MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EXHIBIT 99

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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 SECOND QUARTER NET INCOME OF $23.1 MILLION

CHICAGO, July 23, 2014 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., today announced 2014 second quarter net income of $23.1 million compared to $20.0 million last quarter and $25.3 million in the second quarter a year ago.

Key items for the second quarter include:

Net Interest Income Increased Modestly:


•	Net interest income on a fully tax equivalent basis increased $840 thousand from the first quarter of 2014 due to an extra day in the quarter, and increased $675 thousand from the second quarter of 2013 primarily due to higher yields on taxable investment securities partly offset by lower loan yields.


•	Fully taxable equivalent net interest margin was 3.53% for the second quarter of 2014 compared to 3.64% for the prior quarter and 3.61% for the second quarter of 2013. Higher cash balances in the second quarter of 2014 resulting from strong deposit inflows had minimal impact on net interest income, but reduced net interest margin by 11 basis points.

Credit Quality Metrics Improved during the Quarter:


•	We recorded a negative provision for credit losses of $2.0 million in the second quarter compared to a positive provision for credit losses of $1.2 million in the prior quarter as a result of reduced levels of classified and special mention assets.


•	Non-performing loans decreased by $8.0 million from March 31, 2014.


•	Potential problem loan balances improved by $5.3 million from March 31, 2014.


•	Special mention assets decreased by $24.0 million compared to March 31, 2014.

Fee Income from Key Fee Initiatives Increased $2.8 million, 9.6%, from the Prior Quarter and $2.3 million, 7.9%, from the Second Quarter of 2013:


•	Leasing revenues increased due to higher fees from the sale of third-party equipment maintenance contracts compared to the prior quarter, but decreased slightly compared to the second quarter of 2013.


•	Capital markets and international banking service fees increased due to higher M&A advisory and syndication fees.


•	Card fees increased due to prepaid card program growth.


•	Commercial deposit and treasury management fees increased compared to the second quarter of 2013 due to new customer activity, but slightly decreased compared to the prior quarter.

Core Non-interest Expenses Increased $3.9 million, 5.3%, from the Prior Quarter and $4.6 million, 6.4%, from the Second Quarter of 2013:

•

Salaries and employee benefits increased compared to the prior quarter primarily due to annual salary increases, an extra day in the quarter, an increase in leasing commissions as a result of higher leasing revenues and higher long-term incentive expense. Compared to the second quarter of 2013, salaries and employee benefits increased due to annual salary increases and higher long-term incentive expense, health insurance costs and temporary staffing costs.

•

Other operating expense increased from the prior quarter as a result of an increase of $1.4 million in the clawback liability related to our loss share agreements with the FDIC. The increase was due to better than expected performance of the acquired loan portfolios (faster resolution and lower charge-offs). Compared to the second quarter of 2013, other operating expense increased as a result of an increase in filing and other loan expense, as well as higher FDIC assessments due to our larger balance sheet, increased FDIC clawback liability and higher currency delivery expenses related to new treasury management accounts.

Balance Sheet Activity - Loans and Deposits Increased, Low Cost Deposit Flows Strong:


•	Loans, excluding covered loans, increased approximately $27 million (+0.5%) from March 31, 2014 and approximately $62 million (+1.2%) from June 30, 2013.


•	Low cost deposit flows were strong, increasing approximately $335 million (+5.5%) from March 31, 2014 and approximately $615 million (+10.6%) from June 30, 2013.


•	Noninterest bearing deposits as a percent of total deposits were 34% at June 30, 2014.


•	We continue to maintain robust levels of capital and liquidity and are positioned well to complete our pending merger with Taylor Capital Group, Inc. Cash and interest bearing deposits at our holding company totaled approximately $154 million as of June 30, 2014.

RESULTS OF OPERATIONS

Second Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis increased $840 thousand from the first quarter of 2014 primarily due to an extra day in the quarter. Our net interest margin on a fully tax equivalent basis for the second quarter of 2014 decreased 11 basis points compared to the first quarter of 2014 primarily due to higher cash balances held during the second quarter of 2014 as a result of the strong deposit inflows. Higher deposits and cash balances had minimal impact on net interest income.

Net interest income on a fully tax equivalent basis increased $675 thousand from the second quarter of 2013 primarily due to higher yields on taxable investment securities partly offset by lower loan yields. Our net interest margin on a fully tax equivalent basis for the second quarter of 2014 decreased eight basis points compared to the second quarter of 2013 primarily due to higher cash balances.

See the supplemental net interest margin tables for further detail.

