Midwest Banc Holdings, Inc. Reports Increase in Fourth Quarter 2003 Earnings.Business Editors MELROSE PARK Melrose Park, village (1990 pop. 20,859), Cook co., NE Ill., an industrial suburb of Chicago; inc. 1893. It has large railroad yards and shops, steel mills, and factories that make a wide variety of products. , Ill.--(BUSINESS WIRE)--Jan. 30, 2004 Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians Banc Holdings, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :MBHI MBHI Millon Behavioral Health Inventory ): Highlights -- Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter increased 70.0% to $0.34 compared to the prior period. -- Diluted earnings per share for the year increased 26.3% to $1.25 from $0.99 in 2002. -- Nonperforming loans decreased in the fourth quarter. -- Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. loan growth of 7.9% was achieved in the fourth quarter. -- Net interest margin improved to 3.21% in the fourth quarter. -- $19.0 million in trust preferred securities were issued in December December: see month. 2003. Midwest Banc Holdings, Inc. (NASDAQ:MBHI), a community-based bank holding company, announced today that net income rose 92.6% to $6,313,000 for the three months ended December 31, 2003 compared to $3,277,000 for the three months ended December 31, 2002. Net income increased 39.7% to $22,781,000 for the year ended December 31, 2003 compared to $16,308,000 for the year ended December 31, 2002. E.V. Silveri, Chairman of the Board, stated that "2003 was a challenging but successful year in many respects. We integrated Big Foot Financial and achieved the projected cost savings previously announced. We increased market share in key retail banking markets within our franchise and are completing construction of two new branch sites for 2004. Most noteworthy, our earnings have rebounded from 2002 levels with an increase in the net interest margin and loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. ." "We have made real progress in addressing the issues and challenges which affected our profitability in 2003," affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. Brad A. Luecke, President and Chief Executive Officer. "Management has taken aggressive steps to reduce non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. , increase our allowance coverage ratio, and improve overall portfolio quality." Fourth Quarter Diluted Earnings Per Share Increased 70.0% Over Prior Year Period Basic earnings per share for the three months ended December 31, 2003 increased 75.0% to $0.35 compared to $0.20 for the similar period of 2002. Diluted earnings per share for the three months ended December 31, 2003 increased 70.0% to $0.34 compared to $0.20 for the similar period of 2002. The net income for the three months ended December 31, 2002 reflected a $6,140,000 in provision for loan losses. The return on average assets for the three months ended December 31, 2003 was 1.11% compared to 0.66% for the prior year period. The return on average equity for the three months ended December 31, 2003 was 17.72% compared to 11.27% for the similar period in 2002. Basic earnings per share for the year ended December 31, 2003 increased 26.7% to $1.28 compared to $1.01 for the similar period of 2002. Diluted earnings per share for the twelve months ended December 31, 2003 increased 26.3% to $1.25 compared to $0.99 for the similar period of 2002. The net income for the twelve months ended December 31, 2002 reflected an $18,532,000 in provision for loan losses. The return on average assets for the twelve months ended December 31, 2003 was 1.02% compared to 0.86% for the prior year period. The return on average equity for the year ended December 31, 2003 was 15.45% compared to 14.81% for the similar period in 2002. Net Interest Income Trends Net interest income increased $1,554,000, or 11.1%, to $15,609,000 in the fourth quarter of 2003 compared to $14,055,000 for the similar period in 2002. Net interest margin increased to 3.21% for the fourth quarter of 2003 compared to 3.15% for the similar period in 2002. Net interest income for the twelve months ended December 31, 2003 increased $2,880,000, or 4.8%, to $62,282,000 compared to $59,402,000 for the similar period in 2002. Net interest margin was 3.17% for the twelve months ended December 31, 2003 compared to 3.46% for the year ended December 31, 2002. Due to the continued low interest rate environment during 2003, the Company experienced net interest margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. which was caused in part by the recognition of premium amortization expense associated with the mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. it holds in its investment securities portfolio. Amortization expense was $9,064,000 million for the twelve months