Q1 2009 Earning Report of Midwest Banc Holdings, Inc.

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Q1 2009 Earning Report of Midwest Banc Holdings, Inc.

  1. 1. MBHI 8-K 4/24/2009 Section 1: 8-K (FORM 8-K)
  2. 2. Table of Contents 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) April 24, 2009 MIDWEST BANC HOLDINGS, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 001-13735 36-3252484 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 501 West North Avenue Melrose Park, Illinois 60160 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (708) 865-1053 N/A (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
  3. 3. TABLE OF CONTENTS Item 1.01. Entry into a Material Definitive Agreement Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off- Balance Sheet Arrangement Item 2.02. Results of Operations and Financial Condition Item 9.01. Financial Statements and Exhibit SIGNATURES EX-1.1 EX-99.1
  4. 4. Table of Contents Item 1.01. Entry into a Material Definitive Agreement. Item 2.04. Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. Midwest Banc Holdings, Inc. (the “Company”), has agreed with its lender to extend its short-term revolving line of credit until June 3, 2009, and to reduce the revolving line of credit to $15 million from $25 million. The loan bears interest at prime plus 155 basis points with a floor of 4.25%. Currently, the Company has $8.6 million outstanding on the line of credit and $55.0 million outstanding under a term note with the same lender. These loans are secured by the stock of Midwest Bank and Trust Company. A copy of the short-term revolving line of credit documents are attached hereto as Exhibit 1.01. The Company is obligated to meet certain covenants under the loan agreements relating to these loans. A breach of any of these covenants could result in a default under the loan agreements. Upon the occurrence of an event of default, all amounts outstanding under loan agreements could become immediately due and payable and the lender could terminate all commitments to extend further credit. The lender also could, at its option, increase the interest rate on those loans by 300 basis points. If the Company is unable to repay those amounts, the lender could proceed against the collateral granted to it to secure the indebtedness. If the lender accelerates the repayment of borrowings, the Company may not have sufficient assets to make the payments when due. The Company has advised the lender that its ratio of non-performing loans to total loans was 3.5% at March 31, 2009, thereby violating one of the covenants in the loan agreements. In addition, the Company suffered a net loss for the first quarter of 2009, thereby causing another covenant violation. The Company is seeking a waiver of these covenant violations. It is also negotiating with the lender for a renewal of the line of credit for a longer period and for revisions to other terms of both loans, including the covenants. In connection therewith the Company has agreed to provide additional information, including credit quality projections, to the lender. As previously reported, the Company sought covenant waivers on two occasions since December 31, 2007. The lender waived a covenant violation in the first quarter of 2008 resulting from the Company’s net loss recognized in that period. On March 4, 2009, the lender waived a covenant violation for the third quarter of 2008 resulting from the Company’s net loss recognized in that period, contingent upon the Company making accelerated principal payments under the aforementioned term loan agreement in the amounts and on or prior to the dates shown below: July 1, 2009 — $5.0 million October 1, 2009 — $5.0 million January 4, 2010 — $5.0 million Previously, no principal payments were due under the term loan agreement until the final maturity date of September 28, 2010. This waiver further provides that if the Company raises $15.0 million in new capital pursuant to an offering of common or convertible preferred stock, then the Company shall not be obligated to make any of the accelerated principal payments specified above that fall due after the date on which the Company receives such $15.0 million in new capital until the final maturity date of September 28, 2010. The Company has the capacity to satisfy all payment obligations outlined above. Item 2.02. Results of Operations and Financial Condition. On April 28, 2009, the Company announced its earnings results for the quarter ended March 31, 2009. Attached as Exhibit 99.1 is a copy of the press release relating to the Company’s earnings results, which is incorporated herein by reference. 2
  5. 5. Table of Contents Note: the information in this report provided in item 2.02 (including the exhibit) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Acto f 1933, as amended, or the Exchange, except as shall be expressly set forth by specific reference in such a filing. Item 9.01. Financial Statements and Exhibit. (d) Exhibits. The following materials are filed as exhibits to this Current Report on Form 8-K: Exhibit 1.01 Short-term revolving line of credit loan agreement. Exhibit 99.1 Press Release. 3
  6. 6. Table of Contents 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 hereunto duly authorized. Midwest Banc Holdings, Inc. By: /s/ JoAnn Sannasardo Lilek JoAnn Sannasardo Lilek Executive Vice President and Chief Financial Officer April 30, 2009 4 (Back To Top) Section 2: EX-1.1 (EX-1.1) Exhibit 1.1 M&I Marshall & Ilsley Bank 770 North Water Street Milwaukee, WI 53202-3509 414 765-7700 mibank.com April 3 2009 Ms. JoAnn S. Lilek Executive Vice President & CFO Midwest Banc Holdings, Inc. 501 W. North Avenue Melrose Park, IL 60160-1603 Dear Ms. Lilek: This Letter Agreement (the “Agreement”) is made and entered into as of this 3rd day of April 2009, by and between Midwest Banc Holdings, Inc. (the “Borrower”) and M&I Marshall & Ilsley Bank (the “Lender”). Borrower covenants that so long as any obligation is owed to Lender or Lender has any outstanding commitment to lend to Borrower, under the terms and conditions of any promissory note from Borrower to Lender under the Revolving Loan(s), in the aggregate principal amount of $15,000,000.00 (the “Revolving Credit Limit”) dated April 3, 2009, a promissory note from Borrower to Lender under the Term Loan #1, in the aggregate principal amount of $55,000,000.00 dated March 31, 2008, a promissory note from Borrower to Lender under the Term Loan #2 (a “Subordinated Term Note”), in the aggregate principal amount of $15,000,000.00 dated March 31, 2008; or under any note(s) evidencing a loan, (the “Note(s)”) and all extensions, renewals or modifications of the Note(s), and any other obligation of Borrower to Lender, including but not limited to all obligations, indebtedness and liabilities arising pursuant to or in connection with any interest rate swap transaction, basis swap, forward rate transaction, interest rate option, price risk hedging transaction or any similar transaction between the Borrower and Lender (collectively, the foregoing obligations are referred to herein as the “Obligations”): 1. Lender shall have received the following security documents (the “Security Documents”) in form and substance satisfactory to Lender: (i) Promissory Note(s); (ii) Commercial Pledge Agreement; (iii) 100% of Midwest Bank and Trust Company stock; and (iv) Irrevocable Stock or Bond Power. (Subsections (ii), (iii) and (iv) above shall not apply to the Term Loan #2 (a “Subordinated Term Note”.)
