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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1998
First Midwest Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-10967 36-3161078
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
300 Park Boulevard, Suite 405, Itasca, Illinois 60143
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(Address of principal executive offices) (Zip Code)
(630) 875-7450
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Registrant's telephone number, including area code
N.A.
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(Former name and address, if changed since last report)
Exhibit Index is on Page 6
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FIRST MIDWEST BANCORP, INC.
FORM 8-K
July 14, 1998
Item 2. Acquisition or Disposition of Assets
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On July 1, 1998, First Midwest Bancorp, Inc. ("First Midwest") consummated the
acquisition of Heritage Financial Services, Inc. ("Heritage") pursuant to an
Agreement and Plan of Merger ("Merger Agreement") dated as of January 14, 1998
by and among First Midwest, First Midwest Acquisition Corporation ("Acquisition
Corp."), a wholly owned subsidiary of First Midwest, and Heritage whereby
Heritage was merged with and into Acquisition Corp. (the "Merger"). Heritage was
a $1.3 billion holding company headquartered in Tinley Park, Illinois with 17
banking offices located in the south and southwest suburban Chicago banking
market.
In accordance with the Merger Agreement, the Merger was effected on a stock-for-
stock basis in a tax free exchange whereby each outstanding share of Heritage's
common stock, no par value, was converted into .7695 shares of First Midwest
common stock, $.01 par value, with cash being paid in lieu of fractional shares,
resulting in the issuance of approximately 9,662,000 million shares of First
Midwest common stock. The value of the transaction is approximately $425 million
based on First Midwest's closing stock price of $43.97 on June 30, 1998. The
Merger was accounted for as a pooling-of-interests under generally accepted
accounting principles.
First Midwest's Registration Statement on Form S-4 (Registration No. 333-47381),
which was declared effective by the Securities and Exchange Commission on April
28, 1998, sets forth certain information concerning First Midwest, Heritage, and
the Merger, including without limitation, a description of the assets involved,
the nature and amount of consideration paid by First Midwest, the method used
for determining the amount of such consideration, the nature of any material
relationships between Heritage and First Midwest or any officer or director of
First Midwest or any associate of any such officer or director, the nature of
Heritage's business and First Midwest's intended use of the assets acquired in
the Merger.
First Midwest expects to record pre-tax acquisition costs and related charges
currently estimated at $15.4 million upon the consummation of the Merger. Such
estimated charge includes costs related to severance and related obligations,
investment banker fees and expenses, professional and filing fees, contract
termination fees, and other costs necessary to consummate the acquisition. The
estimates include assumptions about the timing of the consummation of the Merger
and the number of employees whose employment will terminate as a result of the
Merger. Changes in such assumptions could result in a change in the estimated
total charge.
Reference is made to the News Release, dated July 1, 1998, a copy of which is
file as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated
herein by reference.
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Forward Looking Information
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The information contained, or incorporated by reference, in this current report
on Form 8-K may contain forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 which are subject to numerous
assumptions, risks and uncertainties. Actual results could differ materially
from those contained or implied by such statements for a variety of factors,
including; changes in economic conditions, movements in interest rates,
competitive pressures on product pricing and services, success and timing of
cost savings, revenue enhancement and implementation of integration strategies,
and the nature and extent of legislative and regulatory actions and reforms.
Item 7. Financial Statements and Exhibits
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(a) Financial Statements of Business Acquired.
The following audited financial statements of Heritage have been previously
filed with the Securities and Exchange Commission by incorporation by
reference as part of First Midwest's Registration Statement No. 333-47381
on Form S-4 declared effective on April 28, 1998 and are incorporated
herein by reference:
- Report of Independent Public Accountants;
- Consolidated Balance Sheets as of December 31, 1997 and 1996;
- Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995;
- Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 1997, 1996 and 1995;
- Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995; and
- Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed combined financial statements
of First Midwest and Heritage have been previously filed with the
Securities and Exchange Commission as part of First Midwest's Registration
Statement No. 333-47381 on Form S-4 declared effective on April 28, 1998
and are incorporated herein by reference:
- Pro forma Condensed Statement of Condition as of December 31, 1997;
- Pro forma Condensed Statements of Income for the years ended
December 31, 1997, 1996 and 1995.