ended December 31, 2003 compared to $5,255,000 for the similar period in 2002. The Company reduced its portion of the investment portfolio invested in mortgage-backed securities in an attempt to decrease the earnings volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the related to accelerated premium amortization due to mortgage refinancing Refinancing An extension and/or increase in amount of existing debt. . Accordingly as of December 31, 2003, mortgage-backed securities comprised 24.5% of the portfolio compared to 78.5% at December 31, 2002. As a result of the reallocation Noun 1. reallocation - a share that has been allocated again allocation, allotment - a share set aside for a specific purpose 2. reallocation of the mortgage-backed securities and the slower prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. on the remaining mortgage-backed securities, there was an improvement in the fourth quarter of 2003 with amortization expense decreasing to $1,294,000 for the three months ended December 31, 2003 compared to $2,305,000 and $2,774,000 for the three months ended December 31, 2002 and September September: see month. 30, 2003, respectively. Going forward, it is expected that the net interest margin will continue to improve moderately during the first and second quarters of 2004. Key factors for an expected improvement in the net interest margin include an increase in loan volumes, slower prepayments on the remaining mortgage-backed securities, continued benefit of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. related to high interest rate FHLB FHLB Federal Home Loan Bank advances, and the impact of deposit pricing strategies There are many ways in which the price of a product can be determined. The following are the foremost strategies that businesses are likely to use. Competition-based pricing Setting the price based upon prices of the similar competitor products. . The expected improvements in net interest margins also assume no further cuts or increases in interest rates by the Federal Reserve Board of Governors in the near term. Fourth Quarter Other Income Other income, excluding gains on securities transactions and trading account Trading Account 1. An account similar to a traditional bank account, holding cash and securities, and is administered by an investment dealer. 2. An account held at a financial institution and administered by an investment dealer that the account holder uses to employ a profits, was $3,676,000, a decrease of 6.9% or $271,000 on a comparable fourth quarter 2003 to 2002 basis. The other income to average assets ratio was 0.65% for the three months ended December 31, 2003 compared to 0.79% for the same period in 2002. Service charges on deposits were $1,473,000 for the three months ended December 31, 2003 compared to $1,494,000 for the three months ended December 31, 2002. Insurance and brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. commissions and derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. income increased $87,000 and $435,000 to $648,000 and $553,000, respectively, for the quarter ended December 31, 2003. Option fee income, mortgage banking fees, and the increase in cash surrender value The amount of money that an insurance company pays the insured upon cancellation of a life insurance policy before death and which is a specific figure assigned to the policy at that particular time, reduced by a charge for administrative expenses. of life insurance decreased $474,000, $165,000, and $144,000 respectively, for the three months ended December 31, 2003 to $358,000, $88,000, and $234,000, respectively compared to the similar period of 2002. Other income, excluding gains on securities transactions and trading account profits, increased $5,622,000, or 46.3%, to $17,760,000 for the year ended December 31, 2003 compared to $12,138,000 for the twelve months ended December 31, 2002. The other income to average assets ratio was 0.79% for the twelve months ended December 31, 2003 compared to 0.64% for the same period in 2002. Service charges on deposits increased $164,000 to $5,855,000 during the twelve months ended December 31, 2003. Derivative income, insurance and brokerage commissions, and mortgage banking fees increased $903,000, $754,000, and $355,000, respectively, for the year ended December 31, 2003 to $1,022,000, $2,244,000, and $1,048,000, respectively, compared to the similar period of 2002. Option fee income increased $3,504,000 for the year ended December 31, 2003 to $5,326,000 compared to $1,522,000 for the similar period in 2002. Option fees are part of management's ongoing strategy to manage risk in the securities portfolio and take advantage of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market conditions. Management has effectively used the proceeds from