MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EXHIBIT 99 EARNINGS RELEASE 3Q13

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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 THIRD QUARTER NET INCOME OF $24.4 MILLION

AND RETURN ON ASSETS OF 1.05%

CHICAGO, October 17, 2013 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., today announced 2013 third quarter net income of $24.4 million.

"I am pleased with our performance in the third quarter, which continued to be driven by strong fee income and low credit costs," stated Mitchell Feiger, President and Chief Executive Officer of the Company. "Even as we continued to make investments in new products and services, our annualized return on assets was 1.07% for the first nine months of 2013, an increase from 0.93% for the same period in 2012. In addition, year-to-date net income available to common stockholders increased 18% and core non-interest income increased 27% compared to the first nine months of 2012."



	3Q13		2Q13		Change from 2Q13 to 3Q13		3Q12		Change from 3Q12 to 3Q13
(dollars in thousands, except per share data)
Net income	$	24,400	$	25,293	-3.5	%	$	23,133	+5.5	%
Fully diluted earnings per share	0.44		0.46		-4.3		0.42		+4.8

Results for the third quarter of 2013 reflected $1.8 million in legal and professional costs related to the pending merger with Taylor Capital Group, Inc.

Net income, net income available to common stockholders and fully diluted earnings per share increased in the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012 as follows:



	Nine Months Ended				Change
	September 30,				from 2012
	2013		2012		to 2013
(dollars in thousands, except per share data)
Net income	$	74,599	$	66,362	+12.4	%
Net income available to common stockholders	74,599		63,093		+18.2
Fully diluted earnings per share	1.36		1.16		+17.2

Key items include:

Overall Fee Income Remains Strong:



	3Q13			2Q13		Change from 2Q13 to 3Q13		3Q12			Change from 3Q12 to 3Q13
Core non-interest income:
Key fee initiatives:
Capital markets and international banking service fees	$	972		$	939	+4	%	$	1,400		-31	%
Commercial deposit and treasury management fees	6,327			6,029		+5	%	5,860			+8	%
Lease financing, net	14,070			15,102		-7	%	9,671			+45	%
Trust and asset management fees	4,799			4,874		-2	%	4,428			+8	%
Card fees	2,745			2,735		—	%	2,388			+15	%
Total key fee initiatives	28,913			29,679		-3	%	23,747			+22	%

Other non-interest income	8,334			9,225		-10	%	8,120			+3	%
Total core non-interest income	37,247			38,904		-4	%	31,867			+17	%

Total non-core non-interest income	(331		)	2,050		-116	%	(3,314		)	-90	%
Total non-interest income	$	36,916		$	40,954	-10	%	$	28,553		+29	%


•	Revenues from key fee initiatives decreased 3% compared to the second quarter of 2013, as leasing revenues can vary from quarter-to-quarter, and declined from high levels in the first half of 2013. Excluding leasing, revenues from key fee initiatives increased approximately 2% from the prior quarter.

•

Revenues from key fee initiatives increased 22% compared to the third quarter of 2012, primarily as a result of an increase in leasing revenues. This increase was driven by the addition of Celtic Leasing Corp. ("Celtic"), a leasing subsidiary we acquired in December 2012, which contributed $6 million in leasing revenues during the third quarter of 2013. In addition, there was meaningful growth in commercial deposit and treasury management fees, trust and asset management fees and card fees from the third quarter of 2012.


•	Core non-interest income to total revenues ratio was 33.5% in the third quarter compared to 35.0% in the prior quarter and 29.5% in the third quarter of 2012.

Net Interest Margin Increased from Prior Quarter:


•	Fully taxable equivalent net interest margin was 3.66% for the third quarter of 2013 compared to 3.61% for the prior quarter and 3.67% for the third quarter of 2012. The increase from the second quarter of 2013 was primarily due to an increase in the yield on loans and taxable investment securities, and a reduction in cost of funds.


•	Net interest income increased compared to the prior quarter as a result of an extra day in the quarter and a higher net interest margin. Compared to the third quarter of 2012, net interest income declined due to lower average interest earning asset balances, primarily as a result of a decrease in covered loans.

Non-Performing Loans, Potential Problem Loans and Non-Performing Assets Improved During the Quarter:



	3Q13			2Q13			Change from 2Q13 to 3Q13		3Q12			Change from 3Q12 to 3Q13

Non-performing loans	$	102,452		$	115,248		-11.10	%	$	105,283		-2.69	%
Potential problem loans ⁽¹⁾	96,405			131,746			-26.83	%	134,289			-28.21	%
Non-performing loans to total loans	1.83		%	2.03		%	-0.20	%	1.87		%	-0.04	%
Non-performing assets to total assets	1.45			1.59			-0.14		1.56			-0.11
Net loan charge-offs (recoveries) to average loans - annualized	0.18			(0.02		)	+0.20		(0.64		)	+0.82

Credit costs:
Provision for credit losses	$	(3,304	)	$	500				$	(13,000	)
Net loss (gain) recognized on other real estate owned	791			(2,015		)			3,938
Net credit costs	$	(2,513	)	$	(1,515	)			$	(9,062	)

⁽¹⁾ We define potential problem loans as loans rated substandard that do not meet the definition of a non-performing loan.

Provision for credit losses was negative during the quarter due to the improvements in credit quality noted above as well as improved collateral positions on several impaired loans.

Continued Healthy Return on Assets During the Quarter and for the Nine Months Ended September 30, 2013:



	3Q13		2Q13		Change from 2Q13 to 3Q13		3Q12		Change from 3Q12 to 3Q13
Annualized return on average assets	1.05	%	1.09	%	-0.04	%	0.97	%	+0.08	%
Annualized return on average common equity	7.46		7.82		-0.36		7.38		+0.08
Annualized cash return on average tangible common equity	11.74		12.31		-0.57		11.29		+0.45



	Nine Months Ended				Change
	September 30,				from 2012
	2013		2012		to 2013
Annualized return on average assets	1.07	%	0.93	%	+0.14	%
Annualized return on average common equity	7.72		6.87		+0.85
Annualized cash return on average tangible common equity	12.19		10.66		+1.53

Taylor Capital Group, Inc. Pending Merger Update:


•	Regulatory applications have been filed with the Federal Reserve and OCC.


•	Form S-4 registration statement has been filed with the SEC.


•	Transition and integration planning is progressing as expected.


•	Merger related costs of approximately $1.8 million were included in the third quarter statement of income primarily related to fairness opinion, legal and consulting expenses.

Increase in Quarterly Dividend:


•	On August 28, 2013, our Board of Directors approved a quarterly cash dividend of $0.12 per share, an increase from $0.10 per share paid in recent prior quarters.

RESULTS OF OPERATIONS

Third Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis increased $1.7 million from the second quarter of 2013 due to one additional day in the quarter (approximately $800 thousand) and an improvement in our net interest margin (approximately $1.0 million). Our net interest margin on a fully tax equivalent basis for the third quarter of 2013 increased five basis points compared to the second quarter of 2013. The increase in net interest margin in the third quarter of 2013 was primarily due to an increase in yields on loans and taxable investment securities as well as a reduction in cost of funds.

