MB FINANCIAL INC /MD - FORM 8-K - EX-99 - PRESS RELEASE

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8-K - MB FINANCIAL, INC. 8-K 04192012 - MB FINANCIAL INC /MD	mbfi_8k04192012.htm

EXHIBIT 99


	MB Financial, Inc.
	800 West Madison Street
	Chicago, Illinois 60607
	(888) 422-6562
	NASDAQ: MBFI

PRESS RELEASE

For Information at MB Financial, Inc. contact:

Jill York - Vice President and Chief Financial Officer

E-Mail: jyork@mbfinancial.com

FOR IMMEDIATE RELEASE

MB FINANCIAL, INC. REPORTS FIRST QUARTER 2012 NET INCOME OF $21.1 MILLION, STRONG PRE-TAX, PRE-PROVISION OPERATING EARNINGS AND IMPROVING CREDIT COSTS

CHICAGO, April 19, 2012 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A (“the Bank” or “MB Financial Bank”), announced today first quarter results for 2012. The words “MB Financial,” “the Company,” “we,” “our” and “us” refer to MB Financial, Inc. and its consolidated subsidiaries, unless indicated otherwise. We had net income of $21.1 million and net income available to common stockholders of $17.8 million for the first quarter of 2012 compared to net income of $6.9 million and net income available to common stockholders of $4.3 million for the first quarter of 2011, and net income of $19.5 million and net income available to common stockholders of $16.8 million for the fourth quarter of 2011.

Key items for the quarter were as follows:

“Shareholder Friendly” TARP Repayment:

·	On March 14, 2012, we repurchased all $196 million of preferred stock issued in 2008 to the U.S. Department of Treasury as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program. No equity or long term debt was issued in conjunction with the repurchase.

·	The repurchase resulted in a one-time, non-cash after-tax charge of approximately $1.2 million or $0.02 per common share in the first quarter of 2012, related to unaccreted discount recorded at the date of issuance.

·	The repurchase was made with cash on hand as of the repurchase date. Prior to the repurchase date, we entered into and fully utilized a $35.0 million unsecured line of credit agreement with a correspondent bank to supplement holding company cash.

Pre-Tax, Pre-Provision Operating Earnings Remain Strong:

·	Pre-tax, pre-provision operating earnings on a fully tax equivalent basis were $44.5 million, or 2.91% of risk-weighted assets, for the first quarter of 2012 compared to $46.0 million, or 2.87% of risk-weighted assets, for the fourth quarter of 2011.

·	Pre-tax, pre-provision operating earnings on a fully tax equivalent basis to average assets was 1.84% for the first quarter of 2012 compared to 1.85% for the fourth quarter of 2011.

·	Net interest margin on a fully tax equivalent basis was 3.87% for the first quarter of 2012 compared to 3.91% in the fourth quarter of 2011.

Credit Costs Continue to Improve:

·	Our provision for credit losses was $3.1 million for the first quarter of 2012, while our net charge-offs were $5.8 million. Our provision for credit losses and net charge-offs for the fourth quarter of 2011 were $8.0 million and $13.9 million, respectively.

·	Our non-performing loans were $124.7 million or 2.15% of total loans as of March 31, 2012, a decrease of $4.7 million from $129.4 million or 2.17% of total loans at December 31, 2011.

·	Our allowance for loan losses to non-performing loans was 100.59% as of March 31, 2012 compared to 98.00% as of December 31, 2011.

·	Our non-performing assets were $187.8 million or 1.94% of total assets as of March 31, 2012, a decrease of $20.2 million from $208.0 million or 2.12% of total assets as of December 31, 2011.

·	Other real estate owned decreased to $63.1 million as of March 31, 2012 compared to $78.5 million as of December 31, 2011, while losses recognized on other real estate owned increased by $1.1 million to $6.6 million for the first quarter of 2012 compared to the fourth quarter of 2011.

RESULTS OF OPERATIONS

First Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis decreased $2.9 million from the fourth quarter of 2011 and decreased by $3.0 million from the first quarter of 2011 to the first quarter of 2012. The decrease from the fourth quarter of 2011 was due primarily to a decrease in average interest earning assets and a decrease in net interest margin. The decrease from the first quarter of 2011 to the first quarter of 2012 was due primarily to a decrease in average interest earning assets.

Our net interest margin, on a fully tax equivalent basis, was 3.87% for the first quarter of 2012 compared to 3.91% for the fourth quarter of 2011 and 3.88% for the first quarter of 2011. The net interest margin decreased from the fourth quarter of 2011 due to a decrease in loan yields, partially offset by an improved deposit mix and downward repricing of interest bearing deposits.

See the supplemental net interest margin tables for further detail.

Other Income (in thousands):

		Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Core other income:
	Loan service fees	$	1,339	$	1,601	$	2,159	$	2,812	$	1,126
	Deposit service fees		9,408		10,085		9,932		9,023		10,030
	Lease financing, net		6,958		7,801		6,494		6,861		5,783
	Brokerage fees		1,255		1,577		1,273		1,615		1,419
	Trust and asset management fees		4,404		4,166		4,272		4,455		4,431
	Increase in cash surrender value of life insurance		917		944		1,014		1,451		968
	Accretion of FDIC indemnification asset		475		683		985		1,339		1,831
	Card fees		2,044		1,096		2,071		2,062		1,788
	Other operating income		2,162		1,632		1,690		1,979		1,598
Total core other income			28,962		29,585		29,890		31,597		28,974

Non-core other income: (1)
	Net gain (loss) on sale of investment securities		(3)		411		-		232		(3)
	Net (loss) gain on sale of other assets		(17)		(87)		-		13		357
	Net gain on sale of loans held for sale (A)		-		-		-		1,790		-
	Net loss recognized on other real estate owned (B)		(4,348)		(3,620)		(2,354)		(3,629)		(369)
	Net loss recognized on other real estate owned
	related to FDIC transactions (B)		(2,241)		(1,858)		(764)		(1,016)		(3)
	Increase (decrease) in market value of assets held
	in trust for deferred compensation (A)		501		20		(405)		158		187
Total non-core other income			(6,108)		(5,134)		(3,523)		(2,452)		169

Total other income		$	22,854	$	24,451	$	26,367	$	29,145	$	29,143

(1)	Letter denotes the corresponding line items where these non-core other income items reside in the consolidated statements of income as follows: A – Other operating income, B – Net loss recognized on other real estate owned.

Core other income decreased by $623 thousand from the fourth quarter of 2011 to the first quarter of 2012. Deposit service fees decreased primarily due to decreases in NSF and overdraft fees. Net lease financing decreased due to a decrease in remarketing revenues, which were unusually robust during the fourth quarter of 2011. Accretion of indemnification asset decreased as a result of the corresponding decrease in the indemnification asset balance during the first quarter of 2012. Card fees increased due to restrictions of the Durbin Amendment to the Dodd-Frank Act on debit card interchange fees currently not applying to us as a result of total assets decreasing under $10 billion as of December 31, 2011. Non-core other income was primarily impacted by higher losses recognized on other real estate owned.

