To bolster its capital position, First Midwest Bancorp Inc. in Itasca, Ill., is offering to exchange common stock for $225 million of its debt.

The $7.8 billion-asset company said Thursday that it had proposed two separate swaps — one for its $100 million of subordinated notes, the other for its $125 million of capital securities. Neither transaction is conditioned on the other one's closing, First Midwest said.

It said the exchanges would boost its tangible common equity ratio, but it did not say by how much. At the end of the second quarter, First Midwe tangible common equity to tangible assets was 5.56%.

First Midwest also said the exchanges would reduce interest and dividend expenses and give it "increased capital flexibility to take advantage of market opportunities."

The company's regulatory capital ratios were well above the thresholds to be considered well capitalized at the end of the second quarter. But it barely turned a profit during the period, netting $63,000 after paying preferred dividends. And these results included $6.6 million of securities gains. A year earlier, First Midwest earned $27 million.

The provision for loan losses grew sixfold from a year earlier, to $36 million last quarter, though it was 25% smaller than in the first quarter.

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