Non-interest Income (in thousands):



													Six Months Ended
													June 30,
	2Q14			1Q14		4Q13			3Q13		2Q13		2014			2013
Core non-interest income:
Key fee initiatives:
Capital markets and international banking service fees	$	1,360		$	978	$	841		$	972	$	939	$	2,338		$	1,747
Commercial deposit and treasury management fees	7,106			7,144		6,545			6,327		6,029		14,250			11,995
Lease financing, net	14,853			13,196		15,808			14,070		15,102		28,049			31,365
Trust and asset management fees	5,405			5,207		4,975			4,799		4,874		10,612			9,368
Card fees	3,304			2,701		2,838			2,745		2,735		6,005			5,430
Total key fee initiatives	32,028			29,226		31,007			28,913		29,679		61,254			59,905

Loan service fees	916			965		1,214			1,427		1,911		1,881			2,922
Consumer and other deposit service fees	3,156			2,935		3,481			3,648		3,593		6,091			6,839
Brokerage fees	1,356			1,325		1,227			1,289		1,234		2,681			2,391
Increase in cash surrender value of life insurance	834			827		848			851		842		1,661			1,686
Accretion of FDIC indemnification asset	28			31		35			64		100		59			243
Net gain on sale of loans	187			59		342			177		506		246			1,145
Other operating income	1,134			768		641			878		1,039		1,902			1,994
Total core non-interest income	39,639			36,136		38,795			37,247		38,904		75,775			77,125
Non-core non-interest income:
Net (loss) gain on investment securities	(87		)	317		(15		)	1		14		230			13
Net (loss) gain on sale of other assets	(24		)	7		(323		)	—		—		(17		)	—
Increase in market value of assets held in trust for deferred compensation ⁽¹⁾	400			152		588			459		21		552			504
Total non-core non-interest income	289			476		250			460		35		765			517

Total non-interest income	$	39,928		$	36,612	$	39,045		$	37,707	$	38,939	$	76,540		$	77,642


⁽¹⁾	Resides in other operating income in the consolidated statements of income.

Core non-interest income for the second quarter of 2014 increased approximately 9.7% from the first quarter of 2014.


•	Leasing revenues increased due to higher fees from the sale of third-party equipment maintenance contracts.


•	Capital markets and international banking service fees increased due to higher M&A advisory and syndication fees.


•	Card fees increased due to a new payroll prepaid card program.

Core non-interest income for the first six months of 2014 decreased approximately 1.8% from the first six months of 2013.


•	Commercial deposit and treasury management fees increased in the first half of 2014 due to robust new customer activity.


•	Trust and asset management fees increased due to the growth in investment management fees as a result of new customers added and the impact of higher equity values on assets under management and related fee revenue.


•	Card fees increased due to a new payroll prepaid card program as well as higher ATM and debit card fees.


•	Leasing revenues declined due to lower equipment remarketing gains and lower fees from the sale of third-party equipment maintenance contracts.


•	Loan service fees decreased due to lower late, prepayment and miscellaneous loan fees collected.


•	Consumer and other deposit service fees decreased due to lower demand deposit service and overdraft charges.


•	Net gain on sale of loans decreased as a result of less mortgage origination activity.

Non-interest Expense (in thousands):



														Six Months Ended
														June 30,
	2Q14			1Q14		4Q13			3Q13		2Q13			2014		2013
Core non-interest expense:
Salaries and employee benefits	$	46,222		$	44,121	$	44,929		$	44,459	$	43,888		$	90,343	$	86,919
Occupancy and equipment expense	9,504			9,592		9,269			8,797		9,408			19,096		18,812
Computer services and telecommunication expense	4,909			5,071		5,509			4,870		4,617			9,980		8,504
Advertising and marketing expense	2,113			1,991		2,081			1,917		2,167			4,104		4,270
Professional and legal expense	1,488			1,369		2,340			1,408		1,353			2,857		2,648
Other intangible amortization expense	1,174			1,240		1,489			1,513		1,538			2,414		3,082
Other real estate expense, net	337			396		175			240		193			733		332
Other operating expenses	11,108			9,220		10,171			10,052		9,083			20,328		18,296
Total core non-interest expense	76,855			73,000		75,963			73,256		72,247			149,855		142,863
Non-core non-interest expense: ⁽¹⁾
Merger related expenses (A)	488			680		724			1,759		—			1,168		—
Net loss (gain) recognized on other real estate owned	204			122		(831		)	754		(2,130		)	326		(1,811		)
Net (gain) loss recognized on other real estate owned related to FDIC transactions (B)	(13		)	65		197			37		115			52		126
Loss on low to moderate income real estate investment (C)	96			2,028		—			—		—			2,124		—
Increase in market value of assets held in trust for deferred compensation (D)	400			152		588			459		21			552		504
Total non-core non-interest expense	1,175			3,047		678			3,009		(1,994		)	4,222		(1,181		)