Core other income was consistent from the first quarter of 2011 to the first quarter of 2012. Deposit service fees decreased due to decreases in NSF and overdraft fees. Net lease financing increased primarily due to an increase in the sales of third party equipment maintenance contracts and related income. Accretion of indemnification asset decreased as a result of corresponding decrease in the indemnification asset balance during the first quarter of 2012. Non-core other income was primarily impacted by higher losses recognized on other real estate owned.

Other Expense (in thousands):

		Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Core other expense:
	Salaries and employee benefits	$	39,928	$	39,826	$	38,827	$	37,657	$	37,588
	Occupancy and equipment expense		9,570		8,498		9,092		8,483		9,394
	Computer services and telecommunication expense		3,653		4,382		3,488		3,570		3,445
	Advertising and marketing expense		2,066		1,831		1,740		1,748		1,719
	Professional and legal expense		1,413		1,422		1,647		1,853		1,225
	Other intangible amortization expense		1,257		1,410		1,414		1,416		1,425
	FDIC insurance premiums		2,643		2,662		2,272		3,502		3,428
	Other real estate expense, net		1,243		1,464		1,181		1,251		398
	Other operating expenses		5,057		7,324		7,352		7,090		7,055
Total core other expense			66,830		68,819		67,013		66,570		65,677

Non-core other expense: (1)
	Branch impairment charges		-		594		-		-		1,000
	Increase (decrease) in market value of assets held
	in trust for deferred compensation (A)		501		20		(405)		158		187
Total non-core other expense			501		614		(405)		158		1,187

Total other expense		$	67,331	$	69,433	$	66,608	$	66,728	$	66,864

(1)	Letters denote the corresponding line items where these non-core other expense items reside in the consolidated statements of income as follows: A – Salaries and employee benefits.

Core other expense decreased by $2.0 million in the first quarter of 2012 compared with the fourth quarter of 2011. Occupancy and equipment expense increased as a result of higher maintenance costs. Computer services and telecommunication expense decreased primarily due to product and system enhancement activities completed in the fourth quarter of 2011. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC.

Core other expense increased by $1.2 million from the first quarter of 2011 to the first quarter of 2012. Salaries and employee benefits expense increased due to officer raises, higher health insurance claims and one extra day in the first quarter of 2012. FDIC insurance premiums decreased due to lower deposits, a change in the assessment computation during the second quarter of 2011, and the impact of improved credit quality on the computation. Other real estate expense increased as a result of increased holding costs related to other real estate owned. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC. Non-core other expense was primarily impacted by $1.0 million of fixed asset impairment charges due to our decision to close a branch in the first quarter of 2011.

Income Taxes

The Company had income tax expense of $8.4 million for the three months ended March 31, 2012. Tax expense in the first quarter of 2011 included $2.1 million of income tax benefit due to an increase in deferred tax assets as a result of an increase in the Illinois corporate income tax rate enacted in the first quarter of 2011.

LOAN PORTFOLIO

The following table sets forth the composition of the loan portfolio, excluding loans held for sale, as of the dates indicated (dollars in thousands):

			March 31,			December 31,			September 30,			June 30,			March 31,
			2012			2011			2011			2011			2011
			Amount	% of Total		Amount	% of Total		Amount	% of Total		Amount	% of Total		Amount	% of Total
Commercial related credits:
	Commercial loans	$	1,040,340	18%	$	1,113,123	19%	$	1,042,583	18%	$	1,108,295	19%	$	1,154,451	18%
	Commercial loans collateralized by
	assignment of lease payments (lease loans)		1,209,942	21%		1,208,575	20%		1,067,191	18%		1,031,677	17%		1,038,507	16%
	Commercial real estate		1,877,380	32%		1,853,788	31%		1,844,894	32%		1,863,223	32%		2,084,651	33%
	Construction real estate		128,040	2%		183,789	3%		210,206	4%		246,557	4%		356,579	6%
Total commercial related credits			4,255,702	73%		4,359,275	73%		4,164,874	72%		4,249,752	72%		4,634,188	73%
Other loans:
	Residential real estate		309,644	5%		316,787	5%		316,305	5%		317,821	5%		335,423	5%
	Indirect vehicle		186,736	3%		187,481	3%		189,033	4%		182,536	3%		175,058	3%
	Home equity		327,450	6%		336,043	6%		348,934	6%		357,181	6%		371,108	6%
	Consumer loans		89,705	2%		88,865	2%		76,025	1%		75,069	1%		74,585	1%
Total other loans			913,535	16%		929,176	16%		930,297	16%		932,607	15%		956,174	15%
Gross loans excluding covered loans			5,169,237	89%		5,288,451	89%		5,095,171	88%		5,182,359	87%		5,590,362	88%
	Covered loans (1)		620,528	11%		662,544	11%		718,566	12%		755,670	13%		777,634	12%
Total loans		$	5,789,765	100%	$	5,950,995	100%	$	5,813,737	100%	$	5,938,029	100%	$	6,367,996	100%

(1)	Covered loans refer to loans we acquired in FDIC-assisted transactions that are subject to loss-sharing agreements with the FDIC.

During the second quarter of 2011, we sold certain performing, sub-performing and non-performing loans. The loans sold had an aggregate carrying amount of $281.6 million prior to the transfer to loans held for sale, which was comprised of $160.8 million in commercial real estate loans, $73.7 million in construction real estate loans, $14.5 million in commercial loans and $32.6 million in residential real estate and home equity loans.

ASSET QUALITY

The following table presents a summary of non-performing assets, excluding loans held for sale, credit-impaired loans that were acquired as part of our FDIC-assisted transactions and OREO related to assets acquired in FDIC-assisted transactions, as of the dates indicated (dollar amounts in thousands):

		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011
Non-performing loans:
Non-accrual loans (1)	$	124,011	$	129,309	$	140,979	$	149,905	$	318,923
Loans 90 days or more past due, still accruing interest		679		82		-		1,121		-
Total non-performing loans		124,690		129,391		140,979		151,026		318,923

OREO		63,077		78,452		87,469		88,185		80,107
Repossessed vehicles		81		156		249		55		139
Total non-performing assets	$	187,848	$	207,999	$	228,697	$	239,266	$	399,169

Total allowance for loan losses (2)	$	125,431	$	126,798	$	128,610	$	130,057	$	178,410

Accruing restructured loans (3)	$	24,145	$	37,996	$	34,321	$	35,037	$	31,819

Total non-performing loans to total loans		2.15%		2.17%		2.42%		2.54%		5.01%
Total non-performing assets to total assets		1.94%		2.12%		2.30%		2.40%		3.96%
Allowance for loan losses to non-performing loans		100.59%		98.00%		91.23%		86.12%		55.94%

(1)	Includes $34.7 million, $42.5 million, $36.0 million, $22.5 million and $60.9 million of restructured loans on non-accrual status at March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.

