This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

First Midwest Snaps Up Failed Bank

NEW YORK (TheStreet) -- First Midwest Bancorp (FMBI) on Friday made its first acquisition of a failed bank in nearly two years.

The Illinois Department of Financial and Professional Regulation shuttered Waukegan Savings Bank, which had been included in TheStreet's Bank Watch List of undercapitalized institutions for more than a year.

When it failed, Waukegan Savings Bank had two offices, $88.9 million in total assets and $77.5 million in deposits. The Federal Deposit Insurance Corp. was appointed receiver, and sold the failed bank to First Midwest's main subsidiary, First Midwest Bank, of Itasca, Ill.

The failed bank's two branches will reopen during their normal business hours as branches of First Midwest Bank. The FDIC estimated that the cost of Waukegan Savings Bank's failure to the deposit insurance fund would be $19.8 million.

First Midwest CEO Michael Scudder said that "with our complementary branch locations, business lines, and community banking values, Waukegan Savings Bank and First Midwest are a great match." First Midwest said that it picked up $63 million in loans as part of its deal with the FDIC.

> > Bull or Bear? Vote in Our Poll

First Midwest's previous failed bank acquisition was Palos Bank and Trust of Palos Heights, Ill., which failed in August 2010, and had $493 million in assets, with five branches.

First Midwest Bancorp had $8.1 billion in total assets as of June 30. The company on July 25 reported second-quarter net income of $6.3 million, or 9 cents a share, down from $8.0 million, or 11 cents a share, a year earlier. Earnings also fell sequentially, from $7.6 million, or 11 cents a share, in the first quarter of 2012.

The declines mainly reflected an increase in the company's provision for loan loss reserves to $22.5 million in the second quarter, from $18.2 million in the first quarter and $18.8 million a year earlier.

First Midwest has been trying to work through an elevated level of problem loans, and its ratio of nonperforming loans to total loans was 3.9% as of June 30.

The year-over-year earnings decline also resulted from a narrowing of the company's net interest margin -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- to 3.88% in the second quarter and the first quarter, from 4.10% in the second quarter of 2011, following the trend for many regional banks in the prolonged low-rate environment.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,707.88 -172.48 -1.02%
S&P 500 1,945.29 -24.78 -1.26%
NASDAQ 4,394.4320 -68.47 -1.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs