<PAGE>
FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-37809
PROSPECTUS
FIRST MIDWEST BANCORP, INC.
1,520,611 Shares
Common Stock
($.01 par value)
This Prospectus pertains to an offering from time to time of up to
1,520,611 shares of common stock, par value $.01 ("Common Stock"), of First
Midwest Bancorp, Inc. (the "Company" or "First Midwest"), held by stockholders
(the "Selling Stockholders") who received the shares in exchange for their
shares of common stock of SparBank, Incorporated ("SparBank"), in connection
with the Company's acquisition of SparBank on October 1, 1997. See "SELLING
STOCKHOLDERS" (located on pages 10-11 of this Prospectus). The Company will not
receive any proceeds from the sale of the shares of Common Stock covered by this
Prospectus. The Company has agreed to pay certain expenses in connection with
this offering (excluding underwriting discounts, selling commissions, brokers'
fees or similar discounts, commissions or fees to be paid by the Selling
Stockholders).
The Common Stock is quoted on the Nasdaq Stock Market's National Market
(the "Nasdaq Stock Market") under the symbol "FMBI". On April 23, 1998, the last
sale price of the Common Stock as reported on the Nasdaq Stock Market was $46.25
per share.
The Common Stock may be offered for sale from time to time by the Selling
Stockholders to or through underwriters or directly to other purchasers or
through agents or brokers in one or more transactions on the Nasdaq Stock
Market, in one or more private transactions, or in a combination of such methods
of sale, at prices and on terms then prevailing, at prices related to such
prices, or at negotiated prices. The price at which any of the shares of Common
Stock may be sold, and the commissions, if any, paid in connection with any such
sale, are unknown and may vary from transaction to transaction. As of the date
hereof, the distribution and sale of the shares of Common Stock offered hereby
are also subject to the provisions of an Investment Agreement, dated as of June
18, 1997, between the Company and the Selling Stockholders (the "Investment
Agreement"). The Investment Agreement requires, among other things, that any
transfer of the shares "to the public" be made in an "ordinary trading
transaction." An "ordinary trading transaction" is defined in the Investment
Agreement as a sale of the shares on the Nasdaq Stock Market using the services
of a broker-dealer registered in the state where the transfer is to occur,
without the use of special selling efforts or methods. See "PLAN OF
DISTRIBUTION" (located on pages 12-13 of this Prospectus).
See "INVESTMENT CONSIDERATIONS" (located on pages 7-10 of the Prospectus)
for a discussion of certain risks that should be considered by prospective
investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
The date of this Prospectus is April 27, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
The Company.................................................. 3
Recent Developments.......................................... 3
Cautionary Statement Concerning Forward-Looking Information.. 7
Investment Considerations.................................... 7
Use of Proceeds.............................................. 10
Selling Stockholders......................................... 10
Plan of Distribution......................................... 11
Pro Forma Financial Information.............................. 13
Legal Matters................................................ 17
Experts...................................................... 17
Available Information........................................ 17
Incorporation of Certain Documents by Reference.............. 18
</TABLE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained or incorporated by
reference in this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or solicitation of
an offer to buy to any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create an implication that
the information contained herein is current as of any time subsequent to the
date hereof.
<PAGE>
THE COMPANY
The Company is a Delaware corporation that was incorporated in 1982 for the
purpose of becoming a multi-bank holding company. The subsidiaries
("Affiliates") of the Company include a commercial bank that is a national
banking association and three nonbank Affiliates that offer trust and investment
management, mortgage banking and credit life insurance related services in the
same markets served by the bank Affiliate. See also "RECENT DEVELOPMENTS" below
(located on pages 3-6 of this Prospectus). The Company, headquartered in the
Chicago suburb of Itasca, Illinois, is Illinois' third largest publicly traded
bank holding company with assets of approximately $3.6 billion at December 31,
1997.
The Bank's national bank affiliate, First Midwest Bank, National
Association (the "Bank"), is engaged in the general commercial banking business
which embraces all the usual functions of commercial and retail banking,
including: accepting deposits; commercial and industrial, consumer and real
estate lending; collections; safe deposit box operations; and other banking
services tailored for individual, commercial and industrial and governmental
customers. The Bank operates 55 banking offices in northern Illinois with
approximately 78% of its banking assets located in the suburban metropolitan
Chicago area. Another approximate 16% of the Bank's assets are located in the
"Quad-Cities" area of Western Illinois which includes the Illinois cities of
Moline and Rock Island and the Iowa cities of Davenport and Bettendorf. The
remaining 6% of the Bank's assets are located in the southeastern region of the
state in Vermilion and Champaign counties. In each of the primary markets in
which the Bank operates, it ranks among the top five banking institutions in
market share of deposits.
First Midwest Trust Company, N.A. (the "Trust Company"), provides trust and
investment management services to its clients, acting as executor,
administrator, trustee, agent, and in various other fiduciary capacities. As of
December 31, 1997, the Trust Company had approximately $1.6 billion in trust
assets under management, comprised of accounts ranging from small personal
investment portfolios to large corporate employee benefit plans.
First Midwest Mortgage Corporation (the "Mortgage Corporation") performs
centralized residential real estate mortgage loan origination, sales and
servicing operations previously conducted by the Bank.
First Midwest Insurance Company operates as a reinsurer of credit life,
accident and health insurance sold through the Bank, primarily in conjunction
with its consumer lending operations.
The Company's principal executive office is located at 300 Park Boulevard,
Suite 405, Itasca, Illinois, 60143-3459, and its telephone number is (630) 875-
7450.
