First Midwest gets OK to pay back TARP investment

Marketwire

Itasca-based First Midwest Bancorp said it has received approval from the Treasury Department to pay off its $193 million stock issued in 2008 under the Troubled Asset Relief Program.

First Midwest said it plans to pay off the loan through a combination of existing liquid assets and debt offerings totaling $115 million.

“We are very pleased to make this announcement,” said Michael L. Scudder, president and chief executive officer of First Midwest Bancorp, Inc. “We believe it’s the right time to redeem Treasury’s investment and, with the absence of any requirement to raise equity, clearly in the best interest of our shareholders.

“First Midwest’s participation in the TARP program was supportive of Treasury’s efforts to enhance lending and to augment already well-capitalized institutions during uncertain economic times,” Scudder added. “Importantly, for more than 70 years, we have been an integral part of the communities we serve, striving to meet the credit, deposit and related financial needs of our clients. Our commitment to doing so into the future remains unchanged.”

Following the stock redemption, the company expects to enter into negotiations to repurchase the warrant held by Treasury to purchase 1.3 million shares of First Midwest common stock. Since its investment in December 2008, the Treasury has received more than $27.0 million in preferred stock dividends from the Company, and will receive additional value from the sale of the warrant.