Why First Midwest Bancorp Inc (NASDAQ: FMBI) stock is under pressure

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First Midwest Bancorp Inc (NASDAQ: FMBI), the holding company of First Midwest Bank, stock lost over 4.1% on 22nd July, 2020 (as of 11:11 am GMT-4; Source: Google finance) after the company posted mixed results for the second quarter of FY 20. The company has reported net income applicable to common shares for the second quarter of 2020 of $17.8 million compared to $19.4 million, for the first quarter of 2020, and $46.6 million, for the second quarter of 2019. The company has posted 1.2% rise in net interest income for the second quarter of 2020 from the first quarter of 2020 and down 3.4% from the second quarter of 2019. The increase in net interest income compared to the first quarter of 2020 was mainly due to the acquisition of interest-earning assets from the Park Bank transaction that closed in March 2020, interest income and fees on PPP loans, and lower costs of funds, partially offset by lower interest rates. Compared to the second quarter of 2019, the decline in net interest income was mainly due to lower interest rates, partially offset by growth in loans and securities, the acquisition of interest-earning assets from the Bridgeview Bank transaction that closed in May 2019 and the Park transaction that closed in March 2020, and lower cost of funds.

FMBI in the second quarter of FY 20 has reported the adjusted earnings per share of 19 cents, while the adjusted revenue of $178.2 million in the second quarter of FY 20, missing the analysts’ estimates for revenue of $185.8 million.

Moreover, the company grew loans to $15 billion, up 7% from March 31, 2020, which got affected by $1.2 billion of PPP loans at June 30, 2020. The company has increased total average deposits by 14% to $15 billion from the prior quarter. The company has increased total capital to 13.70% of risk-weighted assets, up 170 basis points from the prior quarter, which benefited on the back of the issuance of $230.5 million of 7.000% fixed rate preferred stock.

Additionally, during the second quarter of 2020, the company had completed the issuance of $230.5 million of its 7.000% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A and C. The Company received the total proceeds of $221.3 million, which is net of underwriting discounts and commissions and issuance costs. The Company anticipates to use the net proceeds for general corporate purposes.

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