RECENT DEVELOPMENTS
Acquisition of SparBank. The Company consummated the acquisition of
SparBank, the holding company of McHenry State Bank ("MSB"), which was
headquartered in McHenry, Illinois, on October 1, 1997. MSB operated four
banking offices in McHenry County, Illinois, and had total assets of
approximately $436 million as of December 31, 1997. The Company merged MSB into
the Bank on February 23, 1998.
The acquisition was accounted for as a pooling of interests. The Selling
Stockholders received 21.7234 shares of Common Stock for each share of SparBank
common stock they owned in a tax-free exchange. The
3
<PAGE>
Company issued 3,230,764 shares of Common Stock to the Selling Stockholders in
exchange for all of the issued and outstanding common stock of SparBank.
Incident to the SparBank acquisition, the Company recorded in the fourth
quarter of 1997 an acquisition charge of $5.446 million representing primarily
investment banker fees, severance and related benefit costs, legal fees and
professional services, contract termination fees and certain other nonrecurring
merger-related costs. Additionally, also incident to the acquisition, the
Company recorded a one-time provision of $1.296 million to conform MSB's loan
loss reserves and credit policies to First Midwest's.
Pending Acquisition. On January 14, 1998, the Company, First Midwest
Acquisition Corporation, a wholly owned subsidiary of the Company ("Acquisition
Corporation"), and Heritage Financial Services, Inc. ("Heritage"), entered into
an Agreement and Plan of Merger (the "Merger Agreement") whereby Heritage will
be merged with and into Acquisition Corporation (the "Merger"). Heritage is 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.
Pursuant to the Merger Agreement, the transaction will be structured as a
tax-free exchange and accounted for as a pooling-of-interests. Each outstanding
share of Heritage's Common Stock, no par value, will be converted to 0.7695 of a
share of Company Common Stock, resulting in the issuance of approximately 9.7
million shares of Company Common Stock. Based on First Midwest's January 14,
1998 closing price of $42.38 per share, the transaction is valued at
approximately $411 million.
The Merger is conditioned upon, among other things, approval by the
shareholders of both First Midwest and Heritage, and receipt of customary
regulatory approvals. The Merger Agreement has been approved by the Boards of
Directors of both companies. In conjunction with the approval of the Merger
Agreement, Heritage rescinded the balance of its stock repurchase program
authorized in June, 1996. It is anticipated the acquisition will be consummated
late in the second quarter of 1998. First Midwest intends to merge Heritage
Bank, Heritage's principal subsidiary, into the Bank prior to year-end 1998.
Incident to the entry into the Merger Agreement, the Company and Heritage
executed a Stock Option Agreement (the "Option Agreement") pursuant to which
Heritage granted the Company an option to acquire up to 2,400,000 shares of
Heritage Common Stock (representing 19.9% of its outstanding shares as of
January 14, 1998) at a price of $21.25 per share subject to certain terms and
conditions set forth in the Option Agreement.
On January 23, 1998, the Company filed a Current Report on Form 8-K with
the Commission (the "Company Form 8-K"), which contains, among other things,
certain financial and other information (the "Company Form 8-K Materials") about
the Merger. The Company Form 8-K Materials contain certain forward-looking
statements regarding the Company, Heritage and the combined organization
following the Merger, including statements relating to estimated cost savings
and enhanced revenues that may be realized from the Merger, and certain
acquisition costs and charges expected to be incurred in connection with the
Merger. Such forward-looking statements involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in the Company Form 8-K Materials and herein. Factors that might cause such a
difference include, but are not limited to, those discussed in the Company Form
8-K and the Company's Annual Report on Form 10-K for the year ended December 31,
1997. See "AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" and "CAUTIONARY
4
<PAGE>
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION" (located on pages 17, 18 and
7, respectively, of this Prospectus).
As indicated in the Company Form 8-K:
. The Company expects to realize before-tax expense savings
resulting from the Merger of approximately $3.8 million and $9.6
million in 1998 and 1999, respectively, or approximately $2.3
million and $5.8 million after-tax, respectively. These estimates
assume that approximately 30% of Heritage's 1997 annualized
expenses are eliminated by the end of 1999.
. The Company expects to record pre-tax acquisition costs and
related charges currently estimated at $15.4 million upon the
consummation of the Merger, as summarized below:
<TABLE>
<CAPTION>
<S> <C>
Severance and Related Obligations..................... $ 8.0
Investment Banker Fees and Expenses................... 4.7
Professional and Filing Fees.......................... 1.2
Contract Termination Fees............................. 0.8
Other................................................. 0.7
-----
Total................................................. $15.4
=====
</TABLE>
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.
Year 2000 Issues. First Midwest and Heritage are currently in the process
of addressing a potential problem that is facing all users of automated
information systems, including personal computers, that is generally referred to
as the Year 2000 Issue. The problem is the result of computer systems processing
transactions based upon 2 digits representing the year of the transaction rather
than 4 full digits (i.e., 97 for 1997). These computer systems may not operate
properly when the last two digits become "00", as will occur on January 1, 2000.
In some cases, this could result in a system failure, miscalculations causing
disruptions of operations, temporary inability to process transactions, send
invoices or engage in similar normal business activities. The problem could
affect a wide variety of automated information systems such as main frame
computer applications, personal computers, communications systems, including
telephone systems, and other information systems utilized by not only First
Midwest and Heritage but also their vendors and customers.