Total non-interest expense	$	78,030		$	76,047	$	76,641		$	76,265	$	70,253		$	154,077	$	141,682

⁽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 – Salaries and employee benefits, computer services and telecommunication expense, advertising and marketing expense, professional and legal expense and other operating expenses, B – Net (gain) loss recognized on other real estate owned, C – Other operating expenses, D – Salaries and employee benefits.

Core non-interest expense increased by $3.9 million, or 5.3%, from the first quarter of 2014 to the second quarter of 2014.


•	Salaries and employee benefits increased primarily due to annual salary increases, an extra day in the quarter, an increase in leasing commissions as a result of higher leasing revenues and higher long-term incentive expense.


•	Other operating expense increased primarily as a result of an increase of $1.4 million in the clawback liability related to our loss share agreements with the FDIC.

Core non-interest expense increased by $7.0 million, or 4.9%, from the first six months of 2013 to the first six months of 2014.


•	Salaries and employee benefits increased due to annual salary increases, long-term incentive expense, health insurance and temporary staffing needs.


•	Computer services and telecommunication expenses increased due primarily to an increase in spending on IT security, data warehouse, investments in our key fee initiatives, as well as higher transaction volumes in leasing, treasury management and card areas. The increase was also due to increased telecommunication expense related to the transitioning to a new provider.


•	Other operating expense increased primarily as a result of an increase in filing and other loan expense as well as higher FDIC assessments due to our larger balance sheet, higher ATM and debit card processing costs and higher currency delivery expenses related to new treasury management accounts.

Non-core non-interest expense decreased from the preceding quarter. Last quarter's results included a write-off of an investment in funds that invested in low to moderate income real estate projects. This investment was made in 2006 as a community development initiative. The extended slow real estate recovery in some low income areas of Chicago negatively impacted this investment.

LOAN PORTFOLIO

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



	6/30/2014				3/31/2014				12/31/2013				9/30/2013				6/30/2013
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial related credits:
Commercial loans	$	1,272,200	23	%	$	1,267,398	23	%	$	1,281,377	22	%	$	1,169,009	21	%	$	1,198,862	22	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,515,446		27		1,472,621		27		1,494,188		26		1,468,814		26		1,422,901		25
Commercial real estate	1,619,322		29		1,623,509		29		1,647,700		29		1,638,368		29		1,710,964		30
Construction real estate	116,996		2		132,997		2		141,253		3		136,146		2		121,420		2
Total commercial related credits	4,523,964		81		4,496,525		81		4,564,518		80		4,412,337		78		4,454,147		79
Other loans:
Residential real estate	309,234		6		309,137		5		314,440		5		311,256		6		305,710		5
Indirect vehicle	272,841		5		266,044		5		262,632		5		257,740		5		242,964		5
Home equity	245,135		4		258,120		5		268,289		5		274,484		5		281,334		5
Consumer loans	70,584		1		64,812		1		66,952		1		57,418		1		75,476		1
Total other loans	897,794		16		898,113		16		912,313		16		900,898		17		905,484		16
Gross loans excluding covered loans	5,421,758		97		5,394,638		97		5,476,831		96		5,313,235		95		5,359,631		95
Covered loans ⁽¹⁾	134,966		3		173,677		3		235,720		4		273,497		5		308,556		5
Total loans	$	5,556,724	100	%	$	5,568,315	100	%	$	5,712,551	100	%	$	5,586,732	100	%	$	5,668,187	100	%


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

The following table sets forth the composition of the loan portfolio (excluding loans held for sale) based on quarterly average balances for the periods indicated (dollars in thousands):