  7. 7. 2. Borrower and/or Midwest Bank and Trust Company (the “Bank”) shall furnish to Lender, as soon as available, such financing information respecting Borrower and/or Bank as Lender from time to time requests, and without request furnish to Lender: (i) Within 120 days after the end of each fiscal year of Borrower, a balance sheet of Borrower as of the close of such fiscal year and related statements of income and retained earnings and cash flow for such year all in reasonable detail and satisfactory in scope to Lender, prepared in accordance with generally accepted accounting principles applied on a consistent basis, audited by an independent certified public accountant, selected by Borrower and acceptable to Lender. (ii) Within 45 days after the end of each quarter, a balance sheet of Borrower as of the end of such quarter and related statements of income and retained earnings and cash flow for the period from the beginning of the fiscal year to the end of such quarter, prepared in accordance with generally accepted accounting principles applied on a consistent basis, subject to normal year-end adjustments, certified by a financial representative of Borrower. (iii) Copies of all quarterly Federal Financial Institution Examination Council Form 031 (“Call Reports”) required by Midwest Bank and Trust Company (the “Bank”) no later than the due date required by these agencies prepared in accordance with agency requirements, certified by the financial representatives of Bank now owned or hereafter acquired. (iv) Within 45 days after the end of each third month, grid price monitoring will be required. 3. Borrower and/or Bank shall timely perform and observe the following financial covenant(s), all calculated in accordance with generally accepted accounting principles applied on a consistent basis. A financial covenant violation will be an indication of an adverse change to the Borrower’s financial condition: (i) Bank shall maintain at all times a ratio of Non-performing Loans to Total Loans of not greater than 3.00%, tested quarterly. “Non- performing Loans” means loans outstanding which are not accruing interest, have been classified as renegotiated pursuant to guidelines established by the Federal Financial Institutions Examination council or are 90 days or more past due in the payment of principal or interest. “Total Loans” means the sum of loans and direct lease financings, net of unearned income by Bank.
  8. 8. (ii) Bank must report a quarterly profit, tested quarterly, excluding charges related to acquisitions. (iii) Bank must remain well capitalized, tested quarterly. 4. Borrower and/or Bank shall not merge into or consolidate with any other business enterprise or another business enterprise shall not merge into the Borrower and/or Bank, without prior written consent of Lender. For the mergers where the Borrower is the “surviving” entity, approval by the Lender shall be obtained following the announcement of a definitive agreement. 5. An event of default will occur if either the Borrower or Bank becomes subject to an adverse regulatory action (including a Memorandum of Understanding which limits in any way the ability of the bank to pay dividends to the holding company, a written agreement or Cease & Desist order). 6. Use of the Revolving Loan(s) for the purpose of acquisitions must be approved by Lender following the announcement of a definitive agreement. 7. All outstanding debt is due on the sale of Bank or Borrower or of substantially all of the assets of either. 8. In the event of a change in executive management, Borrower shall provide Lender with an acceptable succession plan within 90 days. 9. Other Borrower debt greater than $2,000,000 is prohibited without prior written consent of Lender; excluding Trust Preferred indebtedness, which approval will not be unreasonably withheld. 10. Borrower may at its option, at any time, prepay Term Loan #1, in part; provided, however, that the Borrower may not prepay Term Loan #1 in its entirety, so long as any portion of Term Loan #2 (a “Subordinated Term Note”) remains outstanding, unless Term Loan #1 has been accelerated by the Lender. 11. It shall be considered an additional event of default if Borrower becomes the subject of any bankruptcy, or receivership proceedings (voluntary or involuntary). Upon the occurrence of any bankruptcy or receivership proceedings, Lender at its option, will accelerate the maturity of Term Loan #2 (a “Subordinated Term Note”) to five years from the original funding or the entire amount owed will then be due. 12. All credit is cross-collateralized and cross-defaulted, without limitation, all debts, obligations and liabilities to Lender arising out of credit previously granted, credit contemporaneously granted, and credit granted in the future by Lender to
  9. 9. Borrower. This covenant shall not apply to Term Loan #2 (a “Subordinated Term Note”). 13. This Letter Agreement amends and restates in its entirety an existing Letter Agreement dated April 4, 2008 by and between Borrower and Lender. A breach of any term or condition in this Agreement or Obligations shall constitute an additional event of default under the Note(s) and Lender may, at its option, declare the Note(s) due and payable, and may pursue all remedies available to it with regard to the Note(s). The undersigned shall reimburse Lender for all expenses incurred by it in protecting or enforcing its rights under this Note(s), including without limitation, costs of administration of the Note(s) and costs of collection before and after judgment, including reasonable attorney’s fees and legal expenses. There will be a 10 day cure period for payment defaults and a 30 day cure period for covenant defaults. Any cure period shall begin on the date of receipt of notice thereof. This applies to the line of credit and term loan reference herein. In the case of any ambiguity or conflict between this Agreement, any note evidencing a Loan, or any Security Document, this Agreement will govern. Please confirm your acknowledgment and acceptance of the terms and conditions of this Agreement by signing and dating below. Very truly yours, Very truly yours, By: By: David R. Ball, Senior Vice President Title: Accepted and Agreed as of April 3, 2009 Midwest Banc Holdings, Inc. By: /s/ JoAnn S. Lilek JoAnn S. Lilek, Executive VP/CFO
  10. 10. PROMISSORY NOTE Principal Loan Date Maturity Loan No Call / Coll Account Officer Initials $15,000,000.00 04-03-2009 06-03-2009 37956985-10000 / 00005106953 06564 References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations. Borrower: Midwest Bank Holdings, Inc. Lender: M&I Marshall & Ilsley Bank 501 W North Ave Correspondent Banking Melrose Park, IL 60160-1603 770 N. Water Street Milwaukee, WI 53202 Principal Amount: $15,000,000.00 Date of Note: April 3, 2009 PROMISE TO PAY. Midwest Banc Holdings, Inc, (“Borrower”) promises to pay to M&I Marshall & Ilsley Bank (“Lender”), or order, in lawful money of the United State of America, the principal amount of Fifteen Million & 00/100 Dollars ($15,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on June 3, 2009. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning May 3, 2009, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied to Accrued Interest, Principal, Late Charges, and Escrow. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an index which is the One Month British Bankers Association (BBA) LIBOR as reported by a major news service selected by Lender (such as Reuters, Bloomberg or Moneyline Telerate) (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans and is set by Lender at its sole discretion. If the index becomes unavailable during the term of this loan, Lender may designate a substitute Index after notifying Borrower, Lender will tell Borrower the current index rate upon Borrower’s request. The interest rate change will not occur more often than each 1st day of each calendar month and as defined in Exhibit — “Applicable Margin”. Borrower understands that Lender may make loans based on other rates as well. The index currently is 0.495% per annum. The interest rate to be applied to the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 1.550 percentage points over the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.250% per annum based on a year of 360 days. NOTICE. Under no circumstances will the interest rate on this Note be less than 4.250% per annum or more than the maximum rate allowed by applicable law. INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest rate than the numeric interest rate stated in this Note. PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to M&I Marshall & Ilsley Bank, P.O. 3114 Milwaukee, WI 53201-3114. LATE CHARGE. If a payment is not made on or before the 10th day after its due date, Borrower will be charged 5.000% or the unpaid portion of the regularly scheduled payment. INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding a 3.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.
