UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission file number 0-24566-01

MB FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland

(State or other jurisdiction of incorporation or organization)

36-4460265

(I.R.S. Employer Identification No.)

801 West Madison Street, Chicago, Illinois 60607

(Address of principal executive offices)

Registrant’s telephone number, including area code: (773) 645-7866

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES: ý NO: o

There were outstanding 17,574,561 shares of the registrant’s common stock as of August 14, 2002.

MB FINANCIAL, INC. AND SUBSIDIARIES

FORM 10-Q

June 30, 2002

INDEX

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets at June 30, 2002 (Unaudited), and December 31, 2001

	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2002 and 2001 (Unaudited)

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 and 2001 (Unaudited)

	Notes to Consolidated Financial Statements (Unaudited)

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.	Quantitative and Qualitative Disclosures about Market Risk

PART II.	OTHER INFORMATION

Item 2.	Changes in Securities and Use of Proceeds

Item 4.	Submission of Matters to a Vote of Security Holders

Item 6.	Exhibits and Reports on Form 8-K

	Signatures

	Certification

PART I. – FINANCIAL INFORMATION

Item 1. – Financial Statements

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2002 and December 31, 2001

(Amounts in thousands, except share data)

	June 30, 2002			December 31, 2001
	(Unaudited)
ASSETS
Cash and due from banks	$	81,187		$	106,572
Interest bearing deposits with banks	1,423			4,408
Federal funds sold	6,600			19,500
Investment securities available for sale	891,807			843,286
Loans (net of allowance for loan losses of $31,290 at June 30, 2002 and $27,500 at December 31, 2001)	2,421,405			2,284,454
Lease investments, net	45,738			48,252
Interest only securities	4,954			8,580
Premises and equipment, net	50,497			49,308
Cash surrender value of life insurance	70,958			33,890
Goodwill, net	43,955			32,031
Intangibles, net	3,317			2,795
Other assets	34,011			32,777

Total assets	$	3,655,852		$	3,465,853

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities
Deposits:
Noninterest bearing	$	480,905		$	473,624
Interest bearing	2,604,691			2,348,102
Total deposits	3,085,596			2,821,726
Short-term borrowings	157,572			243,282
Long-term borrowings	62,922			58,980
Accrued expenses and other liabilities	36,282			48,277
Total liabilities	3,342,372			3,172,265

Stockholders’ Equity
Common stock, ($0.01 par value; authorized 40,000,000 shares; issued 17,568,067 shares at June 30, 2002 and 17,486,924 shares at December 31, 2001)	176			175
Additional paid-in capital	64,205			63,104
Retained earnings	236,058			219,424
Accumulated other comprehensive income	13,204			10,885
Less: 5,000 shares of treasury stock, at cost, at June 30, 2002	(163		)	—
Total stockholders’ equity	313,480			293,588

Total liabilities and stockholders’ equity	$	3,655,852		$	3,465,853

See Accompanying Notes to Unaudited Consolidated Financial Statements.

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in Thousands, except Common Share Data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2002		2001		2002		2001
Interest income:
Loans	$	40,896	$	43,255	$	79,481	$	85,905
Investment securities:
Taxable	11,178		13,168		21,784		26,880
Nontaxable	902		1,052		1,745		2,102
Federal funds sold	83		454		171		1,154
Other interest bearing deposits	6		98		24		274
Total interest income	53,065		58,027		103,205		116,315

Interest expense:
Deposits	17,459		26,335		34,530		52,972
Short-term borrowings	920		3,558		2,048		8,198
Long-term borrowings	780		733		1,520		1,544
Total interest expense	19,159		30,626		38,098		62,714
Net interest income	33,906		27,401		65,107		53,601

Provision for loan losses	3,800		1,260		7,200		2,020

Net interest income after provision for loan losses	30,106		26,141		57,907		51,581

Other income:
Loan service fees	1,844		1,011		2,996		1,755
Deposit service fees	2,911		2,153		5,319		4,279
Lease financing, net	490		620		1,253		1,133
Trust and brokerage fees	982		951		2,332		1,606
Net gains on sale of securities available for sale	693		726		1,273		1,614
Increase in cash surrender value of life insurance	1,041		541		2,068		1,064
Other operating income	1,388		1,059		2,443		2,003
	9,349		7,061		17,684		13,454

Other expense:
Salaries and employee benefits	12,182		11,378		23,404		22,094
Occupancy and equipment expense	4,163		4,430		7,916		8,760
Goodwill amortization expense	—		644		—		1,211
Other intangibles amortization expense	265		256		451		497
Advertising and marketing expense	815		832		1,624		1,670
Other operating expenses	5,271		4,128		10,401		8,257
	22,696		21,668		43,796		42,489

Income before income taxes	16,759		11,534		31,795		22,546

Income taxes	5,216		3,996		9,903		7,684

Net Income	$	11,543	$	7,538	$	21,892	$	14,862

Common share data:
Basic earnings per common share	$	0.66	$	0.43	$	1.25	$	0.84
Diluted earnings per common share	$	0.64	$	0.42	$	1.22	$	0.84
Weighted average common shares outstanding	17,563,806		17,606,797		17,547,693		17,607,079
Weighted average common shares outstanding including dilutive shares	17,926,360		17,883,646		17,901,767		17,790,056

See Accompanying Notes to Unaudited Consolidated Financial Statements.

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands) (Unaudited)	Six Months Ended June 30,
	2002					2001

Cash Flows From Operating Activities
Net income	$		21,892			$		14,862
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	8,892					10,365
Gain on disposal of premises and equipment and leased equipment	(661				)	(92				)
Amortization of other intangibles and goodwill	451					1,708
Provision for loan losses	7,200					2,020
Deferred income tax (benefit) expense	(2,175				)	826
Amortization of premiums and discounts on investment securities available for sale, net	1,898					325
Net gains on sale of investment securities available for sale	(1,273				)	(1,614				)
Proceeds from sale of loans held for sale	15,558					46,175
Originations of loans held for sale	(15,288				)	(46,094				)
Net gains on sale of loans held for sale	(207				)	—
Increase in cash surrender value of life insurance, net	(2,068				)	(1,064				)
Interest only securities accretion	(477				)	(493				)
Decrease in other assets	1,976					4,202
Decrease in other liabilities	(16,564				)	(8,931				)
Net cash provided by operating activities	19,154					22,195

Cash Flows From Investing Activities
Proceeds from sale of investment securities available for sale	81,604					30,905
Proceeds from maturities and calls of securities available for sale	155,923					230,118
Purchase of securities available for sale	(170,737				)	(188,767				)
Net increase in loans	(42,956				)	(91,336				)
Purchases of premises and equipment and leased equipment	(8,138				)	(14,018				)
Proceeds from sales of premises and equipment and leased equipment	2,993					182
Principal collected (paid) on lease investments	1,868					(197				)
Purchase of bank owned life insurance	(35,000				)	—
Cash paid, net of cash and cash equivalents acquired in acquisition	(22,560				)	(6,780				)
Proceeds received from interest only securities	3,391					2,852
Net cash used in investing activities	(33,612				)	(37,041				)

Cash Flows From Financing Activities
Net increase in deposits	81,047					37,205
Net decrease in short-term borrowings	(107,482				)	(31,027				)
Proceeds from long-term borrowings	4,000					16,000
Principal paid on long-term borrowings	(58				)	(6,439				)
Treasury stock transactions, net	(163				)	(92				)
Stock options exercised	1,102					—
Dividends paid on common stock	(5,258				)	(3,220				)
Net cash (used in) provided by financing activities	(26,812				)	12,427

Net decrease in cash and cash equivalents	$		(41,270		)	$		(2,419		)

Cash and cash equivalents:
Beginning of period	130,480					131,599

End of period	$		89,210			$		129,180

Supplemental Disclosures of Cash Flow Information:

Cash payments for:
Interest paid to depositors and other borrowed funds		$		39,111			$		62,344
Income taxes paid, net		8,749					4,500

Supplemental Schedule of Noncash Investing Activities:

Acquisitions

Noncash Assets acquired:
Investment securities available for sale		$		111,656			$		45,435
Loans, net		101,434					139,518
Premises and equipment, net		3,730					4,424
Other assets		2,019					584
Intangibles, net		973					326
Goodwill		11,924					6,944
		231,736					197,231

Liabilities assumed:
Deposits		182,823					176,549
Short-term borrowings		21,772					—
Long-term borrowings		—					5,526
Accrued expenses and other liabilities		4,581					8,376
		209,176					190,451
Net non cash assets acquired		$		22,560			$		6,780

Cash and cash equivalents acquired		$		12,478			$		35,109

Transfer of investment securities from held-to-maturity to available-for-sale		$		—			$		660,311
Real estate acquired in settlement of loans		176					1,048

See Accompanying Notes to Unaudited Consolidated Financial Statements.