	2Q14				1Q14				4Q13				3Q13				2Q13
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial related credits:
Commercial loans	$	1,229,799	22	%	$	1,232,562	22	%	$	1,167,924	21	%	$	1,166,887	21	%	$	1,206,740	21	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,476,618		27		1,479,998		26		1,468,257		26		1,429,169		26		1,340,854		25
Commercial real estate	1,620,658		29		1,631,041		29		1,629,270		29		1,652,339		30		1,716,170		30
Construction real estate	133,557		2		140,920		3		141,041		3		128,115		2		133,705		2
Total commercial related credits	4,460,632		80		4,484,521		80		4,406,492		79		4,376,510		79		4,397,469		78
Other loans:
Residential real estate	309,848		6		311,466		5		315,303		5		307,555		5		306,978		5
Indirect vehicle	269,556		5		263,510		5		260,918		5		250,003		5		231,577		5
Home equity	252,891		5		263,283		5		271,898		5		277,122		5		286,640		5
Consumer loans	65,437		1		62,616		1		60,054		1		61,950		1		70,603		1
Total other loans	897,732		17		900,875		16		908,173		16		896,630		16		895,798		16
Gross loans excluding covered loans	5,358,364		97		5,385,396		96		5,314,665		95		5,273,140		95		5,293,267		94
Covered loans ⁽¹⁾	158,371		3		221,481		4		258,094		5		281,896		5		335,148		6
Total loans	$	5,516,735	100	%	$	5,606,877	100	%	$	5,572,759	100	%	$	5,555,036	100	%	$	5,628,415	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 criticized assets (excluding loans held for sale, credit-impaired loans and other real estate owned that were acquired as part of our FDIC-assisted transactions) as of the dates indicated (dollars in thousands):



	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Non-performing loans:
Non-accrual loans ⁽¹⁾	$	108,414		$	118,023		$	106,115		$	102,042		$	112,926
Loans 90 days or more past due, still accruing interest	2,363			747			446			410			2,322
Total non-performing loans	110,777			118,770			106,561			102,452			115,248
Other real estate owned	20,306			20,928			23,289			31,356			32,993
Repossessed assets	73			772			840			861			749
Total non-performing assets	131,156			140,470			130,690			134,669			148,990
Potential problem loans ⁽²⁾	63,477			68,785			79,589			96,410			131,746
Total classified assets	194,633			209,255			210,279			231,079			280,736
Special mention	47,284			71,311			68,277			73,931			85,835
Total criticized assets	$	241,917		$	280,566		$	278,556		$	305,010		$	366,571

Total allowance for loan losses	$	100,910		$	106,752		$	111,746		$	118,031		$	123,685
Accruing restructured loans ⁽³⁾	27,135			25,797			29,430			29,911			28,270
Total non-performing loans to total loans	1.99		%	2.13		%	1.87		%	1.83		%	2.03		%
Total non-performing assets to total assets	1.34			1.49			1.36			1.45			1.59
Allowance for loan losses to non-performing loans	91.09			89.88			104.87			115.21			107.32


⁽¹⁾	Includes $14.5 million, $15.6 million, $25.0 million, $22.3 million and $20.9 million of restructured loans on non-accrual status at June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013 and June 30, 2013, 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.


⁽³⁾	Accruing restructured loans consist 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 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 (in thousands):



	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
Commercial and lease	$	36,807	$	42,532	$	22,348	$	22,293	$	25,968
Commercial real estate	48,751		49,541		58,292		54,276		62,335
Construction real estate	337		782		475		496		519
Consumer related	24,882		25,915		25,446		25,387		26,426
Total non-performing loans	$	110,777	$	118,770	$	106,561	$	102,452	$	115,248

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



	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
Balance at the beginning of quarter	$	20,928		$	23,289		$	31,356		$	32,993		$	31,462
Transfers in at fair value less estimated costs to sell	112			539			104			1,846			3,503
Capitalized other real estate owned costs	—			—			21			45			8
Fair value adjustments	(286		)	(140		)	(176		)	(741		)	1,170
Net gains (losses) on sales of other real estate owned	82			18			1,007			(13		)	960
Cash received upon disposition	(530		)	(2,778		)	(9,023		)	(2,774		)	(4,110		)
Balance at the end of quarter	$	20,306		$	20,928		$	23,289		$	31,356		$	32,993