  11. 11. DEFAULT. Each of the following shall constitute an event of default (“Event of Default “) under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Insecurity. Lender in good faith believes itself insecure. LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. ATTORNEYS’ FEES EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any
  12. 12. automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law. JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Wisconsin without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Wisconsin. CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Milwaukee County, State of Wisconsin. DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge with which Borrower pays is later dishonored. RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to extent permitted by applicable law, to charge or setoff all sums owing on the debt against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph. LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note, as well as directions for payment from Borrower’s accounts, may be requested orally or in writing by Borrower or by an authorized person. Lender may, but need not, require that all oral requests be confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor’s guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender; or (E) Lender in good faith believes itself insecure. HEDGING INSTRUMENTS. Obligations and indebtedness includes, without limitation all obligations, indebtedness and liabilities arising pursuant to or in connection with any interest rate swap transaction, basis swap, forward rate transaction, interest rate option, price risk hedging transaction or any similar transaction between the Borrower and Lender. APPLICABLE MARGIN. An exhibit, titled “Applicable Margin,” is attached to this Note and by this reference is made a part of this Note just as if all the provisions, terms and conditions of the Exhibit had been fully set forth in this Note. PRIOR NOTE. This Promissory Note provides for the renewal or refinance of the existing debt evidenced by the Promissory Note dated March 24, 2006, in the original principal amount of $50,000,000.00 as may have been modified, extended or amended. This Note is not intended to satisfy or extinguish the underlying debt and obligation evidenced by the March 24, 2006 Promissory Note, but rather set forth the terms and conditions on which such debt is being renewed or refinanced.
  13. 13. SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and assigns and shall inure to the benefit of Lender and its successors and assigns. GENERAL PROVISIONS. This Note benefits Lender and its successors and assigns, and binds Borrower and Borrower’s heirs, successors, assigns, and representatives. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification in made. The obligations under this Note are joint and several.
  14. 14. PROMISSORY NOTE Loan No: 37956985-10000- (Continued) Page 3 PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS, BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER: MIDWEST BANC HOLDINGS, INC. By: /s/ JoAnn S. Lilek JoAnn S. Lilek, Executive V. P. & CFO of Midwest Banc Holdings, Inc.
  15. 15. APPLICABLE MARGIN Principal Loan Date Maturity Loan No Call / Coll Account Officer $15,000,000.00 04-03-2009 06-03-2009 37956985-10000 / 00005106953 06564 Initials References in the boxes above, are for Lander’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations. Borrower: Midwest Banc Holdings, Inc. Lender: M&I Marshall & Ilsley Bank 501 W North Ave Correspondent Banking Melrose Park, II 60160-1603 770 N. Water Street Milwaukee, WI 53202 This APPLICABLE MARGIN is attached to and by this reference is made a part of the Promissory Note, dated April 3, 2009, and executed in connection with a loan or other financial accommodations between M&I MARSHALL & ILSLEY BANK and Midwest Banc Holdings, Inc. Initial pricing will be Libor + 155 bp. Pricing will be subject to a performance-based grid below. Company is profitable for two consecutive quarters Libor + 155bp ROA> .50% - 1.03% for two consecutive quarters Libor + 140bp ROA> 1.04% for two consecutive quarters Libor + 125bp * ROA to exclude restructuring charges associated with merger and acquisition activity. THIS APPLICABLE MARGIN IS EXECUTED ON APRIL 3, 2009. BORROWER: MIDWEST BANC HOLDINGS, INC. By: /s/ JoAnn S. Lilek JoAnn S. Lilek, Executive V. P. & CFO of Midwest Banc Holdings, Inc.
  16. 16. DISBURSEMENT REQUEST AND AUTHORIZATION Principal Loan Date Maturity Loan No Call / Coll Account Officer $15,000,000.00 04-03-2009 06-03-2009 37956985-10000 / 00005106953 06564 Initials References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations. Borrower: Midwest Banc Holdings, Inc. Lender: M&I Marshall & Ilsley Bank 501 W North Ave Correspondent Banking Melrose Park, IL. 60160-1603 770 N. Water Street Milwaukee, WI 53202 LOAN TYPE. This is a Variable Rate Nondisclosable Revolving Line of Credit Loan to a Corporation for $15,000,000.00 due on June 3, 2009. This is a secured renewal of the following described indebtedness: This Promissory Note provides for the renewal or refinance of the existing debt evidenced by the Promissory Note, dated March 24, 2006. In the original principal amount of $50,000,000.00, as may have been modified, extended or amended. This Note is not intended to satisfy or extinguish the underlying debt and obligation evidenced by the March 24, 2006 Promissory Note, but rather set forth the terms and conditions on which such debt is being renewed or referenced. PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for: o Personal, Family or Household purposes or Personal Investment. o Agricultural Purposes. þ Business Purposes. SPECIFIC PURPOSE. The specific purpose of this loan is: working capital. DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be disbursed until all of Lender’s conditions for making the loan have been satisfied. Please disburse the loan proceeds of $15,000,000.00 as follows: Undishursed Funds: $15,000,000.00 Note Principal: $15,000,000.00 CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the following charges: Prepaid Finance Charges Paid in Cash: $ 0.00 Other Charges Paid in Cash: $20.00 Lien Search $20.00 Total Charges Paid in Cash: $20.00 JOINT CREDIT INTENT. If the application was for joint credit, all persons signing below confirm that their intent at time of application was to apply for joint credit. INSTRUCTIONS TO BANKER. 1) Please put an “X” next to the fees listed above that RCC is to pay. 2) Please complete the following section as applicable: a) Bank deposited fees into account number: Total dollar amount deposited into this account: $ b) Bank deposited fees into customer related: Total dollar amount deposited into this account: $ IF BORROWER IS AN ORGANIZATION: If Organization has used any other name, OR if Organization was a successor by merger, consolidation, acquisition or otherwise during the past 5 years, list name(s) below: . FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN
  17. 17. BORROWER’S FINANCIAL CONDITION AS DISCLOSED IN BORROWER’S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS AUTHORIZATION IS DATED APRIL 3, 2009.