MB FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2002 and 2001

(Unaudited)

1. BASIS OF PRESENTATION

The unaudited consolidated financial statements include the accounts of MB Financial, Inc., a Maryland corporation (the “Company”) and its subsidiaries, including its three wholly owned national bank subsidiaries (collectively, the “Banks”): MB Financial Bank, N.A. (“MB Financial Bank”), Union Bank, N.A., and Abrams Centre National Bank. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been made. The results of operations for the three and six months ended June 30, 2002 are not necessarily indicative of the results to be expected for the entire fiscal year.

The unaudited interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and industry practice. Certain information in footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America and industry practice has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2001 audited financial statements filed on Form 10-K.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ from those estimates.

2. MERGERS AND ACQUISITIONS

On August 12, 2002, the Company acquired LaSalle Systems Leasing, Inc. and its affiliated company, LaSalle Equipment Limited Partnership (“LaSalle”), based in the Chicago metropolitan area, for $39.7 million. Of this amount, $5.0 million was paid in the form of common stock, with the balance paid in cash. The purchase price, which includes a $4.0 million deferred payment tied to LaSalle’s future results, is expected to generate approximately $3.0 million in goodwill. LaSalle operates as a subsidiary of MB Financial Bank. At December 31, 2001, LaSalle’s assets totaled approximately $94.6 million and stockholders’ equity totaled approximately $29.5 million.

On April 8, 2002, the Company completed its acquisition of First National Bank of Lincolnwood (“Lincolnwood”), based in Lincolnwood, Illinois, and Lincolnwood’s parent, First Lincolnwood Corporation. Under the acquisition agreement, the Company paid $351.11 in cash for each of the 85,810 outstanding shares of the common stock of First Lincolnwood Corporation, and $185.00 in cash per share for each of the 26,535 outstanding shares of Lincolnwood stock held by minority stockholders, for an aggregate purchase price of approximately $35.0 million. The Company merged the three-office, $227.5 million asset Lincolnwood into the Company’s Illinois-based subsidiary bank, MB Financial Bank.

Pro forma results of operation for Lincolnwood for the six month period ended June 30, 2002 and three and six months ended June 30, 2001 are not included, as Lincolnwood would not have had a material impact on the Company’s financial statements.

On November 6, 2001, MB Financial, Inc., a Delaware corporation (“Old MB Financial”) and MidCity Financial Corporation, a Delaware corporation (“MidCity Financial”) each merged with and into the Company, with the Company as the surviving entity. The Company, named MB-MidCity, Inc. prior to the merger, was renamed MB Financial, Inc., upon completion of the merger.

The holders of Old MB Financial common stock were issued one share of common stock of the Company for each share held prior to the transaction. Each share of MidCity Financial common stock was exchanged for 230.32955 shares of common stock of the newly formed Company. The merger was accounted for under the pooling-of-interests method of accounting and, accordingly, the information included in the consolidated financial statements presents the combined results as if the merger had been in effect for all periods presented at historical cost.

After completion of the merger, Old MB Financial’s subsidiary bank, Manufacturers Bank, and MidCity Financial’s Illinois-based subsidiary banks, The Mid-City National Bank of Chicago, First National Bank of Elmhurst and First National Bank of Morton Grove, were merged. The Mid-City National Bank of Chicago was the surviving institution and was renamed and now operates as MB Financial Bank. MidCity Financial’s other subsidiary banks, Abrams Centre National Bank, based in Dallas, Texas, and Union Bank, N.A., based in Oklahoma City, Oklahoma, are now held as separate subsidiaries of the Company.

The following information reconciles net interest income and net income of Old MB Financial as previously reported in Old MB Financial’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2001 to those included in the accompanying consolidated financial statements (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2001		June 30, 2001

Net interest income
Old MB Financial	$	11,747	$	22,771
MidCity Financial	15,654		30,830
Total net interest income	$	27,401	$	53,601

Net Income
Old MB Financial	$	3,263	$	6,238
MidCity Financial	4,275		8,624
Total net income	$	7,538	$	14,862

On April 21, 2001, the Old MB Financial acquired FSL Holdings (“FSL”) and its subsidiary, First Savings & Loan Association of South Holland, with assets of $221.8 million. First Savings and Loan of South Holland was subsequently merged into MB Financial Bank. Each shareholder of FSL was paid $165.00 for each share of common stock held by such shareholder (for an aggregate consideration of $41.3 million). The transaction was accounted for as a purchase and generated $6.9 million in goodwill.

Pro forma results of operation for FSL for the three and six months ended June 30, 2001 are not included, as FSL would not have had a material impact on the Company’s financial statements.

3. COMPREHENSIVE INCOME

Comprehensive income includes net income, as well as the change in net unrealized gain on investment securities available for sale and interest only receivables arising during the quarter, net of tax. For the three and six month periods ended June 30, 2002, comprehensive income was $16.7 million and $24.2 million, and for the three and six months ended June 30, 2001, comprehensive income was $7.8 million and $22.9 million, respectively.

4. EARNINGS PER SHARE DATA

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (dollars in thousands, except share and per share data):

	Three Months Ended				Six Months Ended
	June 30, 2002		June 30, 2001		June 30, 2002		June 30, 2001

Basic:
Net income	$	11,543	$	7,538	$	21,892	$	14,862
Average shares outstanding	17,563,806		17,606,797		17,547,693		17,607,079
Basic earnings per share	$	0.66	$	0.43	$	1.25	$	0.84

Diluted:
Net income	$	11,543	$	7,538	$	21,892	$	14,862
Average shares outstanding	17,563,806		17,606,797		17,547,693		17,607,079
Net effect of dilutive stock options	362,554		276,849		354,074		182,977
Total	17,926,360		17,883,646		17,901,767		17,790,056
Diluted earnings per share	$	0.64	$	0.42	$	1.22	$	0.84

5. ADOPTION OF STATEMENT 142

On January 1, 2002, the Company implemented Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Under the provisions of SFAS No. 142, goodwill is no longer subject to amortization over its estimated useful life, but instead will be subject to at least annual assessments for impairment by applying a fair-value based test. SFAS No. 142 also requires that an acquired intangible asset should be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal rights, or if the asset can be sold, transferred, licensed, rented or exchanged, regardless of the acquirer’s intent to do so. The Company determined that no transitional impairment loss was required at January 1, 2002.

Intangible asset disclosures are as follows (in thousands):

	As of June 30, 2002
	Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Core deposit intangibles	$	16,296	$	(12,979	)

Aggregate intangible amortization expense:
For the six months ended June 30, 2002	$	451

Estimated intangible amortization expense:
For the year ended December 31, 2002	$	971
For the year ended December 31, 2003	824
For the year ended December 31, 2004	614
For the year ended December 31, 2005	376
For the year ended December 31, 2006	249

The changes in the carrying amount of goodwill for the six months ended June 30, 2002, are as follows (in thousands):

	Six Months Ended
	June 30, 2002

Balance at beginning of period	$	32,031
Goodwill acquired during period	11,924
Balance at June 30,	$	43,955

The following table presents pro forma net income and earnings per share in all periods presented exclusive of goodwill amortization expense (dollar amounts in thousands except earnings per share):

	Three Months Ended				Six Months Ended
	June 30, 2002		June 30, 2001		June 30, 2002		June 30, 2001

Reported net income	$	11,543	$	7,538	$	21,892	$	14,862
Add back: Goodwill Amortization	—		644		—		1,211
Adjusted net income	$	11,543	$	8,182	$	21,892	$	16,073

Basic earnings per share:
Reported net income	$	0.66	$	0.43	$	1.25	$	0.84
Add back: Goodwill Amortization	—		0.04		—		0.07
Adjusted net income	$	0.66	$	0.47	$	1.25	$	0.91

Fully diluted earnings per share:
Reported net income	$	0.64	$	0.42	$	1.22	$	0.84
Add back: Goodwill Amortization	—		0.04		—		0.06
Adjusted net income	$	0.64	$	0.46	$	1.22	$	0.90

6. RECENT ACCOUNTING PRONOUNCEMENTS

SFAS No. 143, Accounting for Asset Retirement Obligations, addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period it is incurred if a reasonable estimate of fair value can be made. The associated retirement costs are capitalized as a component of the carrying amount of the long-lived asset and allocated to expense over the useful life of the asset. The statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. Management does not believe the adoption of the statement will have a material impact on the Company’s consolidated financial statements.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, establishes accounting and reporting standards for the impairment or disposal of long-lived assets. This statement supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed. SFAS No. 144 provides one accounting model to be used for long-lived assets to be disposed of by sale, whether previously held for use or newly acquired and broadens the presentation of discontinued operations to include more disposal transactions. The provisions of SFAS No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001. The Company adopted the statement as of January 1, 2002 and the implementation of this standard did not have a material impact on the Company’s consolidated financial statements.