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



																Six Months Ended
																June 30,
	2Q14			1Q14			4Q13			3Q13			2Q13			2014			2013
Allowance for credit losses, balance at the beginning of period	$	108,395		$	113,462		$	119,725		$	125,497		$	124,733		$	113,462		$	128,279
Provision for credit losses	(1,950		)	1,150			(3,000		)	(3,304		)	500			(800		)	500
Charge-offs:
Commercial loans	446			90			676			1,686			433			536			1,344
Commercial loans collateralized by assignment of lease payments (lease loans)	40			—			—			—			—			40			—
Commercial real estate	1,727			7,156			2,386			1,236			1,978			8,883			3,895
Construction real estate	14			56			125			26			747			70			829
Residential real estate	433			265			722			713			399			698			1,361
Home equity	817			619			1,145			437			1,323			1,436			2,110
Indirect vehicle	583			920			981			572			629			1,503			1,358
Consumer loans	590			495			572			485			451			1,085			1,016
Total charge-offs	4,650			9,601			6,607			5,155			5,960			14,251			11,913
Recoveries:
Commercial loans	696			1,628			1,348			579			777			2,324			1,229
Commercial loans collateralized by assignment of lease payments (lease loans)	130			—			—			—			987			130			1,131
Commercial real estate	567			485			672			966			3,647			1,052			4,387
Construction real estate	77			99			789			420			131			176			407
Residential real estate	6			519			18			48			199			525			413
Home equity	127			133			152			228			100			260			214
Indirect vehicle	439			442			300			372			324			881			739
Consumer loans	68			78			65			74			59			146			111
Total recoveries	2,110			3,384			3,344			2,687			6,224			5,494			8,631
Total net charge-offs (recoveries)	2,540			6,217			3,263			2,468			(264		)	8,757			3,282
Allowance for credit losses	103,905			108,395			113,462			119,725			125,497			103,905			125,497
Allowance for unfunded credit commitments	(2,995		)	(1,643		)	(1,716		)	(1,694		)	(1,812		)	(2,995		)	(1,812		)
Allowance for loan losses	$	100,910		$	106,752		$	111,746		$	118,031		$	123,685		$	100,910		$	123,685

Total loans, excluding loans held for sale	$	5,556,724		$	5,568,315		$	5,712,551		$	5,586,732		$	5,668,187		$	5,556,724		$	5,668,187
Average loans, excluding loans held for sale	5,516,735			5,606,877			5,572,759			5,555,036			5,628,415			5,561,559			5,648,277
Ratio of allowance for loan losses to total loans, excluding loans held for sale	1.82		%	1.92		%	1.96		%	2.11		%	2.18		%	1.82		%	2.18		%
Net loan charge-offs (recoveries) to average loans, excluding loans held for sale (annualized)	0.18			0.45			0.23			0.18			(0.02		)	0.32			0.12

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



	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
Commercial related loans:
General reserve	$	70,855	$	75,695	$	78,270	$	87,112	$	87,836
Specific reserve	10,270		11,325		12,834		12,378		16,679
Consumer related reserve	19,785		19,732		20,642		18,541		19,170
Total allowance for loan losses	$	100,910	$	106,752	$	111,746	$	118,031	$	123,685

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 (in thousands):



	6/30/2014		3/31/2014			12/31/2013			9/30/2013			6/30/2013
Securities available for sale:
Fair value
Government sponsored agencies and enterprises	$	51,727	$	51,836		$	52,068		$	52,527		$	33,935
States and political subdivisions	19,498		19,350			19,143			19,312			684,710
Mortgage-backed securities	797,783		726,439			754,174			744,722			701,201
Corporate bonds	275,529		273,853			283,070			263,021			215,256
Equity securities	10,421		10,572			10,457			10,541			10,570
Total fair value	$	1,154,958	$	1,082,050		$	1,118,912		$	1,090,123		$	1,645,672

Amortized cost
Government sponsored agencies and enterprises	$	50,096	$	50,291		$	50,486		$	50,678		$	32,050
States and political subdivisions	19,228		19,285			19,398			19,461			669,791
Mortgage-backed securities	786,496		717,548			747,306			736,070			690,681
Corporate bonds	271,351		272,490			284,083			265,293			219,362
Equity securities	10,414		10,703			10,649			10,574			10,560
Total amortized cost	$	1,137,585	$	1,070,317		$	1,111,922		$	1,082,076		$	1,622,444

Unrealized gain, net
Government sponsored agencies and enterprises	$	1,631	$	1,545		$	1,582		$	1,849		$	1,885
States and political subdivisions	270		65			(255		)	(149		)	14,919
Mortgage-backed securities	11,287		8,891			6,868			8,652			10,520
Corporate bonds	4,178		1,363			(1,013		)	(2,272		)	(4,106		)
Equity securities	7		(131		)	(192		)	(33		)	10
Total unrealized gain, net	$	17,373	$	11,733		$	6,990		$	8,047		$	23,228

Securities held to maturity, at amortized cost:
States and political subdivisions	$	993,937	$	940,610		$	932,955		$	941,273		$	282,655
Mortgage-backed securities	247,455		248,082			249,578			252,271			253,779
Total amortized cost	$	1,241,392	$	1,188,692		$	1,182,533		$	1,193,544		$	536,434

Securities of states and political subdivisions with an approximate fair value of $656.6 million were transferred from available for sale to held to maturity during the third quarter of 2013, which is the new cost basis.

