SOURCE:
Midwest Banc Holdings, Inc.
2008-07-22 16:45:00
MBHI Reports 2Q08 EPS of $.06
MELROSE PARK, IL–(EMWNews – July 22, 2008) – Midwest Banc Holdings, Inc. (
reported earnings per share of $.06 for the second quarter 2008.
Overview
MBHI, while not immune to the difficult economic conditions, has made
meaningful progress on a number of fronts. Trends in the second quarter
include:
Credit Quality
-- Delinquencies 30-89 days were down 57% in the second quarter and at
.35% of loans are at the lowest level in the previous five quarters.
-- Non-performing assets to total assets are down to 1.16%, the third
consecutive quarter of declines and the lowest level since September 2006.
-- Outstanding balance on the Large Problem Credit (LPC) was reduced by
$5.7 million through the sale of assets; in addition, early in the third
quarter MBHI took possession of the largest remaining asset.
-- Credits on the internal watch list have increased significantly,
reflecting a difficult economic environment.
Net Interest Margin
-- Net Interest Margin increased 7 basis points in the quarter to 2.89%.
A stable or rising interest rate environment is positive for MBHI spreads.
Loan Growth
-- Loans increased 5.4% on an annualized basis and the movement away from
Construction loans toward Commercial and Industrial and Owner-occupied CRE
loans continued.
Expenses
-- Expenses declined $1.1 million from the first quarter, excluding the
loss on extinguishment of debt incurred in the first quarter.
New Hires & Organizational Changes
-- Brogan M. Ptacin assumed responsibility for leading Midwest Bank's
Corporate Banking Group
-- Jonathan P. Gilfillan joined Midwest Bank as Executive Vice President
and Division Head of Commercial Real Estate Lending
-- Susan K. Moll joined Midwest Bank as Senior Vice President - Financial
Planning and Analysis
“We are spending more time on liquidity and capital planning than in any
period in recent memory,” stated James Giancola, CEO. “Our new retail CD
promotion has generated $99 million in new money in the past few weeks and
has helped reduce our borrowed funds position. The Company remains
well-capitalized by all measures and we continue to evaluate our capital
position and alternatives on a regular basis.”
Loan Portfolio
Loans increased by $33 million from the first quarter of 2008 to the second
quarter of 2008. Midwest has significantly changed the mix of its loan
portfolio through the two most recent acquisitions, Royal American and
Northwest Suburban. At December 31, 2004, the loan portfolio was
approximately 25% construction and 17% commercial. At June 30, 2008,
construction represented approximately 19% of the portfolio while
commercial loans have increased to approximately 18% of total loans. When
owner-occupied CRE loans and other loans based on source of repayment
(other than the underlying real estate) are added to the commercial loan
total, the concentration of commercial loans in 2008 increased to 44%.
Loan Composition -
Collateral-Based Method 12/31/2004 6/30/2008
----------------------- -----------------------
($ in 000s) % of Total ($ in 000s) % of Total
----------- ----------- ----------- -----------
1-4 Family Loans $ 126,047 11.5 $ 250,459 10.0
Commercial & Multifamily
Real Estate Loans 411,535 37.5 1,105,632 44.3*
----------- ----------- ----------- -----------
Real Estate Loans 537,582 49.0 1,356,091 54.3
Construction & Development
Loans 270,836 24.7 483,590 19.3
Home Equity Loans 100,322 9.1 202,642 8.1
Other Consumer Loans 4,377 0.4 7,876 0.3
----------- ----------- ----------- -----------
Consumer Loans 104,699 9.5 210,518 8.4
Commercial Loans 184,558 16.8 451,215 18.0
----------- ----------- ----------- -----------
Total Gross Loans ($000) $ 1,097,675 100.0 $ 2,501,414 100.0
=========== =========== =========== ===========
* $493 million, or 45%, of the CRE portfolio is owner-occupied. The Bank
did not monitor the owner-occupied portion of CRE in 2004, but it was
estimated to be a small portion of the total in 2004. The largest portion
of loans in this category was acquired in the Royal American and Northwest
Suburban acquisitions.
Net Interest Margin
After reaching a low point in February, the net interest margin improved
steadily throughout the second quarter. For the full quarter, the net
interest margin increased to 2.89% compared to 2.82% in the first quarter.
Unlike the first quarter where the prime decreased three times, interest
rates were more stable in the second quarter with only one drop in prime at
the end of April. In this more stable rate environment, Midwest’s net
interest margin benefited as interest bearing liabilities re-priced
steadily downward. Interest bearing liability costs fell 55 basis points as
certificates of deposits matured and re-priced at materially lower rates.
In addition, because Midwest prepaid $130 million of FHLB advances at the
end of the first quarter, Midwest had the full benefit of a 239 basis point
decrease in the cost of these borrowings in the second quarter.
Loan Quality
Midwest’s loan quality measures continued to improve in the second quarter
in spite of a challenging economic environment. Nonaccrual loans declined
$6.0 million to $41 million or 1.64% of total loans. Nonperforming assets
declined $6.1 million to $43 million or 1.16% of total assets. Midwest had
one $4.3 million loan relationship in 90+ days past due and accruing as of
June 30, 2008 and the payment was received on July 1st. As expected,
Midwest saw a $5.7 million net reduction in the LPC through the sale of
assets; in addition, in early July Midwest took ownership of a substantial
piece of real estate. Delinquencies 30 – 89 days in the second quarter
were down 57% to $8.7 million or .35% of loans and the lowest level since
December 2006.
The provision for loan losses decreased by $1.0 million to $4.4 million in
the second quarter of 2008. Net charge-offs for the second quarter of 2008
were $2.2 million or .35% of average loans, down from $11.8 million or
1.93% of loans in the first quarter. As a result, the allowance for loan
losses to loans increased to .90% of loans outstanding at quarter end
compared to .82% of loans outstanding at the end of the first quarter.