The following unaudited pro forma condensed combined financial statements
of First Midwest and Heritage are filed herewith and incorporated herein as
exhibit 99.1:
- Pro forma Condensed Statement of Condition as of March 31, 1998;
- Pro forma Condensed Statements of Income for the periods ending
March 31, 1998 and 1997.
(c) Exhibit Index is located on Page 6 of this Report on Form 8-K.
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FIRST MIDWEST BANCORP, INC.
FORM 8-K
July 14, 1998
The following Items are not applicable for this Form 8-K:
Item 1. Changes in Control of Registrant
Item 3. Bankruptcy or Receivership
Item 4. Changes in Registrant's Certifying Accountant
Item 5. Other Events
Item 6. Resignations of Registrant's Directors
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FIRST MIDWEST BANCORP, INC.
FORM 8-K
July 14, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
First Midwest Bancorp, Inc.
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(Registrant)
DONALD J. SWISTOWICZ
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Date: July 14, 1998 Donald J. Swistowicz
Executive Vice President
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FIRST MIDWEST BANCORP, INC.
FORM 8-K
July 14, 1998
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description of Documents Number
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<C> <S> <C>
2.1 Agreement and Plan of Merger, dated January 14, 1998, between First
Midwest Bancorp, Inc. ("First Midwest"), First Midwest Acquisition
Corporation, and Heritage Financial Services, Inc. ("Heritage") is
incorporated herein by reference to Appendix A of First Midwest's
Registration Statement No. 333-47381 on Form S-4 declared effective
on April 28, 1998.
2.2 Stock Option Agreement, dated January 14, 1998, between First
Midwest and Heritage is incorporated herein by reference to Appendix
E of First Midwest's Registration Statement No. 333-47381 on Form
S-4 declared effective on April 28, 1998.
2.3 Agreement of Affiliates, dated January 14, 1998, between First
Midwest and certain of the directors and executive officers of Heritage
is incorporated herein by reference to Exhibit 2.3 of First Midwest's
Registration Statement No. 333-47381 on Form S-4 declared effective
on April 28, 1998.
23 Consent of Arthur Anderson LLP. 7
99.1 Unaudited Pro Forma Condensed Combined Financial Statements of 8
First Midwest and Heritage as of, and for the quarters ended March 31,
1998 and 1997.
99.2 Press release issued by First Midwest Bancorp, Inc. dated July 1, 1998. 12
</TABLE>
6
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Current Report on Form 8-K of our report dated January 19,
1998 on Heritage Financial Services, Inc.'s consolidated financial statements
for the year ended December 31, 1997, included in Heritage Financial Services,
Inc.'s 1997 Annual Report on Form 10-K/A and to all references to our Firm
included in this Current Report on Form 8-K.
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois
July 13, 1998
7
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Exhibit 99.1
First Midwest Bancorp, Inc. and Heritage Financial Services, Inc.
Unaudited Pro Forma Statement of Condition
as of March 31, 1998
and
Unaudited Pro Forma Statements of Income
for the quarters ended,
March 31, 1998 and 1997
(Amounts in thousands except per share data)
**********
The accompanying financial information presents the statement of condition and
statements of income of First Midwest and Heritage on a pro forma basis as if
the transaction had been consummated on January 1, 1997, with all prior periods
being restated.