(2)	Includes $12.7 million for unfunded credit commitments at March 31, 2011.

(3)	Accruing restructured loans consists primarily of residential real estate and home equity loans that have been modified and are performing in accordance with those modified terms.

The decreases in total non-performing loans and total non-performing assets from March 31, 2011 to June 30, 2011 were primarily due to the sale during the second quarter of 2011 of loans with an aggregate carrying amount of $281.6 million prior to the transfer to loans held for sale, $156.3 million of which were non-performing.

The following table represents a summary of OREO, excluding OREO related to assets acquired in FDIC-assisted transactions (in thousands):

		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011

Balance at the beginning of quarter	$	78,452	$	87,469	$	88,185	$	80,107	$	71,476
Transfers in at fair value less estimated costs to sell		2,110		4,209		15,658		15,761		25,167
Fair value adjustments		(4,764)		(3,733)		(2,524)		(3,417)		(1,314)
Net gains (losses) on sales of OREO		416		113		170		(212)		945
Cash received upon disposition		(13,137)		(9,606)		(14,020)		(4,054)		(16,167)
Balance at the end of quarter	$	63,077	$	78,452	$	87,469	$	88,185	$	80,107

The following table presents data related to non-performing loans, by dollar amount and category at March 31, 2012, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):

	Commercial and Lease Loans			Construction Real Estate Loans			Commercial Real Estate Loans				Consumer Loans		Total Loans
	Number of Relationships		Amount	Number of Relationships		Amount	Number of Relationships		Amount		Amount		Amount
$10.0 million or more	-	$	-	-	$	-	-	$	-	$	-	$	-
$5.0 million to $9.9 million	3		21,476	-		-	1		5,431		-		26,907
$1.5 million to $4.9 million	2		3,577	-		-	15		40,603		1,603		45,783
Under $1.5 million	43		9,418	4		1,553	68		24,905		16,124		52,000
	48	$	34,471	4	$	1,553	84	$	70,939	$	17,727	$	124,690

Percentage of individual loan category			1.53%			1.21%			3.78%		1.94%		2.15%

The following table presents data related to non-performing loans, by dollar amount and category at December 31, 2011, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):

	Commercial and Lease Loans			Construction Real Estate Loans			Commercial Real Estate Loans				Consumer Loans		Total Loans
	Number of Relationships		Amount	Number of Relationships		Amount	Number of Relationships		Amount		Amount		Amount
$10.0 million or more	-	$	-	-	$	-	-	$	-	$	-	$	-
$5.0 million to $9.9 million	2		14,322	-		-	2		15,435		-		29,757
$1.5 million to $4.9 million	5		12,031	-		-	13		37,509		-		49,540
Under $1.5 million	42		10,642	3		1,145	61		23,607		14,700		50,094
	49	$	36,995	3	$	1,145	76	$	76,551	$	14,700	$	129,391

Percentage of individual loan category			1.59%			0.62%			4.13%		1.58%		2.17%

We define potential problem loans as performing loans rated substandard that do not meet the definition of a non-performing loan (See “Asset Quality” section above for non-performing loans). Potential problem loans carry a higher probability of default and require additional attention by management. The aggregate principal amount of potential problem loans was $159.4 million, or 2.75% of total loans, as of March 31, 2012, compared to $149.8 million, or 2.51% of total loans, as of December 31, 2011.

Below is a reconciliation of the activity in our allowance for credit and loan losses for the periods indicated (dollar amounts in thousands):

			Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011

Allowance for credit losses, balance at the beginning of period		$	135,975	$	141,861	$	147,107	$	178,410	$	192,217
Provision for credit losses			3,100		8,000		11,500		61,250		40,000
Charge-offs:
	Commercial loans		(539)		(2,932)		(3,497)		(7,991)		(3,151)
	Commercial loans collateralized by
	assignment of lease payments (lease loans)		-		(1,373)		-		(93)		-
	Commercial real estate loans		(3,003)		(3,793)		(7,815)		(55,250)		(29,775)
	Construction real estate		(3,436)		(6,989)		(6,008)		(18,826)		(21,094)
	Residential real estate		(294)		(860)		(141)		(8,080)		(3,562)
	Indirect vehicle		(715)		(954)		(611)		(553)		(718)
	Home equity		(1,072)		(2,061)		(1,605)		(5,493)		(1,907)
	Consumer loans		(258)		(285)		(475)		(344)		(544)
	Total charge-offs		(9,317)		(19,247)		(20,152)		(96,630)		(60,751)
Recoveries:
	Commercial loans		2,038		634		1,413		758		2,565
	Commercial loans collateralized by
	assignment of lease payments (lease loans)		256		1		5		153		66
	Commercial real estate loans		162		747		739		312		1,534
	Construction real estate		565		3,519		681		2,364		2,026
	Residential real estate		34		9		7		26		7
	Indirect vehicle		311		378		327		369		325
	Home equity		20		6		151		19		48
	Consumer loans		111		67		83		76		373
	Total recoveries		3,497		5,361		3,406		4,077		6,944

Total net charge-offs			(5,820)		(13,886)		(16,746)		(92,553)		(53,807)

Allowance for credit losses			133,255		135,975		141,861		147,107		178,410

Allowance for unfunded credit commitments (1)			(7,824)		(9,177)		(13,251)		(17,050)		-

Allowance for loan losses (2)		$	125,431	$	126,798	$	128,610	$	130,057	$	178,410

Total loans, excluding loans held for sale		$	5,789,765	$	5,950,995	$	5,813,737	$	5,938,029	$	6,367,996
Average loans, excluding loans held for sale		$	5,802,037	$	5,818,425	$	5,827,181	$	6,293,073	$	6,460,508

Ratio of allowance for loan losses to total loans, excluding loans held for sale			2.17%		2.13%		2.21%		2.19%		2.80%

Ratio of allowance for credit losses to total loans, excluding loans held for sale,
and unfunded credit commitments			2.27%		2.26%		2.40%		2.43%		2.75%

Net loan charge-offs to average loans, excluding loans held for sale (annualized)			0.40%		0.95%		1.14%		5.90%		3.38%

(1)	The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011.

(2)	Includes $12.7 million for unfunded credit commitments at March 31, 2011.

The activity in the second quarter of 2011 reflects the previously disclosed sale of certain performing, sub-performing and non-performing loans, which resulted in approximately $87.6 million in charge-offs and an increase in the provision for credit losses of approximately $50 million.

Our allowance for loan losses is comprised of three elements: a general loss reserve, a specific reserve for impaired loans and a reserve for smaller-balance homogenous loans. The following table presents these three elements of our allowance for loan losses (in thousands):

		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011

General loss reserve	$	98,985	$	102,196	$	102,752	$	104,002	$	126,423
Specific reserve (1)		13,422		10,804		11,416		12,111		38,054
Smaller-balance homogenous loans reserve		13,024		13,798		14,442		13,944		13,933
Total allowance for loan losses	$	125,431	$	126,798	$	128,610	$	130,057	$	178,410

(1)	The specific reserve as of March 31, 2011 includes reserves on unfunded credit commitments of approximately $12.7 million. Beginning as of June 30, 2011, reserves on unfunded credit commitments are recorded as liabilities.