  18. 18. DISBURSEMENT REQUEST AND AUTHORIZATION Loan No: 37956985-10000- (Continued) Page 2 BORROWER: MIDWEST BANC HOLDINGS, INC. By: /s/ JoAnn S. Lilek JoAnn S. Lilek, Executive V. P. & CFO of Midwest Banc Holdings, Inc. (Back To Top) Section 3: EX-99.1 (EX-99.1) Exhibit 99.1 Midwest Banc Holdings, Inc. Reports Q1 Results MELROSE PARK, Ill. — April 28, 2009 — Midwest Banc Holdings, Inc. (NASDAQ:MBHI) today reported a net loss per common share of $(0.27), for the first quarter ended March 31, 2009. This compares to earnings per share of $0.12 in the fourth quarter of 2008 and a net loss per share of $(0.22) for the first quarter of 2008. Overview “Throughout our 50 years of service to the Chicago area market, Midwest has remained committed to its customers and the community,” stated Jay Fritz, CEO of Midwest. “We continue to successfully serve our customers and, in fact, grew loans over $80 million in the first quarter lending to credit-worthy individuals and businesses. This continued lending is important to our customers because it helps them manage in this very challenging environment and, in turn, will bolster the overall economy.” “That being said, we are closely monitoring our portfolio in this difficult market,” he continued. “We are committed to safety and soundness and focused on increasing shareholder value. Our bank is well-capitalized with a 10.51 percent total risk based capital ratio. We are currently taking measured steps to reduce expenses and control growth to preserve capital. However, we remain committed to servicing our customers and will continue to aggressively seek new business relationships that satisfy our underwriting criteria.” Key Developments • In January 2009, Jay Fritz, formerly the chief operating officer was appointed president and chief executive officer. Fritz moved into this position without any salary or other benefit increase; • The chief executive officer and all executive vice presidents as a group (15 people – the “executive officers”) did not receive bonuses, whether in the form of cash, restricted stock or options for 2008; • Net interest income increased by $1.3 million compared to the fourth quarter due to loan growth, improved net interest margin and the continued inclusion of interest rate floors in loan pricing; • Recorded $13.0 million provision for loan losses increasing the allowance for loan losses to $53.0 million or 2.0 percent of loans;
  19. 19. • Nonaccrual loans increased $19.2 million to $80.3 million or 3.1 percent of loans; • Non-interest expense decreased $3.9 million compared to the fourth quarter, due largely to a reduction in compensation and benefits expense and professional fees; • Loans increased $81.3 million compared to the fourth quarter reflecting high quality marketplace opportunities which Midwest will continue to moderate through pricing discipline; • Strong sales efforts have produced increased average core deposits of $14.4 million compared to the fourth quarter; • A successful retail CD campaign produced over $100 million of new deposits; • Average brokered CDs decreased $49.4 million compared to the fourth quarter; • Midwest renewed for 60 days a line credit for $15.0 million with its correspondent bank, of which $8.6 million is currently outstanding; and • As a result of economic conditions leading to an increase in nonaccrual loans and provisions for loan losses, Midwest as of March 31, 2009 was in violation of two covenants contained in the loan agreement with its correspondent bank, for which Midwest is currently seeking covenant waivers. Compliance with TARP Midwest took several steps with regard to executive compensation and prudent lending practices: • The executive officers covered by the Treasury regulations amended their compensation arrangements with Midwest prior to the receipt of the Dec. 2008 TARP investment to ensure that the arrangements complied with the Capital Purchase Program executive compensation rules. • In a manner consistent with prudent lending practices, Midwest has grown the loan portfolio $81 million from Dec. 31, 2008 to March 31, 2009. • During the first quarter Midwest also renewed $208 million of loans.
  20. 20. Capital At March 31, 2009 Midwest Bank’s total risk based capital ratio was 10.51 percent and the Bank’s tier 1 risk based capital ratio was 7.52 percent. All of the Bank’s capital ratios exceed the regulatory guidelines for classification as “well-capitalized,” which is the highest regulatory capital rating given to financial institutions. Loan Portfolio & Asset Quality From Dec. 31, 2008 to March 31, 2009 Midwest grew loans $81.3 million. Loan growth in the first quarter was facilitated by the new capital raised in December under the TARP program. Average total loans increased $44.0 million during the first quarter. In the first quarter, Midwest recorded a provision for loan losses of $13.0 million and recognized net loan charge-offs totaling $4.4 million. Loan Portfolio As of March 31, 2009 (dollars in millions) Total Total Percent Balance Availability Commitment Availability Loan Type - Source of Repayment Land $ 98.4 $ 1.0 $ 99.4 1.0 percent Land Development, Residential 30.9 1.7 32.6 5.2 Land Development, Commercial 23.0 5.9 28.9 20.4 Land Development, Teardown 8.2 0.5 8.7 5.7 Condominium 68.1 14.2 82.3 17.3 Residential Construction 87.9 7.5 95.4 7.9 Commercial Construction 45.1 3.1 48.2 6.4 Residential Non-Builder 9.6 1.0 10.6 9.4 Buy Farmland 1.8 — 1.8 — Letters of Credit — 0.2 0.2 100.0 Other 0.1 — 0.1 — Total Const. & Land Development 373.1 35.1 408.2 8.6 1-4 Residential 68.5 — 68.5 — 1-4 ARM 50.7 0.1 50.8 0.2 Total Residential 119.2 0.1 119.3 0.1 Home Equity Fixed 17.1 0.7 17.8 3.9 Home Equity Floating 196.3 118.6 314.9 37.7 Total Home Equity 213.4 119.3 332.7 35.9 CRE — Non-Owner Occupied 764.5 36.7 801.2 4.6 CRE — Owner Occupied 563.2 46.6 609.8 7.6 Total CRE 1,327.7 83.3 1,411.0 5.9 Commercial & Industrial 538.1 348.8 886.9 39.3 Agricultural 9.2 0.9 10.1 8.9 Consumer 6.4 2.3 8.7 26.4 Overdrafts, Settlement, Miscellaneous 3.9 — — — Total Portfolio $2,591.0 $ 589.8 $ 3,176.9 18.6 percent
