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Wall Street’s Best Digest Daily Alert - 11/12/20

This preferred stock is issued by a Chicago-based regional bank.

This preferred stock is issued by a Chicago-based regional bank.

First Midwest Bancorp, Inc. (FMBIO)
From Income Securities Investor

First Midwest Bancorp, Inc.; 7.00% Fixed Rate, Non-Cumulative Perpetual; Par $25.00; Annual Cash Dividend $1.75; Current Indicated Yield 6.26%; Call Date 08/20/25 at $25.00; Yield to Call 4.28%; Pay Cycle 2m; Ratings, Moody’s Ba1, S&P BB-; CUSIP 320867500;

First Midwest Bancorp, Inc. (FMBI) is small regional banking institution based in Chicago, with financial operations in Illinois, Wisconsin, Indiana, and Iowa, although the banking company remains concentrated in the greater metropolitan Chicago market.

FMBI had $20.0 billion in total assets and $15.7 billion in total deposits as of June 30, 2020. The company’s commercial banking operations include middle market lending, business banking, real estate lending, specialty finance, and equipment leasing. The consumer business is dedicated to the retail, small business owner, mortgage product, and eCommerce business lines. FMBI also has full-service wealth management capabilities, including private banking and investment management.

This preferred is callable at par on the initial 08/20/25 call date or any dividend payment date thereafter. Third quarter 2020 net income of $23.4 million or $0.21 per share missed analysts’ estimates by $0.02; revenue also missed the mark. Like most banking companies, FMBI’s operating results were negatively affected by the COVID-19 pandemic. FMBI took considerably higher provisions for loan losses while also taking measures to address balance sheet optimization.

Dividends from this issue are taxed at the 15%-20% rate. This investment is suitable for medium- to high-risk taxable portfolios. Buy up to $28.15 for a 6.22% current yield and a 4.12% yield to call.

Martin Fridson, CFA, Income Securities Investor,, 800-472-2680, November 2020