After two acquisitions, First Midwest Bank, Chicago, is riding on record profits. It closed the third quarter having generated a company record net income of $54.5 million. Total assets stood at $18 billion, up 3 percent from the second quarter and 20 percent from a year ago.
First’s deal to buy the $500 million NorStates Bank, Waukegan, Wis., closed in the second quarter of 2019 and its acquisition of the $1 billion Park Bank, Milwaukee, is expected to close before the end of the first quarter.
“It’s a tough rate backdrop, but that’s really true for the short-term,” said Mike Scudder, president. “As we look to the longer term, we really like our positioning. We continue to execute on our priorities and, as we say in this type of environment, that also creates opportunities that we believe will accrue to our long-term benefit. Included among those is our team’s continuing to work hard and build a tremendous core deposit foundation, which can be undervalued amidst today’s short-term noise. Our credit capabilities are broader and more diverse. Our acquisition [of Park Bank] will add a talented team and broader access to what we believe is a very attractive Milwaukee marketplace. As we await an expected first quarter close, the team is locked and loaded and we look forward to competing in the marketplace. We’re very thrilled with our progress to-date there.”
Competing for deposits has gotten costlier, said CFO Pat Barrett, adding that this was true across the bank’s Midwestern footprint. He doesn’t see this changing.
“We’re still running money market promotions and a seven-month CD promotion just so that we are competitive with what the market is offering,” Barrett said. “And to the extent we have those there, that could keep us from dropping costs as much as we would prefer. We obviously don’t have a lot of room on the retail side to drop just because we have such a large non-interest bearing or low-interest bearing retail deposit base. The bigger opportunity would be in the municipal borrowings and to a certain extent in corporate money markets, but we’d love to bring costs down.”