Net interest income on a fully tax equivalent basis decreased $2.5 million from the third quarter of 2012 due to lower average earning asset balances, primarily as a result of a decrease in covered loans.

Net interest income on a fully tax equivalent basis decreased $17.2 million in the nine months ended September 30, 2013 compared to the same period in 2012. The decrease from the nine months ended September 30, 2012 was due to lower average earning asset balances (primarily as a result of a decrease in covered loans) as well as a decline in net interest margin. Our net interest margin, on a fully tax equivalent basis, declined to 3.62% for the nine months ended September 30, 2013 compared to 3.79% for the same period in 2012. The decrease in the margin during 2013 was primarily due to a decrease in yields on loans and investment securities, partially offset by lower cost of funds.

See the supplemental net interest margin tables for further detail.

Non-interest Income (dollars in thousands):



																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Core non-interest income:
Key fee initiatives:
Capital markets and international banking service fees	$	972		$	939		$	808		$	2,386		$	1,400		$	2,719		$	2,700
Commercial deposit and treasury management fees	6,327			6,029			5,966			6,095			5,860			18,322			17,541
Lease financing, net	14,070			15,102			16,263			12,419			9,671			45,435			23,963
Trust and asset management fees	4,799			4,874			4,494			4,623			4,428			14,167			13,367
Card fees	2,745			2,735			2,695			2,505			2,388			8,175			6,863
Total key fee initiatives	28,913			29,679			30,226			28,028			23,747			88,818			64,434

Loan service fees	1,427			1,911			1,011			2,436			1,075			4,349			3,409
Consumer and other deposit service fees	3,648			3,593			3,246			3,655			3,786			10,487			10,773
Brokerage fees	1,289			1,234			1,157			1,088			1,185			3,680			3,704
Increase in cash surrender value of life insurance	851			842			844			893			890			2,537			2,677
Accretion of FDIC indemnification asset	64			100			143			154			204			307			901
Net gain on sale of loans	177			506			639			822			575			1,322			1,503
Other operating income	878			1,039			955			1,325			405			2,872			2,967
Total core non-interest income	37,247			38,904			38,221			38,401			31,867			114,372			90,368

Non-core non-interest income: (1)
Net gain (loss) on investment securities	1			14			(1		)	311			281			14			244
Net loss on sale of other assets	—			—			—			(905		)	(12		)	—			(37		)
Net gain (loss) recognized on other real estate owned (A)	(754		)	2,130			(319		)	(1,848		)	(4,151		)	1,057			(12,655		)
Net (loss) gain recognized on other real estate owned related to FDIC transactions (A)	(37		)	(115		)	(11		)	222			213			(163		)	(3,313		)
Increase in market value of assets held in trust for deferred compensation (B)	459			21			483			104			355			963			707
Total non-core non-interest income	(331		)	2,050			152			(2,116		)	(3,314		)	1,871			(15,054		)

Total non-interest income	$	36,916		$	40,954		$	38,373		$	36,285		$	28,553		$	116,243		$	75,314


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

Core non-interest income for the third quarter of 2013 decreased approximately 4% from the second quarter of 2013.


•	Net lease financing revenue decreased during the third quarter primarily due to a decrease in fees related to equipment maintenance contracts. As noted in prior quarters, remarketing gains and fees from the sale of equipment maintenance contracts can fluctuate from quarter to quarter.

Core non-interest income for the nine months ended September 30, 2013 rose 27% compared to the nine months ended September 30, 2012.


•	Net lease financing income increased as a result of increased remarketing gains and fees from the sale of equipment maintenance contracts as well as the impact of leasing revenues attributable to Celtic (approximately $19 million).


•	Card fee income increased due to fees earned on prepaid, debit and credit cards.

Non-interest Expense (dollars in thousands):



											Nine Months Ended
											September 30,
	3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Core non-interest expense:
Salaries and employee benefits	$	44,459	$	43,888	$	43,031	$	42,934	$	41,728	$	131,378	$	121,951
Occupancy and equipment expense	8,797		9,408		9,404		8,774		8,274		27,609		27,032
Computer services and telecommunication expense	4,870		4,617		3,887		4,160		3,777		13,374		11,339
Advertising and marketing expense	1,917		2,167		2,103		2,335		1,936		6,187		5,848
Professional and legal expense	1,408		1,353		1,295		1,640		1,554		4,056		4,470
Other intangible amortization expense	1,513		1,538		1,544		1,251		1,251		4,595		3,759
Other real estate expense, net	240		193		139		449		874		572		2,541
Other operating expenses	10,052		9,083		9,213		8,027		7,976		28,348		24,243
Total core non-interest expense	73,256		72,247		70,616		69,570		67,370		216,119		201,183

Non-core non-interest expense: ⁽¹⁾
Merger related expenses (A)	1,759		—		—		—		—		1,759		—
Branch impairment charges	—		—		—		1,432		758		—		758
Prepayment fees on interest bearing liabilities	—		—		—		—		12,682		—		12,682
Increase in market value of assets held in trust for deferred compensation (B)	459		21		483		104		355		963		707
Total non-core non-interest expense	2,218		21		483		1,536		13,795		2,722		14,147

Total non-interest expense	$	75,474	$	72,268	$	71,099	$	71,106	$	81,165	$	218,841	$	215,330


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

Core non-interest expense increased by $1.0 million (+1%) from the second quarter of 2013 to the third quarter of 2013.


•	Salaries and employee benefits increased due to one additional day in the third quarter.


•	Occupancy and equipment expense decreased due to lower real estate taxes.

Core non-interest expense increased by $14.9 million (+7%) from the nine months ended September 30, 2012 to the nine months ended September 30, 2013.


•	Salaries and employee benefits increased due to annual salary increases and the impact of Celtic.


•	Other operating expenses were higher as a result of an increase in the clawback liability related to our loss share agreements with the FDIC recorded during the first nine months of 2013.


•	Computer services and telecommunication expenses increased due primarily to an increase in spending on storage, security and investment in our key fee initiatives.


•	Other real estate expense decreased due to fewer OREO properties in 2013.


•	Other intangible amortization expense increased due to the impact of Celtic.

Non-core non-interest expense for the third quarter of 2013 increased from the preceding quarter primarily due to merger related expenses incurred related to fairness opinion, legal and consulting expenses. Non-core non-interest expense in the nine months ended September 30, 2012 was impacted by the $12.7 million in prepayment fees related to the early redemption of interest bearing liabilities.