This increase was deemed prudent in light of the challenging economic
environment.
Noninterest Income
Noninterest income was up modestly in the second quarter at $4.4 million.
Excluding the first quarter impairment charge on securities and the gain on
sale of our Bucktown branch, noninterest income improved by $214,000. Most
of this increase was due to increased sales of variable annuities at the
brokerage unit.
Expense Control
Midwest continues to tightly control operating expenses. Noninterest
expenses on a linked quarter basis, excluding the $7.1 million loss on
extinguishment of debt in the first quarter, declined $1.1 million or 5.2%.
Salary and employee benefits expense was $2.0 million below the March
quarter. Base salary expenses were flat to the first quarter while annual
incentive accruals were adjusted downward $1.3 million based upon financial
results. Payroll taxes were down $293,000 from the first quarter due to
annual withholding caps being reached and retirement benefits were down
$458,000 in total with $224,000 of that attributable to a one-time
adjustment in the first quarter. Midwest closely monitors its personnel
costs, adding employees only when the proof of need is clearly delineated
or expected revenue increases warrant. FTE employees at June 30, 2008 are
down 6% or 34 less than the combined FTE employees of Midwest and Northwest
Suburban as of March 31, 2007, the period closest to our merger
announcement date. Using this same data, assets per FTE employee have
increased 13% over that time frame.
Those decreases in salaries and benefits were partially offset by increases
in: FDIC premiums of $315,000 as the one-time credit was depleted;
occupancy and equipment of $194,000 mainly from Bucktown branch rent which
began in April; $258,000 in professional services mostly related to legal
fees in loan workouts; $232,000 in increased foreclosed properties expense;
and $137,000 in marketing expenses related to media services including an
enhanced web page design.
Midwest’s projected effective tax rate for the remainder of 2008 is 16-18%.
Securities Portfolio and Balance Sheet Management
Midwest’s $742 million investment securities portfolio is held primarily to
assist with liquidity management and is an important component of its
interest rate risk management. In managing the securities portfolio,
Midwest attempts not to take any credit risk or invest in exotic investment
products. Midwest has no sub-prime or Alt-A mortgage backed securities. All
of the $311.5 million in mortgage-backed securities are agency issued,
AAA-rated, and are either pass-throughs or CMOs. At June 30, 2008, the
ratings of Midwest’s securities portfolio were: AAA 87%; AA 11%; and A 2%.
At March 31, 2008, Midwest recognized a $17.6 million other-than-temporary
impairment (OTTI) of certain FNMA and FHLMC preferred securities. Midwest
maintains a position in both securities and continues to monitor the
situation of the GSEs. As of June 30, 2008, the combined holdings were in
an estimated unrealized loss position of $5.5 million.
Midwest has a portfolio of bank owned life insurance that had a cash
surrender value of $83 million at June 30, 2008. The income from increases
in cash surrender value was $865,000 in the second quarter of 2008.
At June 30, 2008, Midwest had $974 million of funding from various
borrowing sources to complement its $2.3 billion in deposits.
Midwest has an aggressive program of modeling the interest rate risk
inherent in its balance sheet including simulating various scenarios of
market rate changes. At June 30, 2008, Midwest’s position is asset
sensitive due to a concentration of prime-based commercial loans. Over a
12-month period, however, the impact to earnings from changes in interest
rates, either up or down, is projected to be minimal.
Financial Highlights
On October 1, 2007, Midwest Banc Holdings, Inc. acquired Northwest Suburban
Bancorp, Inc. Special merger-related charges were $114,000 and $80,000 in
the first and second quarters of 2008, respectively. Therefore,
comparisons involving prior periods may be affected by these merger-related
charges.
Earnings
-- Diluted earnings (loss) per share was $.06 for second quarter and
($.17) for six months 2008
-- Compared to ($.22) for first quarter 2008
-- Compared to $.21 for second quarter 2007
-- Compared to $.38 for six months 2007
-- Net income (loss) was $2.4 million for second quarter and ($3.0)
million for six months 2008
-- Compared to ($5.4) million for first quarter 2008
-- Compared to $5.1 million for second quarter 2007
-- Compared to $9.5 million for six months 2007
-- Net interest margin was 2.89% for second quarter and 2.86% for six
months 2008
-- Compared to 2.82% for first quarter 2008
-- Compared to 3.05% for second quarter 2007
-- Compared to 3.03% for six months 2007
-- Top line revenue was $27.2 million for second quarter and $51.2 million
for six months 2008
-- Up 13% from the first quarter 2008
-- Up 14% from the second quarter 2007
-- Up 10% from six months 2007
-- Efficiency ratio was 70% for second quarter and 67% for six months 2008
-- Compared to 66% for first quarter 2008
-- Compared to 66% for second quarter 2007
-- Compared to 68% for six months 2007
Loans and Loan Quality
-- Loans in second quarter increased
-- $33.4 million compared to first quarter 2008
-- Annualized net charge-off rate was .35% for second quarter 2008
-- Compared to 1.93% for first quarter 2008
-- Compared to .27% for second quarter 2007
-- Nonaccrual loans at June 30, 2008 were $41.0 million or 1.64% of loans
-- Compared to 1.90% at March 31, 2008
-- Compared to 2.20% at June 30, 2007
-- Nonperforming assets at June 30, 2008 were $43.3 million, or 1.16% of
assets
-- Compared to 1.33% at March 31, 2008
-- Compared to 1.52% at June 30, 2007
-- Allowance for loan losses at June 30, 2008 was .90% of loans
-- Compared to .82% at March 31, 2008
-- Compared to 1.20% at June 30, 2007
-- Allowance for loan losses to nonaccrual loans was 55% at June 30, 2008
-- Compared to 43% at March 31, 2008
-- Compared to 54% at June 30, 2007
-- Delinquencies 30-89 days to loans were .35% at June 30, 2008
-- Compared to .82% at March 31, 2008
-- Compared to .63% at June 30, 2007
Capital Ratios
-- Capital ratios at June 30, 2008
-- Tier 1 risk-based 9.09%
-- Total risk-based 10.43%
-- Tier 1 leverage 7.38%
-- Equity to assets 9.95%
Additional financial data are contained in the accompanying statements,
tables and schedules.