In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred rather than when a company commits to such an activity and also establishes fair value as the objective for initial measurement of the liability. The Company will adopt SFAS No. 146 for exit or disposal activities that are initiated after December 31, 2002. The Company has not yet assessed the impact of its adoption on the consolidated financial statements.

7. LONG TERM BORROWINGS

The Company had notes payable to banks totaling $7.8 million and $7.9 million at June 30, 2002 and December 31, 2001, respectively, which accrue interest at rates ranging from 6.02% to 8.43% and require aggregate monthly payments of approximately $264,000, including interest at various dates through October 7, 2006. Lease investments includes equipment with an amortized cost of $6.9 million and $7.6 million at June 30, 2002 and 2001, respectively, that is pledged as collateral on these notes.

At June 30, 2002 and December 31, 2001, long-term borrowings included $25.0 million in floating rate Preferred Capital Securities (“Capital Securities”) through Coal City Capital Trust I (“Trust”), a statutory business trust and wholly owned subsidiary of the Company. The Capital Securities pay cumulative cash distributions quarterly at a rate per annum, reset quarterly, equal to the 3-month London Interbank Offered Rate (“LIBOR”) plus 180 basis points. The rate at June 30, 2002 was 3.70%. Proceeds from the sale of the Capital Securities were invested by the Trust in floating rate (3-month LIBOR plus 180 basis points) Junior Subordinated Deferrable Interest Debentures (“Debentures”) issued by the Company which represents all of the assets of the Trust. The Capital Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Junior Subordinated Debentures at the stated maturity in the year 2028 or their earlier redemption, in each case at a redemption price equal to the aggregate liquidation preference of the Capital Securities plus any accumulated and unpaid distributions thereon to the date of redemption. Prior redemption is permitted under certain circumstances.

At June 30, 2002 and December 31, 2001, long-term borrowings included $20.0 million and $16.0 million, respectively, in unsecured floating rate subordinated debt. The subordinated debt is subject to a revolving loan agreement that allows borrowings up to $40.0 million and requires at least $ 20.0 million outstanding to keep the credit facility available for a period of one year. On January 30, 2003, the outstanding principal balance of such debt will become fixed. Interest accrues at a rate equal to the 6-month LIBOR plus 260 basis points and is due quarterly. Terms for this seven-year instrument are interest quarterly for two years, with equal quarterly principal amortization over the final five years, with a maturity of January 2009. Prepayment is allowed at any time without penalty.

The Company had Federal Home Loan Bank advances with maturity dates greater than one year of $10.1 million at June 30, 2002 and December 31, 2001. As of June 2002, the advances have fixed interest rates ranging from 4.90% to 6.26%. Advances in the amount of $3.0 million are callable on a quarterly basis and are due in 2008.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of the Company’s financial position and results of operations and should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. As described in note 2, the merger of Old MB Financial and MidCity Financial with and into the Company, which was completed on November 6, 2001 has been accounted for using the pooling of interests method of accounting and the historical financial statements of the Company reflect the merged companies combined.

General

The profitability of the Company’s operations depends primarily on its net interest income, which is the difference between total interest earned on interest earning assets and total interest paid on interest bearing liabilities. The Company’s net income is affected by its provision for loan losses as well as other income and other expenses. The provision for loan losses reflects the amount considered to be adequate to cover probable credit losses in the loan portfolio. Non-interest income or other income consists of loan service fees, deposit service fees, net lease financing income, net gains (losses) on the sale of securities available for sale, increase in cash surrender value of life insurance and other operating income. Other expenses include salaries and employee benefits along with occupancy and equipment expense, other intangibles amortization expense, advertising and marketing expense and other operating expenses.

The amount of net interest income is affected by changes in the volume and mix of interest earning assets, the level of interest rates earned on those assets, the volume and mix of interest bearing liabilities, and the level of interest rates paid on those interest bearing liabilities. The provision for loan losses is dependent on changes in the loan portfolio and management’s assessment of the collectibility of the loan portfolio, as well as economic and market conditions. Other income and other expenses are impacted by growth of operations and growth in the number of accounts through both acquisitions and core banking business growth. Growth in operations affects other expenses as a result of additional employees, branch facilities and promotional marketing expense. Growth in the number of accounts affects other income including service fees as well as other expenses such as computer services, supplies, postage, telecommunications and other miscellaneous expenses.

Results of Operations

Second Quarter Results

The Company had net income of $11.5 million for the second quarter of 2002 compared to $7.5 million for the second quarter of 2001, an increase of $4.0 million or 53.1%. Fully diluted earnings per share for the second quarter of 2002 increased 52.4% to $0.64 compared to $0.42 for the second quarter of 2001. Of this increase, approximately $644 thousand, or $0.04 basic and fully diluted earnings per share, resulted from the adoption of Statement of Financial Accounting Standard No. 142 on January 1, 2002 which eliminated the requirement to amortize goodwill. Net interest income, the largest component of net income, was $33.9 million for the three months ended June 30, 2002, an increase of $6.5 million from $27.4 million for the second quarter of 2001. Net interest income grew due to a 59 basis point increase in the net interest margin expressed on a fully taxable equivalent basis to 4.12%, and a $165.5 million increase in average earning assets. The increased net interest margin was due to the reversal of interest rate compression experienced in 2001, at which time earning assets were repricing more quickly than interest bearing liabilities in a declining rate environment and better pricing obtained by the Company on loans and deposits in 2002. The increase in earning assets was primarily due to the Lincolnwood acquisition and continued growth of the loan portfolio.

The provision for loan losses increased by $2.5 million for the three months ended June 30, 2002 compared to the same period in 2001. The increase was primarily due to a larger number of non-performing loans and charge-offs in the second quarter of 2002 compared to the same period in 2001, an increase of 9.1% in the loan portfolio over the past twelve months, and continued weakness in the overall economic environment.

Other income increased $2.2 million, or 32.4% to $9.3 million for the quarter ended June 30, 2002 from $7.1 million for the second quarter of 2001. Loan service fees, deposit service fees, increase in cash surrender value of life insurance and other operating income increased by $833 thousand, $758 thousand, $500 thousand and $329 thousand, respectively.

Other expense increased by $1.0 million, or 4.7% to $22.7 million for the three months ended June 30, 2002 from $21.7 million for the three months ended June 30, 2001. Within the category, other operating expense increased by $1.1 million, primarily due to a $665 thousand increase in computer services related to the outsourcing of data processing activities during December 2001 and the acquisition of Lincolnwood. Salaries and employee benefits increased by $804 thousand due to the Lincolnwood acquisition and the Company’s continued growth and investment in personnel. Goodwill amortization expense declined by $644 thousand due to the adoption of SFAS No. 142. Occupancy and equipment expenses declined by $267 thousand due to a $409 thousand decrease in depreciation expense resulting from the outsourcing of data processing activities in December 2001 (MidCity Financial utilized an in-house data processing system prior to merger with Old MB Financial).

Year-To-Date Results

The Company had net income of $21.9 million for the six months ended June 30, 2002 compared to $14.9 million for the six months ended June 30, 2001, an increase of $7.0 million or 47.3%. Fully diluted earnings per share for the six months ended June 30, 2002 increased 45.2% to $1.22 compared to $0.84 for the same period in 2001. Of this increase, approximately $1.2 million, or $0.07 basic and $0.06 fully diluted earnings per share, resulted from the adoption of SFAS No. 142 on January 1, 2002 which eliminated the requirement to amortize goodwill. Net interest income, the largest component of net income, was $65.1 million for the six months ended June 30, 2002, an increase of $11.5 million from $53.6 million for the first six months of 2001. Net interest income grew due to a 55 basis point increase in the net interest margin expressed on a fully taxable equivalent basis to 4.10% and a $142.0 million increase in average earning assets. The increased net interest margin was due to the reversal of interest rate compression experienced in 2001, at which time earning assets were repricing more quickly than interest bearing liabilities in a declining rate environment and better pricing obtained by the Company on loans and deposits in 2002. The increase in earning assets was primarily due to the Lincolnwood acquisition and continued growth of the loan portfolio.

The provision for loan losses increased by $5.2 million for the six months ended June 30, 2002 compared to the same period in 2001. The increase was primarily due to a larger number of non-performing loans and charge-offs in the first six months of 2002 compared to the same period in 2001, an increase of 9.1% increase in the loan portfolio over the past twelve months, and continued weakness in the overall economic environment.

Other income increased $4.2 million, or 31.4% to $17.7 million for the six-month period ended June 30, 2002 from $13.5 million for the first six months of 2001. Loan service fees, deposit service fees, increase in cash surrender value of life insurance, trust and brokerage fees and other operating income increased by $1.2 million, $1.0 million, $1.0 million, $726 thousand and $440 thousand, respectively, while net gains on sale of securities available for sale declined by $341 thousand.