selling covered call Covered Call Having a long position in an asset combined with a short position in a call option on the same underlying asset. Notes: This is considered to be one of the safest option positions. and put options to offset net interest margin compression and has administered such sales in a coordinated process with the Company's overall asset/liability management Asset/Liability Management A technique companies employ in coordinating the management of assets and liabilities so that an adequate return may be earned. Also known as "surplus management. . Management is poised to adjust its option strategy when interest rates increase or decrease. There is no assurance that the option fee income realized through December 31, 2003 is sustainable in future periods. Gains on securities transactions were $1,619,000 and $131,000 during the three months ended December 31, 2003 and December 31, 2002, respectively. For the year ended December 31, 2003, gains on securities transactions were $5,340,000 compared to $1,522,000 for the similar period in 2002. During the twelve months ended December 31, 2003, trading account losses were $14,000 compared to trading account profits of $348,000 during the similar period of 2002. 2003 Efficiency Ratio of 50.74% Other expenses increased $2,433,000, or 27.2%, to $11,375,000 for the three months ended December 31, 2003 compared to $8,942,000 for the three months ended December 31, 2002. The other expenses to average assets ratio was 2.01% for the three months ended December 31, 2003 compared to 1.80% for the same period in 2002. Salaries and employee benefits expense increased 15.4% or $797,000 to $5,986,000 during the three months ended December 31, 2003 compared to December 31, 2002. Occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and equipment expenses increased $326,000, or 25.2%, to $1,621,000 during the fourth quarter of 2003 compared to $1,295,000 for the same period in 2002. The net overhead expense to average assets ratio was 1.36% for the fourth quarter of 2003 compared to 1.01% for the similar period in 2002. The efficiency ratio was 54.82% for the three months ended December 31, 2003 compared to 47.19% for the same period in 2002. The increase in the efficiency ratio was primarily due to the increase in other expenses during the quarter. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1,200,000 of other expenses were directly related to specific loan workouts, other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most , and other professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Other expenses increased $9,586,000 or 28.3% to $43,495,000 for the year ended December 31, 2003 compared to $33,909,000 for the twelve months ended December 31, 2002. The other expenses to average assets ratio was 1.95% for the twelve months ended December 31, 2003 compared to 1.79% for the same period in 2002. Salaries and employee benefits expense increased 16.9% or $3,497,000 to $24,156,000 during the twelve months ended December 31, 2003 compared to the twelve months ended December 31, 2002. An increase in full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full staff positions, including brokerage staff, employees added through the acquisition of Big Foot Financial Corp. ("Big Foot"), and other new positions were the primary reasons for the increase in salaries and benefits. Increased health insurance costs also contributed to the increase in salaries and employee benefits. Occupancy and equipment expenses increased $1,677,000 or 34.8% to $6,495,000 during the fourth quarter of 2003 compared to $4,818,000 for the comparable period in 2002. This increase reflects $1,309,000 due to the addition of the three branches acquired as a result of the Big Foot acquisition. The net overhead expense to average assets ratio was 1.15% for the twelve months ended December 31, 2003 for the same as the similar period in 2002. The efficiency ratio was 50.74% for the twelve months ended December 31, 2003 compared to 45.19% for the same period in 2002. Balance Sheet Trends Total assets were $2.3 billion at December 31, 2003, an increase of $255.1 million, or 12.7%, compared to at December 31, 2002. Total earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin increased $153.2 million, or 8.0%, to $2.1 billion at December 31, 2003 compared to at December 31, 2002, primarily as a result of the increase in the Company's available-for-sale securities portfolio due to the increase in interest bearing deposits. Loans decreased by $55.4 million, or 4.9%, during the past twelve months to $1.1 billion from December 31, 2002. The Company sold $141.9 million of mortgage loans during the first quarter of 2003 that were acquired from Big Foot in an effort to reduce the interest rate risk of the portfolio. During 