The most significant of First Midwest's automated information systems
affected by the Year 2000 Issue are the data processing systems used to process
transactions and information for loan, deposit and trust customers. First
Midwest currently purchases the services for these systems from three nationally
recognized data processing vendors. First Midwest currently plans to convert
Heritage's loan, deposit and trust systems to its vendors during 1998 in
conjunction with the integration of Heritage into First Midwest. Other
programs/applications used in First Midwest's and Heritage's operations that
will be affected by the Year 2000 Issue include building and security
5
<PAGE>
systems, equipment such as proof machines, sorters and cash dispensers, hardware
such as routers, servers, printers, controllers and ATM modems and computer
software. The majority of these items have been purchased from outside vendors
who are responsible for maintenance of the systems and modifications to enable
uninterrupted usage. Additionally, First Midwest and Heritage both have some in-
house applications, interface equipment and interfaces that must be reviewed and
modified.
In April 1997, First Midwest began the process of developing a plan and
identifying internal resources to address the Year 2000 Issue. The plan includes
the identification of the extent of the problem by performing an inventory of
all potentially affected software, hardware, other equipment and systems and
initiating formal communications with all of First Midwest's significant
suppliers and vendors to obtain certification of Year 2000 compliance and the
testing of all impacted applications (both third party provided and internally
developed). First Midwest's goals are to be fully compliant by November 1998 and
to conduct testing of all programs/applications during the period January
through June 1999.
First Midwest's plan to become Year 2000 compliant is being executed with
internal resources, primarily through its Information Systems staff.
Additionally, First Midwest expects to utilize contract consulting to supplement
its internal staff, as needed. Other costs to become compliant will include
updating and/or replacement of software and hardware, the cost of which will be
capitalized and depreciated. The payroll and payroll related costs and
consulting expenses for internal and external human resources will be expensed
as incurred.
Based on currently available information, First Midwest does not anticipate
that the cost to address the Year 2000 issues will have a material adverse
impact on its financial condition, results of operations or liquidity.
6
<PAGE>
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This Prospectus (including information included or incorporated by
reference herein) contains certain forward-looking statements with respect to
the financial condition, results of operations, plans, objectives, future
performance and business of each of the Company and Heritage, including (i)
statements relating to the cost savings estimated to result from the Merger,
(ii) statements relating to revenues estimated to result from the Merger, (iii)
statements relating to the restructuring charges estimated to be incurred in
connection with the Merger and (iv) statements preceded by, followed by or that
include the words "believes," "expects," "anticipates," "estimates" or similar
expressions. See "RECENT DEVELOPMENTS" and "PRO FORMA FINANCIAL INFORMATION"
(located on pages 3-6 and 13-16 respectively, of this Prospectus). These
forward-looking statements involve certain risks and uncertainties. The Company
does not undertake any obligation to reflect circumstances or events that arise
after the date hereof. Factors that may cause actual results to differ
materially from those contemplated by such forward-looking statements include,
among others, the following possibilities: (a) expected cost savings from the
Merger may not be fully realized or realized within the expected time frame; (b)
revenues following the Merger may be lower than expected, or deposit attrition,
operating costs or customer loss and business disruption following the Merger
may be greater than expected; (c) competitive pressures among depository and
other financial institutions may increase significantly; (d) costs or
difficulties related to the integration of the business of the Company and
Heritage may be greater than expected; (e) changes in the interest rate
environment may reduce margins; (f) general economic or business conditions,
either nationally or in the states in which the Company is doing business, may
be less favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit; (g) legislative
or regulatory changes may adversely affect the business in which the Company is
engaged; (h) the failure of the Company, Heritage or their vendors or customers
to achieve Year 2000 compliance on a timely basis could result in disruptions of
the Company's business; and (i) changes may occur in the securities markets. The
forward-looking earnings estimates included in this Prospectus have not been
examined or compiled by the independent public accountants of the Company nor
have such accountants applied any procedures thereto. Accordingly, such
accountants do not express an opinion or any other form of assurance on them.
Further information on other factors which could affect the financial results of
the Company after the Merger is included in the Commission filings incorporated
by reference herein.
INVESTMENT CONSIDERATIONS
Prospective purchasers should consider carefully the following factors
associated with the ownership of the Common Stock together with the other
information contained in this Prospectus.
Competition. Illinois, and more specifically the metropolitan Chicago area,
is a highly competitive market for banking and related financial services. Since
the Chicago area is the Company's focus market, the Bank and the Mortgage
Corporation are exposed to varying types and levels of competition from
associated industries. In general, however, the Bank and the Mortgage
Corporation compete with other banking institutions, savings and loan
associations, personal loan and finance companies, and credit unions within
their market areas. The Trust Company competes with retail and discount stock
brokers, investment advisors, mutual funds, insurance companies, and to a lesser
extent, financial institutions. Factors influencing the type of competition
experienced by the Trust Company generally involve the variety of products and
services that can be offered to clients.
7
<PAGE>
Satisfying the needs of the client, in terms of providing quality services and
tailored products at competitive prices, primarily dictates the competitive
advantage within the industries.
Loan Portfolio Risks. Inherent in the Company's banking operations are
risks associated with the loan portfolio, including credit, interest rate,
prepayment and liquidity risk. The Company manages such risks through adherence
to policies and procedures designed to control and/or limit risk, such as
underwriting and asset/liability policies and procedures as well as a detailed
loan rating system used in conjunction with credit reviews performed by its loan
review staff. Further, loan loss reserve policies provide Management with
recommended levels of loan reserves, mitigating the financial statement impact
of unforeseen future losses on loans. Management does not believe that the
overall loan portfolio risk inherent in the Company's loan portfolio is in
excess of risks experienced by others in the same or similar industries.