Hosting a Conference Call
Midwest will conduct a conference call to discuss these results July 23,
2008, at 11:00 A.M. eastern / 10:00 A.M. central.
The webcast and call will be hosted by members of management. A brief
discussion of results and trends will be followed by questions from
professional investors and analysts invited to participate in the
interactive portion of the discussion.
Interested parties wishing to participate in the interactive portion of the
call can dial in to 800-860-2442 or +1 412-858-4600 for international
calls. The live webcast can be accessed and will be available for replay at
www.midwestbanc.com. The audio replay may be accessed through July 30, 2008
at 877-344-7529 or +1 412-317-0088. The replay passcode is 420171.
Franchise
Midwest Banc Holdings, Inc., with $3.7 billion in assets, provides a wide
range of retail and commercial banking services, personal and corporate
trust services, securities services and insurance brokerage services in the
greater Chicago area. The principal operating subsidiaries of Midwest Banc
Holdings, Inc. are Midwest Bank and Trust Company and Midwest Financial and
Investment Services, Inc. Midwest has 29 banking offices and operates 31
ATMs. On January 1, 2008, Midwest joined the Allpoint®/STARsf®
surcharge-free network. Midwest customers now have access to thousands of
surcharge-free ATMs nationwide, with over 1,000 ATMs in the Chicagoland
area.
Information on Midwest products, services and locations is available at:
Forward-Looking Statements
This press release contains certain “Forward-Looking Statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and should
be reviewed in conjunction with the Company’s Annual Report on Form 10-K
and other publicly available information regarding the Company, copies of
which are available from the Company upon request. Such publicly available
information sets forth certain risks and uncertainties related to the
Company’s business which should be considered in evaluating
“Forward-Looking Statements.”
Financial Highlights
Midwest Banc Holdings, Inc.
(In thousands, except per share data)
Three Months Ended
-------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Income Statement Data:
Net income (Loss) $ 2,428 $ (5,416) $ 4,222 $ 4,836 $ 5,107
Per Share Data:
Basic and diluted
earnings $ .06 $ (.22) $ .14 $ .20 $ .21
Cash dividends
declared .13 .13 .13 .13 .13
Book value 11.76 12.14 11.94 11.69 11.55
"If converted"
book value(11) 12.06 12.41 12.23 11.69 11.55
Tangible book
value(1) 5.48 5.79 5.56 8.02 7.91
"If converted"
tangible book
value(1)(11) 6.37 6.65 6.44 8.02 7.91
Stock price at
period end 4.87 12.78 12.42 14.77 14.50
Share Data:
Common shares
outstanding - at
period end 27,859 27,839 27,804 24,406 24,547
Basic - average 27,855 27,838 27,895 24,454 24,638
Diluted - average 27,958 27,838 28,043 24,647 24,828
Selected Financial Ratios:
Return on average
assets .26% (.59)% .45% .64% .68%
Return on average
equity 2.57 (5.69) 4.80 6.75 7.07
Net interest
margin (tax
equivalent) 2.89 2.82 2.93 3.10 3.05
Efficiency
ratio(2)(3) 70 66 73 64 66
Dividend payout
ratio 233 N/M 91 67 64
Loans to deposits
at period end 107 103 101 101 96
Loans to assets
at period end 67 66 67 66 66
Equity to assets
at period end 9.95 10.22 10.16 9.41 9.38
Tangible equity
to tangible
assets at period
end(1)(4) 5.51 5.75 5.62 6.65 6.62
Tier 1 capital to
risk-weighted
assets 9.09 9.33 9.21 11.42 11.76
Total capital to
risk-weighted
assets 10.43 10.61 10.17 12.52 12.81
Tier 1 leverage
ratio 7.38 7.47 7.33 8.99 9.13
Full time equivalent
employees 543 543 539 460 489
Balance Sheet Data:
Total earning
assets $3,275,580 $3,298,143 $3,266,461 $2,750,334 $2,698,762
Average earning
assets 3,274,335 3,276,965 3,301,501 2,736,154 2,731,527
Average assets 3,686,350 3,686,269 3,721,444 3,020,254 3,013,039
Average loans 2,459,486 2,459,830 2,453,292 1,989,119 1,961,437
Average
securities 762,889 765,966 808,774 698,541 726,534
Average deposits 2,384,764 2,415,385 2,480,831 2,022,709 2,021,256
Tangible
shareholders'
equity(1) 195,751 204,295 197,713 195,790 194,138
Average equity 379,677 382,603 348,639 284,231 289,760
See footnotes at end of statements, tables and schedules.
Financial Highlights
Midwest Banc Holdings, Inc.