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):



	9/30/2013				6/30/2013				3/31/2013				12/31/2012				9/30/2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial related credits:
Commercial loans	$	1,169,009	21	%	$	1,198,862	21	%	$	1,207,638	21	%	$	1,220,472	21	%	$	1,073,981	19	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,468,814		26	%	1,422,901		25	%	1,347,666		24	%	1,303,020		23	%	1,219,361		22	%
Commercial real estate	1,638,368		29	%	1,710,964		30	%	1,743,329		30	%	1,761,832		30	%	1,770,261		31	%
Construction real estate	136,146		2	%	121,420		2	%	101,581		2	%	110,261		2	%	149,872		3	%
Total commercial related credits	4,412,337		78	%	4,454,147		79	%	4,400,214		77	%	4,395,585		76	%	4,213,475		75	%
Other loans:
Residential real estate	311,256		6	%	305,710		5	%	312,804		5	%	314,359		5	%	308,866		5	%
Indirect vehicle	257,740		5	%	242,964		4	%	220,739		4	%	208,633		4	%	206,973		3	%
Home equity	274,484		5	%	281,334		5	%	291,190		5	%	305,186		5	%	314,718		6	%
Consumer loans	57,418		1	%	75,476		1	%	81,932		2	%	93,317		2	%	84,651		2	%
Total other loans	900,898		17	%	905,484		16	%	906,665		16	%	921,495		16	%	915,208		16	%
Gross loans excluding covered loans	5,313,235		95	%	5,359,631		95	%	5,306,879		93	%	5,317,080		92	%	5,128,683		91	%
Covered loans (1)	273,497		5	%	308,556		5	%	400,789		7	%	449,850		8	%	496,162		9	%
Total loans	$	5,586,732	100	%	$	5,668,187	100	%	$	5,707,668	100	%	$	5,766,930	100	%	$	5,624,845	100	%


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

ASSET QUALITY

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



	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Non-performing loans:
Non-accrual loans (1)	$	102,042		$	112,926		$	108,765		$	115,387		$	104,813
Loans 90 days or more past due, still accruing interest	410			2,322			5,193			1,599			470
Total non-performing loans	102,452			115,248			113,958			116,986			105,283
OREO	31,356			32,993			31,462			36,977			42,427
Repossessed assets	861			749			757			773			113
Total non-performing assets	134,669			148,990			146,177			154,736			147,823
Potential problem loans (2)	96,405			131,746			115,451			111,553			134,289
Total classified assets	$	231,074		$	280,736		$	261,628		$	266,289		$	282,112

Total allowance for loan losses	$	118,031		$	123,685		$	121,802		$	124,204		$	121,182
Accruing restructured loans (3)	29,911			28,270			21,630			21,256			17,929
Total non-performing loans to total loans	1.83		%	2.03		%	2.00		%	2.03		%	1.87		%
Total non-performing assets to total assets	1.45			1.59			1.56			1.62			1.56
Allowance for loan losses to non-performing loans	115.21			107.32			106.88			106.17			115.10


(1)	Includes $18.5 million, $20.9 million, $26.3 million, $28.4 million and $27.1 million of restructured loans on non-accrual status at September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012, respectively.


(2)	We define potential problem loans as loans rated substandard that do not meet the definition of a non-performing loan. Potential problem loans carry a higher probability of default and require additional attention by management. The decrease in potential problem loans in the third quarter of 2013 related primarily to payments on several loans.


(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 as of the dates indicated. The increase in accruing restructured loans in the second quarter of 2013 was primarily a result of non-accrual loans upgraded to accrual status due to continued performance.

The following table presents data related to non-performing loans by category (excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions) as of the dates indicated (dollars in thousands):



	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Commercial and lease	$	22,293	$	25,968	$	22,247	$	25,517	$	22,648
Commercial real estate	54,276		62,335		57,604		59,508		55,387
Construction real estate	496		519		1,025		1,028		1,225
Consumer related	25,387		26,426		33,082		30,933		26,023
Total non-performing loans	$	102,452	$	115,248	$	113,958	$	116,986	$	105,283

The following table represents a summary of OREO (excluding OREO related to assets acquired in FDIC-assisted transactions) as of the dates indicated (dollars in thousands):



	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
Balance at the beginning of quarter	$	32,993		$	31,462		$	36,977		$	42,427		$	49,690
Transfers in at fair value less estimated costs to sell	1,846			3,503			711			1,811			63
Capitalized OREO costs	45			8			—			505			978
Fair value adjustments	(741		)	1,170			(349		)	(1,982		)	(4,648		)
Net (losses) gains on sales of OREO	(13		)	960			30			134			497
Cash received upon disposition	(2,774		)	(4,110		)	(5,907		)	(5,918		)	(4,153		)
Balance at the end of quarter	$	31,356		$	32,993		$	31,462		$	36,977		$	42,427

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



																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Allowance for credit losses, balance at the beginning of period	$	125,497		$	124,733		$	128,279		$	124,926		$	128,840		$	128,279		$	135,975
Provision for credit losses	(3,304		)	500			—			1,000			(13,000		)	(2,804		)	(9,900		)
Charge-offs:
Commercial loans	1,686			433			911			343			75			3,030			2,065
Commercial loans collateralized by assignment of lease payments (lease loans)	—			—			—			1			—			—			1,720
Commercial real estate loans	1,236			1,978			1,917			2,965			2,994			5,131			8,412
Construction real estate	26			747			82			56			71			855			3,951
Residential real estate	713			399			962			1,068			474			2,074			1,876
Home equity	437			1,323			787			1,394			1,209			2,547			3,157
Indirect vehicle	572			629			729			623			433			1,930			1,636
Consumer loans	485			451			565			485			332			1,501			864
Total charge-offs	5,155			5,960			5,953			6,935			5,588			17,068			23,681
Recoveries:
Commercial loans	579			777			452			745			306			1,808			2,730
Commercial loans collateralized by assignment of lease payments (lease loans)	—			987			144			6,260			111			1,131			460
Commercial real estate loans	966			3,647			740			871			12,893			5,353			16,116
Construction real estate	420			131			276			561			752			827			1,458
Residential real estate	48			199			214			271			8			461			230
Home equity	228			100			114			248			303			442			423
Indirect vehicle	372			324			415			261			224			1,111			835
Consumer loans	74			59			52			71			77			185			280
Total recoveries	2,687			6,224			2,407			9,288			14,674			11,318			22,532
Total net charge-offs (recoveries)	2,468			(264		)	3,546			(2,353		)	(9,086		)	5,750			1,149
Allowance for credit losses	119,725			125,497			124,733			128,279			124,926			119,725			124,926
Allowance for unfunded credit commitments	(1,694		)	(1,812		)	(2,931		)	(4,075		)	(3,744		)	(1,694		)	(3,744		)
Allowance for loan losses	$	118,031		$	123,685		$	121,802		$	124,204		$	121,182		$	118,031		$	121,182

Total loans, excluding loans held for sale	$	5,586,732		$	5,668,187		$	5,707,668		$	5,766,930		$	5,624,845		$	5,586,732		$	5,624,845
Average loans, excluding loans held for sale	5,555,036			5,628,415			5,668,359			5,604,837			5,630,232			5,616,855			5,714,657
Ratio of allowance for loan losses to total loans, excluding loans held for sale	2.11		%	2.18		%	2.13		%	2.15		%	2.15		%	2.11		%	2.15		%
Net loan charge-offs (recoveries) to average loans, excluding loans held for sale (annualized)	0.18			(0.02		)	0.25			(0.17		)	(0.64		)	0.14			0.03

The following table presents the three elements of our allowance for loan losses (dollars in thousands):



	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Commercial related loans:
General reserve	$	87,112	$	87,836	$	92,433	$	91,745	$	95,586
Specific reserve	12,378		16,679		12,137		13,231		11,300
Consumer related reserve	18,541		19,170		17,232		19,228		14,296
Total allowance for loan losses	$	118,031	$	123,685	$	121,802	$	124,204	$	121,182

Although management believes that adequate loan loss allowances have been established, actual losses are dependent upon future events and, as such, further additions to the level of loan loss allowances may become necessary.