Impact of Interest Rate Changes. Interest rate risk is an inherent part of
the banking business as financial intermediaries garner deposits and borrow
other funds to finance earning assets. Risk results when either contractual
relationships or prevailing market conditions cause rates paid on deposits and
other borrowings to reprice on a basis which does not coincide with the
repricing events affecting yields on earning assets. If more assets than
liabilities reprice in a given time period, the balance sheet is considered
asset-sensitive. In a rising interest rate environment, this position would
generally result in favorable growth in net interest income, and in a declining
interest rate environment, net interest income would be adversely affected.
Conversely, if more liabilities than assets reprice, the balance sheet is
considered liability-sensitive. In a rising rate environment, this position
would generally result in an adverse effect on net interest income, and in a
declining interest rate environment the effect would be favorable.
Economic Conditions and Monetary Policies. Conditions beyond Management's
control may have a significant impact on changes in net interest income from one
period to another. Examples of such conditions could include: (a) the strength
of credit demands by customers; (b) fiscal and debt management policies of the
federal government, including changes in tax laws; (c) the Federal Reserve
Board's monetary policy, including the percentage of deposits that must be held
in the form of non-performing cash reserves; (d) the introduction and growth of
new investment instruments and transaction accounts by non-bank financial
competitors; and (e) changes in rules and regulations governing payment of
interest on deposit accounts.
Government Regulation. The Company and its Affiliates are subject to
regulation and supervision by various governmental regulatory authorities
including, but not limited to, the Federal Reserve Board, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation (the
"FDIC"), the Illinois Commissioner of Banks and Real Estate, the Arizona
Department of Insurance, the Internal Revenue Service and state taxing
authorities. Financial institutions and their holding companies are extensively
regulated under federal and state law.
Federal and state laws and regulations generally applicable to financial
institutions, such as the Company and the Affiliates, regulate, among other
things, the scope of business, investments, reserves against deposits, capital
levels relative to operations, the nature and amount of collateral for loans,
the establishment of branches, mergers, consolidations and dividends. This
supervision and regulation is intended primarily for the protection of the
FDIC's bank and savings association insurance funds and depositors of a
financial institution. Consequently, laws and regulations may impose limitations
on the Company that may not be in the best interests of the Company
8
<PAGE>
and its stockholders. The effect of such statutes, regulations and policies can
be significant, and cannot be predicted with a high degree of certainty.
FDIC Insurance Premiums. The deposits of the Company are insured up to
$100,000 per insured member (as defined by law and regulation) by the FDIC with
such insurance backed by the full faith and credit of the United States
government. The Company's deposits are predominantly insured by the Bank
Insurance Fund ("BIF") while certain deposits of the Company are insured by the
Savings Association Insurance Fund ("SAIF"), both of which are administered by
the FDIC.
As insurer, the FDIC assesses deposit insurance premiums and is authorized
to conduct examinations of, and require reporting by, FDIC-insured institutions.
Deposit insurance premiums are assessed through a risk-based system under which
all insured depository institutions are placed into one of nine categories and
assessed insurance premiums based upon their level of capital and supervisory
evaluation. Institutions assigned higher risk classifications pay deposit
insurance premiums at a higher rate than the institutions assigned lower risk
classifications.
The 1998 annual deposit insurance premium established by the FDIC for the
Company's BIF assessable deposits is set at 0%, reflecting the lowest premium
assessment as the Company is classified as well-capitalized. Further, as a
result of the special assessment on SAIF deposits required by the Deposit
Insurance Funds Act of 1996, the SAIF was recapitalized on October 1, 1996.
Accordingly, no premium assessments have been imposed on the Company's SAIF
deposits for 1998. It is unknown whether such assessments will change in future
periods.
For 1998, the Company will pay premium assessments on both its BIF and SAIF
deposits in order to service the interest on the Financing Corporation ("FICO")
bond obligations which were used to finance the cost of "thrift bailouts" in the
1980's. The FICO assessment rates on BIF assessable deposits were set at $.01296
and $.0126 per $100 of insured deposits for the 1998 first and second semi-
annual periods, respectively, and $.0648 and $.0630 per $100 of insured deposits
for SAIF assessable deposits, respectively, for such periods. These rates may be
adjusted quarterly to reflect changes in the assessment basis for the BIF and
SAIF. By law, the FICO rate on BIF assessable deposits must be 1/5 of the rate
on SAIF assessable deposits until the insurance funds are merged or until
January 1, 2000, whichever occurs first.
Anti-Takeover Provisions. The Company has taken a number of actions which
could have the effect of discouraging a takeover attempt that might be
beneficial to stockholders who wish to receive a premium for their shares from a
potential bidder. The Company has adopted a stockholder rights plan which would
cause substantial dilution to a person who attempts to acquire the Company on
terms not approved by the Company's Board of Directors. The stockholder rights
plan may therefore have the effect of delaying or preventing any change in
control and deterring any prospective acquisition of the Company. The Company's
Restated Certificate of Incorporation and its Amended and Restated By-laws also
contain provisions which may have the effect of delaying or preventing a change
in control. The provisions include: (i) the classification of the Board of
Directors; (ii) the restriction that directors can only be removed for cause and
only by a majority of the directors or by the vote of persons holding 67 % of
the voting securities of the Company; (iii) the authority of the Board of
Directors to issue series of preferred stock with such voting rights and other
provisions as the Board of Directors may determine; (iv) a super-majority voting
requirement to approve certain business combinations; and (v) a super-majority
voting requirement to amend provisions of the Restated Certificate of
Incorporation or the Amended and Restated By-laws relating to the classification
of the Board, removal of directors and the super-majority voting
9
<PAGE>
requirement for certain business combinations. In addition, Section 203 of the
Delaware General Corporation Law may have the effect of discouraging takeover
attempts directed at the Company. Furthermore, employment agreements with
certain senior executives of the Company provide for severance pay in the event
of a "Change of Control" of the Company as such term is defined in such
agreements.