(In thousands, except per share data)
Six Months Ended
--------------------------
June 30, June 30,
2008 2007
----------- ------------
Income Statement Data:
Net income (Loss) $ (2,988) $ 9,519
Per Share Data:
Basic earnings $ (.17) $ .39
Diluted earnings (.17) .38
Cash dividends declared .26 .26
Share Data:
Common shares outstanding - at period end 27,859 24,547
Basic - average 27,847 24,670
Diluted - average 27,847 24,886
Selected Financial Ratios:
Return on average assets (.16)% .64%
Return on average equity (1.58) 6.64
Net interest margin (tax equivalent) 2.86 3.03
Efficiency ratio(2)(3) 67 68
Dividend payout ratio N/M 68
Full time equivalent employees 543 489
Balance Sheet Data:
Total earning assets $ 3,275,580 $ 2,698,762
Average earning assets 3,275,650 2,698,470
Average assets 3,686,309 2,989,670
Average loans 2,459,658 1,953,990
Average securities 764,428 701,915
Average deposits 2,400,075 2,008,559
Tangible shareholders' equity(1) 195,751 194,138
Average equity 381,140 289,274
See footnotes at end of statements, tables and schedules.
Statement of Income
Midwest Banc Holdings, Inc.
(In thousands, except per share data)
Three Months Ended
-------------------------------------------------
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
-------- --------- -------- -------- --------
Interest Income
Loans $ 37,392 $ 40,806 $ 44,598 $ 37,566 $ 36,822
Loans held for sale -- -- -- 11 48
Securities
Taxable 8,977 9,060 9,886 8,609 8,729
Exempt from fed
income taxes 593 598 645 462 462
Trading securities -- -- -- 2 --
Dividends from FRB and
FHLB stock 184 183 158 227 226
Short-term investments 98 148 150 297 205
-------- --------- -------- -------- --------
Total interest
income 47,244 50,795 55,437 47,174 46,492
-------- --------- -------- -------- --------
Interest Expense
Deposits 16,111 19,089 21,577 18,634 18,582
Federal funds purchased 672 815 673 64 393
Securities sold under
repurchase agreements 3,482 3,178 3,443 3,137 2,563
Advances from the FHLB 2,437 3,482 3,811 3,640 3,670
Junior subordinated
debentures 876 1,045 1,325 1,334 1,315
Notes payable 669 967 1,352 18 --
Subordinated debt 232 3 -- -- --
-------- --------- -------- -------- --------
Total interest
expense 24,479 28,579 32,181 26,827 26,523
-------- --------- -------- -------- --------
Net interest income 22,765 22,216 23,256 20,347 19,969
Provision for loan
losses 4,415 5,400 1,410 1,800 1,036
-------- --------- -------- -------- --------
Net interest income after
provision for loan
losses 18,350 16,816 21,846 18,547 18,933
Noninterest Income
Service charges on
deposit accounts 1,953 1,963 1,953 1,535 1,575
Gains (losses) on
securities transactions 44 12 9 6 31
Impairment charge on
securities -- (17,586) -- -- --
Gains on sale of loans -- -- 1 41 225
Insurance and brokerage
commissions 683 560 488 685 541
Trust 482 449 508 453 503
Increase in CSV of life
insurance 865 858 871 736 703
Gain on sale of
property -- 15,196 -- -- --
Other 367 338 331 244 318
-------- --------- -------- -------- --------
Total noninterest
income 4,394 1,790 4,161 3,700 3,896
-------- --------- -------- -------- --------
Noninterest Expenses
Salaries and employee
benefits 11,015 13,040 11,665 9,740 10,363
Occupancy and equipment 3,093 2,899 2,740 2,362 2,190
Professional services 1,796 1,538 1,857 1,297 1,108
Marketing 713 576 614 538 478
Foreclosed properties 237 5 (2) 4 7
Loss on extinguishment
of debt -- 7,121 -- -- --
Amortization of
intangible assets 625 625 644 409 409
Merger related charges 80 114 1,333 -- (21)
Other 2,809 2,691 2,574 1,895 2,110
-------- --------- -------- -------- --------
Total noninterest
expenses 20,368 28,609 21,425 16,245 16,644
-------- --------- -------- -------- --------
Income (Loss) before
income taxes 2,376 (10,003) 4,582 6,002 6,185
Provision (benefit) for
income taxes (52) (4,587) 360 1,166 1,078
-------- --------- -------- -------- --------
Net Income (Loss) $ 2,428 $ (5,416) $ 4,222 $ 4,836 $ 5,107
======== ========= ======== ======== ========
Net Income (Loss)
available to common
shareholders $ 1,592 $ (6,251) $ 4,018 $ 4,836 $ 5,107
Basic and diluted
earnings per share $ .06 $ (.22) $ .14 $ .20 $ .21
======== ========= ======== ======== ========
Cash dividends declared
per share $ .13 $ .13 $ .13 $ .13 $ .13
======== ========= ======== ======== ========
Top line revenue (5) $ 27,159 $ 24,006 $ 27,417 $ 24,047 $ 23,865
Noninterest income to
top line revenue 16% 7% 15% 15% 16%
See footnotes at end of statements, tables and schedules.
Statement of Income
Midwest Banc Holdings, Inc.