DEPOSIT MIX

The following table shows the composition of deposits based on period end balances as of the dates indicated (dollars in thousands):



	6/30/2014				3/31/2014				12/31/2013				9/30/2013				6/30/2013
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	2,605,367	34	%	$	2,435,868	32	%	$	2,375,863	32	%	$	2,269,367	31	%	$	2,230,384	30	%
Money market and NOW accounts	2,932,089		38		2,772,766		37		2,682,419		36		2,680,127		37		2,718,989		37
Savings accounts	872,324		11		865,910		12		855,394		12		843,671		12		845,742		11
Total low cost deposits	6,409,780		83		6,074,544		81		5,913,676		80		5,793,165		80		5,795,115		78
Certificates of deposit:
Certificates of deposit	1,137,262		14		1,188,896		16		1,243,433		17		1,266,989		17		1,357,777		18
Brokered deposit accounts	216,022		3		222,307		3		224,150		3		238,532		3		292,504		4
Total certificates of deposit	1,353,284		17		1,411,203		19		1,467,583		20		1,505,521		20		1,650,281		22
Total deposits	$	7,763,064	100	%	$	7,485,747	100	%	$	7,381,259	100	%	$	7,298,686	100	%	$	7,445,396	100	%

The following table shows the composition of deposits based on quarterly average balances for the periods indicated (dollars in thousands):



	2Q14				1Q14				4Q13				3Q13				2Q13
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	2,476,396	33	%	$	2,372,866	32	%	$	2,352,901	32	%	$	2,258,357	31	%	$	2,179,284	30	%
Money market and NOW accounts	2,880,910		38		2,727,620		37		2,685,343		36		2,695,479		37		2,675,189		36
Savings accounts	868,694		11		862,197		12		848,734		12		844,647		11		840,154		11
Total low cost deposits	6,226,000		82		5,962,683		81		5,886,978		80		5,798,483		79		5,694,627		77
Certificates of deposit:
Certificates of deposit	1,157,805		15		1,210,189		16		1,250,049		17		1,309,539		17		1,406,693		19
Brokered deposit accounts	220,396		3		223,926		3		229,635		3		263,448		4		294,277		4
Total certificates of deposit	1,378,201		18		1,434,115		19		1,479,684		20		1,572,987		21		1,700,970		23
Total deposits	$	7,604,201	100	%	$	7,396,798	100	%	$	7,366,662	100	%	$	7,371,470	100	%	$	7,395,597	100	%

Average low cost deposits increased by $263.3 million (+4.4%) and $531.4 million (+9.3%) from the first quarter of 2014 and second quarter of 2013, respectively, to the second quarter of 2014, driven by growth in noninterest bearing deposits. Our deposit mix improved over the past twelve months as average low cost deposits now comprise 82% of total deposits in the second quarter of 2014 compared to 77% in the second quarter of 2013.

CAPITAL

Tangible book value per common share increased to $16.81 at June 30, 2014 compared to $15.60 a year ago primarily due to net income less dividends. Our regulatory capital ratios remain strong. MB Financial Bank, N.A. was categorized as “well capitalized” at June 30, 2014 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 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, including without limitation litigation relating to the pending Taylor Capital merger; (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.

TABLES TO FOLLOW

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

As of the dates indicated

(In thousands)