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Pro Forma Condensed Statement of Condition (Unaudited)
<TABLE>
<CAPTION>
As of March 31, 1998
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First Pro Forma
Midwest Heritage Pro Forma Consolidated
---------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Assets
Cash and due from banks $ 133,498 $ 35,088 $ --- $ 168,586
Funds sold and other short-term investments 7,666 43,255 --- 50,921
Mortgages held for sale 44,365 --- --- 44,365
Securities available for sale 1,072,764 380,516 --- 1,453,280
Securities held to maturity 26,720 111,393 --- 138,113
Trading account securities --- 471 --- 471
Loans 2,282,947 718,533 --- 3,001,480
Reserve for loan losses (35,822) (9,801) --- (45,623)
---------- ---------- --------- ------------
Net loans 2,247,125 708,732 --- 2,955,857
---------- ---------- --------- ------------
Premises, furniture and equipment 58,807 19,352 --- 78,159
Accrued interest receivable and other assets 138,002 26,286 --- 164,288
---------- ---------- --------- ------------
Total Assets $3,728,947 $1,325,093 $ --- $ 5,054,040
========== ========== ========= ============
Liabilities
Deposits $2,800,167 $1,134,409 $ --- $ 3,934,576
Short-term borrowings 548,345 52,442 --- 600,787
Accrued interest payable and other liabilities 41,180 12,364 11,550/(1)/ 65,094
---------- ---------- --------- ------------
Total liabilities 3,389,692 1,199,215 11,550 4,600,457
---------- ---------- --------- ------------
Stockholders' Equity
Common Stock 201 --- 93/(2)/ 294
Additional paid-in capital 62,901 24,260 (93)/(2)/ 87,068
Retained earnings 288,675 96,130 (11,550)/(1)/ 373,255
Accumulated other comprehensive income 1,191 5,579 --- 6,770
Less: Treasury stock (13,713) (91) --- (13,804)
---------- ---------- --------- ------------
Total stockholders' equity 339,255 125,878 (11,550) 453,583
---------- ---------- --------- ------------
Total Liabilities and Stockholders' Equity $3,728,947 $1,325,093 $ --- $ 5,054,040
========== ========== ========= ============
</TABLE>
See Footnotes on Page 11.
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Pro Forma Condensed Statement of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
----------------------------------------
First Pro Forma
Midwest Heritage Consolidated
------------ ---------- ---------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans................................................... $ 51,957 $ 14,913 $ 66,870
Interest on securities....................................................... 15,694 8,133 23,827
Interest on funds sold and other short-term investments...................... 856 303 1,159
-------- -------- ---------
Total interest income.................................................... 68,507 23,349 91,856
-------- -------- ---------
Interest Expense
Interest on deposits......................................................... 25,565 10,454 36,019
Interest on short-term borrowings............................................ 6,353 478 6,831
-------- -------- ---------
Total interest expense................................................... 31,918 10,932 42,850
-------- -------- ---------
Net interest income...................................................... 36,589 12,417 49,006
Provision for Loan Losses.................................................... 1,118 150 1,268
-------- -------- ---------
Net interest income after provision for loan losses...................... 35,471 12,267 47,738
Noninterest Income........................................................... 9,771 2,621 12,392
Noninterest Expense.......................................................... 28,444 8,016 36,460
-------- -------- ---------
Income before income tax expense......................................... 16,798 6,872 23,670
Income Tax Expense........................................................... 5,356 2,127 7,483
-------- -------- ---------
Net Income................................................................ $ 11,442 $ 4,745 $ 16,187
======== ======== =========
Basic Earnings Per Share/(3)/............................................. $ 0.57 $ 0.55
======== =========
Diluted Earnings Per Share/(4)/........................................... $ 0.56 $ 0.54
======== =========
Average Shares Outstanding /(3)/.......................................... 20,077 29,409
======== =========
Average Diluted Shares Outstanding/(4)/................................... 20,345 29,981
======== =========
</TABLE>
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See Footnotes on Page 11.