(In thousands, except per share data)
Six Months Ended
June 30,
--------------------
Increase Increase
2008 2007 (Decrease) (Decrease)
--------- --------- ---------- ----------
Interest Income
Loans $ 78,198 $ 72,880 $ 5,318 7.3%
Loans held for sale -- 78 (78) (100.0)
Securities
Taxable 18,037 16,292 1,745 10.7
Exempt from fed income
taxes 1,191 1,162 29 2.5
Dividends from FRB and FHLB
stock 367 454 (87) (19.2)
Short-term investments 246 392 (146) (37.2)
--------- --------- ---------- ----------
Total interest income 98,039 91,258 6,781 7.4
--------- --------- ---------- ----------
Interest Expense
Deposits 35,200 36,481 (1,281) (3.5)
Federal funds purchased 1,487 1,092 395 36.2
Securities sold under
repurchase agreements 6,660 4,722 1,938 41.0
Advances from the FHLB 5,919 7,318 (1,399) (19.1)
Junior subordinated
debentures 1,921 2,616 (695) (26.6)
Notes payable 1,636 -- 1,636 100.0
Subordinated debt 235 -- 235 100.0
--------- --------- ---------- ----------
Total interest expense 53,058 52,229 829 1.6
--------- --------- ---------- ----------
Net interest income 44,981 39,029 5,952 15.3
Provision for loan losses 9,815 1,681 8,134 483.8
--------- --------- ---------- ----------
Net interest income after
provision for loan losses 35,166 37,348 (2,182) (5.8)
Noninterest Income
Service charges on deposit
accounts 3,916 3,209 707 22.0
Gains (losses) on securities
transactions 56 17 39 229.4
Impairment charge on
securities (17,586) -- (17,586) 100.0
Gains on sale of loans -- 401 (401) (100.0)
Insurance and brokerage
commissions 1,243 1,114 129 11.6
Trust 931 896 35 3.9
Increase in CSV of life
insurance 1,723 1,456 267 18.3
Gain on sale of property 15,196 -- 15,196 100.0
Other 705 523 182 34.8
--------- --------- ---------- ----------
Total noninterest income 6,184 7,616 (1,432) (18.8)
--------- --------- ---------- ----------
Noninterest Expenses
Salaries and employee
benefits 24,055 20,810 3,245 15.6
Occupancy and equipment 5,992 4,380 1,612 36.8
Professional services 3,334 2,316 1,018 44.0
Marketing 1,289 1,157 132 11.4
Foreclosed properties 242 32 210 652.3
Loss on extinguishment of
debt 7,121 -- 7,121 100.0
Amortization of intangible
assets 1,250 865 385 44.5
Merger related charges 194 (21) 215 1,023.8
Other 5,500 4,186 1,314 31.4
--------- --------- ---------- ----------
Total noninterest expenses 48,977 33,725 15,252 45.2
--------- --------- ---------- ----------
Income (loss) before income
taxes (7,627) 11,239 (18,866) (167.9)
Provision (benefit) for income
taxes (4,639) 1,720 (6,359) (369.7)
--------- --------- ---------- ----------
Net Income (Loss) $ (2,988) $ 9,519 $ (12,507) (131.4)
========= ========= ========== ==========
Net Income (Loss) available to
common shareholders $ (4,659) $ 9,519 $ (14,178) (149)
========= ========= ========== ==========
Basic earnings per share $ (.17) $ .39 $ (.22) (56)
========= ========= ========== ==========
Diluted earnings per share $ (.17) $ .38 $ (.21) (55)
========= ========= ========== ==========
Cash dividends declared per
share $ .26 $ .26 $ -- --
========= ========= ========== ==========
Top line revenue (5) $ 51,165 $ 46,645 $ 4,520 9.7
Noninterest income to top line
revenue 12% 16%
See footnotes at end of statements, tables and schedules.
Balance Sheet
Midwest Banc Holdings, Inc.
(In thousands)
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Assets
Cash $ 85,015 $ 71,080 $ 70,111 $ 46,963 $ 53,832
Short-term
investments 3,042 31,415 14,388 17,241 8,861
Securities available-
for-sale 710,803 737,089 710,881 660,986 639,087
Securities held-
to-maturity 31,389 32,674 37,601 40,978 42,110
---------- ---------- ---------- ---------- ----------
Total
securities 742,192 769,763 748,482 701,964 681,197
Federal Reserve
and FHLB stock,
at cost 29,264 29,264 29,264 23,683 23,683
Loans held for
sale -- -- -- -- 2,349
Loans 2,501,082 2,467,701 2,474,327 2,007,446 1,982,672
Allowance for loan
losses (22,606) (20,344) (26,748) (24,879) (23,724)
---------- ---------- ---------- ---------- ----------
Net loans 2,478,476 2,447,357 2,447,579 1,982,567 1,961,298
Cash value of life
insurance 82,889 82,024 81,166 67,412 66,676
Premises and
equipment 38,739 38,232 41,821 22,468 22,489
Foreclosed
properties 2,375 2,527 2,220 2,246 2,312
Goodwill and other
intangibles 174,947 176,861 177,451 89,443 89,437
Other 89,781 81,923 80,300 78,578 112,510
---------- ---------- ---------- ---------- ----------
Total assets $3,726,720 $3,730,446 $3,692,782 $3,032,565 $3,022,294
========== ========== ========== ========== ==========
Liabilities and
Shareholders'
Equity
Liabilities
Deposits Noninterest-
bearing $ 334,813 $ 313,727 $ 321,317 $ 246,153 $ 256,152
Interest-bearing 2,005,230 2,090,985 2,136,831 1,748,774 1,801,690
---------- ---------- ---------- ---------- ----------
Total deposits 2,340,043 2,404,712 2,458,148 1,994,927 2,057,842
Federal funds
purchased 198,000 184,500 81,000 12,000 29,000
Securities sold
under repurchase
agreements 297,650 394,764 283,400 317,118 282,037
FHLB advances 340,000 190,000 323,439 319,925 269,911
Junior
subordinated
debentures 60,757 60,741 60,724 65,861 65,845
Notes payable 62,600 76,500 72,500 2,500 --
Subordinated debt 15,000 -- -- -- --
Other 41,972 38,073 38,407 35,001 34,084
---------- ---------- ---------- ---------- ----------
Total
liabilities 3,356,022 3,349,290 3,317,618 2,747,332 2,738,719
---------- ---------- ---------- ---------- ----------
Shareholders' Equity
Preferred equity 43,125 43,125 43,125 -- --
Common equity 335,662 336,877 345,956 295,807 295,436
Accumulated other
comprehensive
income (loss) (8,089) 1,154 (13,917) (10,574) (11,861)
---------- ---------- ---------- ---------- ----------
Total
shareholders'
equity 370,698 381,156 375,164 285,233 283,575
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $3,726,720 $3,730,446 $3,692,782 $3,032,565 $3,022,294
========== ========== ========== ========== ==========
Loan Portfolio Composition - Source of Repayment
June 30, 2008 December 31, 2007 *
--------------------- ---------------------
($ in % ($ in %
millions) of Total millions) of Total
---------- ---------- ---------- ----------
Commercial $ 1,090 44 $ 1,080 44
Construction 422 17 464 19
Commercial real estate 687 27 628 25
Consumer 165 7 153 6
Residential mortgage 137 5 150 6
---------- ---------- ---------- ----------
Total loans, gross $ 2,501 100 $ 2,475 100
========== ========== ========== ==========
* Amounts have been reclassified to conform to current period presentation.