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.

INVESTMENT SECURITIES

The following table sets forth the fair value, amortized cost, and total unrealized gain of our investment securities, by type (in thousands):

		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011

Securities available for sale:
Fair value
Government sponsored agencies and enterprises	$	42,070	$	42,401	$	56,007	$	55,656	$	56,971
States and political subdivisions		581,720		535,660		394,279		392,670		365,481
Mortgage-backed securities		1,193,248		1,334,491		1,421,789		1,424,302		1,279,968
Corporate bonds		5,686		5,899		5,899		6,019		6,019
Equity securities		10,887		10,846		10,764		10,435		10,215
Total fair value	$	1,833,611	$	1,929,297	$	1,888,738	$	1,889,082	$	1,718,654

Amortized cost
Government sponsored agencies and enterprises	$	39,503	$	39,640	$	53,016	$	54,423	$	56,452
States and political subdivisions		547,262		500,979		366,651		371,598		350,851
Mortgage-backed securities		1,168,340		1,308,020		1,399,801		1,401,975		1,258,171
Corporate bonds		5,686		5,899		5,899		6,019		6,019
Equity securities		10,520		10,457		10,324		10,246		10,169
Total amortized cost	$	1,771,311	$	1,864,995	$	1,835,691	$	1,844,261	$	1,681,662

Unrealized gain
Government sponsored agencies and enterprises	$	2,567	$	2,761	$	2,991	$	1,233	$	519
States and political subdivisions		34,458		34,681		27,628		21,072		14,630
Mortgage-backed securities		24,908		26,471		21,988		22,327		21,797
Corporate bonds		-		-		-		-		-
Equity securities		367		389		440		189		46
Total unrealized gain	$	62,300	$	64,302	$	53,047	$	44,821	$	36,992

Securities held to maturity, at cost:
States and political subdivisions	$	239,526	$	240,183	$	240,839	$	-	$	-
Mortgage-backed securities		259,241		259,100		258,199		230,154		102,206
Total amortized cost	$	498,767	$	499,283	$	499,038	$	230,154	$	102,206

We do not have any meaningful direct or indirect holdings of subprime residential mortgage loans, home equity lines of credit, or any Fannie Mae or Freddie Mac preferred or common equity securities in our investment securities portfolio. Additionally, more than 99% of our mortgage-backed securities are agency guaranteed.

DEPOSIT MIX

The following table shows the composition of deposits as of the dates indicated (dollars in thousands):

			March 31,			December 31,			September 30,			June 30,			March 31,
			2012			2011			2011			2011			2011
				% of			% of			% of			% of			% of
			Amount	Total		Amount	Total		Amount	Total		Amount	Total		Amount	Total
Low cost deposits:
	Noninterest bearing deposits	$	1,874,028	25%	$	1,885,694	25%	$	1,803,141	23%	$	1,776,873	23%	$	1,666,868	22%
	Money market and NOW accounts		2,702,636	35%		2,645,334	34%		2,722,162	35%		2,645,953	34%		2,712,314	34%
	Savings accounts		786,357	10%		753,610	10%		751,062	10%		729,222	9%		718,896	9%
Total low cost deposits			5,363,021	70%		5,284,638	69%		5,276,365	68%		5,152,048	66%		5,098,078	65%

Certificates of deposit:
	Certificates of deposit		1,820,266	24%		1,925,608	25%		2,001,210	26%		2,124,815	28%		2,326,591	29%
	Brokered deposit accounts		451,415	6%		437,361	6%		444,332	6%		441,720	6%		467,337	6%
Total certificates of deposit			2,271,681	30%		2,362,969	31%		2,445,542	32%		2,566,535	34%		2,793,928	35%

Total deposits		$	7,634,702	100%	$	7,647,607	100%	$	7,721,907	100%	$	7,718,583	100%	$	7,892,006	100%

FORWARD-LOOKING STATEMENTS

When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “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 our 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 revenues, cost savings, synergies and other benefits from our merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the possibility that the expected benefits of the FDIC-assisted transactions we previously completed will not be realized; (3) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses, which could necessitate additional provisions for loan losses, resulting both from loans we originate and loans we acquire from other financial institutions; (4) results of examinations by the Office of Comptroller of Currency and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan losses or write-down assets; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (10) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (11) our ability to access cost-effective funding; (12) changes in financial markets; (13) changes in economic conditions in general and in the Chicago metropolitan area in particular; (14) the costs, effects and outcomes of litigation; (15) new legislation or regulatory changes, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (16) changes in accounting principles, policies or guidelines; (17) our future acquisitions of other depository institutions or lines of business; and (18) future goodwill impairment due to changes in our business, changes in market conditions, or other factors.

We do 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.

TABLES TO FOLLOW

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

As of the dates indicated

(Amounts in thousands)