  21. 21. • Total construction and land loan commitments are 91 percent funded. • Land loans represent 3.8 percent of the loan portfolio. Loan Quality (dollars in millions) As of March 31, 2009 30 - 89 Days Nonaccrual 2009 Past Due Loans Specifically Amount ($) Loan Type Balance $ Percent $ Percent Reserved Charged-off Land $ 98.4 $ 0.6 0.6 percent $ 5.0 5.1 percent $ 0.1 $ — Land Development, Residential 30.9 0.2 0.6 0.6 1.9 — — Land Development, Commercial 23.0 — — 0.6 2.6 — — Land Development, Teardown 8.2 — — — — — — Condominium 68.1 — — 9.8 14.4 0.9 — Residential Construction 87.9 4.8 5.5 5.8 6.6 0.1 0.2 Commercial Construction 45.1 — — 3.5 7.8 — — Residential Non-Builder 9.6 3.3 34.4 1.0 10.4 0.1 — Buy Farmland 1.8 — — — — — — Other 0.1 — — — — — — Total Const. & Land Development 373.1 8.9 2.4 26.3 7.0 1.2 0.2 1-4 Residential 68.5 1.0 1.5 1.6 2.3 0.2 — 1-4 ARM 50.7 2.9 5.7 3.3 6.5 0.1 — Total Residential 119.2 3.9 3.3 4.9 4.1 0.3 — Home Equity Fixed 17.1 — — — — — — Home Equity Floating 196.3 3.1 1.6 1.7 0.9 0.2 — Total Home Equity 213.4 3.1 1.5 1.7 0.8 0.2 — CRE — Non-Owner Occupied 764.5 14.6 1.9 12.1 1.6 1.3 — CRE — Owner Occupied 563.2 3.6 0.6 19.1 3.4 1.8 — Total CRE 1,327.7 18.2 1.4 31.2 2.3 3.1 — Commercial & Industrial 538.1 4.0 0.7 16.2 3.0 6.8 4.5 Agricultural 9.2 — — — — — — Consumer 6.4 0.1 1.6 — — — — Overdrafts, Settlement, Miscellaneous 3.9 — — — — — 0.1 Total Portfolio $2,591.0 $ 38.2 1.5 percent $ 80.3 3.1 percent $ 11.6 $ 4.8 During the first quarter Midwest completed a thorough review of the loan portfolio. The C&I portfolio experienced the most duress in the first quarter; $12.6 million moved to non-accrual status, mostly due to the following three credits: • The largest, a $6.5 million loan to a company that markets to realtors, has been negatively affected by the real estate downturn. • A $2.8 million loan relationship with an energy company. The borrower is currently operating under a forbearance agreement. • A $2.8 million loan relationship with a full-service tradeshow display company in which the recent death of the principal caused business problems. The borrower is currently operating under a forbearance agreement
  22. 22. Liquidity Midwest expanded its effective liquidity management during the first quarter. The Bank’s liquidity position supported strong asset growth while liquid assets, including Federal Reserve Bank cash and unencumbered securities, improved by $137.7 million or 3.8 times the amount as of Dec. 31, 2008. As of March 31, 2009, non-interest bearing demand deposits increased $8.9 million from Dec. 31, 2008 levels or 2.7 percent, and total deposits, excluding demand deposit accounts and brokered deposits, increased by $150.4 million or 9.2 percent. Reliance on brokered CDs was reduced by $28.1 million, a reduction of 6.4 percent compared to Dec. 31, 2008. The Company’s liquidity position continues to improve and the core deposit gathering continues to show favorable trends. Net Interest Margin Net interest margin increased 12 basis points from 2.51 percent in the fourth quarter to 2.63 percent in the first quarter. Significant margin improvement came from the narrowing of average prime and LIBOR spreads when compared to the fourth quarter. This benefit was slightly offset by some variable rate loans which have yet to renew and become subject to recently implemented pricing floors and an increase in nonaccrual loans. The strong loan growth in the first quarter positively impacted the margin. Maturities of approximately $300 million of brokered CDs during the first quarter were replaced at lower rates helping to significantly reduce overall costs. Average brokered CD balances decreased almost $50 million when compared to the fourth quarter. Noninterest Expense Noninterest expense for the first quarter 2009 was $21.8 million compared to $25.7 million in the fourth quarter 2008. Despite an increase in FDIC insurance premiums of $670 thousand in the first quarter, noninterest expense declined $3.9 million. The decrease was primarily attributable to a $2.7 million decline in salaries and benefits when compared to the fourth quarter. This was due in large part to the difference in first quarter officer incentive expense including the reversal of $850 thousand accrued in prior periods. This reversal was related to a reduction in previously planned staff bonuses and a recent decision to forego all 2008 bonuses for executive officers. Professional services were down 35 percent, or $1.1 million compared to the fourth quarter due to expenses related to legal, printing and consulting fees associated with the TARP and other capital raising efforts in the fourth quarter. Excluding non-recurring items, on a normalized basis noninterest expense for the first quarter 2008 was $21.7 million.
  23. 23. Financial Highlights Earnings Income (loss) per common share was $(0.27) for the first quarter, compared to: — $ 0.12 for fourth quarter 2008 — $ (0.22) for first quarter 2008 Net income (loss) was $(5.3) million for the first quarter, compared to: — $ 4.4 million for fourth quarter 2008 — $ (5.4) million for first quarter 2008 Net interest margin was 2.63 percent for the first quarter, compared to: — 2.51 percent for fourth quarter 2008 — 2.82 percent for first quarter 2008 Loans and Loan Quality Average loans in the first quarter increased $44.0 million compared to fourth quarter 2008 Gross loans in the first quarter 2009 increased $81.3 million compared to fourth quarter 2008 facilitated by receipt of TARP investment Annualized net charge-off rate was 0.70 percent for the first quarter 2009, compared to: — 2.39 percent for the fourth quarter 2008 — 1.93 percent for the first quarter 2008 Nonaccrual loans at March 31, 2009 were $80.3 million or 3.10 percent of loans, compared to: — 2.43 percent of loans at Dec. 31, 2008 — 1.90 percent of loans at March 31, 2008 Nonperforming assets (includes troubled debt restructuring) at March 31, 2009 were $109.9 million, or 2.96 percent of assets, compared to: — 2.36 percent of assets at Dec. 31, 2008 — 1.33 percent of assets at March 31, 2008 Allowance for loan losses at March 31, 2009 was $53.0 million, or 2.05 percent of loans, compared to: — 1.77 percent of loans at Dec. 31, 2008 — 0.82 percent of loans at March 31, 2008
  24. 24. Allowance for loan losses to nonaccrual loans was 66 percent at March 31, 2009, compared to: — 73 percent at Dec. 31, 2008 — 43 percent at March 31, 2008 Foreclosed properties at March 31, 2009 were $18.5 million compared to: — $ 12.0 million at Dec. 31, 2008 — $ 2.5 million at March 31, 2008 Loan delinquencies 30-89 days were 1.48 percent of loans at March 31, 2009, compared to: — 1.03 percent at Dec. 31, 2008 — 0.82 percent at March 31, 2008 Company Bank Capital Ratios at March 31, 2009: — Tier 1 risk-based 7.39% 7.52% — Total risk-based 9.16% 10.51% — Tier 1 leverage 6.22% 6.33% Additional financial data are contained in the accompanying statements, tables and schedules. Hosting a Conference Call Midwest will conduct a conference call to discuss these results Wednesday, April 29, 2009, at 11:00 a.m. Eastern time / 10:00 a.m. Central time. The webcast and call will be hosted by members of management. A brief discussion of results and trends will be followed by questions from professional investors and analysts invited to participate in the interactive portion of the discussion. Interested parties wishing to participate in the interactive portion of the call can dial in to 800-860-2442 or +1 412-858-4600 for international calls. The live webcast can be accessed and will be available for replay at www.midwestbank.com. The audio replay may be accessed through May 7, 2009, at 877-344-7529 or +1 412-317-0088. The replay passcode is 429301.