INVESTMENT SECURITIES

The following table sets forth, by type, the fair value and amortized cost of our investment securities, excluding FHLB and FRB stock, as well as the unrealized gain of our investment securities available for sale (dollars in thousands):



	9/30/2013			6/30/2013			3/31/2013		12/31/2012			9/30/2012
Securities available for sale:
Fair value
Government sponsored agencies and enterprises	$	52,527		$	33,935		$	40,949	$	41,315		$	42,187
States and political subdivisions	19,312			684,710			719,761		725,019			668,966
Mortgage-backed securities	744,722			701,201			842,605		993,328			1,075,962
Corporate bonds	263,021			215,256			197,675		96,674			16,626
Equity securities	10,541			10,570			11,179		11,835			11,231
Total fair value	$	1,090,123		$	1,645,672		$	1,812,169	$	1,868,171		$	1,814,972

Amortized cost
Government sponsored agencies and enterprises	$	50,678		$	32,050		$	38,478	$	38,605		$	39,233
States and political subdivisions	19,461			669,791			680,978		679,991			620,489
Mortgage-backed securities	736,070			690,681			827,384		981,513			1,060,665
Corporate bonds	265,293			219,362			197,162		97,014			16,617
Equity securities	10,574			10,560			10,820		11,398			10,644
Total amortized cost	$	1,082,076		$	1,622,444		$	1,754,822	$	1,808,521		$	1,747,648

Unrealized gain
Government sponsored agencies and enterprises	$	1,849		$	1,885		$	2,471	$	2,710		$	2,954
States and political subdivisions	(149		)	14,919			38,783		45,028			48,477
Mortgage-backed securities	8,652			10,520			15,221		11,815			15,297
Corporate bonds	(2,272		)	(4,106		)	513		(340		)	9
Equity securities	(33		)	10			359		437			587
Total unrealized gain	$	8,047		$	23,228		$	57,347	$	59,650		$	67,324

Securities held to maturity, at cost:
States and political subdivisions	$	941,273		$	282,655		$	262,310	$	237,563		$	238,211
Mortgage-backed securities	252,271			253,779			255,475		255,858			257,640
Total amortized cost	$	1,193,544		$	536,434		$	517,785	$	493,421		$	495,851

Securities of states and political subdivisions with an approximate fair value of $660 million were transferred from available for sale to held to maturity during the quarter, which is the new cost basis.

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):



	9/30/2013				6/30/2013				3/31/2013				12/31/2012				9/30/2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	2,269,367	31	%	$	2,230,384	30	%	$	2,067,310	28	%	$	2,164,547	29	%	$	2,011,542	27	%
Money market and NOW accounts	2,680,127		37	%	2,718,989		37	%	2,778,916		37	%	2,747,273		36	%	2,682,608		36	%
Savings accounts	843,671		12	%	845,742		11	%	833,251		11	%	811,333		11	%	797,741		10	%
Total low cost deposits	5,793,165		80	%	5,795,115		78	%	5,679,477		76	%	5,723,153		76	%	5,491,891		73	%
Certificates of deposit:
Certificates of deposit	1,266,989		17	%	1,357,777		18	%	1,478,039		20	%	1,525,366		20	%	1,632,370		22	%
Brokered deposit accounts	238,532		3	%	292,504		4	%	294,390		4	%	294,178		4	%	355,086		5	%
Total certificates of deposit	1,505,521		20	%	1,650,281		22	%	1,772,429		24	%	1,819,544		24	%	1,987,456		27	%

Total deposits	$	7,298,686	100	%	$	7,445,396	100	%	$	7,451,906	100	%	$	7,542,697	100	%	$	7,479,347	100	%

Our deposit mix improved over the past twelve months as low cost deposits now comprise 80% of total deposits at September 30, 2013 compared to 73% at September 30, 2012, driven by increases in noninterest bearing deposits.

CAPITAL

Tangible book value per common share increased to $15.83 at September 30, 2013 compared to $15.64 a year ago primarily due to retained net income. Our regulatory capital ratios remain strong. MB Financial Bank, N.A. was categorized as “well capitalized” at September 30, 2013 under the Prompt Corrective Action (“PCA”) provisions.

FORWARD-LOOKING STATEMENTS

When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in other 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 the pending Taylor Capital merger and our other 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 requisite stockholder and regulatory approvals for the pending Taylor Capital merger might not be obtained; (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; (4) results of examinations by the Office of Comptroller of Currency, the Board of Governors of the Federal Reserve System 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 of 2010 (the "Dodd-Frank Act") and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, 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.

ADDITIONAL INFORMATION

In connection with the proposed merger between MB Financial and Taylor Capital, MB Financial has filed a registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”). The registration statement includes a preliminary joint proxy statement of MB Financial and Taylor Capital that also constitutes a preliminary prospectus of MB Financial, which, when finalized, will be sent to the stockholders of MB Financial and Taylor Capital. Stockholders are advised to read the preliminary joint proxy statement/prospectus regarding the proposed merger, the definitive joint proxy statement/prospectus (when it becomes available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain, or will contain, as the case may be, important information about MB Financial, Taylor Capital and the proposed transaction. Copies of all documents relating to the merger filed by MB Financial and Taylor Capital can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing MB Financial’s website at www.mbfinancial.com under the tab “Investor Relations” and then under “SEC Filings” or by accessing Taylor Capital’s website at www.taylorcapitalgroup.com under the tab “SEC Filings” and then under “Documents.” Alternatively, these documents can be obtained free of charge from MB Financial upon written request to MB Financial, Inc., Secretary, 6111 North River Road, Rosemont, Illinois 60018 or by calling (847) 653-1992, or from Taylor Capital, upon written request to Taylor Capital Group, Inc., Investor Relations, 9550 West Higgins Road, Rosemont, Illinois 60018 or by calling (847) 653-7978.

MB Financial, Taylor Capital and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed transaction under the rules of the SEC. Information about these participants may be found in the definitive proxy statement of MB Financial relating to its 2013 Annual Meeting of Stockholders filed with the SEC by MB Financial on April 12, 2013 and the definitive proxy statement of Taylor Capital relating to its 2013 Annual Meeting of Stockholders filed with the SEC on April 24, 2013. These definitive proxy statements can be obtained

free of charge from the sources indicated above. Additional information regarding the interests of these participants can be found in the joint proxy statement/prospectus regarding the proposed transaction, copies of which may also be obtained free of charge from the sources indicated above.