			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
ASSETS
Cash and due from banks		$	128,411	$	144,228	$	133,755	$	129,942	$	123,794
Interest earning deposits with banks			272,553		100,337		347,055		513,378		504,765
Total cash and cash equivalents			400,964		244,565		480,810		643,320		628,559
Investment securities:
	Securities available for sale, at fair value		1,833,611		1,929,297		1,888,738		1,889,082		1,718,654
	Securities held to maturity, at amortized cost		498,767		499,283		499,038		230,154		102,206
	Non-marketable securities - FHLB and FRB Stock		65,541		80,832		80,815		80,815		80,186
Total investment securities			2,397,919		2,509,412		2,468,591		2,200,051		1,901,046
Loans held for sale			3,364		4,727		-		-		11,533
Loans:
	Total loans, excluding covered loans		5,169,237		5,288,451		5,095,171		5,182,359		5,590,362
	Covered loans		620,528		662,544		718,566		755,670		777,634
	Total loans		5,789,765		5,950,995		5,813,737		5,938,029		6,367,996
	Less: Allowance for loan losses		125,431		126,798		128,610		130,057		178,410
Net loans			5,664,334		5,824,197		5,685,127		5,807,972		6,189,586
Lease investments, net			124,748		135,490		133,345		139,391		129,182
Premises and equipment, net			212,589		210,705		211,062		210,901		209,257
Cash surrender value of life insurance			126,226		125,309		124,364		126,938		126,014
Goodwill, net			387,069		387,069		387,069		387,069		387,069
Other intangibles, net			28,237		29,494		30,904		32,318		33,734
Other real estate owned, net			63,077		78,452		87,469		88,185		80,107
Other real estate owned related to FDIC transactions			53,703		60,363		69,311		69,920		61,461
FDIC indemnification asset			72,161		80,830		94,542		119,837		148,314
Other assets			137,209		142,459		149,767		151,833		165,481
Total assets		$	9,671,600	$	9,833,072	$	9,922,361	$	9,977,735	$	10,071,343
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
	Noninterest bearing	$	1,874,028	$	1,885,694	$	1,803,141	$	1,776,873	$	1,666,868
	Interest bearing		5,760,674		5,761,913		5,918,766		5,941,710		6,225,138
Total deposits			7,634,702		7,647,607		7,721,907		7,718,583		7,892,006
Short-term borrowings			269,691		219,954		257,418		235,733		295,180
Long-term borrowings			256,456		266,264		274,378		275,559		275,327
Junior subordinated notes issued to capital trusts			158,530		158,538		158,546		158,554		158,563
Accrued expenses and other liabilities			136,791		147,682		141,490		243,962		100,031
Total liabilities			8,456,170		8,440,045		8,553,739		8,632,391		8,721,107
Stockholders' Equity
Preferred stock			-		194,719		194,562		194,407		194,255
Common stock			549		548		548		546		546
Additional paid-in capital			732,613		731,248		730,056		728,244		726,604
Retained earnings			445,233		427,956		411,659		396,081		406,594
Accumulated other comprehensive income			37,935		39,150		32,322		27,322		22,566
Treasury stock			(3,326)		(3,044)		(3,010)		(3,771)		(2,845)
Controlling interest stockholders' equity			1,213,004		1,390,577		1,366,137		1,342,829		1,347,720
Noncontrolling interest			2,426		2,450		2,485		2,515		2,516
Total stockholders' equity			1,215,430		1,393,027		1,368,622		1,345,344		1,350,236
Total liabilities and stockholders' equity		$	9,671,600	$	9,833,072	$	9,922,361	$	9,977,735	$	10,071,343

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data) (Unaudited)

		Three Months Ended
		March 31,	December 31,	September 30,	June 30,	March 31,
		2012	2011	2011	2011	2011
Interest income:
	Loans	$ 71,648	$ 75,466	$ 78,046	$ 84,114	$ 87,167
	Investment securities:
	Taxable	10,884	11,608	11,699	10,290	7,752
	Nontaxable	6,739	6,178	4,299	3,443	3,345
	Other interest earning accounts	169	181	244	258	470
	Total interest income	89,440	93,433	94,288	98,105	98,734
Interest expense:
	Deposits	8,760	9,569	10,207	11,746	13,359
	Short-term borrowings	206	189	204	239	217
	Long-term borrowings and junior subordinated notes	3,381	3,430	3,461	3,713	2,953
	Total interest expense	12,347	13,188	13,872	15,698	16,529
Net interest income		77,093	80,245	80,416	82,407	82,205
Provision for credit losses		3,100	8,000	11,500	61,250	40,000
Net interest income after provision for credit losses		73,993	72,245	68,916	21,157	42,205
Other income:
	Loan service fees	1,339	1,601	2,159	2,812	1,126
	Deposit service fees	9,408	10,085	9,932	9,023	10,030
	Lease financing, net	6,958	7,801	6,494	6,861	5,783
	Brokerage fees	1,255	1,577	1,273	1,615	1,419
	Trust and asset management fees	4,404	4,166	4,272	4,455	4,431
	Net gain (loss) on sale of securities available for sale	(3)	411	-	232	(3)
	Increase in cash surrender value of life insurance	917	944	1,014	1,451	968
	Net (loss) gain on sale of assets	(17)	(87)	-	13	357
	Accretion of FDIC indemnification asset	475	683	985	1,339	1,831
	Card fees	2,044	1,096	2,071	2,062	1,788
	Net loss recognized on other real estate owned	(6,589)	(5,478)	(3,118)	(4,645)	(372)
	Other operating income	2,663	1,652	1,285	3,927	1,785
	Total other income	22,854	24,451	26,367	29,145	29,143
Other expenses:
	Salaries and employee benefits	40,429	39,846	38,422	37,815	37,775
	Occupancy and equipment expense	9,570	8,498	9,092	8,483	9,394
	Computer services and telecommunication expense	3,653	4,382	3,488	3,570	3,445
	Advertising and marketing expense	2,066	1,831	1,740	1,748	1,719
	Professional and legal expense	1,413	1,422	1,647	1,853	1,225
	Other intangible amortization expense	1,257	1,410	1,414	1,416	1,425
	FDIC insurance premiums	2,643	2,662	2,272	3,502	3,428
	Branch impairment charges	-	594	-	-	1,000
	Other real estate expense, net	1,243	1,464	1,181	1,251	398
	Other operating expenses	5,057	7,324	7,352	7,090	7,055
	Total other expense	67,331	69,433	66,608	66,728	66,864
Income (loss) before income taxes		29,516	27,263	28,675	(16,426)	4,484
Income taxes		8,430	7,810	8,978	(9,060)	(2,460)
Net income (loss)		21,086	19,453	19,697	(7,366)	6,944
Dividends and discount accretion on preferred shares		3,269	2,606	2,605	2,602	2,601
	Net income (loss) available to common stockholders	$ 17,817	$ 16,847	$ 17,092	$ (9,968)	$ 4,343

	Three Months Ended
		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011
Common share data:
Basic earnings allocated to common stock per common share	$	0.39	$	0.36	$	0.36	$	(0.14)	$	0.13
Impact of preferred stock dividends on basic
earnings (loss) per common share		(0.06)		(0.05)		(0.04)		(0.04)		(0.05)
Basic earnings (loss) per common share		0.33		0.31		0.32		(0.18)		0.08

Diluted earnings allocated to common stock per common share		0.39		0.36		0.36		(0.14)		0.13
Impact of preferred stock dividends on diluted
earnings (loss) per common share		(0.06)		(0.05)		(0.05)		(0.04)		(0.05)
Diluted earnings (loss) per common share		0.33		0.31		0.31		(0.18)		0.08

Weighted average common shares outstanding for
basic earnings per common share		54,155,856		54,140,646		54,121,156		54,002,979		53,961,176

Weighted average common shares outstanding for
diluted earnings per common share		54,411,916		54,360,178		54,323,320		54,002,979		54,254,876

Selected Financial Data:
		Three Months Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
		2012			2011			2011			2011			2011
Performance Ratios:
Annualized return on average assets		0.87	%		0.78	%		0.80	%		(0.30)	%		0.28	%
Annualized return on average common equity		5.94			5.66			5.86			(3.43)			1.53
Annualized cash return on average tangible
common equity(1)		9.36			9.09			9.52			(4.80)			2.88
Net interest rate spread		3.67			3.71			3.71			3.71			3.68
Cost of funds(2)		0.60			0.63			0.66			0.74			0.77
Efficiency ratio(3)		60.04			59.94			58.69			56.63			57.45
Annualized net non-interest expense to
average assets(4)		1.54			1.56			1.48			1.38			1.44
Pre-tax pre-provision operating earnings to
risk-weighted assets(5)		2.91			2.87			3.03			3.30			3.00
Pre-tax pre-provision operating earnings
to average assets(5)		1.84			1.85			1.91			2.05			1.93
Net interest margin		3.64			3.71			3.74			3.79			3.76
Tax equivalent effect		0.23			0.20			0.16			0.13			0.12
Net interest margin - fully tax equivalent basis(6)		3.87			3.91			3.90			3.92			3.88
Asset Quality Ratios:
Non-performing loans(7) to total loans		2.15	%		2.17	%		2.42	%		2.54	%		5.01	%
Non-performing assets(7) to total assets		1.94			2.12			2.30			2.40			3.96
Allowance for loan losses to non-performing loans(7)		100.59			98.00			91.23			86.12			55.94
Allowance for loan losses to total loans		2.17			2.13			2.21			2.19			2.80
Allowance for credit losses to total loans and
unfunded credit commitments		2.27			2.26			2.40			2.43			2.75
Net loan charge-offs to average loans (annualized)		0.40			0.95			1.14			5.90			3.38
Capital Ratios:
Tangible equity to tangible assets(8)		8.74	%		10.47	%		10.10	%		9.79	%		9.74	%
Tangible common equity to risk weighted assets(9)		13.17			12.48			12.42			11.97			11.36
Tangible common equity to tangible assets(10)		8.74			8.40			8.06			7.76			7.73
Book value per common share(11)	$	22.23		$	21.92		$	21.48		$	21.14		$	21.24
Less: goodwill and other intangible assets,
net of benefit, per common share		7.41			7.43			7.45			7.49			7.52
Tangible book value per common share(12)		14.81			14.49			14.03			13.64			13.73

Total capital (to risk-weighted assets)		17.11	%		19.41	%		19.61	%		19.18	%		18.33	%
Tier 1 capital (to risk-weighted assets)		15.04			17.36			17.54			17.11			16.31
Tier 1 capital (to average assets)		9.99			11.73			11.59			11.16			11.00
Tier 1 common capital (to risk-weighted assets)		12.54			11.87			11.90			11.50			11.01

(1)	Net cash flow available to common stockholders (net income available to common stockholders, plus other intangibles amortization expense, net of tax benefit) divided by average tangible common equity (average common equity less average goodwill and average other intangibles, net of tax benefit).
(2)	Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits.
(3)	Equals total other expense excluding non-core items divided by the sum of net interest income on a fully tax equivalent basis, total other income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance.
(4)	Equals total other expense excluding non-core items less total other income excluding non-core items, and including tax equivalent adjustment on the increase in cash surrender value of life insurance divided by average assets.
(5)	Equals net income before taxes, on a fully tax equivalent basis, excluding loan loss provision expense, non-core other income items, and non-core other expense items, including tax equivalent adjustment on the increase in cash surrender value of life insurance divided by risk-weighted assets or average assets.
(6)	Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.
(7)	Non-performing loans excludes purchased credit-impaired loans and loans held for sale. Non-performing assets excludes purchased credit-impaired loans, loans held for sale, and other real estate owned related to FDIC transactions.
(8)	Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.
(9)	Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total risk-weighted assets.
(10)	Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.
(11)	Equals total ending common stockholders’ equity divided by common shares outstanding.
(12)	Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding.

NON-GAAP FINANCIAL INFORMATION

This press release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include pre-tax, pre-provision operating earnings; core other income, core other expense, non-core other income and non-core other expense; net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis; efficiency ratio, ratio of annualized net non-interest expense to average assets, ratio of pre-tax, pre-provision operating earnings to risk-weighted assets and ratio of pre-tax, pre-provision operating earnings to average assets, with net gains and losses on securities available for sale, net losses on sale of other assets, net gains and losses on other real estate owned, net gain on sale of loans held for sale and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, impairment charges and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest expense components of these ratios, with tax equivalent adjustment for tax-exempt interest income and increase in cash surrender value of life insurance, as applicable; ratios of tangible equity to tangible assets, tangible common equity to risk-weighted assets, tangible common equity to tangible assets and Tier 1 common capital to risk-weighted assets; tangible book value per common share; and annualized cash return on average tangible common equity. Our management uses these non-GAAP measures, together with the related GAAP measures, in its analysis of our performance and in making business decisions. Management also uses these measures for peer comparisons.

Management believes that pre-tax, pre-provision operating earnings are a useful measure in assessing our core operating performance, particularly during times of economic stress. In recent periods, our results of operations have been negatively impacted by adverse economic conditions, as seen in our elevated levels of loan charge-offs and provision for credit losses. Management believes that measuring earnings before the impact of the provision for loan losses makes our financial data more comparable between reporting periods so that investors can better understand our operating performance trends. Management also believes that this is a standard figure used in the banking industry to measure performance.

Management believes that core and non-core other income and other expense are useful in assessing our core operating performance and in understanding the primary drivers of our other income and other expense when comparing periods.

The tax equivalent adjustment to net interest income, net interest margin, tax-exempt interest income and increase in cash surrender value of life insurance recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income and net interest margin on a fully tax equivalent basis, and accordingly believes that providing these measures may be useful for peer comparison purposes. For the same reasons, management believes the tax equivalent adjustments to tax-exempt interest income and increase in cash surrender value of life insurance are useful.

Management also believes that by excluding net gains and losses on securities available for sale, net gains and losses on sale of other assets, net losses on other real estate owned, net gain on sale of loans held for sale and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest income components, and excluding impairment changes and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest expense components, of the efficiency ratio, the ratio of annualized net non-interest expense to average assets, the ratio of pre-tax, pre-provision operating earnings to risk-weighted assets and the ratio of pre-tax, pre-provision operating earnings to average assets, these ratios better reflect our core operating performance, as the excluded items do not pertain to our core business operations and their exclusion makes these ratios more meaningful when comparing our operating results from period to period.

In addition, management believes that presenting the ratio of Tier 1 common equity to risk-weighted assets is useful for assessing our capital strength and for peer comparison purposes. The other measures exclude the acquisition-related goodwill and other intangible assets, net of tax benefit, in determining tangible assets, tangible equity, tangible common equity and average tangible common equity and exclude other intangible amortization expense, net of tax benefit, in determining net cash flow available to common stockholders. Management believes the presentation of these other financial measures excluding the impact of such items provides useful supplemental information that is helpful in understanding our financial results, as they provide a method to assess management’s success in utilizing our tangible capital as well as our capital strength. Management also believes that providing measures that exclude balances of acquisition-related goodwill and other intangible assets, which are subjective components of valuation, facilitates the comparison of our performance with the performance of our peers. In addition, management believes that these are standard financial measures used in the banking industry to evaluate performance.