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Pro Forma Condensed Statement of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
------------------------------------------
First Pro Forma
Midwest Heritage Consolidated
------------ ------------ ------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans....................................... $ 51,022 $ 13,811 $ 64,833
Interest on securities........................................... 14,383 8,217 22,600
Interest on funds sold and other short-term investments.......... 391 13 404
------------ ------------ ------------
Total interest income........................................ 65,796 22,041 87,837
------------ ------------ ------------
Interest Expense
Interest on deposits............................................. 25,858 9,480 35,338
Interest on short-term borrowings................................ 4,569 577 5,146
------------ ------------ ------------
Total interest expense....................................... 30,427 10,057 40,484
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Net interest income.......................................... 35,369 11,984 47,353
Provision for Loan Losses........................................ 2,108 150 2,258
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Net interest income after provision for loan losses.......... 33,261 11,834 45,095
Noninterest Income............................................... 9,334 2,301 11,635
Noninterest Expense.............................................. 26,438 7,774 34,212
------------ ------------ ------------
Income before income tax expense............................. 16,157 6,361 22,518
Income Tax Expense............................................... 5,748 2,030 7,778
------------ ------------ ------------
Net Income................................................... $ 10,409 $ 4,331 $ 14,740
============ ============ ============
Basic Earnings Per Share/ (3)/............................... $ 0.52 $ $0.50
============ ============
Diluted Earnings Per Share/(4)/.............................. $ 0.52 $ $0.49
============ ============
Average Shares Outstanding /(3)/............................. 19,998 29,300
============ ============
Average Diluted Shares Outstanding /(4)/..................... 20,181 29,785
============ ============
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</TABLE>
Footnotes to Pro Forma Combining Financial Statements:
(1) Reflects the estimated acquisition charge ($15,400) and related tax
benefits ($3,850) to be recorded upon the consummation of the Merger. Such
estimated charge includes costs related to severance and related
obligations, investment banker fees and expenses, professional and filing
fees, contract termination fees, and other costs necessary to consummate
the acquisition. The estimates include assumptions about the timing of the
consummation of the Merger and the number of employees whose employment
will terminate as a result of the Merger. Changes in such assumptions could
result in a change in the estimated total charge. These costs result
directly from the Merger and are expected to be incurred within 12 months
of the consummation date. The unaudited financial information does not
reflect the effect of any cost savings or revenue enhancements which are
expected to result from the consolidation of operations of First Midwest
and Heritage.
(2) Reflects the increase in First Midwest Common Stock, $.01 par value and
related reduction in additional paid-in capital for the issuance of
approximately 9,342 shares in the exchange for 12,141 shares of Heritage
Common Stock outstanding at March 31, 1998.
(3) The pro forma consolidated basic earnings per share and average shares
outstanding are based upon net income for First Midwest and Heritage
divided by the total pro forma average shares of the combined entity
assuming conversion of the Heritage Common Stock at the 0.7695 exchange
ratio.
(4) The pro forma consolidated diluted earnings per share and average diluted
shares outstanding are based upon net income of First Midwest and Heritage
divided by the total pro forma average shares of the combined entity,
adjusted for the potential dilutive effect of shares issuable under the
entities' stock option plans, assuming conversion of the Heritage Common
Stock at the 0.7695 exchange ratio.
11
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Exhibit 99.2
CONTACT: James M. Roolf
FOR IMMEDIATE RELEASE (630) 875-7452
TRADED: NASDAQ/NMS
SYMBOL: FMBI
FIRST MIDWEST COMPLETES
ACQUISITION OF HERITAGE FINANCIAL
ITASCA, IL., JULY 1, 1998 -- First Midwest Bancorp, Inc.(NASDAQ: FMBI) announced
today that it has completed the acquisition of Heritage Financial Services,
Inc., a $1.3 billion banking company located in southwest suburban Chicago. It
is anticipated that Heritage Bank will change its name to First Midwest Bank
coincident with systems conversion in late October 1998.
With the acquisition First Midwest has assets of $5.1 billion and a market
capitalization exceeding $1.3 billion making it the premier independent suburban
Chicago banking franchise. It is the largest independent and ninth largest
overall deposit share holder in the nine county Chicago MSA enjoying a rank of
#1 or #2 in four of such counties. Of the Company's network of 72 offices 56 are
located in suburban Chicago.
Pursuant to the merger agreement, First Midwest will issue approximately 9.7
million shares of its common stock in exchange for all of the outstanding stock
of Heritage. Former Heritage shareholders will receive 0.7695 shares of First
Midwest common stock for each share of Heritage common stock in a tax free
exchange that will be accounted for as a pooling of interests. The value of the
transaction is approximately $425 million based on First Midwest's closing stock
price on June 30, 1998.
12
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At August 1998 meeting, the Board of Directors of First Midwest will appoint
former Heritage Directors Richard T. Wojcik, Jack Payan and John L. Sterling as
Directors of First Midwest to serve until 2001.
With assets of $5.1 billion, First Midwest is the third largest banking company
headquartered in Illinois and the premier independent suburban Chicago banking
company. It provides commercial banking, trust, investment management, mortgage
and related financial services to a variety of consumer, business and
governmental customers in 47 communities primarily in northern Illinois.
13