TABLES TO FOLLOW

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

As of the dates indicated

(Dollars in thousands)



	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
ASSETS
Cash and due from banks	$	215,017		$	152,302		$	131,146		$	176,010		$	129,326
Interest earning deposits with banks	41,700			280,618			108,885			111,533			327,301
Total cash and cash equivalents	256,717			432,920			240,031			287,543			456,627
Federal funds sold	47,500			7,500			—			—			—
Investment securities:
Securities available for sale, at fair value	1,090,123			1,645,672			1,812,169			1,868,171			1,814,972
Securities held to maturity, at amortized cost	1,193,544			536,434			517,785			493,421			495,851
Non-marketable securities - FHLB and FRB Stock	50,870			50,870			52,434			55,385			57,653
Total investment securities	2,334,537			2,232,976			2,382,388			2,416,977			2,368,476
Loans held for sale	1,120			2,528			3,030			7,492			7,221
Loans:
Total loans, excluding covered loans	5,313,235			5,359,631			5,306,879			5,317,080			5,128,683
Covered loans	273,497			308,556			400,789			449,850			496,162
Total loans	5,586,732			5,668,187			5,707,668			5,766,930			5,624,845
Less: Allowance for loan losses	118,031			123,685			121,802			124,204			121,182
Net loans	5,468,701			5,544,502			5,585,866			5,642,726			5,503,663
Lease investments, net	112,491			113,958			117,744			129,823			113,180
Premises and equipment, net	220,574			219,783			219,662			221,533			214,301
Cash surrender value of life insurance	129,332			130,565			129,723			128,879			127,985
Goodwill	423,369			423,369			423,369			423,369			387,069
Other intangibles	24,917			26,430			27,968			29,512			25,735
Other real estate owned, net	31,356			32,993			31,462			36,977			42,427
Other real estate owned related to FDIC transactions	24,792			19,014			20,011			22,478			32,607
FDIC indemnification asset	11,074			16,337			29,197			39,345			36,311
Other assets	171,138			166,784			175,379			185,151			147,943
Total assets	$	9,257,618		$	9,369,659		$	9,385,830		$	9,571,805		$	9,463,545
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing	$	2,269,367		$	2,230,384		$	2,067,310		$	2,164,547		$	2,011,542
Interest bearing	5,029,319			5,215,012			5,384,596			5,378,150			5,467,805
Total deposits	7,298,686			7,445,396			7,451,906			7,542,697			7,479,347
Short-term borrowings	240,600			230,547			224,379			220,602			289,613
Long-term borrowings	62,428			62,786			64,019			116,050			118,798
Junior subordinated notes issued to capital trusts	152,065			152,065			152,065			152,065			152,065
Accrued expenses and other liabilities	194,371			182,784			198,658			264,621			162,892
Total liabilities	7,948,150			8,073,578			8,091,027			8,296,035			8,202,715
Stockholders' Equity
Common stock	551			550			550			550			550
Additional paid-in capital	736,294			736,281			734,057			732,771			731,679
Retained earnings	564,779			547,116			527,332			507,933			489,426
Accumulated other comprehensive income	9,918			14,231			34,928			36,326			40,985
Treasury stock	(3,525		)	(3,558		)	(3,529		)	(3,293		)	(3,304		)
Controlling interest stockholders' equity	1,308,017			1,294,620			1,293,338			1,274,287			1,259,336
Noncontrolling interest	1,451			1,461			1,465			1,483			1,494
Total stockholders' equity	1,309,468			1,296,081			1,294,803			1,275,770			1,260,830
Total liabilities and stockholders' equity	$	9,257,618		$	9,369,659		$	9,385,830		$	9,571,805		$	9,463,545

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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



															Nine Months Ended
															September 30,
	3Q13			2Q13		1Q13			4Q12			3Q12			2013			2012
Interest income:
Loans	$	60,115		$	59,581	$	60,793		$	63,328		$	67,482		$	180,489		$	208,380
Investment securities:
Taxable	6,330			6,280		6,140			6,371			7,287			18,749			27,053
Nontaxable	8,175			8,163		8,060			7,687			7,582			24,399			21,624
Federal funds sold	7			2		—			—			—			9			—
Other interest earning accounts	193			92		135			228			312			420			639
Total interest income	74,820			74,118		75,128			77,614			82,663			224,066			257,696
Interest expense:
Deposits	4,433			5,132		5,709			6,066			7,374			15,274			24,192
Short-term borrowings	112			116		167			294			342			395			910
Long-term borrowings and junior subordinated notes	1,367			1,390		1,567			1,738			2,872			4,324			9,322
Total interest expense	5,912			6,638		7,443			8,098			10,588			19,993			34,424
Net interest income	68,908			67,480		67,685			69,516			72,075			204,073			223,272
Provision for credit losses	(3,304		)	500		—			1,000			(13,000		)	(2,804		)	(9,900		)
Net interest income after provision for credit losses	72,212			66,980		67,685			68,516			85,075			206,877			233,172
Non-interest income:
Capital markets and international banking service fees	972			939		808			2,386			1,400			2,719			2,700
Commercial deposit and treasury management fees	6,327			6,029		5,966			6,095			5,860			18,322			17,541
Lease financing, net	14,070			15,102		16,263			12,419			9,671			45,435			23,963
Trust and asset management fees	4,799			4,874		4,494			4,623			4,428			14,167			13,367
Card fees	2,745			2,735		2,695			2,505			2,388			8,175			6,863
Loan service fees	1,427			1,911		1,011			2,436			1,075			4,349			3,409
Consumer and other deposit service fees	3,648			3,593		3,246			3,655			3,786			10,487			10,773
Brokerage fees	1,289			1,234		1,157			1,088			1,185			3,680			3,704
Net gain (loss) on securities available for sale	1			14		(1		)	311			281			14			244
Increase in cash surrender value of life insurance	851			842		844			893			890			2,537			2,677
Net loss on sale of other assets	—			—		—			(905		)	(12		)	—			(37		)
Accretion of FDIC indemnification asset	64			100		143			154			204			307			901
Net gain (loss) recognized on other real estate owned	(791		)	2,015		(330		)	(1,626		)	(3,938		)	894			(15,968		)
Net gain on sale of loans	177			506		639			822			575			1,322			1,503
Other operating income	1,337			1,060		1,438			1,429			760			3,835			3,674
Total non-interest income	36,916			40,954		38,373			36,285			28,553			116,243			75,314
Non-interest expense:
Salaries and employee benefits	44,918			43,909		43,514			43,038			42,083			132,341			122,658
Occupancy and equipment expense	8,797			9,408		9,404			8,774			8,274			27,609			27,032
Computer services and telecommunication expense	4,870			4,617		3,887			4,160			3,777			13,374			11,339
Advertising and marketing expense	1,917			2,167		2,103			2,335			1,936			6,187			5,848
Professional and legal expense	3,102			1,353		1,295			1,640			1,554			5,750			4,470
Other intangible amortization expense	1,513			1,538		1,544			1,251			1,251			4,595			3,759
Branch impairment charges	—			—		—			1,432			758			—			758
Other real estate expense, net	240			193		139			449			874			572			2,541
Prepayment fees on interest bearing liabilities	—			—		—			—			12,682			—			12,682
Other operating expenses	10,117			9,083		9,213			8,027			7,976			28,413			24,243
Total non-interest expense	75,474			72,268		71,099			71,106			81,165			218,841			215,330
Income before income taxes	33,654			35,666		34,959			33,695			32,463			104,279			93,156
Income tax expense	9,254			10,373		10,053			9,683			9,330			29,680			26,794
Net income	24,400			25,293		24,906			24,012			23,133			74,599			66,362
Dividends and discount accretion on preferred shares	—			—		—			—			—			—			3,269
Net income available to common stockholders	$	24,400		$	25,293	$	24,906		$	24,012		$	23,133		$	74,599		$	63,093