Balance Sheet Comparison
Midwest Banc Holdings, Inc.
(In thousands)
The following table sets forth the changes in the balance sheet at June 30,
2008 compared to June 30, 2007 excluding the Northwest Suburban acquisition
on October 1, 2007.
Excluding
Northwest
North- Suburban
west Acquisition
June 30, Suburban ----------------
--------------------- Acquisi- %
2008 2007 $ Change tion(a) $ Change Change
---------- ---------- -------- -------- -------- -------
(Dollars in thousands)
Assets
Cash and cash
equivalents(b) $ 88,057 $ 62,693 $ 25,364 $ 3,342 $ 22,022 35.1%
Securities
available-for-
sale 710,803 639,087 71,716 57,597 14,119 2.2
Securities held-
to-maturity 31,389 42,110 (10,721) -- (10,721) (25.5)
---------- ---------- -------- -------- -------- -------
Total securities 742,192 681,197 60,995 57,597 3,398 0.5
Federal Reserve
and FHLB stock,
at cost 29,264 23,683 5,581 1,503 4,078 17.2
Loans held for sale -- 2,349 (2,349) -- (2,349) (100.0)
Loans 2,501,082 1,982,672 518,410 439,249 79,161 4.0
Allowance for loan
loss (22,606) (23,724) 1,118 (2,767) 3,885 (16.4)
---------- ---------- -------- -------- -------- -------
Net loans 2,478,476 1,958,948 519,328 436,482 83,046 4.2
Cash surrender
value of life
insurance 82,889 66,676 16,213 12,884 3,329 5.0
Premises and
equipment 38,739 22,489 16,250 19,279 (3,029) (13.5)
Foreclosed
properties 2,375 2,312 63 -- 63 2.7
Core deposit and
other
intangibles, net 15,864 9,812 6,052 8,061 (2,009) (20.5)
Goodwill 159,083 79,625 79,458 80,550 (1,092) (1.4)
Other 89,781 112,510 (22,729) 7,914 (30,643) (27.2)
---------- ---------- -------- -------- -------- -------
Total assets $3,726,720 $3,022,294 $704,426 $627,612 $ 76,814 2.5%
========== ========== ======== ======== ======== =======
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-
bearing $ 334,813 $ 256,152 $ 78,661 $ 65,299 $ 13,362 5.2%
Interest-bearing 2,005,230 1,801,690 203,540 405,361 (201,821) (11.2)
---------- ---------- -------- -------- -------- -------
Total deposits 2,340,043 2,057,842 282,201 470,660 (188,459) (9.2)
Federal funds
purchased 198,000 29,000 169,000 6,170 162,830 561.5
Securities sold
under agreements
to repurchase 297,650 282,037 15,613 -- 15,613 5.5
FHLB advances 340,000 269,911 70,089 3,500 66,589 24.7
Junior
subordinated
debentures 60,757 65,845 (5,088) 10,310 (15,398) (23.4)
Subordinated debt 15,000 -- 15,000 -- 15,000 100.0
Notes payable 62,600 -- 62,600 75,000 (12,400) -100.0
Other 41,972 34,084 7,888 6,982 906 2.7
---------- ---------- -------- -------- -------- -------
Total
liabilities 3,356,022 2,738,719 617,303 572,622 44,681 1.6
Shareholders' Equity
Total shareholders'
equity 370,698 283,575 87,123 54,990 32,133 11.3
---------- ---------- -------- -------- -------- -------
Total liabilities
and shareholders'
equity $3,726,720 $3,022,294 $704,426 $627,612 $ 76,814 2.5%
========== ========== ======== ======== ======== =======
(a) Includes fair value adjustments.
(b) Northwest Suburban Acquisition column includes cash and cash
equivalents acquired through Northwest Suburban of $10,066 less cash
paid for acquisition of $81,163, capitalized costs of $414, costs
relating to the registration statement of $147, and $75,000 borrowing.
Net Interest Margin
Midwest Banc Holdings, Inc.