Net Interest Margin

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, and the resultant costs, expressed both in dollars and rates (dollars in thousands):

	Three Months Ended June 30,
	2002						2001
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate

Interest Earning Assets:
Loans (1) (2)	$	2,430,137	$	40,772	6.73	%	$	2,187,104	$	43,119	7.91	%
Loans exempt from federal income taxes (3)	9,932		190		7.67		10,540		209		7.95
Taxable investment securities	809,200		11,178		5.54		849,587		13,168		6.22
Investment securities exempt from federal income taxes (3)	85,142		1,388		6.54		93,747		1,619		6.93
Federal funds sold	19,858		83		1.68		41,189		454		4.42
Other interest bearing deposits	1,874		6		1.28		8,515		98		4.62
Total interest earning assets	3,356,143		53,617		6.41		3,190,682		58,667		7.37
Non-interest earning assets	309,960						258,507
Total assets	$	3,666,103					$	3,449,189

Interest Bearing Liabilities:
Deposits:
NOW and money market deposit accounts	$	573,718	$	1,714	1.20	%	$	554,837	$	3,621	2.62	%
Savings deposits	374,726		934		1.00		336,961		2,171		2.58
Time deposits	1,675,491		14,811		3.55		1,481,580		20,543		5.56
Short-term borrowings	162,886		920		2.27		281,082		3,558		5.08
Long-term borrowings	63,223		780		4.95		60,514		733		4.86
Total interest bearing liabilities	2,850,044		19,159		2.70		2,714,974		30,626		4.52
Demand deposits – non-interest bearing	474,048						410,855
Other non-interest bearing liabilities	39,736						36,014
Stockholders’ equity	302,275						287,346

Total liabilities and stockholders’ equity	$	3,666,103					$	3,449,189

Net interest income/interest rate spread (4)			$	34,458	3.71	%			$	28,041	2.85	%

Net interest margin on a fully tax equivalent basis (5)					4.12	%					3.53	%

Net interest margin (5)					4.05	%					3.44	%

(1) Non-accrual loans are included in average loans.

(2) Interest income includes loan origination fees of $747 thousand and $658 thousand for the three months ended June 30, 2002 and 2001, respectively.

(3) Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate for the three months ended June 30, 2002 and 2001.

(4) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.

(5) Net interest margin represents net interest income as a percentage of average interest earning assets.

The Company’s net interest income increased $6.5 million, or 23.7% to $33.9 million for the quarter ended June 30, 2002 from $27.4 million in the second quarter of 2001. Interest income decreased by $5.0 million due to a 96 basis point decline in yield on average interest earning assets to 6.41%. The decrease in yield was partially offset by a $165.5 million, or 5.2% increase in average earning assets, comprised of a $242.4 million, or 11.0% increase in average loans, a $49.0 million, or 5.2% decline in average investment securities and a $21.3 million, or 51.8% decline in federal funds sold. Interest expense declined by $11.5 million due to a 182 basis point decrease in the cost of funds to 2.70%, which was partially offset by a $135.1 million, or 5.0% increase in average interest bearing liabilities. The net interest margin expressed on a fully taxable equivalent basis rose 59 basis points to 4.12% in the second quarter of 2002 from 3.53% in the comparable 2001 period due to the reversal of interest rate compression experienced in 2001, at which time earning assets were repricing more quickly than interest bearing liabilities in a declining rate environment.

AVERAGE BALANCES, INTEREST RATES AND YIELDS - Continued

(Dollars in Thousands)

	Six Months Ended June 30,
	2002						2001
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate

Interest Earning Assets:
Loans (1) (2)	$	2,364,158	$	79,252	6.76	%	$	2,104,457	$	85,634	8.21	%
Loans exempt from federal income taxes (3)	9,994		352		7.10		10,553		417		7.97
Taxable investment securities	778,353		21,784		5.64		849,999		26,880		6.38
Investment securities exempt from federal income taxes (3)	81,455		2,685		6.65		93,780		3,234		6.95
Federal funds sold	20,542		171		1.68		46,526		1,154		5.00
Other interest bearing deposits	3,287		24		1.47		10,446		274		5.29
Total interest earning assets	3,257,789		104,268		6.45		3,115,761		117,593		7.61
Non-interest earning assets	304,588						260,917
Total assets	$	3,562,377					$	3,376,678

Interest Bearing Liabilities:
Deposits:
NOW and money market deposit accounts	$	572,151	$	3,533	1.25	%	$	550,304	$	8,132	2.98	%
Savings deposits	356,324		1,758		0.99		329,774		3,743		2.29
Time deposits	1,586,160		29,239		3.72		1,417,783		41,097		5.85
Short-term borrowings	179,773		2,048		2.30		293,760		8,198		5.63
Long-term borrowings	62,813		1,520		488		56,6874		1,544		5.49
Total interest bearing liabilities	2,757,221		38,098		2.79		2,648,308		62,714		4.78
Demand deposits – non-interest bearing	464,608						406,282
Other non-interest bearing liabilities	39,831						37,493
Stockholders’ equity	300,717						284,595

Total liabilities and stockholders’ equity	$	3,562,377					$	3,376,678

Net interest income/interest rate spread (4)			$	66,170	3.66	%			$	54,879	2.83	%

Net interest margin on a fully tax equivalent basis (5)					4.10	%					3.55	%

Net interest margin (5)					4.03	%					3.47	%

(1) Non-accrual loans are included in average loans.

(2) Interest income includes loan origination fees of $1.5 million and $1.4 million for the six months ended June 30, 2002 and 2001, respectively.

(3) Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate for the six months ended June 30, 2002 and 2001.

(5) Net interest margin represents net interest income as a percentage of average interest earning assets.

The Company’s net interest income increased $11.5 million, or 21.5% to $65.1 million for the six months ended June 30, 2002 from $53.6 million in the six months ended June 30, 2001. Interest income decreased by $13.1 million due to a 116 basis point decline in yield on average interest earning assets to 6.45%. The decrease in yield was partially offset by a $142.0 million, or 4.6% increase in average earning assets, comprised of a $259.1 million, or 12.3% increase in average loans, an $84.0 million, or 8.9% decline in average investment securities and a $26.0 million, or 55.8% decline in federal funds sold. Interest expense declined by $24.6 million due to a 199 basis point decrease in the cost of funds to 2.79%, which was partially offset by a $108.9 million, or 4.1% increase in average interest bearing liabilities. The net interest margin expressed on a fully taxable equivalent basis rose 55 basis points to 4.10% in the first six months of 2002 from 3.55% in the comparable 2001 period due to the reversal of interest rate compression experienced in 2001.

Volume and Rate Analysis of Net Interest Income

The following table presents the extent to which changes in volume and interest rates of interest earning assets and interest bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior period rate), (ii) changes attributable to changes in rates (changes in rates multiplied by prior period volume) and (iii) change attributable to a combination of changes in rate and volume (change in rates multiplied by the changes in volume) (in thousands). Changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	Three Months Ended June 30, 2002 Compared to June 30, 2001									Six Months Ended June 30, 2002 Compared to June 30, 2001
	Change Due to Volume			Change Due to Rate			Total Change			Change Due to Volume			Change Due to Rate			Total Change

Interest Earning Assets:
Loans	$	4,489		$	(6,836	)	$	(2,347	)	$	9,801		$	(16,183	)	$	(6,382	)
Loans exempt from federal income taxes (1)	(12		)	(7		)	(19		)	(21		)	(44		)	(65		)
Taxable investment securities	(605		)	(1,385		)	(1,990		)	(2,156		)	(2,940		)	(5,096		)
Investment securities exempt from federal Income taxes (1)	(144		)	(87		)	(231		)	(411		)	(138		)	(549		)
Federal funds sold	(169		)	(202		)	(371		)	(449		)	(534		)	(983		)
Other interest bearing deposits	(48		)	(44		)	(92		)	(122		)	(128		)	(250		)
Total increase in interest income	3,511			(8,561		)	(5,050		)	6,642			(19,967		)	(13,325		)

Interest Bearing Liabilities:
NOW and money market deposit accounts	119			(2,026		)	(1,907		)	311			(4,910		)	(4,599		)
Savings deposits	220			(1,457		)	(1,237		)	280			(2,265		)	(1,985		)
Time deposits	2,430			(8,162		)	(5,732		)	4,444			(16,302		)	(11,858		)
Short-term borrowings	(1,138		)	(1,500		)	(2,638		)	(2,436		)	(3,714		)	(6,150		)
Long-term borrowings	34			13			47			158			(182		)	(24		)
Total increase in interest expense	1,665			(13,132		)	(11,467		)	2,757			(27,373		)	(24,616		)
Increase (decrease) in net interest income	$	1,846		$	4,571		$	6,417		$	3,885		$	7,406		$	11,291

(1) Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% rate for the three months and six months ended June 30, 2002 and June 30, 2001.

