 51.1% at September 30, 2009, an increase from 48.4% at June 30, 2009.

Securities Portfolio

Net securities losses were $7.0 million for third quarter 2009. The Company sold approximately $120 million of collateralized mortgage backed, municipal, and other securities at a net gain of $4.5 million. During third quarter 2009, the Company recorded an other-than-temporary impairment charge of $11.5 million associated with its portfolio of trust-preferred collateralized debt obligations.

Capital Management

During third quarter 2009, the Company retired $38.3 million of trust preferred debt and $29.5 million of subordinated debt at a discount to par in exchange for approximately 5.6 million shares of the Company's common stock. The total pre-tax gain from the exchanges was approximately $14.0 million. Regulatory and tangible common equity ratios were improved in comparison to June 30, 2009. The significant improvements in the Tier 1 and tangible capital ratios primarily reflect the exchange of trust preferred debt and subordinated debt classified as Tier 1 and Tier 2 debt, respectively, for common stock.

As reflected in the following table, all regulatory mandated ratios for characterization as "well-capitalized" were significantly exceeded as of September 30, 2009.

                                                   Minimum   Excess Over
                                                    "Well-    Required
                                    September June  Capital-  Minimums at
                                       30,     30,   ized"   September 30,
                                      2009    2009   Level       2009
                                    -------  ------  ------  --------------
                                                              (Amounts in
                                                                millions)
Regulatory Capital Ratios:
   Total capital to risk-weighted
    assets                           15.27%  15.21%  10.00%     53%   $ 329
   Tier 1 capital to risk-weighted
    assets                           12.88%  12.38%   6.00%    115%   $ 429
   Tier 1 leverage to average
    assets                           10.52%   9.87%   5.00%    110%   $ 421

Regulatory capital ratios,
 excluding preferred stock:
   Total capital to risk-weighted
    assets                           12.18%  12.17%  10.00%     22%   $ 136
   Tier 1 capital to risk-weighted
    assets                            9.78%   9.33%   6.00%     63%   $ 236
   Tier 1 leverage to average
    assets                            7.99%   7.44%   5.00%     60%   $ 228

Tier 1 common capital to
 risk-weighted assets                 8.43%   7.36%    N/A     N/A      N/A
   Tangible equity ratios:
   Tangible common equity to
    tangible assets                   6.88%   5.56%    N/A     N/A      N/A
   Tangible common equity,
    excluding other comprehensive
    loss, to tangible assets          7.10%   6.23%    N/A     N/A      N/A
Tangible common equity to
 risk-weighted assets                 8.16%   6.57%    N/A     N/A      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 93 offices located in 62 communities, primarily in metropolitan Chicago.

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.