The non-GAAP disclosures contained herein should not be viewed as substitutes for the results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table presents a reconciliation of tangible equity to equity (in thousands):

			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Stockholders' equity - as reported		$	1,215,430	$	1,393,027	$	1,368,622	$	1,345,344	$	1,350,236
	Less: goodwill		387,069		387,069		387,069		387,069		387,069
	Less: other intangible, net of tax benefit		18,354		19,171		20,088		21,007		21,927
Tangible equity		$	810,007	$	986,787	$	961,465	$	937,268	$	941,240

The following table presents a reconciliation of tangible assets to total assets (in thousands):

			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Total assets - as reported		$	9,671,600	$	9,833,072	$	9,922,361	$	9,977,735	$	10,071,343
	Less: goodwill		387,069		387,069		387,069		387,069		387,069
	Less: other intangible, net of tax benefit		18,354		19,171		20,088		21,007		21,927
Tangible assets		$	9,266,177	$	9,426,832	$	9,515,204	$	9,569,659	$	9,662,347

The following table presents a reconciliation of tangible common equity to stockholders’ common equity (in thousands):

			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Common stockholders' equity - as reported		$	1,215,430	$	1,198,308	$	1,174,060	$	1,150,937	$	1,155,981
	Less: goodwill		387,069		387,069		387,069		387,069		387,069
	Less: other intangible, net of tax benefit		18,354		19,171		20,088		21,007		21,927
Tangible common equity		$	810,007	$	792,068	$	766,903	$	742,861	$	746,985

The following table presents a reconciliation of average tangible common equity to average common stockholders’ equity (in thousands):

			Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Average common stockholders' equity - as reported		$	1,206,364	$	1,181,820	$	1,158,119	$	1,165,022	$	1,152,119
	Less: average goodwill		387,069		387,069		387,069		387,069		387,069
	Less: average other intangible assets, net of tax benefit		18,721		19,494		20,414		21,331		22,254
Average tangible common equity		$	800,574	$	775,257	$	750,636	$	756,622	$	742,796

The following table presents a reconciliation of net cash flow available to common stockholders to net income (loss) available to common stockholders (in thousands):

			Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011

Net income (loss) available to common stockholders - as reported		$	17,817	$	16,847	$	17,092	$	(9,968)	$	4,343
	Add: other intangible amortization expense, net of tax benefit		817		917		919		920		926
Net cash flow available to common stockholders		$	18,634	$	17,764	$	18,011	$	(9,048)	$	5,269

The following table presents a reconciliation of Tier 1 common capital to Tier 1 capital (in thousands):

			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Tier 1 capital - as reported		$	925,089	$	1,101,538	$	1,083,020	$	1,061,482	$	1,072,537
	Less: preferred stock		-		194,719		194,562		194,407		194,255
	Less: qualifying trust preferred securities		153,500		153,787		153,795		153,803		153,812
Tier 1 common capital		$	771,589	$	753,032	$	734,663	$	713,272	$	724,470

Efficiency Ratio Calculation (Dollars in Thousands)

		Three Months Ended
		March 31,		December 31,		September 30,		June 30,		March 31,
		2012		2011		2011		2011		2011
Non-interest expense	$	67,331	$	69,433	$	66,608	$	66,728	$	66,864
Adjustment for impairment charges		-		594		-		-		1,000
Adjustment for increase (decrease) in market value of
assets held in trust for deferred compensation		501		20		(405)		158		187
Non-interest expense - as adjusted	$	66,830	$	68,819	$	67,013	$	66,570	$	65,677

Net interest income	$	77,093	$	80,245	$	80,416	$	82,407	$	82,205
Tax equivalent adjustment		4,756		4,468		3,320		2,775		2,625
Net interest income on a fully tax equivalent basis		81,849		84,713		83,736		85,182		84,830
Tax equivalent adjustment on the increase in cash
surrender value of life insurance		494		508		546		781		521
Plus other income		22,854		24,451		26,367		29,145		29,143
Less net losses on other real estate owned		(6,589)		(5,478)		(3,118)		(4,645)		(372)
Less net gains (losses) on securities available for sale		(3)		411		-		232		(3)
Less net (losses) gains on sale of other assets		(17)		(87)		-		13		357
Less net gain on sale of loans held for sale		-		-		-		1,790		-
Less increase (decrease) in market value of
assets held in trust for deferred compensation		501		20		(405)		158		187

Net interest income plus non-interest income - as adjusted	$	111,305	$	114,806	$	114,172	$	117,560	$	114,325

Efficiency ratio		60.04%		59.94%		58.69%		56.63%		57.45%

Efficiency ratio (without adjustments)		67.37%		66.32%		62.38%		59.82%		60.05%

Annualized Net Non-interest Expense to Average Assets Calculation (Dollars in Thousands)

			Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Non-interest expense		$	67,331	$	69,433	$	66,608	$	66,728	$	66,864
Adjustment for impairment charges			-		594		-		-		1,000
Adjustment for increase (decrease) in market value of assets
held in trust for deferred compensation			501		20		(405)		158		187
	Non-interest expense - as adjusted		66,830		68,819		67,013		66,570		65,677

Other income			22,854		24,451		26,367		29,145		29,143
Less net losses on other real estate owned			(6,589)		(5,478)		(3,118)		(4,645)		(372)
Less net gains (losses) on securities available for sale			(3)		411		-		232		(3)
Less net (losses) gains on sale of other assets			(17)		(87)		-		13		357
Less net gain on sale of loans held for sale			-		-		-		1,790		-
Less increase (decrease) in market value of assets held in
trust for deferred compensation			501		20		(405)		158		187
Other income - as adjusted			28,962		29,585		29,890		31,597		28,974
Less tax equivalent adjustment on the increase in cash
surrender value of life insurance			494		508		546		781		521

Net non-interest expense		$	37,374	$	38,726	$	36,577	$	34,192	$	36,182

Average assets		$	9,736,702	$	9,856,835	$	9,807,561	$	9,966,898	$	10,198,626

Annualized net non-interest expense to average assets			1.54%		1.56%		1.48%		1.38%		1.44%

Annualized net non-interest expense to average
assets (without adjustments)			1.84%		1.81%		1.63%		1.51%		1.50%

Calculation of Pre-Tax, Pre-Provision Operating Earnings (Dollars in Thousands)

			Three Months Ended
			March 31,		December 31,		September 30,		June 30,		March 31,
			2012		2011		2011		2011		2011
Income (loss) before income taxes		$	29,516	$	27,263	$	28,675	$	(16,426)	$	4,484
Provision for credit losses			3,100		8,000		11,500		61,250		40,000
	Pre-tax, pre-provision earnings		32,616		35,263		40,175		44,824		44,484

Tax equivalent adjustment on tax-exempt interest income			4,756		4,468		3,320		2,775		2,625
Tax equivalent adjustment on the increase in cash surrender
value of life insurance			494		508		546		781		521
	Pre-tax, pre-provision earnings on a fully tax equivalent basis		37,866		40,239		44,041		48,380		47,630