Other Income

Other income increased $2.2 million, or 32.4% to $9.3 million for the quarter ended June 30, 2002 from $7.1 million for the second quarter of 2001. Loan service fees increased by $833 thousand primarily due to a $779 thousand gain realized in the 2002 period in connection with the termination, through the clean up call, of the 96-1 home equity line of credit securitization trust as well as an increase of $228 thousand in loan prepayment penalties. Deposit service fees grew by $758 thousand primarily due to growth of monthly service charges and NSF and overdraft fees. Increase in cash surrender value of life insurance grew by $500 thousand as the insurance investment more than doubled due to an additional $35.0 million invested on January 2, 2002. Other operating income increased by $329 thousand, primarily due to $207 thousand in gains on the origination and sale of residential mortgage loans in the quarter.

Other income increased $4.2 million, or 31.4% to $17.7 million for the six-month period ended June 30, 2002 from $13.5 million for the first six months of 2001. Loan service fees increased $1.2 million primarily due to a $779 thousand gain realized in the 2002 period in connection with the termination, through the clean up call, of the 96-1 home equity line of credit securitization trust as well as an increase of $228 thousand in loan prepayment penalties. Deposit service fees grew by $1.0 million primarily due to growth of monthly service charges and NSF and overdraft fees. Increase in cash surrender value of life insurance grew by $1.0 million as the insurance investment more than doubled due to an additional $35.0 million invested on January 2, 2002. Trust and brokerage fees increased by $726 thousand, due to increases in income from trust services and investment services

income of $418 thousand and $264 thousand, respectively. Other operating income increased by $440 thousand, largely due to $207 thousand in gains on the origination and sale of residential mortgage loans in the 2002 period.

Other Expense

Other expense increased by $1.0 million or 4.7% to $22.7 million for the quarter ended June 30, 2002 compared to $21.7 million for the three months ended June 30, 2001. Within the category, other operating expense increased by $1.1 million, primarily due to a $665 thousand increase in computer services related to the outsourcing of processing activities and the addition of Lincolnwood. Salaries and employee benefits increased by $804 thousand due to the Lincolnwood acquisition and the Company’s continued growth and investment in personnel. Goodwill amortization expense declined by $644 thousand as goodwill is not subject to amortization in the 2002 period under the provisions of SFAS No. 142, which the Company adopted on January 1, 2002. Occupancy and equipment expenses declined by $267 thousand due to a $409 thousand decrease in depreciation expense resulting from the outsourcing of the data processing function.

Other expense increased by $1.3 million, or 3.1% to $43.8 million for the six months ended June 30, 2002 compared to $42.5 million for the six months ended June 30, 2001. Within the category, other operating expenses increased by $2.1 million primarily due to a $1.1 million accrual for an unfavorable appellate court ruling related to rent payments claimed to be owed by the Company pursuant to a land lease agreement under which the Company is lessee. During the first quarter of 2002, an appellate court reversed the decision of a lower court, which found that the Company was not liable for these payments under the lease agreement and directed summary judgement in favor of the plaintiff, the lessor. During the third quarter of 2002, the Company appealed the appellate court’s ruling to the Illinois Supreme Court, seeking reversal of the ruling. The Company has not been informed whether the Illinois Supreme Court will consider the appeal. The accrual reflects the amount pertaining to rent expense incurred through the first six months of 2002. A $995 thousand increase in computer services related to the outsourcing of processing activities and the addition of Lincolnwood also contributed to the rise in other operating expenses. Salaries and employee benefits increased by $1.3 million due to the Lincolnwood acquisition and the Company’s continued growth and investment in personnel. Goodwill amortization expense declined by $1.2 million due to the Company’s adoption of SFAS No. 142. Occupancy and equipment expenses declined by $844 thousand due to a decrease in depreciation expense resulting from the outsourcing of the data processing function.

Income Taxes

Income tax expense for the three months ended June 30, 2002 was $5.2 million compared to $4.0 million for the same period in 2001. The effective tax rate decreased to 31.1% for the second quarter of 2002 from 34.6% for the same period in 2001. The effective tax rate decreased primarily due to the favorable tax treatment of the income generated by the additional purchase of $35.0 million in cash surrender value of life insurance made during January of 2002 and the elimination of non-deductible goodwill amortization expense.

Income tax expense for the six-month period ended June 30, 2002 was $9.9 million compared to $7.7 million for the same period in 2001. The effective tax rate decreased to 31.1% for the first six months of 2002 from 34.1% for the same period in 2001. The effective tax rate decreased primarily due to the favorable tax treatment of the income generated by the additional purchase of $35.0 million in cash surrender value of life insurance made during January of 2002 and the elimination of non-deductible goodwill amortization expense.

Balance Sheet

Total assets increased $190.0 million or 5.5% to $3.7 billion at June 30, 2002 compared to $3.5 billion at December 31, 2001. Net loans increased by $137.0 million or 6.0% and investment securities available for sale increased by $48.5 million, or 5.8%. These increases were primarily due to the acquisition of Lincolnwood, which totaled approximately $227.5 million in assets on April 5, 2002, the acquisition closing date. Cash surrender value of life insurance increased by $37.1 million, or 109.4% primarily due to an additional investment of $35.0 million made in January 2002, while goodwill increased by $11.9 million due to goodwill generated in the Lincolnwood acquisition.

Total liabilities increased by $170.1 million, or 5.4% to $3.3 billion at June 30, 2002 from $3.2 billion at December 31, 2001. Interest-bearing deposits grew by $256.6 million, largely due to deposits acquired in the Lincolnwood acquisition. Short-term borrowings declined by $85.7 million primarily due to net repayments of Federal Home Loan Bank advances and notes payable of $80.0 million and $11.6 million, respectively. Accrued expenses and other liabilities declined by $12.0 million, primarily due to accrued merger expenses paid during the first six months of 2002 pertaining to the merger of Old MB Financial and MidCity Financial.

Total stockholders’ equity increased $19.9 million, or 6.8% to $313.5 million at June 30, 2002 compared to $293.6 million at December 31, 2001. The growth was primarily due to continued strong earnings and a $2.3 million increase in accumulated other comprehensive income, which were partially offset by $5.3 million, or $0.30 per share cash dividends paid.

Loan Portfolio

The following table sets forth the composition of the loan portfolio as of the dates indicated (dollars in thousands):

	June 30, 2002					December 31, 2001					June 30, 2001
	Amount			Percent		Amount			Percent		Amount			Percent

Commercial	$	505,656		20.62	%	$	490,314		21.21	%	$	570,854		25.38	%
Commercial loans collateralized by assignment of lease payments	297,949			12.15	%	303,063			13.11	%	255,451			11.36	%
Commercial real estate	904,143			36.86	%	862,586			37.31	%	790,349			35.13	%
Residential real estate	370,011			15.09	%	351,064			15.18	%	346,417			15.40	%
Construction real estate	181,583			7.40	%	132,403			5.73	%	103,025			4.58	%
Installment and other	193,353			7.88	%	172,524			7.46	%	183,433			8.15	%
Gross loans (1)	2,452,695			100.00	%	2,311,954			100.00	%	2,249,529			100.00	%
Allowance for loan losses	(31,290		)			(27,500		)			(29,552		)
Net loans	$	2,421,405				$	2,284,454				$	2,219,977

(1) Gross loan balances at June 30, 2002, December 31, 2001, and June 30, 2001 are net of unearned income, including net deferred loan fees of $3.7 million, $3.6 million, and $2.8 million, respectively.

Net loans increased by $137.0 million from $2.3 billion December 31, 2001, due primarily to increases in construction real estate, commercial real estate and installment and other loans of $49.2 million, $41.6 million and $20.8 million, respectively. Net loans increased by $201.4 million from $2.2 billion at June 30, 2001 due to increases in commercial real estate and construction real estate of $113.8 million and $78.6 million, respectively, which were partially offset by a $65.2 million decline in commercial loans. A large portion of the loan growth was provided by approximately $101.4 million in loans acquired through the Lincolnwood acquisition in April 2002.

Asset Quality

The following table presents a summary of non-performing assets as of the dates indicated (dollars in thousands):

	June 30, 2002			December 31, 2001			June 30, 2001

Non-performing loans:
Non-accrual loans	$	19,858		$	17,835		$	13,562
Loans 90 days or more past due, still accruing interest	357			164			1,712
Total non-performing loans	20,215			17,999			15,274

Other real estate owned	140			1,164			940
Other repossessed assets	42			38			46

Total non-performing assets	$	20,397		$	19,201		$	16,260

Total non-performing loans to total loans	0.82		%	0.78		%	0.68		%
Allowance for loan losses to non-performing loans	154.79		%	152.79		%	193.48		%
Total non-performing assets to total assets	0.56		%	0.55		%	0.46		%

Total non-performing assets increased $1.2 million, or 6.2%, to $20.4 million at June 30, 2002 from $19.2 million at December 31, 2001 due to a $2.0 million increase in non-accrual loans. Non-accrual loans increased primarily due to $8.7 million in home equity lines of credit acquired from the June 2002 termination of the 96-1 securitization trust, which added $1.5 million to the non-accrual total. The increase in non-accrual loans was partially offset by a $1.0 million decline in other real estate owned due to the sale of five parcels at a net gain of $26 thousand.

