The analyst also said that First Midwest's "capital levels remained solid," with a tangible common equity ratio of 8.9%. The company reported a June 30 tangible book value of $9.30 a share, and Rodis said that "if FMBI does choose to do some sort of bulk loan sale we believe the ultimate hit to tangible book value (TBV) will be manageable in the 5% area," based on the assumption that the company "sells $200- 300 million in non-performing loans (which is ~ half the current level of non-accruals + potential problem loans) and takes an additional hit of $0.10-0.20 on the dollar ($1.00)." Rodis believes "the after-tax impact on TBV would be ~ $0.25-0.50 per share," on a bulk loan sale of roughly $250 million.

Rodis rates First Midwest "Outperform," with a $12 price target, and estimates the company will report earnings of 45 cents a share for all of 2012,not factoring in a potential loan sale, followed by 2013 EPS of 85 cents. The shares trade for 1.3 times tangible book value and the analyst said "we believe a lot of the bad news is already built into the stock."

First Midwest's shares closed at $11.59, returning 15% year-to-date, following a 12% decline during 2011.

FMBI Chart FMBI data by YCharts

Rodis said that "longer term we believe the FMBI franchise remains one of the more attractive Chicago-based banks. And from a fundamental perspective we believe a number of the operational changes that have been made over the past year are starting to take hold and as a result we think things are moving in the right direction."

Interested in more on First Midwest Bancorp? See TheStreet Ratings' report card for this stock.

RELATED STORIES:





-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

If you liked this article you might like

Bullish and Bearish Reversals for This Week

Ex-Dividends To Watch: 3 Stocks Going Ex-Dividend Tomorrow: EFF, NHF, FMBI

The Jonas Effect: What to Expect in Post-Blizzard Week Ahead

First Week Of August 21st Options Trading For First Midwest Bancorp (FMBI)

Why First Midwest Bancorp (FMBI) Stock Is Higher Today