Acquisition Charge. See "RECENT DEVELOPMENTS -- Pending Acquisition"
(located on pages 4-5 of this Prospectus) for a description of the pre-tax
acquisition costs and related charges to be recorded in the second quarter of
1998 incident to the acquisition of Heritage.
USE OF PROCEEDS
All of the shares of Common Stock covered hereby are being offered by the
Selling Stockholders. The Company will not receive any proceeds from the sales
of Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS
On June 18, 1997, the Company, FMB Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of the Company ("FMB"), and SparBank and
certain of the Selling Stockholders entered into an Agreement and Plan of Merger
(the "SparBank Merger Agreement") pursuant to which SparBank was merged with and
into FMB on October 1, 1997 (the "SparBank Merger"). Upon the consummation of
the SparBank Merger, each outstanding share of common stock of SparBank was
converted into 21.7234 shares of Common Stock of the Company. A total of
3,230,764 shares of Common Stock were issued to the Selling Stockholders in
exchange for all of the issued and outstanding shares of SparBank common stock.
The Selling Stockholders and the Company are parties to the Investment
Agreement pursuant to which the Company agreed to prepare and file with the
Securities and Exchange Commission (the "Commission") a Registration Statement
under the Securities Act of 1933, as amended (the "Securities Act"), registering
the offer and sale by the Selling Stockholders of an agreed-upon number of the
shares of Common Stock issued in the Merger. The Company has agreed to prepare
and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus as may be necessary to keep the Registration
Statement effective until the earlier of October 1, 1998, or the date on which
all of the shares of Common Stock offered hereby have been sold. Under the terms
of the Investment Agreement, the Company has agreed to pay certain fees and
expenses incurred in connection with the registration; provided, however, that
the Company will not pay any underwriting discounts, selling commissions,
brokers' fees or similar discounts, commissions or fees attributable to the sale
or distribution of the shares of Common Stock, which expenses will be paid by
the Selling Stockholders.
Under the Investment Agreement, the Selling Stockholders agreed that they
would not directly or indirectly offer, sell, pledge or transfer or otherwise
dispose of (or solicit any offers to buy, purchase, or otherwise acquire or
pledge) any of the shares offered hereby, except in compliance with the
Investment Agreement and the Securities Act and the rules and regulations
promulgated thereunder.
The Selling Stockholders may not transfer their rights under the Investment
Agreement without the Company's consent. Such consent is not required, however,
in the case of a transfer by bequest, devise, inheritancy, laws of intestacy, or
gift.
10
<PAGE>
The table below sets forth certain information with respect to the Selling
Stockholders and their beneficial ownership of Common Stock as of April 20,
1998, and includes information with respect to positions, offices or other
material relationships of the Selling Stockholders with the Company, or any of
its predecessors or affiliates, during the past three years. Each of the Selling
Stockholders will determine, in such Selling Stockholder's sole discretion, the
number of shares of Common Stock, if any, to be sold by such Selling Stockholder
during the effectiveness of the Registration Statement, but in no event will
such number exceed the number of shares of Common Stock specified below. The
Company may amend or supplement this Prospectus from time to time to disclose
the names, relationships to the Company, and holdings of Common Stock of
additional Selling Stockholders.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Shares of of Common Stock Common Stock
Common Stock Number of Shares Owned Assuming Owned Assuming
Owned Prior to of Common Stock the Sale of All of the Sale of All of
Name /1/ the Offering Offered the Shares Offered the Shares Offered
- -------- -------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Geraldine C. Cowlin/2/..... 2,310,153 600,000 1,710,153 8.53%
William J. Cowlin, Sr./3/.. 8,689 8,689 0 0.00
William J. Cowlin, Jr./4/.. 114,286 114,286 0 0.00
Sarah Cowlin Towne/4/...... 114,286 114,286 0 0.00
Bridget Cowlin............. 114,286 114,286 0 0.00
Martha Cowlin.............. 114,286 114,286 0 0.00
David Cowlin............... 114,330 114,330 0 0.00
John Zieman................ 170,224 170,224 0 0.00
Jane Zieman Salmon......... 170,224 170,224 0 0.00
--------- ---------
Total................. 3,230,764 1,520,611
========= ---------
</TABLE>
- -----------------
/1/ William J. Cowlin, Sr., is the spouse of Geraldine C. Cowlin. William J.
Cowlin, Jr., Sarah Cowlin Towne, Bridget Cowlin, Martha Cowlin and David
Cowlin are the children of William J. Cowlin, Sr., and Geraldine Cowlin.
John Zieman and Jane Zieman Salmon are the nephew and niece of William J.
Cowlin, Sr., and Geraldine C. Cowlin.
/2/ Geraldine C. Cowlin served as President and a Director of SparBank and as a
Director of MSB prior to the SparBank Merger.