(In thousands)
For the Three Months Ended
----------------------------------------------------
June 30, 2008 March 31, 2008 June 30, 2007
---------------- ---------------- ----------------
Average Average Average Average Average Average
Balance Rate Balance Rate Balance Rate
---------- ----- ---------- ----- ---------- -----
Interest-Earning Assets:
Short-term investments$ 22,696 1.73% $ 21,939 2.70% $ 16,857 4.86%
Securities:
Taxable(6) 701,254 5.43 704,119 5.43 678,766 5.46
Exempt from federal
income taxes(6) 61,635 5.92 61,847 5.95 47,768 5.95
---------- ----- ---------- ----- ---------- -----
Total securities 762,889 5.47 765,966 5.48 726,534 5.49
FRB and FHLB stock 29,264 2.52 29,230 2.50 23,688 3.82
Loans held for sale -- -- -- -- 3,011 6.38
Loans (7)(8)(9) 2,459,486 6.09 2,459,830 6.65 1,961,437 7.52
---------- ----- ---------- ----- ---------- -----
Total interest-earning
assets $3,274,335 5.88% $3,276,965 6.31% $2,731,527 6.92%
Noninterest-Earning Assets:
Cash $ 52,693 $ 55,634 $ 49,301
Premises and equipment 38,144 41,325 22,279
Allowance for loan
losses (20,412) (27,287) (23,807)
Other 341,590 339,632 233,739
---------- ---------- ----------
Total noninterest-
earning assets 412,015 409,304 281,512
---------- ---------- ----------
Total assets $3,686,350 $3,686,269 $3,013,039
========== ========== ==========
Interest-Bearing Liabilities:
Deposits:
Interest-bearing
demand deposits $ 215,076 0.92% $ 217,515 1.37% $ 171,671 1.85%
Money-market demand
and savings accounts 399,380 1.20 411,091 1.78 362,692 2.62
Time deposits 1,448,198 3.98 1,470,272 4.49 1,232,214 5.00
---------- ----- ---------- ----- ---------- -----
Total interest-bearing
deposits 2,062,654 3.12 2,098,878 3.64 1,766,577 4.21
Borrowings:
Fed funds purch &
repurchase agreements 451,351 3.68 402,774 3.97 283,571 4.17
FHLB advances 296,044 3.29 315,158 4.42 318,256 4.61
Junior subordinated
debentures 60,749 5.77 60,733 6.88 65,837 7.99
Notes payable 78,896 4.57 76,368 5.08 -- --
---------- ----- ---------- ----- ---------- -----
Total borrowings 887,040 3.77 855,033 4.44 667,664 4.76
---------- ----- ---------- ----- ---------- -----
Total interest-bearing
liabilities $2,949,694 3.32% $2,953,911 3.87% $2,434,241 4.36%
Noninterest-Bearing
Liabilities:
Noninterest-bearing
demand deposits $ 322,110 $ 316,507 $ 254,679
Other liabilities 34,869 33,248 34,359
---------- ---------- ----------
Total noninterest-
bearing liabilities 356,979 349,755 289,038
---------- ---------- ----------
Shareholders' equity 379,677 382,603 289,760
---------- ---------- ----------
Total liabilities and
shareholders' equity $3,686,350 $3,686,269 $3,013,039
========== ========== ==========
Net interest margin
(tax equivalent)
(6)(9) 2.89% 2.82% 3.05%
See footnotes at end of statements, tables and schedules.
Net Interest Margin
Midwest Banc Holdings, Inc.
(In thousands)
For the Six Months Ended June 30,
--------------------------------------
2008 2007
------------------ ------------------
Average Average Average Average
Balance Rate Balance Rate
----------- ------ ----------- ------
Interest-Earning Assets:
Short-term investments $ 22,317 2.20% $ 16,425 4.77%
Securities:
Taxable(6) 702,687 5.43 641,112 5.42
Exempt from federal income
taxes(6) 61,741 5.93 60,803 5.88
----------- ------ ----------- ------
Total securities 764,428 5.47 701,915 5.46
FRB and FHLB stock 29,247 2.51 23,630 3.84
Loans held for sale -- -- 2,510 6.22
Loans (7)(8)(10) 2,459,658 6.37 1,953,990 7.48
----------- ------ ----------- ------
Total interest-earning assets $ 3,275,650 6.10% $ 2,698,470 6.90%
Noninterest-Earning Assets:
Cash $ 54,164 $ 60,134
Premises and equipment 39,735 22,142
Allowance for loan losses (23,850) (24,354)
Other 340,610 233,278
----------- -----------
Total noninterest-earning assets 410,659 291,200
----------- -----------
Total assets $ 3,686,309 $ 2,989,670
=========== ===========
Interest-Bearing Liabilities:
Deposits:
Interest-bearing demand deposits $ 216,296 1.14% $ 167,413 1.82%
Money-market demand and savings
accounts 405,235 1.49 370,323 2.61
Time deposits 1,459,235 4.24 1,215,272 4.96
----------- ------ ----------- ------
Total interest-bearing deposits 2,080,766 3.38 1,753,008 4.16
Borrowings:
Fed funds purch & repurchase
agreements 427,063 3.82 270,023 4.31
FHLB advances 305,601 3.87 319,068 4.59
Junior subordinated debentures 60,741 6.33 65,828 7.95
Notes payable 77,631 4.82 -- --
----------- ------ ----------- ------
Total borrowings 871,036 4.10 654,919 4.80
----------- ------ ----------- ------
Total interest-bearing liabilities $ 2,951,802 3.59% $ 2,407,927 4.34%
Noninterest-Bearing Liabilities:
Noninterest-bearing demand deposits $ 319,309 $ 255,551
Other liabilities 34,058 36,918
----------- -----------
Total noninterest-bearing
liabilities 353,367 292,469
----------- -----------
Shareholders' equity 381,140 289,274
----------- -----------
Total liabilities and shareholders'
equity $ 3,686,309 $ 2,989,670
=========== ===========
Net interest margin (tax
equivalent)(6)(10) 2.86% 3.03%
See footnotes at end of statements, tables and schedules.
Credit Risk Management
Midwest Banc Holdings, Inc.