  25. 25. About Midwest Midwest Banc Holdings, Inc., with $3.7 billion in assets, has provided a range of retail and commercial financial services for more than 50 years, through its two principal operating subsidiaries: Midwest Bank and Trust Company and Midwest Financial and Investment Services, Inc. Midwest Bank operates 28 full-service community banking centers throughout the greater Chicagoland area meeting the diverse needs of businesses and consumers through commercial banking, wealth management, corporate trust and retail banking areas. Midwest Financial Services provides securities and insurance brokerage services. Forward-Looking Statements This press release contains certain “Forward-Looking Statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and should be reviewed in conjunction with the Company’s Annual Report on Form 10-K and other publicly available information regarding the Company, copies of which are available from the Company upon request. Such publicly available information sets forth certain risks and uncertainties related to the Company’s business which should be considered in evaluating “Forward-Looking Statements.” Contacts Midwest Banc Holdings, Inc. John B. Pelling, III, 708-498-2013 Vice President – Investor Relations IR@midwestbank.com
  26. 26. Financial Highlights Midwest Banc Holdings, Inc. (In thousands, except per share data and percentages) Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Income Statement Data: Net (loss) income $ (5,320) $ 4,429 $ (159,714) $ 2,428 $ (5,416) Per Share Data: Basic and diluted (loss) earnings $ (0.27) $ 0.12 $ (5.76) $ 0.06 $ (0.22) Cash dividends declared — — — 0.13 0.13 Book value 6.38 6.56 5.89 11.76 12.14 “If converted” book value(10) 7.18 7.35 6.74 12.06 12.41 Tangible book value(1) 3.05 3.21 2.51 5.48 5.79 “If converted” tangible book value(1)(10) 4.16 4.31 3.68 6.37 6.65 Stock price at period end 1.01 1.40 4.00 4.87 12.78 Share Data: Common shares outstanding – at period end 27,929 27,893 27,859 27,859 27,839 Basic — average 27,925 27,863 27,859 27,855 27,838 Diluted — average 27,925 27,863 27,859 27,958 27,838 Selected Financial Ratios: Return on average assets (0.59) percent 0.49 percent (17.25) percent 0.26 percent (0.59) percent Return on average equity (7.12) 7.17 (181.60) 2.57 (5.69) Net interest margin (tax equivalent) 2.63 2.51 2.77 2.89 2.82 Efficiency ratio(2)(3) 84 105 387 70 66 Dividend payout ratio — — — 233 N/M Loans to deposits at period end 102 104 99 107 103 Loans to assets at period end 70 70 70 67 66 Equity to assets at period end 8.11 8.57 5.78 9.95 10.22 Tangible equity to tangible assets at period end(1)(4) 5.75 6.11 3.24 5.51 5.75 Tier 1 capital to risk-weighted assets 7.39 8.30 6.26 9.09 9.33 Total capital to risk-weighted assets 9.16 10.07 8.04 10.43 10.61 Tier 1 leverage ratio 6.22 6.90 4.94 7.38 7.47 Full time equivalent employees 542 536 550 543 543 Balance Sheet Data: Total earning assets $3,339,448 $3,195,408 $3,176,629 $3,275,580 $3,298,143 Average earning assets 3,268,589 3,219,078 3,263,571 3,274,335 3,276,965 Average assets 3,648,873 3,590,313 3,682,449 3,686,350 3,686,269 Average loans 2,543,770 2,499,802 2,512,653 2,459,486 2,459,830 Average securities 688,334 668,830 715,219 762,889 765,966 Average deposits 2,474,262 2,478,948 2,411,013 2,384,764 2,415,385 Tangible shareholders’ equity(1) 208,098 212,289 113,101 195,751 204,295 Average equity 303,019 245,795 349,878 379,677 382,603 See footnotes at end of statements, tables and schedules.