/3/ William J. Cowlin, Sr., served as Secretary and a Director of SparBank and
as a Director of MSB prior to the SparBank Merger. As provided in the
SparBank Merger Agreement, William J. Cowlin, Sr., was appointed to serve
as a Director of the Company effective as of October 1, 1997, for a three-
year term. Under the terms of the SparBank Merger Agreement, William J.
Cowlin, Sr. (or such other nominee of Geraldine C. Cowlin) shall be
nominated by the Board of Directors of the Company to serve as director of
the Company for a second three-year term following the expiration of his
first term.
/4/ William J. Cowlin, Jr., and Sarah Cowlin Towne served as directors of MSB
prior to the SparBank Merger.
PLAN OF DISTRIBUTION
Subject to applicable provisions of the Investment Agreement, the Common
Stock covered by this Prospectus may be offered for sale from time to time by
the Selling Stockholders to or through underwriters or directly to other
purchasers or through agents in one or more transactions on the Nasdaq National
Market,
11
<PAGE>
in one or more private transactions, or in a combination of such methods of
sale, at prices and on terms then prevailing, at prices related to such prices,
or at negotiated prices. Such methods of sale may include, without limitation,
(a) a block trade in which the broker-dealer so engaged will attempt to sell the
Common Stock as agent but may position and resell a portion of the block as
principal to facilitate the transaction, (b) purchases by a broker-dealer as a
principal and resale by such broker-dealer for its own account pursuant to this
Prospectus, and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. This Prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution, to the extent
that such amendment or supplement is required by applicable law.
In connection with sales of the Common Stock or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of Common Stock in the
course of hedging the positions they assume with the Selling Stockholders. To
the extent permitted by applicable law, the Selling Stockholders may also sell
Common Stock short and redeliver the shares to close out such short positions.
The Selling Stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker- dealer or financial institution of the Common Stock offered hereby,
which Common Stock such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Stockholders may also pledge the shares registered
hereunder to a broker-dealer or other financial institution and, upon a default,
such broker-dealer or other financial institution may, subject to the Investment
Agreement, effect sales of the pledged Common Stock pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with sales pursuant hereto. Any such remuneration
will be disclosed in a prospectus or prospectus supplement filed under the
Securities Act, to the extent such disclosure is required under applicable law.
The Selling Stockholders and such brokers and dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales, and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock will be sold hereunder in such jurisdictions only
through registered or licensed brokers or dealers.
Notwithstanding the foregoing, as of the date of this Prospectus, the
distribution and sale of the shares of Common Stock offered hereby are subject
to the provisions of the Investment Agreement. The Investment Agreement
requires, among other things, that any transfer of such shares of Common Stock
"to the public" be made in an "ordinary trading transaction." An "ordinary
trading transaction" is defined in the Investment Agreement as a sale of the
shares on the Nasdaq National Market using the services of a broker-dealer
registered in the state where the transfer is to occur, without the use of
special selling efforts or methods.
Under the Investment Agreement, the Company has agreed to indemnify the
Selling Stockholders and certain related persons against certain liabilities in
connection with the offering of the Common Stock pursuant to this Prospectus,
including liabilities arising under the Securities Act. The Selling Stockholders
have also agreed to indemnify the Company and certain related persons against
certain liabilities in connection with the offering of the Common Stock pursuant
to this Prospectus, including liabilities arising under the Securities Act.
12
<PAGE>
PRO FORMA FINANCIAL INFORMATION
(dollars in thousands, except per share data)
The following unaudited Pro Forma Condensed Statement of Condition as of
December 31, 1997, combines, under the pooling-of-interests method of
accounting, the historical consolidated statements of condition of the Company
and Heritage as if the Merger had been effective on December 31, 1997. The
following unaudited Pro Forma Condensed Statements of Income for the years ended
December 31, 1997, December 31, 1996 and December 31, 1995 present the combined
results of operations of the Company and Heritage, under the pooling-of-
interests method of accounting, as if the Merger had been effective at January
1, 1995.
The pro forma combined information is not necessarily indicative of the
actual results that would have occurred had the Merger been consummated prior to
the periods indicated, or of the future operations of the combined entity. This
information should be read in conjunction with, and is qualified in its entirety
by, the historical financial statements of the Company, including the notes
thereto. See "AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION," and
"RECENT DEVELOPMENTS" (located on pages 17, 18, 7, and 3-6, respectively, of
this Prospectus).
Under the pooling-of-interests method of accounting, the historical basis
of the assets and liabilities of the Company and Heritage will be combined as of
the consummation of the Merger and carried forward at their previously recorded
amounts. The stockholders' equity accounts of the Company and Heritage will be
combined on the Company's consolidated statement of condition, and no goodwill
or other intangible assets will be created. Financial statements of the Company
issued after the Merger will be restated retroactively to reflect the
consolidated operations of the Company and Heritage as if the Merger had taken
place prior to the periods covered by such financial statements.
The Company and Heritage expect that the combined company will achieve
substantial benefits from the Merger in the form of operating cost savings.
However, the unaudited pro forma financial information does not reflect any
direct costs or potential savings which are expected to result from the
consolidation of operations of the Company and Heritage, and, therefore, does
not purport to be indicative of the results of future operations.