	6/30/2014			3/31/2014			12/31/2013			9/30/2013			6/30/2013
ASSETS
Cash and due from banks	$	294,475		$	268,803		$	205,193		$	215,017		$	152,302
Interest earning deposits with banks	466,820			244,819			268,266			41,700			280,618
Total cash and cash equivalents	761,295			513,622			473,459			256,717			432,920
Federal funds sold	10,000			7,500			42,950			47,500			7,500
Investment securities:
Securities available for sale, at fair value	1,154,958			1,082,050			1,118,912			1,090,123			1,645,672
Securities held to maturity, at amortized cost	1,241,392			1,188,692			1,182,533			1,193,544			536,434
Non-marketable securities - FHLB and FRB Stock	51,432			51,432			51,417			50,870			50,870
Total investment securities	2,447,782			2,322,174			2,352,862			2,334,537			2,232,976
Loans held for sale	1,219			802			629			1,120			2,528
Loans:
Total loans, excluding covered loans	5,421,758			5,394,638			5,476,831			5,313,235			5,359,631
Covered loans	134,966			173,677			235,720			273,497			308,556
Total loans	5,556,724			5,568,315			5,712,551			5,586,732			5,668,187
Less: Allowance for loan losses	100,910			106,752			111,746			118,031			123,685
Net loans	5,455,814			5,461,563			5,600,805			5,468,701			5,544,502
Lease investments, net	127,194			122,589			131,089			112,491			113,958
Premises and equipment, net	224,245			221,711			221,065			220,574			219,783
Cash surrender value of life insurance	131,842			131,008			130,181			129,332			130,565
Goodwill	423,369			423,369			423,369			423,369			423,369
Other intangibles	21,014			22,188			23,428			24,917			26,430
Other real estate owned, net	20,306			20,928			23,289			31,356			32,993
Other real estate owned related to FDIC transactions	15,349			22,682			20,472			24,792			19,014
FDIC indemnification asset	4,607			8,055			11,675			11,074			16,337
Other assets	174,655			159,112			186,154			171,138			166,784
Total assets	$	9,818,691		$	9,437,303		$	9,641,427		$	9,257,618		$	9,369,659
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing	$	2,605,367		$	2,435,868		$	2,375,863		$	2,269,367		$	2,230,384
Interest bearing	5,157,697			5,049,879			5,005,396			5,029,319			5,215,012
Total deposits	7,763,064			7,485,747			7,381,259			7,298,686			7,445,396
Short-term borrowings	229,809			189,872			493,389			240,600			230,547
Long-term borrowings	71,473			65,664			62,159			62,428			62,786
Junior subordinated notes issued to capital trusts	152,065			152,065			152,065			152,065			152,065
Accrued expenses and other liabilities	236,964			200,175			225,873			194,371			182,784
Total liabilities	8,453,375			8,093,523			8,314,745			7,948,150			8,073,578
Stockholders' Equity
Common stock	553			553			551			551			550
Additional paid-in capital	742,824			740,245			738,053			736,294			736,281
Retained earnings	611,741			595,301			581,998			564,779			547,116
Accumulated other comprehensive income	13,034			10,362			8,383			9,918			14,231
Treasury stock	(4,295		)	(4,132		)	(3,747		)	(3,525		)	(3,558		)
Controlling interest stockholders' equity	1,363,857			1,342,329			1,325,238			1,308,017			1,294,620
Noncontrolling interest	1,459			1,451			1,444			1,451			1,461
Total stockholders' equity	1,365,316			1,343,780			1,326,682			1,309,468			1,296,081
Total liabilities and stockholders' equity	$	9,818,691		$	9,437,303		$	9,641,427		$	9,257,618		$	9,369,659

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data) (Unaudited)