  27. 27. Statement of Income Midwest Banc Holdings, Inc. (In Thousands, except per share data) Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2008 2008 2008 2008 2009 Interest Income Loans $ 34,549 $ 35,558 $ 37,364 $37,392 $ 40,806 Securities Taxable 6,940 7,381 7,739 8,977 9,060 Exempt from federal income taxes 550 551 574 593 598 Dividends from FRB and FHLB stock 190 190 184 184 183 Short-term investments 37 54 27 98 148 Total interest income 42,266 43,734 45,888 47,244 50,795 Interest Expense Deposits 13,685 15,524 15,301 16,111 19,089 Federal funds purchased and FRB discount window advances 29 14 563 672 815 Securities sold under repurchase agreements 3,205 3,264 3,338 3,482 3,178 Advances from the FHLB 3,029 3,126 2,779 2,437 3,482 Junior subordinated debentures 739 911 864 876 1,045 Revolving note payable 43 204 96 94 80 Term note payable 282 616 565 575 887 Subordinated debt 152 243 229 232 3 Total interest expense 21,164 23,902 23,735 24,479 28,579 Net interest income 21,102 19,832 22,153 22,765 22,216 Provision for loan losses 13,000 20,000 41,950 4,415 5,400 Net interest income after provision for loan losses 8,102 (168) (19,797) 18,350 16,816 Noninterest Income Service charges on deposit accounts 1,894 1,908 1,918 1,953 1,963 (Losses) gains on securities transactions — — (16,652) 44 12 Impairment loss on securities — — (47,801) — (17,586) Gains on sales of loans — — (75) — — Insurance and brokerage commissions 320 333 448 683 560 Trust 282 241 451 482 449 Increase in CSV of life insurance 842 875 911 865 858 Gain on sale of property — — — — 15,196 Other 5 375 288 367 338 Total noninterest income (loss) 3,343 3,732 (60,512) 4,394 1,790 Noninterest Expenses Salaries and employee benefits 11,083 13,819 12,515 11,015 13,040 Occupancy and equipment 3,245 3,511 3,211 3,093 2,899 Professional services 2,102 3,240 2,016 1,796 1,538 Marketing 688 842 575 713 576 Foreclosed properties 345 66 24 237 5 Amortization of intangible assets 573 590 590 591 590 Merger related charges — — 77 80 114 Loss on extinguishment of debt — — — — 7,121 Goodwill impairment charge — — 80,000 — — Other 3,725 3,610 4,288 2,843 2,726 Total noninterest expenses 21,761 25,678 103,296 20,368 28,609 (Loss) income before income taxes (10,316) (22,114) (183,605) 2,376 (10,003) Benefit for income taxes (4,996) (26,543) (23,891) (52) (4,587) Net (Loss) Income $ (5,320) $ 4,429 $(159,714) $ 2,428 $ (5,416) Net (loss) income available to common shareholders $ (7,443) $ 3,207 $(160,550) $ 1,592 $ (6,251) Basic and diluted (loss) earnings per share $ (0.27) $ 0.12 $ (5.76) $ 0.06 $ (0.22) Cash dividends declared per share $ — $ — $ — $ 0.13 $ 0.13 Top line revenue (5) $ 24,445 $ 23,564 $ (38,359) $27,159 $ 24,006 Noninterest income to top line revenue 14 percent 16 percent N/M 16 percent 7 percent
  28. 28. See footnotes at end of statements, tables and schedules.
  29. 29. Balance Sheet . Midwest Banc Holdings, Inc. (In thousands) March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Assets Cash $ 56,516 $ 61,330 $ 111,769 $ 85,015 $ 71,080 Short-term investments 1,762 1,735 1,674 3,042 31,415 Securities available-for-sale 685,858 621,949 618,215 710,803 737,089 Securities held-to-maturity 29,082 30,267 30,817 31,389 32,674 Total securities 714,940 652,216 649,032 742,192 769,763 Federal Reserve and FHLB stock, at cost 31,698 31,698 31,698 29,264 29,264 Loans 2,591,048 2,509,759 2,494,225 2,501,082 2,467,701 Allowance for loan losses (53,011) (44,432) (39,428) (22,606) (20,344) Net loans 2,538,037 2,465,327 2,454,797 2,478,476 2,447,357 Cash value of life insurance 85,517 84,675 83,800 82,889 82,024 Premises and equipment 38,528 38,313 38,216 38,739 38,232 Foreclosed properties 18,534 12,018 8,025 2,375 2,527 Goodwill and other intangibles 92,972 93,546 94,136 174,947 176,861 Other 134,560 129,354 110,230 89,781 81,923 Total assets $3,713,064 $3,570,212 $3,583,377 $3,726,720 $3,730,446 Liabilities and Shareholders’ Equity Liabilities Deposits Noninterest-bearing $ 343,422 $ 334,495 $ 334,545 $ 334,813 $ 313,727 Interest-bearing 2,200,583 2,078,296 2,178,459 2,005,230 2,090,985 Total deposits 2,544,005 2,412,791 2,513,004 2,340,043 2,404,712 Federal funds purchased & FRB discount window 55,000 — — 198,000 184,500 Securities sold under repurchase agreements 297,650 297,650 297,650 297,650 394,764 FHLB advances 340,000 380,000 380,000 340,000 190,000 Junior subordinated debentures 60,807 60,791 60,774 60,757 60,741 Revolving note payable 8,600 8,600 20,600 7,600 6,500 Term note payable 55,000 55,000 55,000 55,000 55,000 Subordinated debt 15,000 15,000 15,000 15,000 15,000 Other 35,932 34,546 34,112 41,972 38,073 Total liabilities 3,411,994 3,264,378 3,376,140 3,356,022 3,349,290 Shareholders’ Equity Preferred equity 122,976 122,748 43,125 43,125 43,125 Common equity 178,362 185,208 175,806 335,662 336,877 Accumulated other comprehensive income (loss) (268) (2,122) (11,694) (8,089) 1,154 Total shareholders’ equity 301,070 305,834 207,237 370,698 381,156 Total liabilities and shareholders’ equity $3,713,064 $3,570,212 $3,583,377 $3,726,720 $3,730,446 Loan Portfolio Composition — Source of Repayment March 31, 2009 Dec. 31, 2008 Percent of Percent of ($ in millions) Total ($ in millions) Total Commercial $ 1,106 43 $ 1,090 43 Construction 373 14 366 15 Commercial real estate 774 30 730 29 Consumer 220 8 201 8
  30. 30. Residential mortgage 119 5 123 5 Total loans, gross excluding deferred fees $ 2,592 100 $ 2,510 100
  31. 31. Net Interest Margin Midwest Banc Holdings, Inc. (In thousands) For the Three Months Ended March 31, 2009 Dec. 31, 2008 March 31, 2008 Average Average Average Average Average Average Balance Rate Balance Rate Balance Rate Interest-Earning Assets: Short-term investments $ 4,787 3.09 percent $ 18,748 1.15 percent $ 21,939 2.70 percent Securities: Taxable(6) 629,783 4.41 610,160 4.84 704,119 5.43 Exempt from federal income taxes(6) 58,551 5.78 58,670 5.78 61,847 5.95 Total securities 688,334 4.52 668,830 4.92 765,966 5.48 FRB and FHLB stock 31,698 2.40 31,698 2.40 29,230 2.50 Loans (7)(8)(9) 2,543,770 5.44 2,499,802 5.70 2,459,830 6.65 Total interest-earning assets $3,268,589 5.22 percent $3,219,078 5.48 percent $3,276,965 6.31 percent Noninterest-Earning Assets: Cash $ 69,006 $ 63,352 $ 55,634 Premises and equipment 38,166 38,208 41,325 Allowance for loan losses (46,503) (41,522) (27,287) Other 319,615 311,197 339,632 Total noninterest-earning assets 380,284 371,235 409,304 Total assets $3,648,873 $3,590,313 $3,686,269 Interest-Bearing Liabilities: Deposits: Interest-bearing demand deposits $ 173,291 0.59 percent $ 176,803 0.72 percent $ 217,515 1.37 percent Money-market demand and savings accounts 351,778 0.86 334,217 0.94 411,091 1.78 Time deposits 1,618,236 3.13 1,637,302 3.52 1,470,272 4.49 Total interest-bearing deposits 2,143,305 2.55 2,148,322 2.89 2,098,878 3.64 Borrowings: Fed funds purch & repurchase agreements 333,990 3.87 305,242 4.30 402,774 3.97 FHLB advances 363,000 3.34 380,000 3.29 315,158 4.42 Junior subordinated debentures 60,799 4.86 60,783 6.00 60,733 6.88 Revolving note payable 8,600 2.00 17,470 4.67 6,368 5.03 Term note payable 55,000 2.05 55,000 4.48 69,835 5.08 Subordinated debt 15,000 4.05 15,000 6.48 165 7.27 Total borrowings 836,389 3.58 833,495 4.02 855,033 4.44 Total interest-bearing liabilities $2,979,694 2.84 percent $2,981,817 3.21 percent $2,953,911 3.87 percent Noninterest-Bearing Liabilities: Noninterest-bearing demand deposits $ 330,957 $ 330,626 $ 316,507 Other liabilities 35,203 32,075 33,248 Total noninterest-bearing liabilities 366,160 362,701 349,755 Shareholders’ equity 303,019 245,795 382,603 Total liabilities and shareholders’ equity $3,648,873 $3,590,313 $3,686,269 2.63 percent 2.51 percent 2.82 percent Net interest margin (tax equivalent)(6)(9) See footnotes at end of statements, tables and schedules.