13
<PAGE>
PRO FORMA COMBINING FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Pro forma Condensed Statement of Condition (Unaudited)
December 31, 1997
------------------------------------------------------------------
Historical
---------------------------- Pro forma Pro forma
First Midwest Heritage Adjustments Consolidated
------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Assets
Cash and due from banks................. $ 117,974 $ 48,214 $(15,400) /(1)/ $ 150,788
Funds sold and other short-term
investments........................... 31,055 2,864 -- 33,919
Mortgages held for sale................. 26,857 -- -- 26,857
Securities available for sale........... 974,467 407,087 -- 1,381,554
Securities held to maturity............. 20,323 113,101 -- 133,424
Trading account securities.............. -- 450 -- 450
Loans................................... 2,333,252 711,541 -- 3,044,793
Reserve for loan losses................. (37,344) (9,621) -- (46,965)
---------- ---------- -------- ----------
Net Loans........................... 2,295,908 701,920 $ -- $2,997,828
---------- ---------- -------- ----------
Premises, furniture and equipment....... 59,219 19,585 -- 78,804
Accrued interest receivable and other
assets................................ 88,370 26,100 -- 114,470
---------- ---------- -------- ----------
Total Assets........................ $3,614,173 $1,319,321 $(15,400) $4,918,094
========== ========== ======== ==========
Liabilities and Stockholders' Equity
Deposits................................ $2,795,975 $1,139,631 $ -- $3,935,606
Short-term borrowings................... 438,032 45,569 -- 483,601
Accrued interest payable and other
liabilities........................... 42,654 11,915 (3,850) /(1)/ 50,719
---------- ---------- -------- ----------
Total liabilities................... 3,276,661 1,197,115 (3,850) 4,469,926
---------- ---------- -------- ----------
Stockholders' equity
Common stock............................ 201 -- 93 /(2)/ 294
Additional paid-in capital.............. 63,049 24,181 (93) /(2)/ 87,137
Retained earnings....................... 281,770 93,346 (11,550) /(1)/ 363,566
Unrealized net appreciation on
securities, net of tax................ 6,644 5,367 -- 12,011
Less: Treasury stock.................... (14,152) (688) -- (14,840)
---------- ---------- -------- ----------
Total stockholders' equity.......... 337,512 122,206 (11,550) 448,168
---------- ---------- -------- ----------
Total Liabilities and Stockholders'
Equity............................ $3,614,173 $1,319,321 $(15,400) $4,918,904
========== ========== ======== ==========
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Condensed Statement of Income (Unaudited)
December 31, 1997
--------------------------------------------------
Historical
----------------------- Pro Forma
Interest Income First Midwest Heritage Consolidated
------------- -------- ------------
<S> <C> <C> <C>
Interest and fees on loans................................ $209,003 $57,772 $266,775
Interest on securities.................................... 59,005 32,960 91,965
Interest on funds sold and other short-term
investments............................................. 2,498 424 2,922
-------- ------- --------
Total interest income................................... 270,506 91,156 361,662
-------- ------- --------
Interest Expense
Interest on deposits...................................... 99,973 40,692 140,665
Interest on short-term borrowings......................... 25,809 2,044 27,853
-------- ------- --------
Total interest expense.................................. 125,782 42,736 168,518
-------- ------- --------
Net interest income..................................... 144,724 48,420 193,144
Provision for Loan Losses................................. 8,765 600 9,365
-------- ------- --------
Net interest income after provision
for loan losses....................................... 135,959 47,820 183,779
Noninterest Income........................................ 37,222 9,607 46,829
Noninterest Expense....................................... 113,810 31,765 145,575
-------- ------- --------
Income before income tax expense........................ 59,371 25,662 85,033
Income Tax Expense........................................ 20,556 7,869 28,425
-------- ------- --------
Net Income.............................................. $ 38,815 $17,793 $ 56,608
======== ======= ========
Net Income Per Share/(3)/............................... $ 1.94 $ 1.93
======== ========
Net Income Per Share, assuming dilution/(4)/............ $ 1.92 $ 1.90
======== ========
Average Shares Outstanding/(3)/......................... 19,986 29,260
======== ========
Average Shares Outstanding,
assuming dilution/(4)/................................ 20,238 29,828
======== ========
Pro Forma Condensed Statement of Income (Unaudited)
December 31, 1996
--------------------------------------------------
Historical
----------------------- Pro Forma
Interest Income First Midwest Heritage Consolidated
------------- -------- ------------
<S> <C> <C> <C>
Interest and fees on loans................................ $202,953 $52,907 $255,860
Interest on securities.................................... 62,397 30,223 92,620
Interest on funds sold and other short-term
investments............................................. 3,443 694 4,137
-------- ------- --------
Total interest income................................... 268,793 83,824 352,617
-------- ------- --------
Interest Expense
Interest on deposits...................................... 100,142 36,327 136,469
Interest on short-term borrowings......................... 30,226 2,279 32,505
-------- ------- --------
Total interest expense.................................. 130,368 38,606 168,974
-------- ------- --------
Net interest income..................................... 138,425 45,218 183,643
Provision for Loan Losses................................. 7,790 400 8,190
-------- ------- --------
Net interest income after provision
for loan losses....................................... 130,635 44,818 175,453
Noninterest Income........................................ 34,335 7,724 42,059
Noninterest Expense....................................... 104,767 30,801 135,568
-------- ------- --------
Income before income tax expense........................ 60,203 21,741 81,944
Income Tax Expense........................................ 20,331 6,903 27,234
-------- ------- --------
Net Income.............................................. $ 39,872 $14,838 $ 54,710
======== ======= ========
Net Income Per Share/(3)/............................... $ 1.96 $ 1.86
======== ========
Net Income Per Share, assuming dilution/(4)/............ $ 1.95 $ 1.82
======== ========
Average Shares Outstanding/(3)/......................... 20,314 29,470
======== ========
Average Shares Outstanding,
assuming dilution/(4)/................................ 20,467 30,076
======== ========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Condensed Statement of Income (Unaudited)