2003, overall loan demand was down as a result of current economic conditions, the successful completion of several large construction projects by existing borrowers, and other competitive factors. In addition, the decrease in loans was due to a corporate commitment to tighter credit standards Credit Standards The guidelines a company follows to determine whether a credit applicant is creditworthy. and pricing disciplines applied to commercial and commercial real estate loans to protect long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. profitability. Loans increased $20.8 million during the fourth quarter of 2003. The Company expects its business development efforts will generate additional growth in loans throughout 2004, despite highly competitive pricing conditions in commercial lending markets. Total deposits increased 14.1% or $195.8 million to $1.6 billion during 2003 compared to $1.4 billion in 2002. The Company acquired $73.4 million in core deposits and $64.6 million in time deposits through the acquisition of Big Foot. Deposits at the three Big Foot branches increased 31.8% to $181.8 million at December 31, 2003 compared to January January: see month. 3, 2003, the Big Foot acquisition date. Non-interest-bearing deposits were $160.7 million as of December 31, 2003, approximately $25.8 million higher than the $134.9 million level as of December 31, 2002. Over the same period, interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid deposits increased 13.5% or $170.0 million to $1.4 billion. Certificates of deposits less than $100,000 increased 20.3% or $124.9 million to $739.4 million at December 31, 2003 compared to $614.5 million in 2002. The Company's strategy during 2003 was to reduce the levels of certificates of deposit over $100,000 and public funds See Fund, 3. See also: Public . As a result, these types of deposits decreased $96.5 million from $235.5 million at December 31, 2002 to $139.0 at December 31, 2003. Most of the decrease was due to brokered certificates of deposit and public fund maturities. The Company's marketing efforts have focused on core and time deposit account growth in its retail markets, reducing the need to rely on public funds and brokered certificates of deposit. Borrowings increased 10.8% or $49.8 million to $512.2 million in 2003 compared to $462.4 million in 2002. The increase was the result of the $19.0 million trust preferred offerings as well as the $33.0 million in FHLB advances acquired as a result of the acquisition of Big Foot. Total stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $143.1 million as of December 31, 2003 compared to $115.0 million as of December 31, 2002. The Company issued 1.6 million shares of common stock as partial payment of the purchase price of the acquisition of Big Foot, representing an increase of $30.4 million in equity. Total capital to asset ratio at December 31, 2003 was 9.40% compared to 7.66% at December 31, 2002. Asset Quality and Nonperforming Loans The allowance for loan losses was $15.7 million, or 1.45%, of total loans at December 31, 2003 compared to $20.8 million or 1.83% of total loans at December 31, 2002. The provision for loan losses was $10,205,000 for the twelve months ended December 31, 2003 compared to $18,532,000 for the twelve months ended December 31, 2002. Net charge-offs for the year ended December 31, 2003 were $8.9 million compared to $7.9 for the twelve months ended December 31, 2002. The net charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. percentage to average loans was 0.79% and 0.73% at December 31, 2003 and December 31, 2002, respectively. Two charged-off loans represent $8.3 million, or 93.3%, of the net charged-off loans; a commercial loan totaling $7.2 million and a $1.1 million commercial real estate loan. The allowance for loan losses to nonperforming loans ratio was 1.00x and 0.66x at December 31, 2003 and December 31, 2002, respectively. Nonperforming loans were $15.7 million and $31.5 million at December 31, 2003 and December 31, 2002, respectively. The nonperforming loans to total loans ratio for these two time periods was 1.45% and 2.78%, respectively. The nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. to total assets ratio was 1.00% and 1.60% for December 31, 2003 and December 31, 2002, respectively. Other real estate owned was $6.9 million at December 30, 2003, an increase of $6.4 million compared to $533,000 at December 31, 2002. Included in other real estate owned is one property totaling $6.5 million. This property is a townhouse town·house or town house n. 1. A residence in a city. 2. A row house, especially a fashionable one. development for which the borrower BORROWER, contracts. He to whom a thing is lent at his request. 