Total non-performing assets increased $4.1 million, or 25.4%, to $20.4 million at June 30, 2002 from $16.3 million at June 30, 2001 due to a $4.9 million increase in non-performing loans. Non-accrual loans increased $6.3 million over the past twelve months primarily due to continued weakness in the overall economic environment.

Allowance for Loan Losses

A reconciliation of the activity in the Company’s allowance for loan losses follows (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30, 2002			June 30, 2001			June 30, 2002			June 30, 2001

Balance at beginning of period	$	27,506		$	29,065		$	27,500		$	26,836
Additions from acquisition / purchase of loans	1,212			1,025			1,212			3,025
Provision for loans losses	3,800			1,260			7,200			2,020
Charge-offs	(1,799		)	(2,286		)	(5,432		)	(2,967		)
Recoveries	571			488			810			638
Balance at June 30,	$	31,290		$	29,552		$	31,290		$	29,552

Total loans at June 30,	$	2,452,695		$	2,249,529		$	2,452,695		$	2,249,529

Ratio of allowance for loan losses to total loans	1.28		%	1.31		%	1.28		%	1.31		%

Net charge-offs increased by $2.3 million to $4.6 million for the six months ended June 30, 2002 compared to $2.3 million for the six months ended June 30, 2001. The increase was primarily due to the charge-off of $2.8 million in loans to one commercial and one lease-banking customer during the first quarter of 2002. The provision for loan losses increased by $2.5 million to $3.8 million in the quarter ended June 30, 2002 from $1.3 million in the quarter ended June 30, 2001, and by $5.2 million to $7.2 million in the six months ended June 30, 2002 from $2.0 million in the six-month 2001 period. The increases were primarily due a larger number of non-performing loans and charge-offs in 2002, an increase of 9.1% in the loan portfolio over the past twelve months, as well as continued weakness in the overall economic environment.

Management believes the allowance for loan losses accounting policy is critical to the portrayal and understanding of the Company’s financial condition and results of operations. As such, selection and application of this “critical accounting policy” involves judgements, estimates, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of materially different financial condition or results of operations is a reasonable likelihood.

The Company maintains its allowance for loan losses at a level that management believes will be adequate to absorb probable losses on existing loans based on an evaluation of the collectibility of loans and prior loss experience. The Company further uses a risk rating system to evaluate the adequacy of the allowance for loan losses. With this system, each loan is risk rated between one and nine, by the originating loan officer or loan committee, with one being the best case and nine being a loss. While all loans are monitored by the loan officer responsible, loans rated five or worse are closely monitored by credit management and the officer responsible for the account. Loan loss reserve factors are multiplied against the balances in each risk-rating category to determine an appropriate level for the allowance for loan losses. Control of the Company’s loan quality is continually monitored by management and is reviewed by the Board of Directors of the Company and each Bank’s Board of Directors on a monthly basis, subject to oversight by the Company’s Board of Directors through several of its members who serve on the senior most loan committee. The Company consistently applies its methodology for determining the adequacy of the allowance for loan losses, but may make adjustments to its methodologies and assumptions based on historical information related to charge-offs and management’s evaluation of the current loan portfolio.

Potential Problem Loans

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem assets. At each scheduled bank Board of Directors meeting, a watch list is presented, showing significant loan relationships listed as “Special Mention,” “Substandard,” “Doubtful” and “Loss.” An asset is classified Substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and viewed as non-bankable assets, worthy of charge-off. Assets that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that may or may not be within the control of the customer are deemed to be Special Mention.

The Company’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by the Banks’ primary regulators, which can order the establishment of additional general or specific loss allowances. There can be no assurance that regulators, in reviewing the Company’s loan portfolio, will not request the Company to materially increase its allowance for loan losses. Although management believes that adequate specific and general loan loss allowances have been established, actual losses are dependent upon future events and, as such, further additions to the level of specific and general loan loss allowances may become necessary.

Potential problem loans are loans included on the watch list presented to the Board of Directors that do not meet the definition of a non-performing loan, but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with present loan repayment terms. The aggregate principal amounts of potential problem loans as of June 30, 2002, December 31, 2001 and June 30, 2001 were approximately $30.3 million, $15.7 million and $16.5 million, respectively. The increase from June 30, 2001 is primarily due to one lease customer relationship totaling $9.3 million (see discussion below with respect to K-Mart loans) and one commercial real estate relationship totaling $3.8 million.

As of June 30, 2002, the Company had approximately $9.3 million in performing lease loans (collectively “K-Mart loans”) under which K-Mart Corporation was the lessee. Approximately $5.6 million of these loans were direct financing leases included in the Company’s lease loan portfolio pursuant to which the Company invested in the equipment leased. K-Mart Corporation filed for bankruptcy protection on January 22, 2002. The K-Mart loans are secured by revenue producing equipment with an original cost of $10.2 million that was purchased and installed during the second half of 2001. Subsequent to filing for bankruptcy protection, K-Mart Corporation closed a number of its retail store locations, including some in which this equipment was located. K-Mart has informed us that all of our equipment located in closed stores has been moved to stores that will remain open, but to the Company’s knowledge K-Mart has not affirmed or rejected our leases in bankruptcy court.

While the K-Mart loans are currently performing in accordance with their terms, no assurance can be given that this will continue to be the case and such performance may depend on the terms of a reorganization plan for K-Mart. No assurances can be made that a loss related to these loans will not be incurred.

Lease Investments

Lease investments by categories follow (in thousands):

	June 30, 2002			December 31, 2001			June 30, 2001

Direct financing leases (1)	$	6,666		$	7,863		$	1,758

Operating leases:
Equipment, at cost	85,204			82,489			85,690
Less accumulated depreciation	(39,466		)	(34,237		)	(37,580		)
Lease investments, net	$	45,738		$	48,252		$	48,110

(1) Direct financing leases are included as lease loans for financial statement purposes.

Lease investments are investments in equipment leased to other companies by the Company. The Company has seen its lease portfolio grow over the past five years from virtually nothing to $45.7 million at June 30, 2002. The Company funds most of its lease equipment purchases, but has some loans at other banks totaling $7.8 million at June 30, 2002, $7.9 million at December 31, 2001 and $5.8 million at June 30, 2001.

The operating lease portfolio is made up of various types of equipment, generally technology related, such as computer systems, satellite equipment, and general manufacturing equipment. A lessee generally must have an investment grade rating for its public debt from Moody’s or Standard & Poors, or the equivalent. Gains on leased equipment periodically result when a lessee renews a lease or purchases the equipment at the end of a lease, or the equipment is sold to a third party at a profit. Individual lease transactions can, however, result in a loss. This generally happens when, at the end of a lease, the lessee does not renew the lease or purchase the equipment. To mitigate this risk of loss, the Company usually limits individual leased equipment residuals (expected lease book values at the end of initial lease terms) to approximately $500 thousand per transaction and seeks to diversify both the type of equipment leased and the industries in which the lessees to whom such equipment is leased participate.

At June 30, 2002, the following schedule represents the residual values for operating leases in the year initial lease terms are ended (in thousands):

End of Initial Lease Terms December 31,	Residual Values
2002	$	4,776
2003	1,294
2004	3,300
2005	1,924
2006	881
2007	327
	$	12,502

There were approximately 161 leases at June 30, 2002 compared to 143 at December 31, 2001. In addition, residual lease values were $12.5 million and $11.2 million at June 30, 2002 and December 31, 2001, resulting in an average residual per lease of $78 thousand as of both dates.

Interest Only Securities

In 1996, 1997 and 1998, Avondale Federal Savings Bank (which was purchased in 1999) securitized certain home equity lines of credit to investors with limited recourse, retaining the right to service the underlying loans. The securitizations were done using qualified special purpose entities (securitization trusts). Upon the sale of the loans to the securitization trusts, the net carrying amount of the loans were removed from the balance sheet, and certain retained residual interests were recorded. The retained interests included rights to service the loans that were sold (the “servicing rights”) and the rights to future cash flows (the “interest only securities”) arising after the investors in the securitization trusts received their contractual return. In addition, the Company retained a security interest in the securitization trusts, reflecting the excess of the total amount of loans transferred to the trusts over the portion represented by certificates sold to investors. Through the Avondale merger, the Company acquired servicing rights related to these loans, the security interest in the securitization trusts and interest only receivables. The annual servicing fees received by the Company approximates 1.00% of the outstanding loan balance. The investors and their securitization trusts have no recourse to the Company’s other assets for failure of debtors to pay when due. Most of the Company’s retained interest in the securitization trusts is generally restricted until investors have been fully paid and is subordinate to investor’s interest. The retained interest is included with securities available for sale and is reflected as investments in equity lines of credit trust. The Company estimates fair value of these securities by using prices paid for similar securities.