  32. 32. Credit Risk Management Midwest Banc Holdings, Inc. (In thousands) Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Loan Quality Nonaccrual loans $ 80,332 $ 61,104 $ 60,474 $ 40,956 $ 46,916 Troubled debt restructuring 11,006 11,006 — — — Nonperforming loans 91,338 72,110 60,474 40,956 46,916 Foreclosed properties 18,534 12,018 8,025 2,375 2,527 Nonperforming assets $ 109,872 $ 84,128 $ 68,499 $ 43,331 $ 49,443 90+ days past due and accruing $ — $ — $ — $ 4,320 $ — Loans $2,591,048 $2,509,759 $2,494,225 $2,501,082 $2,467,701 Loan-related assets $2,609,582 $2,521,777 $2,502,250 $2,503,457 $2,470,228 Nonaccrual loans to loans 3.10 percent 2.43 percent 2.42 percent 1.64 percent 1.90 percent Nonperforming assets to loan-related assets 4.21 percent 3.34 percent 2.74 percent 1.73 percent 2.00 percent Nonperforming assets to total assets 2.96 percent 2.36 percent 1.91 percent 1.16 percent 1.33 percent Allowance for Loan Losses Beginning balance $ 44,432 $ 39,428 $ 22,606 $ 20,344 $ 26,748 Provision for loan losses 13,000 20,000 41,950 4,415 5,400 Net chargeoffs (recoveries) 4,421 14,996 25,128 2,153 11,804 Ending balance $ 53,011 $ 44,432 $ 39,428 $ 22,606 $ 20,344 Net chargeoffs to average loans 0.70 percent 2.39 percent 3.98 percent 0.35 percent 1.93 percent Delinquencies 30 – 89 days to loans 1.48 percent 1.03 percent 0.99 percent 0.35 percent 0.82 percent Allowance for loan losses to Loans at period end 2.05 percent 1.77 percent 1.58 percent 0.90 percent 0.82 percent Nonaccrual loans 66 percent 73 percent 65 percent 55 percent 43 percent
  33. 33. Footnotes Midwest Banc Holdings, Inc. (In thousands) (1) Shareholders’ equity less goodwill and net core deposit intangible and other intangibles. March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Shareholders’ equity $301,070 $305,834 $207,237 $ 370,698 $ 381,156 Core deposit intangible & other intangibles, net (14,110) (14,683) (15,274) (15,864) (16,454) Goodwill (78,862) (78,862) (78,862) (159,083) (160,407) Tangible shareholders’ equity $208,098 $212,289 $113,101 $ 195,751 $ 204,295 (2) Excludes net gains or losses on securities transactions. (3) Noninterest expense less amortization and foreclosed properties expenses divided by the sum of net interest income (tax equivalent) plus noninterest income. (4) Total assets less goodwill and net core deposit intangible and other intangibles. March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Total assets $3,713,064 $3,570,212 $3,583,377 $3,726,720 $3,730,446 Core deposit intangible & other intangibles, net (14,110) (14,683) (15,274) (15,864) (16,454) Goodwill (78,862) (78,862) (78,862) (159,083) (160,407) Tangible assets $3,620,092 $3,476,667 $3,489,241 $3,551,773 $3,553,585 (5) Includes net interest income and noninterest income. (6) Adjusted for 35 percent tax rate and for the dividends-received deduction where applicable. (7) Nonaccrual loans are included in the average balance; however, these loans are not earning any interest. (8) Includes loan fees. (9) Reconciliation of reported net interest income to tax equivalent net interest income. Three Months Ended March 31, Dec. 31, March 31, 2009 2008 2008 Net interest income $ 21,102 $19,832 $ 22,216 Tax equivalent adjustment to net interest income 357 363 892 Net interest income, tax equivalent basis $ 21,459 $20,195 $ 23,108 (10) Reconciliation of common equity to shareholders’ equity. March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Preferred equity $122,976 $122,748 $ 43,125 $ 43,125 $ 43,125 Common equity 178,094 183,086 164,112 327,573 338,031 Shareholders’ equity $301,070 $305,834 $207,237 $370,698 $381,156 Reconciliation of tangible common equity to tangible shareholders’ equity. March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Preferred equity $122,976 $122,748 $ 43,125 $ 43,125 $ 43,125 Tangible common equity 85,122 89,541 69,976 152,626 161,170 Tangible shareholders’ equity $208,098 $212,289 $113,101 $195,751 $204,295 Reconciliation of common shares outstanding at period end to “if converted” shares outstanding. March 31, Dec. 31, Sept. 30, June 30, March 31, 2009 2008 2008 2008 2008 Common shares outstanding 27,929 27,893 27,859 27,859 27,839 Resulting common shares if preferred shares were
  34. 34. converted 2,875 2,875 2,875 2,875 2,875 “If converted” shares outstanding 30,804 30,768 30,734 30,734 30,714 (Back To Top)

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