2. The contract of loan confers rights, and imposes duties on the borrower' 1. In general, he has the right to use the thing borrowed, during the time and for the purpose intended between the ceased construction activities on the project and a construction manager has been appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. . The Company will continue the development and has engaged a well established construction contractor contractor n. 1) a person or entity that enters into a contract. 2) commonly, a person or entity that agrees to construct a building or to provide or install specialized portions of the construction. to complete the development in the next two years. There are 101 townhouse units to be built, and the Company expects full retirement of its outstanding other real estate owned amount. Further decreases in nonperforming loans are anticipated in 2004, and prospects exist for a partial recovery of loans previously charged-off in 2003. The Company anticipates net charge-offs and the provision for loan losses to be reduced from 2002 and 2003 levels. Trust Preferred Offerings In December 2003, the Company formed MBHI Capital Trust III ("Trust III") and MBHI Capital Trust IV ("Trust IV"), statutory trusts formed under the laws of the State of Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). and wholly-owned subsidiaries of the Company. Trust III issued $9.0 million in aggregate liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy amount of trust preferred securities in a private placement offering. The interest rate payable on the debentures and the trust preferred securities resets quarterly and is equal to LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 3.00%. The junior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before will mature on December 30, 2033, at which time the preferred securities must be redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. , and are callable Callable Applies mainly to convertible securities. Redeemable by the issuer before the scheduled maturity under specific conditions and at a stated price, which usually begins at a premium to par and declines annually. at par at any time after five years. Trust IV issued $10.0 million in aggregate liquidation amount of trust preferred securities in a private placement offering. The interest rate payable on the debentures and the trust preferred securities resets quarterly and is equal to LIBOR plus 2.85%. The junior subordinated debentures will mature on January 23, 2034, at which time the preferred securities must be redeemed, and are callable at par at any time after five years. The Company has provided a full, irrevocable Unable to cancel or recall; that which is unalterable or irreversible. IRREVOCABLE. That which cannot be revoked. 2. A will may at all times be revoked by the same person who made it, he having a disposing mind; but the moment the testator is , and unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. UNCONDITIONAL. subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. guarantee of the obligations of the Trust III and Trust IV under the preferred securities. Other Matters On April 24, 2003, the Federal Reserve and the OBRE OBRE Office of Banks and Real Estate (Illinois State Regulatory Agency) completed the on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. portion of their regularly scheduled annual examination of the Company's banking subsidiaries. The examination included, among other items, a review of the Company's over-all risk management, lending and credit review practices. The Company received the examination report during the third quarter of 2003. The Company is in discussions with the regulators over some form of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. action. Midwest Banc Holdings, Inc. provides a wide range of retail and commercial lending services, personal and corporate trust services, residential mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real , and securities and insurance brokerage activities throughout the greater Chicago metropolitan area “Chicagoland” redirects here. For for the racing venue, see Chicagoland Speedway. The Chicago metropolitan area is the metropolitan area associated with the city of Chicago in the United States. and Western Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. . The Company's principal operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. are: Midwest Bank and Trust Company, Midwest Bank of Western Illinois, Midwest Financial and Investment Services, Inc., and Midwest Bank Insurance Services, L.L.C. This press release contains certain "Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ," within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, and should be reviewed in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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."
MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
INCOME STATEMENT SUMMARY AND PER SHARE DATA
(In thousands, except per share data)
Three Months Ended 2002-2003
December 31, Comparison
------------------- ------------------
2003 2002 $Change %Change
--------- --------- ------- ----------
Interest income $27,384 $27,381 $ 3 0.0%
Interest expense 11,775 13,326 (1,551) -11.6%
--------- --------- ------- ----------
Net interest income 15,609 14,055 1,554 11.1%
Provision for loan losses 717 6,140 (5,423) -88.3%
Other income 3,676 3,947 (271) -6.9%
Net gains on securities
transactions 1,619 131 1,488 1,135.9%
Other expenses 11,375 8,942 2,433 27.2%
--------- --------- ------- ----------
Income before income taxes 8,812 3,051 5,761 188.8%
Provision for income taxes 2,499 (226) 2,725 -1,205.8%
--------- --------- ------- ----------
Net income $ 6,313 $ 3,277 $ 3,036 92.6%
========= ========= ======= ==========
Basic earnings per share $ 0.35 $ 0.20 $ 0.15 75.0%
========= ========= ======= ==========
Diluted earnings per share $ 0.34 $ 0.20 $ 0.14 70.0%
========= ========= ======= ==========
Cash dividends declared $ 0.12 $ 0.10 $ 0.02 20.0%
========= ========= ======= ==========
Twelve Months
Ended 2002-2003
December 31, Comparison
------------------- ------------------
2003 2002 $Change %Change
--------- --------- ------- ----------
Interest income $112,079 $112,721 $ (642) -0.6%
Interest expense 49,797 53,319 (3,522) -6.6%
--------- --------- ------- ----------
Net interest income 62,282 59,402 2,880 4.8%
Provision for loan losses 10,205 18,532 (8,327) -44.9%
Other income 17,760 12,138 5,622 46.3%
Net gains on securities
transactions 5,326 1,870 3,456 184.8%
Other expenses 43,495 33,909 9,586 28.3%
--------- --------- ------- ----------
Income before income taxes 31,668 20,969 10,699 51.0%
Provision for income taxes 8,887 4,661 4,226 90.7%
--------- --------- ------- ----------
Net income $ 22,781 $ 16,308 $ 6,473 39.7%
========= ========= ======= ==========
Basic earnings per share $ 1.28 $ 1.01 $ 0.27 26.7%
========= ========= ======= ==========
Diluted earnings per share $ 1.25 $ 0.99 $ 0.26 26.3%
========= ========= ======= ==========
Cash dividends declared $ 0.44 $ 0.40 $ 0.04 10.0%
========= ========= ======= ==========
Three Months Ended Quarter to Quarter
------------------- ------------------
Dec. 31, Sept. 30, Comparison
2003 2003 $Change %Change
--------- --------- ------- ----------
Interest income $27,384 $27,137 $ 247 0.9%
Interest expense 11,775 12,257 (482) -3.9%
--------- --------- ------- ----------
Net interest income 15,609 14,880 729 4.9%
Provision for loan losses 717 7,743 (7,026) -90.7%
Other income 3,676 5,017 (1,341) -26.7%
Net gains on securities
transactions 1,619 773 846 109.4%
Other expenses 11,375 10,665 710 6.7%
--------- --------- ------- ----------
Income before income taxes 8,812 2,262 6,549 289.5%
Provision for income taxes 2,499 (21) 2,520 12,000.0%
--------- --------- ------- ----------
Net income $ 6,313 $ 2,283 $ 4,029 176.5%
========= ========= ======= ==========
Basic earnings per share $ 0.35 $ 0.13 $ 0.22 169.2%
========= ========= ======= ==========
Diluted earnings per share $ 0.34 $ 0.12 $ 0.22 183.3%
========= ========= ======= ==========
Cash dividends declared $ 0.12 $ 0.12 $ 0.00 0.0%
========= ========= ======= ==========
MIDWEST BANC HOLDINGS, INC.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
-------------------------- -------------------
December 31, September 30, December 31,
------------- ------------ -------------------
2003 2002 2003 2003 2002
------- ------- ---------- --------- ---------
Income Statement Data:
Net income $6,313 $3,277 $2,283 $27,781 $16,308
Net overhead expense
to average
assets (1)(2) 1.36% 1.01% 0.99% 1.15% 1.15%
Efficiency ratio
(2)(3)(7) 54.82 47.19 50.03 50.74 45.19
Other income to
average assets 0.65 0.79 0.88 0.79 0.64
Other expense to