Non-core other income
	Net losses on other real estate owned		(6,589)		(5,478)		(3,118)		(4,645)		(372)
	Net gains (losses) on securities available for sale		(3)		411		-		232		(3)
	Net (losses) gain on sale of other assets		(17)		(87)		-		13		357
	Net gain on sale of loans held for sale		-		-		-		1,790		-
	Increase (decrease) in market value of assets held in trust
	for deferred compensation		501		20		(405)		158		187
Total non-core other income			(6,108)		(5,134)		(3,523)		(2,452)		169

Non-core other expense
	Impairment charges		-		594		-		-		1,000
	Increase (decrease) in market value of assets held in
	trust for deferred compensation		501		20		(405)		158		187
Total non-core other expense			501		614		(405)		158		1,187
Pre-tax, pre-provision operating earnings		$	44,475	$	45,987	$	47,159	$	50,990	$	48,648

Risk-weighted assets		$	6,150,910	$	6,346,201	$	6,174,508	$	6,203,587	$	6,577,477

Average assets		$	9,736,702	$	9,856,835	$	9,807,561	$	9,966,898	$	10,198,626

Annualized pre-tax, pre-provision operating earnings
to risk-weighted assets			2.91%		2.87%		3.03%		3.30%		3.00%

Annualized pre-tax, pre-provision operating earnings
to risk-weighted assets (without adjustments)			2.13%		2.20%		2.58%		2.90%		2.74%

Annualized pre-tax, pre-provision operating earnings
to average assets			1.84%		1.85%		1.91%		2.05%		1.93%

Annualized pre-tax, pre-provision operating earnings
to average assets (without adjustments)			1.35%		1.42%		1.63%		1.80%		1.77%

A reconciliation of net interest margin on a fully tax equivalent basis to net interest margin is contained in the tables under “Net Interest Margin.” A reconciliation of tangible book value per common share to book value per common share is contained in the “Selected Financial Ratios” table. Reconciliations of core and non-core other income and other expense to other income and other expense are contained in the tables under “Results of Operations—Fourth Quarter Results.”

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 March 31,												Three Months Ended December 31,
				2012						2011						2011
				Average			Yield/			Average			Yield/			Average			Yield/
				Balance		Interest	Rate			Balance		Interest	Rate			Balance		Interest	Rate
Interest Earning Assets:
Loans (1) (2) (3):
Commercial related credits
	Commercial		$	1,062,246	$	12,774	4.76	%	$	1,164,698		14,331	4.99	%	$	1,051,065	$	12,989	4.90	%
	Commercial loans collateralized by
	assignment of lease payments			1,176,901		13,757	4.68			1,003,872		14,090	5.61			1,102,220		14,167	5.14
	Real estate commercial			1,863,892		23,906	5.07			2,139,597		28,235	5.28			1,839,689		25,132	5.35
	Real estate construction			145,728		1,540	4.18			407,148		3,519	3.46			209,098		2,443	4.57
Total commercial related credits				4,248,767		51,977	4.84			4,715,315		60,175	5.10			4,202,072		54,731	5.10
Other loans
	Real estate residential			313,602		3,650	4.66			332,856		4,467	5.37			316,087		3,719	4.71
	Home equity			332,909		3,670	4.43			376,361		4,003	4.31			342,011		3,701	4.29
	Indirect			186,359		2,935	6.33			174,362		2,940	6.84			188,562		3,080	6.48
	Consumer loans			69,747		529	3.05			57,468		600	4.23			62,703		482	3.05
Total other loans				902,617		10,784	4.81			941,047		12,010	5.18			909,363		10,982	4.79
	Total loans, excluding covered loans			5,151,384		62,761	4.90			5,656,362		72,185	5.18			5,111,435		65,713	5.10
	Covered loans			652,146		10,014	6.18			804,275		15,805	7.97			707,039		10,894	6.11
	Total loans			5,803,530		72,775	5.04			6,460,637		87,990	5.52			5,818,474		76,607	5.22
Taxable investment securities				1,702,766		10,884	2.56			1,313,061		7,752	2.36			1,820,680		11,608	2.55
Investment securities exempt from
federal income taxes (3)				742,568		10,368	5.58			348,831		5,146	5.90			676,893		9,505	5.49
Other interest earning deposits				258,351		169	0.26			747,013		471	0.26			272,762		181	0.26
	Total interest earning assets		$	8,507,215	$	94,196	4.45		$	8,869,542	$	101,359	4.63		$	8,588,809	$	97,901	4.52
Non-interest earning assets				1,229,487						1,329,084						1,268,026
	Total assets		$	9,736,702					$	10,198,626					$	9,856,835

Interest Bearing Liabilities:
Core funding:
	Money market and NOW accounts		$	2,649,671	$	1,207	0.18	%	$	2,726,599	$	2,486	0.37	%	$	2,653,486	$	1,498	0.22	%
	Savings accounts			772,335		248	0.13			710,455		420	0.24			751,766		327	0.17
	Certificates of deposit			1,892,328		3,883	0.86			2,429,280		6,520	1.09			1,971,473		4,294	0.89
	Customer repurchase agreements			203,003		134	0.27			262,578		187	0.29			235,666		151	0.25
Total core funding				5,517,337		5,472	0.40			6,128,912		9,613	0.64			5,612,391		6,270	0.44
Wholesale funding:
	Brokered accounts (includes fee expense)			439,890		3,422	3.13			467,417		3,933	3.41			438,123		3,450	3.12
	Other borrowings			429,231		3,453	3.18			440,241		2,983	2.71			431,165		3,468	3.15
Total wholesale funding				869,121		6,875	2.76			907,658		6,916	3.09			869,288		6,918	2.88
Total interest bearing liabilities			$	6,386,458	$	12,347	0.78		$	7,036,570	$	16,529	0.95		$	6,481,679	$	13,188	0.81
Non-interest bearing deposits				1,851,211						1,672,003						1,878,049
Other non-interest bearing liabilities				136,412						143,775						120,671
Stockholders' equity				1,362,621						1,346,278						1,376,436
		Total liabilities and stockholders' equity	$	9,736,702					$	10,198,626					$	9,856,835
		Net interest income/interest rate spread (4)			$	81,849	3.67	%			$	84,830	3.68	%			$	84,713	3.71	%
		Taxable equivalent adjustment				4,756						2,625						4,468
		Net interest income, as reported			$	77,093					$	82,205					$	80,245
		Net interest margin (5)					3.64	%					3.76	%					3.71	%
		Tax equivalent effect					0.23	%					0.12	%					0.20	%
		Net interest margin on a fully tax
		equivalent basis (5)					3.87	%					3.88	%					3.91	%

(1)	Non-accrual loans are included in average loans.
(2)	Interest income includes amortization of deferred loan origination fees of $877 thousand, $1.2 million, and $1.3 million for the three months ended March 31, 2012, December 31, 2011, and March 31, 2011, respectively.
(3)	Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate.
(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.

Attached files

MB FINANCIAL INC /MD Reports

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