											Nine Months Ended
											September 30,
	3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Common share data:
Basic earnings per common share	$	0.45	$	0.46	$	0.46	$	0.44	$	0.43	$	1.37	$	1.16
Diluted earnings per common share	0.44		0.46		0.46		0.44		0.42		1.36		1.16
Weighted average common shares outstanding for basic earnings per common share	54,565,089		54,436,043		54,411,806		54,401,504		54,346,827		54,471,541		54,226,241
Weighted average common shares outstanding for diluted earnings per common share	55,130,653		54,868,075		54,736,644		54,597,737		54,556,517		54,912,352		54,472,617



Selected Financial Data:
																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Performance Ratios:
Annualized return on average assets	1.05		%	1.09		%	1.07		%	1.01		%	0.97		%	1.07		%	0.93		%
Annualized return on average equity	7.46			7.82			7.89			7.55			7.38			7.72			6.87
Annualized cash return on average tangible equity⁽¹⁾	11.74			12.31			12.53			11.47			11.29			12.19			10.66
Net interest rate spread	3.52			3.46			3.44			3.41			3.48			3.48			3.60
Cost of funds⁽²⁾	0.30			0.34			0.38			0.40			0.52			0.34			0.56
Efficiency ratio⁽³⁾	65.11			64.26			63.10			61.16			61.43			64.16			60.94
Annualized net non-interest expense to average assets⁽⁴⁾	1.52			1.42			1.37			1.29			1.46			1.44			1.53
Core non-interest income to revenues ⁽⁵⁾	33.51			35.01			34.56			34.18			29.49			34.36			27.81
Net interest margin	3.37			3.33			3.32			3.31			3.42			3.34			3.55
Tax equivalent effect	0.29			0.28			0.27			0.26			0.25			0.28			0.24
Net interest margin - fully tax equivalent basis⁽⁶⁾	3.66			3.61			3.59			3.57			3.67			3.62			3.79
Asset Quality Ratios:
Non-performing loans⁽⁷⁾ to total loans	1.83		%	2.03		%	2.00		%	2.03		%	1.87		%	1.83		%	1.87		%
Non-performing assets⁽⁷⁾ to total assets	1.45			1.59			1.56			1.62			1.56			1.45			1.56
Allowance for loan losses to non-performing loans⁽⁷⁾	115.21			107.32			106.88			106.17			115.10			115.21			115.10
Allowance for loan losses to total loans	2.11			2.18			2.13			2.15			2.15			2.11			2.15
Net loan charge-offs (recoveries) to average loans (annualized)	0.18			(0.02		)	0.25			(0.17		)	(0.64		)	0.14			0.03
Capital Ratios:
Tangible equity to tangible assets⁽⁸⁾	9.87		%	9.58		%	9.54		%	9.13		%	9.46		%	9.87		%	9.46		%
Tangible common equity to risk weighted assets⁽⁹⁾	13.40			13.23			13.29			13.07			14.16			13.40			14.16
Book value per common share⁽¹⁰⁾	$	23.82		$	23.63		$	23.63		$	23.29		$	23.01		$	23.82		$	23.01
Less: goodwill and other intangible assets, net of benefit, per common share	7.99			8.03			8.06			8.08			7.37			7.99			7.37
Tangible book value per common share⁽¹¹⁾	$	15.83		$	15.60		$	15.57		$	15.21		$	15.64		$	15.83		$	15.64

Total capital (to risk-weighted assets)	16.70		%	16.48		%	16.22		%	16.62		%	17.91		%	16.70		%	17.91		%
Tier 1 capital (to risk-weighted assets)	15.44			15.22			14.96			14.73			15.83			15.44			15.83
Tier 1 capital (to average assets)	11.39			11.19			10.74			10.50			10.60			11.39			10.60
Tier 1 common capital (to risk-weighted assets)	13.17			12.94			12.66			12.42			13.39			13.17			13.39


(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 equity (average 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 non-interest expense excluding non-core items divided by the sum of net interest income on a fully tax equivalent basis, total non-interest income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance.


(4)	Equals total non-interest expense excluding non-core items less total non-interest 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 total non-interest income excluding non-core items and tax equivalent adjustment on the increase in cash surrender value of life insurance divided by the sum of net interest income on a fully tax equivalent basis, total non-interest income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance.


(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 stockholders’ equity divided by common shares outstanding.


(11)	Equals total ending 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 core non-interest income, core non-interest income to revenues (with non-core items excluded from both core non-interest income and revenues), core non-interest expense, non-core non-interest income and non-core non-interest expense, net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis, efficiency ratio and the ratio of annualized net non-interest expense to average assets with net gains and losses on investment securities, net losses on sale of other assets, net gains (losses) on other real estate owned, and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, prepayment fees on interest bearing liabilities, impairment charges, merger related expenses 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 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 core and non-core non-interest income and non-interest expense are useful in assessing our core operating performance and in understanding the primary drivers of our non-interest income and non-interest 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 that 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 investment securities, net losses on sale of other assets, net gains and losses on other real estate owned and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest income components, and excluding prepayment fees on interest bearing liabilities, impairment changes, merger related expenses and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest expense components, of the efficiency ratio and the ratio of annualized net non-interest expense 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.

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 non-interest income and non-interest expense to non-interest income and non-interest expense are contained in the tables under “Results of Operations—Third Quarter Results.”

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



	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Stockholders' equity - as reported	$	1,309,468	$	1,296,081	$	1,294,803	$	1,275,770	$	1,260,830
Less: goodwill	423,369		423,369		423,369		423,369		387,069
Less: other intangible assets, net of tax benefit	16,196		17,180		18,179		19,183		16,728
Tangible equity	$	869,903	$	855,532	$	853,255	$	833,218	$	857,033

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



	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Total assets - as reported	$	9,257,618	$	9,369,659	$	9,385,830	$	9,571,805	$	9,463,545
Less: goodwill	423,369		423,369		423,369		423,369		387,069
Less: other intangible assets, net of tax benefit	16,196		17,180		18,179		19,183		16,728
Tangible assets	$	8,818,053	$	8,929,110	$	8,944,282	$	9,129,253	$	9,059,748

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



											Nine Months Ended
											September 30,
	3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Average common stockholders' equity - as reported	$	1,297,498	$	1,297,364	$	1,280,921	$	1,264,772	$	1,247,846	$	1,291,988	$	1,226,046
Less: average goodwill	423,369		423,369		423,369		387,464		387,069		423,369		387,069
Less: average other intangible assets, net of tax benefit	16,620		17,605		18,611		16,238		17,018		17,605		17,878
Average tangible common equity	$	857,509	$	856,390	$	838,941	$	861,070	$	843,759	$	851,014	$	821,099

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



												Nine Months Ended
												September 30,
		3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Net income available to common stockholders - as reported		$	24,400	$	25,293	$	24,906	$	24,012	$	23,133	$	74,599	$	63,093
	Add: other intangible amortization expense, net of tax benefit	983		1,000		1,004		813		813		2,987		2,443
Net cash flow available to common stockholders		$	25,383	$	26,293	$	25,910	$	24,825	$	23,946	$	77,586	$	65,536