average assets 2.01 1.80 1.86 1.95 1.79
Per Share Data (3):
Earnings per share
(basic) $ 0.35 $ 0.20 $ 0.13 $ 1.28 1.01
Earnings per share
(diluted) 0.34 0.20 0.12 1.25 0.99
Cash dividends
declared 0.12 0.10 0.12 0.44 0.40
Book value at end of
period 8.01 7.12 8.06 8.01 7.12
Tangible book value
at end of period 7.79 6.93 7.83 7.79 6.93
Stock price at end of
period 22.26 18.95 22.26 22.26 18.95
Average stock price 22.82 18.68 21.77 20.73 17.61
Selected Financial
Ratios:
Return on average
assets (4) 1.11% 0.66% 0.40% 1.02% 0.86%
Return on average
equity (5) 17.72 11.27 6.33 15.45 14.81
Dividend payout 33.95 49.30 93.78 34.43 39.61
Loan to deposit 68.16 81.74 67.29 68.16 81.74
Average equity to
average assets 6.28 5.85 6.30 6.60 5.83
Capital to assets 6.32 5.72 6.38 6.32 5.72
Tangible capital to
assets 6.14 5.57 6.20 6.14 5.57
Tier I capital to
risk-weighted
assets 13.68 10.44 12.13 13.68 10.44
Tier II capital to
risk-weighted
assets 14.74 11.69 13.12 14.74 11.69
Net interest margin
(tax equivalent)
(6)(7) 3.21 3.15 3.00 3.17 3.46
Allowance for loan
losses to total
loans at the end
of period 1.45 1.83 1.36 1.45 1.83
Net loans charged
off to average
total loans -0.05 0.56 0.50 0.79 0.73
Nonperforming loans
to total loans at
the end of period
(8) 1.45 2.78 1.61 1.45 2.78
Nonperforming assets
to total assets (9) 1.00 1.60 1.10 1.00 1.60
Allowance to
nonperforming 1.00x 0.66x 0.84x 1.00x 0.66x
loans
December 31, September 30,
------------------- -------------
2003 2002 2003
---- ---- ----
Balance Sheet Data:
Total assets $2,264,149 $2,009,047 $2,253,854
Total earning assets 2,061,747 1,908,533 2,049,394
Average assets (quarter-to-
date) 2,249,174 1,971,807 2,271,501
Average assets (year-to-date) 2,234,293 1,889,511 2,229,944
Total loans 1,081,296 1,136,704 1,060,448
Allowance for loan losses 15,714 20,754 14,452
Total deposits 1,586,411 1,390,648 1,576,007
Borrowings 512,160 462,382 504,756
Stockholders' equity 143,081 114,951 143,734
Tangible stockholders'
equity (10) 139,082 111,929 139,735
Average equity (quarter-to-
date) 141,340 115,308 143,065
Average equity (year-to-date) 147,487 110,101 149,559
Common Shares Outstanding 17,861 16,154 17,841
Average Shares Outstanding
(quarter-to-date) 17,848 16,157 17,816
Average Shares Outstanding
(year-to-date) 17,798 16,131 17,781
(1) Other expenses less other income divided by average total assets.
(2) Excludes net gains on securities transactions.
(3) Other expense divided by the sum of net interest income (tax
equivalent) plus other income.
(4) Net income divided by quarter to date average assets.
(5) Net income divided by quarter to date average equity.
(6) Net interest income, on a tax equivalent basis, divided by quarter
to date average interest earning assets.
(7) The following table reconciles reported net interest income on a
tax equivalent basis for the periods presented:
QTD 4Q03 4Q02 3Q03
Net interest income $15,609 $14,055 $14,880
Tax equivalent adjustment to net
interest income 1,154 803 1,079
------- ------- -------
Net interest income, tax
equivalent basis $16,763 $14,858 $15,959
------- ------- -------
YTD 4Q03 4Q02
Net interest income $62,282 $59,402
Tax equivalent adjustment to net
interest income 4,333 2,890
------- -------
Net interest income, tax
equivalent basis $66,615 $62,292
------- -------
(8) Includes total nonaccrual and all other loans 90 days or more past
due.
(9) Includes total nonaccrual, all other loans 90 days or more past
due, and other real estate owned.
(10) Stockholders' equity less goodwill. The following table
reconciles reported stockholders' equity to tangible stockholders'
equity for the periods presented:
4Q03 4Q02 3Q03
Stockholders' equity $143,081 $114,951 $143,734
Goodwill 3,999 3,022 3,999
------- ------- -------
Tangible stockholders'
equity $139,082 $111,929 $139,735
------- ------- -------
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