At June 30, 2002 and December 31, 2001, interest only securities were $5.0 million and $8.6 million, respectively. The value of interest only securities is subject to substantial credit, prepayment, and interest rate risk on the transferred financial assets. On a quarterly basis, the Company performs a review to determine the fair value of its interest only securities, as these securities were accounted for as investment securities available for sale. As part of the review, the Company reviews its assumptions of prepayment speeds, discount rates and anticipated credit losses.

The following table shows the Company’s assumptions used to estimate the fair value at June 30, 2002 (dollars in thousands):

	Interest Only Securities Pools
	97-1			98-1
	Adjustable (1)			Adjustable (1)

Estimated fair value	$	3,337		$	1,617
Prepayment speed	35.00		%	35.00		%
Weighted-average life (in years) (2)	0.32			1.70
Expected credit losses (3)	0.84		%	8.19		%
Residual cash flows discounted at	12.00		%	12.00		%
Loans outstanding at June 30, 2002	9,967			22,526
Retained interest in equity lines of credit trusts	4,228			1,824

(1) Rates for these loans are adjusted based on the prime rate as published in the Wall Street Journal.

(2) The remaining weighted-average life in years of prepayable assets is calculated by the product of (a) the sum of the principal collections expected in each future year and (b) the number of years until collection, and then dividing the product of (a) and (b) by the initial principal balance. This is not explicitly assumed but it reflects the overall effect of prepayment assumptions.

(3) Assumed remaining credit losses over the life remaining on the loans outstanding at June 30, 2002 are $84 thousand and $1.8 million, for 97-1 and 98-1, respectively. The estimated credit loss percentage is derived by dividing the remaining credit losses by the related loan balance outstanding in the pool.

In June 2002, the Company terminated the 96-1 securitization trust through a clean up call and realized a $779 thousand gain. In February 2001, the Company acquired in the market 100% of securities outstanding in the 97-2 securitization trust held by investors. After the acquisitions, the Company applied purchase accounting and the securitization trusts and their activities were consolidated into the Company’s financial statements.

Management believes the interest only security accounting policy is critical to the portrayal and understanding of the Company’s financial condition and results of operations. As such, selection and application of this “critical accounting policy” involves judgements, estimates, and uncertainties that are susceptible to change. In the event that different assumptions or conditions were to prevail, and depending upon the severity of such changes, the possibility of materially different financial condition or results of operations is a reasonable likelihood.

Investment Securities Available for Sale

The following table sets forth the amortized cost and fair value for the major components of investment securities available for sale carried at fair value (in thousands). There were no investment securities classified as held to maturity as of the dates presented below.

	At June 30, 2002				At December 31, 2001				At June 30, 2001
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value

U.S. Treasury securities	$	23,938	$	24,500	$	26,004	$	26,301	$	32,733	$	32,929
U.S. Government agencies	305,433		316,451		345,334		354,754		408,486		413,072
States and political subdivisions	84,518		86,903		80,866		82,229		92,843		94,449
Mortgage-backed securities	380,408		386,985		292,573		296,216		300,132		302,608
Corporate bonds	53,898		51,871		53,912		52,423		65,152		63,022
Equity securities	17,919		17,993		17,996		19,083		16,646		18,667
Debt securities issued by foreign governments	1,040		1,052		878		881		873		975
Investments in equity lines of credit trusts	6,052		6,052		11,399		11,399		10,639		10,639
Total	$	873,206	$	891,807	$	828,962	$	843,286	$	927,504	$	936,361

Liquidity and Sources of Capital

The Company’s cash flows are composed of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Net cash provided by operating activities was $19.2 million and $22.2 million for the six months ended June 30, 2002 and 2001, respectively, a decrease of $3.0 million. Net cash used in investing activities decreased by $3.4 million, to $33.6 million for the six months ended June 30, 2002 from $37.0 million in the comparable period in 2001. The decrease in cash used was comprised of a $50.7 million increase in proceeds from sales of securities available for sale, a $48.4 million smaller increase in net loans and a $18.0 million decrease in the purchase of securities available for sale, partially offset by a $74.2 million decline in proceeds from the maturity and calls of investment securities available for sale and a $35.0 million purchase of life insurance in January 2002. Net cash used in financing activities was $26.8 million for the six months ended June 30, 2002, while $12.4 million was provided in the first six months of 2001. The $39.2 million increase in net cash used in financing activities was primarily due to a $76.5 million larger decrease in short term borrowings in the 2002 period compared to 2001, which was partially offset by a $43.8 million greater increase in deposits in 2002.

The Company expects to have available cash to meet its liquidity needs. Liquidity management is monitored by the Asset/Liability committee of the Banks, which takes into account the marketability of assets, the sources and stability of funding and the level of unfunded commitments. In the event that additional short-term liquidity is needed, the Banks have established relationships with several large regional banks to provide short-term borrowings in the form of federal funds purchased. While there are no firm lending commitments in place, Management believes that the Banks could borrow $155.7 million for a short time from these banks on a collective basis. Additionally, MB Financial Bank, and Union Bank, N.A. are members of the Federal Home Loan Bank (“FHLB”) and each has the ability to borrow from the FHLB. As a contingency plan for significant funding needs, the Asset/Liability Management committee may also consider the sale of investment securities, selling securities under agreement to repurchase or the temporary curtailment of lending activities.

At June 30, 2002, the Company’s total risk-based capital ratio was 12.24%, Tier 1 capital to risk-weighted assets ratio was 10.34% and Tier 1 capital to average asset ratio was 7.71%. The Banks were each categorized as “Well-Capitalized” under Federal Deposit Insurance Corporation regulations at June 30, 2002.

At June 30, 2002, the Company’s book value per share was $17.85 and tangible book value per share was $15.22.

Forward Looking Statements

When used in this Quarterly Report on Form 10-Q and in other filings with the Securities and Exchange Commission, in press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to the Company’s future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected cost savings and synergies from our merger and acquisition activities, including our recently completed acquisition of First Lincolnwood Corporation and our acquisition of LaSalle Systems Leasing and LaSalle Equipment Limited Partnership, might not be realized within the expected time frames; (2) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write–offs; (3) changes in management’s estimate of the adequacy of the allowance for loan losses; (4) changes in management’s valuation of the Company’s interest only receivables; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and the Company’s net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) the Company’s ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (9) the Company’s ability to realize the residual values of its operating leases; (10) the Company’s ability to access cost-effective funding; (11) changes in financial markets; (12) changes in economic conditions in general and in the Chicago metropolitan area in particular; (13) new legislation or regulatory changes; and (14) changes in accounting principles, policies or guidelines.

The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset Liability Management

The Company’s net interest income is subject to “interest rate risk” to the extent that it can vary based on changes in the general level of interest rates. It is the Company’s policy to maintain an acceptable level of interest rate risk over a range of possible changes in interest rates while remaining responsive to market demand for loan and deposit products. The strategy employed by the Company to manage its interest rate risk is to measure its risk using an asset/liability simulation model and adjust the maturity of securities in its investment portfolio to manage that risk. Also, to limit risk, the Company generally does not make fixed rate loans or accept fixed rate deposits with terms of more than five years.

Interest rate risk can also be measured by analyzing the extent to which the repricing of assets and liabilities are mismatched to create an interest sensitivity “gap”. An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest earning assets maturing or repricing within a specific time period and the amount of interest bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, therefore, a negative gap would tend to adversely affect net interest income. Conversely, during a period of falling interest rates, a negative gap position would tend to result in an increase in net interest income.

The table on the following page sets forth the amounts of interest earning assets and interest bearing liabilities outstanding at June 30, 2002, which are anticipated by the Company, based upon certain assumptions, to reprice or mature in each of the future time periods shown. Except as stated below, the amount of assets and liabilities shown which reprice or mature during a particular period were determined based on the earlier of the term to repricing or the term to repayment of the asset or liability. The table is intended to provide an approximation of the projected repricing of assets and liabilities at June 30, 2002 on the basis of contractual maturities and scheduled rate adjustments within a three-month period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be reinvested and/or repriced as a result of contractual amortization and rate adjustments on adjustable-rate loans. Loan and investment securities contractual maturities and amortization reflect modest prepayment assumptions. While NOW, money market and savings deposit accounts have adjustable rates, it is assumed that the interest rates on these accounts will not adjust immediately to changes in other interest rates.