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



	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Tier 1 capital - as reported	$	1,002,904	$	983,997	$	960,803	$	939,087	$	958,123
Less: qualifying trust preferred securities	147,500		147,500		147,500		147,500		147,500
Tier 1 common capital	$	855,404	$	836,497	$	813,303	$	791,587	$	810,623

Efficiency Ratio Calculation (Dollars in Thousands)



																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Non-interest expense	$	75,474		$	72,268		$	71,099		$	71,106		$	81,165		$	218,841		$	215,330
Less merger related expenses	1,759			—			—			—			—			1,759			—
Less prepayment fees on interest bearing liabilities	—			—			—			—			12,682			—			12,682
Less impairment charges	—			—			—			1,432			758			—			758
Less increase in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Non-interest expense - as adjusted	$	73,256		$	72,247		$	70,616		$	69,570		$	67,370		$	216,119		$	201,183

Net interest income	$	68,908		$	67,480		$	67,685		$	69,516		$	72,075		$	204,073		$	223,272
Tax equivalent adjustment	5,905			5,594			5,555			5,360			5,256			17,054			15,069
Net interest income on a fully tax equivalent basis	74,813			73,074			73,240			74,876			77,331			221,127			238,341
Plus non-interest income	36,916			40,954			38,373			36,285			28,553			116,243			75,314
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	458			454			454			481			479			1,366			1,441
Less net gain (loss) on other real estate owned	(791		)	2,015			(330		)	(1,626		)	(3,938		)	894			(15,968		)
Less net (loss) gain on investment securities	1			14			(1		)	311			281			14			244
Less net loss on sale of other assets	—			—			—			(905		)	(12		)	—			(37		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Net interest income plus non-interest income - as adjusted	$	112,518		$	112,432		$	111,915		$	113,758		$	109,677		$	336,865		$	330,150

Efficiency ratio	65.11		%	64.26		%	63.10		%	61.16		%	61.43		%	64.16		%	60.94		%
Efficiency ratio (without adjustments)	71.32		%	66.65		%	67.04		%	67.21		%	80.66		%	68.32		%	72.12		%

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



																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Non-interest expense	$	75,474		$	72,268		$	71,099		$	71,106		$	81,165		$	218,841		$	215,330
Less merger related expenses	1,759			—			—			—			—			1,759			—
Less prepayment fees on interest bearing liabilities	—			—			—			—			12,682			—			12,682
Less impairment charges	—			—			—			1,432			758			—			758
Less increase in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Non-interest expense - as adjusted	73,256			72,247			70,616			69,570			67,370			216,119			201,183

Non-interest income	36,916			40,954			38,373			36,285			28,553			116,243			75,314
Less net gain (loss) on other real estate owned	(791		)	2,015			(330		)	(1,626		)	(3,938		)	894			(15,968		)
Less net gain (loss) on investment securities	1			14			(1		)	311			281			14			244
Less net loss on sale of other assets	—			—			—			(905		)	(12		)	—			(37		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Non-interest income - as adjusted	37,247			38,904			38,221			38,401			31,867			114,372			90,368
Less tax equivalent adjustment on the increase in cash surrender value of life insurance	458			454			454			481			479			1,366			1,441
Net non-interest expense	$	35,551		$	32,889		$	31,941		$	30,688		$	35,024		$	100,381		$	109,374

Average assets	$	9,261,291		$	9,289,382		$	9,449,588		$	9,461,895		$	9,516,159		$	9,332,730		$	9,576,892

Annualized net non-interest expense to average assets	1.52		%	1.42		%	1.37		%	1.29		%	1.46		%	1.44		%	1.53		%

Annualized net non-interest expense to average assets (without adjustments)	1.65		%	1.35		%	1.40		%	1.46		%	2.20		%	1.47		%	1.95		%

Core Non-interest Income to Revenues Ratio Calculation (Dollars in Thousands)



																Nine Months Ended
																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12			2013			2012
Non-interest income	$	36,916		$	40,954		$	38,373		$	36,285		$	28,553		$	116,243		$	75,314
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	458			454			454			481			479			1,366			1,441
Less net gain (loss) on other real estate owned	(791		)	2,015			(330		)	(1,626		)	(3,938		)	894			(15,968		)
Less net gain (loss) on investment securities	1			14			(1		)	311			281			14			244
Less net loss on sale of other assets	—			—			—			(905		)	(12		)	—			(37		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Non-interest income - as adjusted	$	37,705		$	39,358		$	38,675		$	38,882		$	32,346		$	115,738		$	91,809

Net interest income	$	68,908		$	67,480		$	67,685		$	69,516		$	72,075		$	204,073		$	223,272
Tax equivalent adjustment	5,905			5,594			5,555			5,360			5,256			17,054			15,069
Net interest income on a fully tax equivalent basis	74,813			73,074			73,240			74,876			77,331			221,127			238,341
Plus non-interest income	36,916			40,954			38,373			36,285			28,553			116,243			75,314
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	458			454			454			481			479			1,366			1,441
Less net gain (loss) on other real estate owned	(791		)	2,015			(330		)	(1,626		)	(3,938		)	894			(15,968		)
Less net gain (loss) on investment securities	1			14			(1		)	311			281			14			244
Less net loss on sale of other assets	—			—			—			(905		)	(12		)	—			(37		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	459			21			483			104			355			963			707
Total revenue - as adjusted and on a fully tax equivalent basis	$	112,518		$	112,432		$	111,915		$	113,758		$	109,677		$	336,865		$	330,150

Total revenue - unadjusted	$	105,824		$	108,434		$	106,058		$	105,801		$	100,628		$	320,316		$	298,586

Core non-interest income to revenues ratio	33.51		%	35.01		%	34.56		%	34.18		%	29.49		%	34.36		%	27.81		%

Core non-interest income to revenues ratio (without adjustments)	34.88		%	37.77		%	36.18		%	34.30		%	28.37		%	36.29		%	25.22		%

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):