December 31, 1995
--------------------------------------------------
Historical
----------------------- Pro Forma
Interest Income First Midwest Heritage Consolidated
------------- -------- ------------
<S> <C> <C> <C>
Interest and fees on loans................................ $203,884 $48,156 $252,040
Interest on securities.................................... 69,148 23,326 92,474
Interest on funds sold and other short-term
investments............................................. 2,672 2,378 5,050
-------- ------- --------
Total interest income................................... 275,704 73,860 349,564
-------- ------- --------
Interest Expense
Interest on deposits...................................... 97,602 31,516 129,118
Interest on short-term borrowings......................... 44,690 1,848 46,538
-------- ------- --------
Total interest expense.................................. 142,292 33,364 175,656
-------- ------- --------
Net interest income..................................... 133,412 40,496 173,908
Provision for Loan Losses................................. 11,454 200 11,654
-------- ------- --------
Net interest income after provision
for loan losses....................................... 121,958 40,296 162,254
Noninterest Income........................................ 33,695 6,971 40,666
Noninterest Expense....................................... 108,083 27,670 135,753
-------- ------- --------
Income before income tax expense........................ 47,570 19,597 67,167
Income Tax Expense........................................ 16,166 6,303 22,469
-------- ------- --------
Net Income.............................................. $ 31,404 $13,294 $ 44,698
======== ======= ========
Net Income Per Share/(3)/............................... $ 1.55 $ 1.52
======== ========
Net Income Per Share, assuming dilution/(4)/............ $ 1.53 $ 1.49
======== ========
Average Shares Outstanding/(3)/......................... 20,229 29,391
======== ========
Average Shares Outstanding
assuming dilution/(4)/................................ 20,476 30,067
======== ========
</TABLE>
- ----------------
Footnotes to Pro Forma Combining Financial Statements:
/(1)/ Reflects the estimated acquisition charge ($15,400) and related tax
benefit ($3,850) to be recorded incident to First Midwest's pending
acquisition of Heritage. Such estimated charge includes severance and
related personnel exit costs, contract termination fees, legal and
accountant fees and other costs necessary to consummate the acquisition.
These costs result directly from the Merger and are expected to be
incurred within 12 months of the consummation date.
/(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 9,303 shares in the exchange for 12,090 shares of Heritage
Common Stock outstanding at December 31, 1997.
/(3)/ The pro forma combined net income per share and average shares
outstanding are based upon the historical 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 combined net income per share assuming dilution and average
shares outstanding assuming dilution are based upon the historical 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 issued under the entities stock option plans,
assuming conversion of the Heritage Common Stock at the 0.7695 exchange
ratio.
16
<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Hinshaw & Culbertson, Chicago, Illinois.
EXPERTS
The consolidated financial statements of the Company at December 31, 1997
and 1996, and for each of the two years in the period ended December 31, 1997,
included in the Company's Annual Report (Form 10-K) have been audited by Ernst &
Young LLP, independent auditors, to the extent indicated in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements have been incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of the Company for the year ended
December 31, 1995, have been incorporated by reference herein in reliance upon
the report of KPMG Peat Marwick LLP, independent certified public accountants,
which report is incorporated by reference herein upon the authority of said firm
as experts in accounting and auditing.
The consolidated financial statements of SparBank as of December 31, 1996,
and for each of the two years in the period then ended, have been incorporated
in this Prospectus by reference herein in reliance upon the report of Grant
Thornton LLP, independent certified public accountants, which report is
incorporated by reference herein upon the authority of such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission (File Number 0-10967). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the Commission at the following locations: Seven World Trade
Center, Suite 1300, New York, New York, 10048; and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, the Commission
maintains a website (http://www.sec.gov) that contains certain reports, proxy
statements and other information regarding the Company that the Company files
electronically with the Commission. In addition, such reports, proxy statements,
and other information concerning the Company can be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits to the Registration Statement as
permitted by the rules and regulations of the Commission. Reference is hereby
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company.
17
<PAGE>
Any statements contained herein concerning the provisions of any contract,
agreement or other document are not necessarily complete and, in each instance,
reference is made to the copy of such contract, agreement or other document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have heretofore been filed by the Company
with the Commission are incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the amendment on Form 10-K/A thereto;
2. The Company's Current Report on Form 8-K filed on January 23, 1998;
and
3. The description of the Common Stock, $.01 par value, and Preferred
Stock purchase rights associated with the Common Stock of the Company,
no par value, as contained in the Company's Registration Statement on
Form 8-A, dated February 17, 1989, as amended by subsequently filed
reports on Form 8-A on November 21, 1995 and June 30, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made by this Prospectus
shall be deemed to be incorporated by reference herein and to be a part hereof.
Any statements contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein (or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part of this
Prospectus, except as so modified or superseded.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Such documents (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference) are
available to any person, including any beneficial owner, to whom this Prospectus
is delivered, on written or oral request, without charge, directed to First
Midwest Bancorp, Inc., at its principal executive offices, 300 Park Boulevard,
Suite 405, Itasca, Illinois 60143-0459; Attention: Corporate Communications
Director (630) 875-7450.
18