Therefore, the information in the table is calculated assuming that NOW, money market and savings deposits will reprice as follows: 30%, 85% and 24%, respectively, in the first three months, 10%, 2%, and 12%, respectively, in the next nine months, and 60%, 13% and 64%, respectively, after one year (dollars in thousands):

	Time to Maturity or Repricing
	0 - 90 Days			91 - 365 Days			1 - 5 Years			Over 5 Total			Total

Interest Earning Assets:
Loans	$	1,289,356		$	313,088		$	782,787		$	67,464		$	2,452,695
Investment securities	118,009			192,800			516,609			64,389			891,807
Federal funds sold	6,600			—			—			—			6,600
Interest bearing deposits with banks	1,423			—			—			—			1,423

Total interest earning assets	$	1,415,388		$	505,888		$	1,299,396		$	131,853		$	3,352,525

Interest Bearing Liabilities:
NOW and money market deposit accounts	$	369,576		$	25,933		$	159,301		$	—		$	554,810
Savings deposits	89,610			44,805			238,960			—			373,375
Time deposits	456,293			800,067			415,329			4,817			1,676,506
Short-term borrowings	102,883			54,689			—			—			157,572
Long-term borrowings	45,460			1,441			7,921			8,100			62,922

Total interest bearing liabilities	$	1,063,822		$	926,935		$	821,511		$	12,917		$	2,825,185

Rate sensitive assets (RSA)	$	1,415,388		$	1,921,276		$	3,220,672		$	3,352,525		$	3,352,525
Rate sensitive liabilities (RSL)	1,063,822			1,990,757			2,812,268			2,825,185			2,825,185
Cumulative GAP	351,566			(69,481		)	408,404			527,340			527,340
(GAP=RSA-RSL)
RSA/Total assets	38.72		%	52.55		%	88.10		%	91.70		%	91.70		%
RSL/Total assets	29.10		%	54.45		%	76.93		%	77.28		%	77.28		%
GAP/Total assets	9.62		%	(1.90		)%	11.17		%	14.42		%	14.42		%
GAP/RSA	24.84		%	(3.62		)%	12.68		%	15.73		%	15.73		%

Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets may lag behind changes in market rates. Additionally, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Therefore, the Company does not rely solely on a gap analysis to manage its interest rate risk, but rather it uses what it believes to be the more reliable simulation model relating to changes in net interest income.

Based on simulation modeling at June 30, 2002 and December 31, 2001, the Company’s net interest income would change over a one-year time period due to changes in interest rates as follows (dollars in thousands):

		Change in Net Interest Income Over One Year Horizon
Changes in Levels of Interest Rates		At June 30, 2002					At December 31, 2001
Changes in Levels of Interest Rates		Dollar Change			Percentage Change		Dollar Change			Percentage Change

+ 2.00	%	$	1,357		1.01	%	$	(7,776	)	(5.68	)%
+ 1.00		1,549			1.15		(3,684		)	(2.69	)
(1.00	)	(1,678		)	(1.25	)	3,544			2.59

Simulations used by the Company assume the following:

1. Changes in interest rates are immediate.

2. It is the Company’s policy that interest rate exposure due to a 2.00% interest rate rise or fall be limited to 7.50% of the Company’s annual net interest income as forecasted by the simulation model.

3. Changes in net interest income between June 30, 2002 and December 31, 2001 reflect changes in the composition of interest earning assets and interest bearing liabilities, related interest rates, repricing frequencies, and the fixed or variable characteristics of the interest earning assets and interest bearing liabilities.

PART II. - OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds

(c) On August 12, 2002, the Company acquired LaSalle Systems Leasing, Inc. (“LaSalle Corp”) and its affiliated company, LaSalle Equipment Limited Partnership, for $39.7 million. Of this amount, $5.0 million was paid in the form of the Company’s common stock, with the balance paid in cash. For the stock component, the Company issued 156,757 shares of its common stock to Charles M. Gately, the sole stockholder of LaSalle Corp, in a transaction not registered under the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of the Act and Regulation D promulgated under the Act. In relying upon Regulation D, the Company has relied upon the representations of Mr. Gately in the acquisition agreement, including his representation that he is an accredited investor within the meaning of Rule 501(a) of Regulation D.

Item 4. Submission of Matters to a Vote of Security Holders

On May 15, 2002, the Company held its Annual Meeting of Stockholders. Set forth below are the results of the matters voted upon at the meeting.

1. Election of directors (each for a three-year term):

Name	Votes For	Votes Withheld	Broker Non-Votes
Burton J. Field	15,555,490	278,065	–
Lawrence E. Gilford	15,542,862	290,693	–
Patrick Henry	15,528,236	305,319	–
Richard J. Holmstrom	15,555,498	278,057	–
Clarence Mann	15,553,195	280,360	–
Kenneth A. Skopec	15,431,558	401,997	–

2. Approval of an amendment to the Company’s 1997 Omnibus Incentive Plan to increase from 1,000,000 to 2,500,000 the total number of shares of Company common stock that may be utilized for awards under the plan:

Votes For		Votes Against		Abstentions		Broker Non-Votes
11,167,726		1,460,450		46,559		3,158,820

Item 6. Exhibits and Reports on Form 8-K

(a) See Exhibit Index.

(b) During the quarter ended June 30, 2002, the Company filed current reports on Form 8-K (reporting under Item 9) on May 16, 2002 and June 13, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, MB Financial, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of August 2002.

MB FINANCIAL, INC.

By:	/s/ Mitchell Feiger
Mitchell Feiger
Chief Executive Officer
(Principal Executive Officer)

By:		/s/ Jill E. York
Jill E. York
Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his or her capacity as an officer of MB Financial, Inc. (the “Company”) that the Quarterly Report of the Company on Form 10-Q for the quarterly period ended June 30, 2002 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date:	August 14, 2002	/s/ Mitchell Feiger
		Mitchell Feiger
		President and Chief Executive Officer


Date:	August 14, 2002	/s/ Jill E. York
		Jill E. York
		Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description

3.1	Charter of the Registrant, as amended (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 0-24566-01))

3.2	Bylaws of the Registrant, as amended (incorporated herein by reference to Exhibit 3.2 to Amendment No. One to the Registration Statement on Form S-1 of the Registrant and MB Financial Capital Trust I filed on August 7, 2002 (File Nos. 333-97007 and 333-97007-01))

4.1	The Registrant hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of the holders of each issue of long-term debt of the Registrant and its consolidated subsidiaries

4.2	Certificate of Registrant’s Common Stock (incorporated herein by reference to Exhibit 4.1 to Amendment No. One to the Registrant’s Registration Statement on Form S-4 (No. 333-64584))

10.1	Employment Agreement between the Registrant (as successor to MB Financial, Inc., a Delaware corporation (“Old MB Financial”)) and Robert S. Engelman, Jr. (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-4 of Old MB Financial (then known as Avondale Financial Corp.) (No. 333-70017))

10.2	Form of Employment Agreement between the Registrant, as successor to Old MB Financial, and Mitchell Feiger (incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of Old MB Financial (then known as Avondale Financial Corp.) (No. 333-70017))

10.3	Form of Employment Agreement between the Registrant and Burton Field (incorporated herein by reference to Exhibit 10.5 to Old MB Financial’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (File No. 0-24566))

10.4	Form of Change of Control Severance Agreement between MB Financial Bank, National Association and each of William F. McCarty III, Thomas Panos, Jill E. York, Thomas P. Fitzgibbon, Jr., Jeffrey L. Husserl and others (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 0-24566-01))

10.5	Avondale Financial Corp. 1995 Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-8 of Old MB Financial (then known as Avondale Financial Corp.) (No. 33-98860))

10.6	Coal City Corporation 1995 Stock Option Plan (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-4 (No. 333-64584))

10.7	1997 MB Financial, Inc. Omnibus Incentive Plan (incorporated herein by reference to the appendix to the Registrant’s definitive proxy materials filed on April 22, 2002 (File No. 024566-01))

10.8	MB Financial Stock Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.8(a) to Amendment No. One to the Registrant’s Registration Statement on Form S-4 (No. 333-64584))

10.9		MB Financial Non-Stock Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.8(b) to Amendment No. One to the Registrant’s Registration Statement on Form S-4 (No. 333-64584))

10.10		Avondale Federal Savings Bank Supplemental Executive Retirement Plan Agreement (incorporated herein by reference to Exhibit 10.2 to Old MB Financial’s (then known as Avondale Financial Corp.) Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 0-24566))

10.11		Non-Competition Agreement between the Registrant and E.M. Bakwin (incorporated herein by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 0-24566-01))

10.12		Non-Competition Agreement between the Registrant and Kenneth A. Skopec (incorporated herein by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 0-24566-01))

10.13		Employment Agreement between MB Financial Bank, N.A. and Ronald D. Santo (incorporated herein by reference to Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002 (File No. 0-24566-01))

Three Months Ended

Six Months Ended

Three Months Ended

Six Months Ended

Three Months Ended

Six Months Ended

Second Quarter Results

Income Taxes

June 30, 2002

December 31, 2001

June 30, 2001

Time to Maturity or Repricing

SIGNATURES

June 30,
2002

December 31,
2001

June 30,
2001