	3Q13						3Q12						2Q13
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Interest Earning Assets:
Loans (1) (2) (3):
Commercial related credits
Commercial	$	1,166,887	$	12,263	4.11	%	$	1,071,538	12,640		4.62	%	$	1,206,740	$	12,613	4.18	%
Commercial loans collateralized by assignment of lease payments	1,429,169		13,726		3.84		1,193,462		13,119		4.40		1,340,854		12,987		3.87
Real estate commercial	1,654,311		19,995		4.73		1,778,414		22,836		5.02		1,718,979		19,736		4.54
Real estate construction	128,115		1,324		4.04		154,622		1,618		4.09		133,705		1,270		3.76
Total commercial related credits	4,378,482		47,308		4.23		4,198,036		50,213		4.68		4,400,278		46,606		4.19
Other loans
Real estate residential	307,555		2,961		3.85		310,374		3,425		4.41		306,978		3,042		3.96
Home equity	277,122		2,993		4.28		317,854		3,488		4.37		286,640		3,076		4.30
Indirect	250,003		3,365		5.34		202,583		2,984		5.86		231,577		3,176		5.50
Consumer loans	61,950		599		3.84		69,563		578		3.31		70,603		624		3.54
Total other loans	896,630		9,918		4.39		900,374		10,475		4.63		895,798		9,918		4.44
Total loans, excluding covered loans	5,275,112		57,226		4.30		5,098,410		60,688		4.74		5,296,076		56,524		4.28
Covered loans	281,896		4,391		6.18		536,697		7,967		5.91		335,148		4,255		5.09
Total loans	5,557,008		61,617		4.40		5,635,107		68,655		4.85		5,631,224		60,779		4.33
Taxable investment securities	1,292,366		6,330		1.96		1,418,549		7,287		2.05		1,377,368		6,280		1.82
Investment securities exempt from federal income taxes (3)	946,396		12,577		5.32		843,908		11,665		5.53		933,442		12,559		5.38
Federal funds sold	6,793		7		0.40		—		—		—		2,879		2		0.27
Other interest earning deposits	316,210		193		0.24		483,622		312		0.26		183,010		92		0.20
Total interest earning assets	$	8,118,773	$	80,724	3.94		$	8,381,186	$	87,919	4.17		$	8,127,923	$	79,712	3.93
Non-interest earning assets	1,142,518						1,134,973						1,161,459
Total assets	$	9,261,291					$	9,516,159					$	9,289,382
Interest Bearing Liabilities:
Core funding:
Money market and NOW accounts	$	2,695,479	$	862	0.13	%	$	2,601,181	$	1,026	0.16	%	$	2,675,189	$	833	0.12	%
Savings accounts	844,647		137		0.06		796,229		181		0.09		840,154		136		0.06
Certificates of deposit	1,309,539		1,443		0.44		1,676,047		2,826		0.70		1,406,693		1,893		0.55
Customer repurchase agreements	205,946		113		0.22		211,966		149		0.28		187,496		101		0.22
Total core funding	5,055,611		2,555		0.20		5,285,423		4,182		0.31		5,109,532		2,963		0.23
Wholesale funding:
Brokered accounts (includes fee expense)	263,448		1,989		3.00		429,342		3,341		3.10		294,277		2,271		3.10
Other borrowings	215,041		1,367		2.49		392,871		3,065		3.05		216,372		1,404		2.57
Total wholesale funding	478,489		3,356		2.47		822,213		6,406		2.73		510,649		3,675		2.55
Total interest bearing liabilities	$	5,534,100	$	5,911	0.42		$	6,107,636	$	10,588	0.69		$	5,620,181	$	6,638	0.47
Non-interest bearing deposits	2,258,357						2,020,762						2,179,284
Other non-interest bearing liabilities	171,336						139,915						192,553
Stockholders' equity	1,297,498						1,247,846						1,297,364
Total liabilities and stockholders' equity	$	9,261,291					$	9,516,159					$	9,289,382
Net interest income/interest rate spread (4)			$	74,813	3.52	%			$	77,331	3.48	%			$	73,074	3.46	%
Taxable equivalent adjustment			5,905						5,256						5,594
Net interest income, as reported			$	68,908					$	72,075					$	67,480
Net interest margin (5)					3.37	%					3.42	%					3.33	%
Tax equivalent effect					0.29	%					0.25	%					0.28	%
Net interest margin on a fully tax equivalent basis (5)					3.66	%					3.67	%					3.61	%


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


(2)	Interest income includes amortization of deferred loan origination fees of $839 thousand, $749 thousand, and $817 thousand for the three months ended September 30, 2013, September 30, 2012, and June 30, 2013, 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.



	Nine Months Ended September 30,
	2013						2012
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Interest Earning Assets:
Loans (1) (2) (3):
Commercial related credits
Commercial	$	1,193,034	$	37,436	4.14	%	$	1,068,339	38,340		4.72	%
Commercial loans collateralized by assignment of lease payments	1,357,417		39,512		3.88		1,182,512		40,222		4.54
Real estate commercial	1,702,494		60,475		4.68		1,829,232		70,582		5.07
Real estate construction	125,184		3,714		3.91		146,642		4,562		4.09
Total commercial related credits	4,378,129		141,137		4.25		4,226,725		153,706		4.78
Other loans
Real estate residential	309,075		9,288		4.01		311,318		10,616		4.55
Home equity	287,198		9,259		4.31		325,120		10,732		4.41
Indirect	231,383		9,563		5.53		194,064		8,865		6.10
Consumer loans	67,608		1,830		3.62		69,666		1,658		3.18
Total other loans	895,264		29,940		4.47		900,168		31,871		4.73
Total loans, excluding covered loans	5,273,393		171,077		4.34		5,126,893		185,577		4.84
Covered loans	346,721		13,328		5.14		591,086		26,228		5.93
Total loans	5,620,114		184,405		4.39		5,717,979		211,805		4.95
Taxable investment securities	1,383,975		18,749		1.81		1,554,243		27,053		2.32
Investment securities exempt from federal income taxes (3)	930,653		37,537		5.38		798,660		33,268		5.55
Federal funds sold	3,249		9		0.37		—		—		—
Other interest earning deposits	232,529		420		0.24		329,252		639		0.26
Total interest earning assets	$	8,170,520	$	241,120	3.95		$	8,400,134	$	272,765	4.34
Non-interest earning assets	1,162,210						1,176,758
Total assets	$	9,332,730					$	9,576,892
Interest Bearing Liabilities:
Core funding:
Money market and NOW accounts	$	2,702,567	$	2,622	0.13	%	$	2,619,297	$	3,278	0.17	%
Savings accounts	835,754		409		0.07		784,706		642		0.11
Certificates of deposit	1,408,866		5,734		0.56		1,777,611		9,970		0.78
Customer repurchase agreements	191,789		312		0.22		203,289		409		0.27
Total core funding	5,138,976		9,077		0.23		5,384,903		14,299		0.35
Wholesale funding:
Brokered accounts (includes fee expense)	283,894		6,509		3.07		441,943		10,302		3.11
Other borrowings	230,021		4,407		2.53		415,565		9,823		3.11
Total wholesale funding	513,915		10,916		2.51		857,508		20,125		2.75
Total interest bearing liabilities	$	5,652,891	$	19,993	0.47		$	6,242,411	$	34,424	0.74
Non-interest bearing deposits	2,194,648						1,924,656
Other non-interest bearing liabilities	193,203						131,890
Stockholders' equity	1,291,988						1,277,935
Total liabilities and stockholders' equity	$	9,332,730					$	9,576,892
Net interest income/interest rate spread (4)			$	221,127	3.48	%			$	238,341	3.60	%
Taxable equivalent adjustment			17,054						15,069
Net interest income, as reported			$	204,073					$	223,272
Net interest margin (5)					3.34	%					3.55	%
Tax equivalent effect					0.28	%					0.24	%
Net interest margin on a fully tax equivalent basis (5)					3.62	%					3.79	%


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


(2)	Interest income includes amortization of deferred loan origination fees of $2.6 million and $2.5 million for the nine months ended September 30, 2013 and 2012, 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.

MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EXHIBIT 99 EARNINGS RELEASE 3Q13 - October 17, 2013

Attached files

MB FINANCIAL INC /MD Reports