(In thousands)
Three Months Ended
------------------------------------------------------
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
---------- ---------- ---------- ---------- ----------
Loan Quality
Nonaccrual loans $ 40,956 $ 46,916 $ 49,173 $ 44,681 $ 43,588
Foreclosed
properties $ 2,375 $ 2,527 $ 2,220 $ 2,246 $ 2,312
Nonperforming
assets $ 43,331 $ 49,443 $ 51,393 $ 46,927 $ 45,900
90+ days past due
and accruing $ 4,320 $ -- $ -- $ -- $ 608
Loans $2,501,082 $2,467,701 $2,474,327 $2,007,446 $1,982,672
Loan-related
assets $2,503,457 $2,470,228 $2,476,547 $2,009,692 $1,984,984
Nonaccrual loans
to loans 1.64% 1.90% 1.99% 2.23% 2.20%
Nonperforming
assets to
loan-related
assets 1.73% 2.00% 2.08% 2.34% 2.31%
Nonperforming
assets to total
assets 1.16% 1.33% 1.39% 1.55% 1.52%
Allowance for Loan
Losses
Beginning balance $ 20,344 $ 26,748 $ 24,879 $ 23,724 $ 24,028
Bank acquisition -- -- 2,767 -- --
Provision for
loan losses 4,415 5,400 1,410 1,800 1,036
Net chargeoffs
(recoveries)
Large Problem
Credit -- 10,774 -- -- --
From remainder
of portfolio 2,153 1,030 2,308 645 1,340
---------- ---------- ---------- ---------- ----------
Total net
chargeoffs
(recoveries) 2,153 11,804 2,308 645 1,340
---------- ---------- ---------- ---------- ----------
Ending balance $ 22,606 $ 20,344 $ 26,748 $ 24,879 $ 23,724
========== ========== ========== ========== ==========
Net chargeoffs to
average loans
Total .35% 1.93% .37% .13% .27%
Without Large
Problem Credit .35% .17% .37% .13% .27%
Delinquencies 30 -
89 days to loans .35% .82% .48% .49% .63%
Allowance for loan
losses to
Loans at period end .90% .82% 1.08% 1.24% 1.20%
Nonaccrual loans 55% 43% 54% 56% 54%
Footnotes
Midwest Banc Holdings, Inc.
(In thousands)
(1) Shareholders' equity less goodwill and net core deposit intangible and
other intangibles.
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Shareholders'
equity $ 370,698 $ 381,156 $ 375,164 $ 285,233 $ 283,575
Core deposit
intangible & other
intangibles 15,864 16,454 17,044 9,586 9,812
Goodwill 159,083 160,407 160,407 79,857 79,625
---------- ---------- ---------- ---------- ----------
Tangible shareholders'
equity $ 195,751 $ 204,295 $ 197,713 $ 195,790 $ 194,138
========== ========== ========== ========== ==========
(2) Excludes net gains or losses on securities transactions.
(3) Noninterest expense less amortization and foreclosed properties
expenses divided by the sum of net interest income (tax equivalent)
plus noninterest income.
(4) Total assets less goodwill and net core deposit intangible and other
intangibles.
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
---------- ---------- ---------- ---------- ----------
Total assets $3,726,720 $3,730,446 $3,692,782 $3,032,565 $3,022,294
Core deposit
intangible & other
intangibles 15,864 16,454 17,044 9,586 9,812
Goodwill 159,083 160,407 160,407 79,857 79,625
---------- ---------- ---------- ---------- ----------
Tangible assets $3,551,773 $3,553,585 $3,515,331 $2,943,122 $2,932,857
========== ========== ========== ========== ==========
(5) Includes net interest income and noninterest income.
(6) Adjusted for 35% tax rate and adjusted for the dividends-received
deduction where applicable.
(7) Nonaccrual loans are included in the average balance; however, these
loans are not earning any interest.
(8) Includes loan fees.
(9) Reconciliation of reported net interest income to tax equivalent net
interest income.
For the Three Months Ended,
--------------------------------
June 30, March 31, June 30,
2008 2008 2007
---------- ---------- ----------
Net interest income $ 22,765 $ 22,216 $ 19,969
Tax equivalent adjustment to net interest
income 909 892 836
---------- ---------- ----------
Net interest income, tax equivalent basis $ 23,674 $ 23,108 $ 20,805
========== ========== ==========
(10) Reconciliation of reported net interest income to tax equivalent net
interest income.
For the Six Months
Ended,
---------------------
June 30, June 30,
2008 2007
---------- ----------
Net interest income $ 44,981 $ 39,029
Tax equivalent adjustment to net interest income 1,801 1,815
---------- ----------
Net interest income, tax equivalent basis $ 46,782 $ 40,844
========== ==========
(11) Reconciliation of common equity to shareholders' equity.
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
--------- --------- --------- --------- ---------
Preferred equity $ 43,125 $ 43,125 $ 43,125 $ -- $ --
Common equity 327,573 338,031 332,039 285,233 283,575
--------- --------- --------- --------- ---------
Shareholders' equity $ 370,698 $ 381,156 $ 375,164 $ 285,233 $ 283,575
========= ========= ========= ========= =========
Reconciliation of tangible common equity to tangible shareholders'
equity.
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
--------- --------- --------- --------- ---------
Preferred equity $ 43,125 $ 43,125 $ 43,125 $ -- $ --
Tangible common equity 152,626 161,170 154,588 195,790 194,138
--------- --------- --------- --------- ---------
Tangible shareholders'
equity $ 195,751 $ 204,295 $ 197,713 $ 195,790 $ 194,138
========= ========= ========= ========= =========
Reconciliation of common shares outstanding at period end to "if
converted" shares outstanding.
June 30, March 31, December September June 30,
2008 2008 31, 2007 30, 2007 2007
--------- --------- --------- --------- ---------
Common shares outstanding 27,859 27,839 27,804 24,406 24,547
Resulting common shares
if preferred shares were
converted 2,875 2,875 2,875 -- --
--------- --------- --------- --------- ---------
"If converted" shares
outstanding 30,734 30,714 30,679 24,406 24,547
========= ========= ========= ========= =========
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