															Six Months Ended
															June 30,
	2Q14			1Q14		4Q13			3Q13			2Q13			2014			2013
Interest income:
Loans	$	55,905		$	56,244	$	58,053		$	60,115		$	59,581		$	112,149		$	120,374
Investment securities:
Taxable	8,794			8,146		7,334			6,330			6,280			16,940			12,419
Nontaxable	8,285			8,067		8,166			8,175			8,163			16,352			16,224
Federal funds sold	4			5		6			7			2			9			2
Other interest earning accounts	277			113		270			193			92			390			227
Total interest income	73,265			72,575		73,829			74,820			74,118			145,840			149,246
Interest expense:
Deposits	3,754			3,769		3,966			4,433			5,132			7,523			10,841
Short-term borrowings	95			100		227			112			116			195			283
Long-term borrowings and junior subordinated notes	1,344			1,378		1,373			1,367			1,390			2,722			2,957
Total interest expense	5,193			5,247		5,566			5,912			6,638			10,440			14,081
Net interest income	68,072			67,328		68,263			68,908			67,480			135,400			135,165
Provision for credit losses	(1,950		)	1,150		(3,000		)	(3,304		)	500			(800		)	500
Net interest income after provision for credit losses	70,022			66,178		71,263			72,212			66,980			136,200			134,665
Non-interest income:
Capital markets and international banking service fees	1,360			978		841			972			939			2,338			1,747
Commercial deposit and treasury management fees	7,106			7,144		6,545			6,327			6,029			14,250			11,995
Lease financing, net	14,853			13,196		15,808			14,070			15,102			28,049			31,365
Trust and asset management fees	5,405			5,207		4,975			4,799			4,874			10,612			9,368
Card fees	3,304			2,701		2,838			2,745			2,735			6,005			5,430
Loan service fees	916			965		1,214			1,427			1,911			1,881			2,922
Consumer and other deposit service fees	3,156			2,935		3,481			3,648			3,593			6,091			6,839
Brokerage fees	1,356			1,325		1,227			1,289			1,234			2,681			2,391
Net (loss) gain on securities available for sale	(87		)	317		(15		)	1			14			230			13
Increase in cash surrender value of life insurance	834			827		848			851			842			1,661			1,686
Net (loss) gain on sale of other assets	(24		)	7		(323		)	—			—			(17		)	—
Accretion of FDIC indemnification asset	28			31		35			64			100			59			243
Net gain on sale of loans	187			59		342			177			506			246			1,145
Other operating income	1,534			920		1,229			1,337			1,060			2,454			2,498
Total non-interest income	39,928			36,612		39,045			37,707			38,939			76,540			77,642
Non-interest expense:
Salaries and employee benefits	46,622			44,377		45,517			44,918			43,909			90,999			87,423
Occupancy and equipment expense	9,518			9,592		9,269			8,797			9,408			19,110			18,812
Computer services and telecommunication expense	5,079			5,084		5,509			4,870			4,617			10,163			8,504
Advertising and marketing expense	2,221			2,081		2,085			1,917			2,167			4,302			4,270
Professional and legal expense	1,567			1,779		3,057			3,102			1,353			3,346			2,648
Other intangible amortization expense	1,174			1,240		1,489			1,513			1,538			2,414			3,082
Net loss (gain) recognized on other real estate owned	191			187		(634		)	791			(2,015		)	378			(1,685		)
Other real estate expense, net	337			396		175			240			193			733			332
Other operating expenses	11,321			11,311		10,174			10,117			9,083			22,632			18,296
Total non-interest expense	78,030			76,047		76,641			76,265			70,253			154,077			141,682
Income before income taxes	31,920			26,743		33,667			33,654			35,666			58,663			70,625
Income tax expense	8,814			6,774		9,811			9,254			10,373			15,588			20,426
Net income	$	23,106		$	19,969	$	23,856		$	24,400		$	25,293		$	43,075		$	50,199



											Six Months Ended
											June 30,
	2Q14		1Q14		4Q13		3Q13		2Q13		2014		2013
Common share data:
Basic earnings per common share	$	0.42	$	0.37	$	0.44	$	0.45	$	0.46	$	0.79	$	0.92
Diluted earnings per common share	0.42		0.36		0.43		0.44		0.46		0.78		0.92
Weighted average common shares outstanding for basic earnings per common share	54,669,868		54,639,951		54,622,584		54,565,089		54,436,043		54,654,992		54,423,992
Weighted average common shares outstanding for diluted earnings per common share	55,200,054		55,265,188		55,237,160		55,130,653		54,868,075		55,232,703		54,802,427



Selected Financial Data:
																Six Months Ended
																June 30,
	2Q14			1Q14			4Q13			3Q13			2Q13			2014			2013
Performance Ratios:
Annualized return on average assets	0.97		%	0.86		%	0.99		%	1.05		%	1.09		%	0.92		%	1.08		%
Annualized return on average equity	6.86			6.07			7.19			7.46			7.82			6.47			7.85
Annualized cash return on average tangible equity⁽¹⁾	10.47			9.39			11.23			11.74			12.31			9.94			12.42
Net interest rate spread	3.40			3.51			3.37			3.52			3.46			3.46			3.45
Cost of funds⁽²⁾	0.26			0.27			0.27			0.30			0.34			0.27			0.36
Efficiency ratio⁽³⁾	67.51			66.67			67.12			65.11			64.26			67.10			63.68
Annualized net non-interest expense to average assets⁽⁴⁾	1.54			1.58			1.52			1.52			1.42			1.56			1.40
Core non-interest income to revenues ⁽⁵⁾	35.22			33.41			34.68			33.51			35.01			34.33			34.78
Net interest margin	3.26			3.36			3.23			3.37			3.33			3.31			3.33
Tax equivalent effect	0.27			0.28			0.27			0.29			0.28			0.28			0.27
Net interest margin - fully tax equivalent basis⁽⁶⁾	3.53			3.64			3.50			3.66			3.61			3.59			3.60
Loans to deposits	71.58			74.39			77.39			76.54			76.13			71.58			76.13
Asset Quality Ratios:
Non-performing loans⁽⁷⁾ to total loans	1.99		%	2.13		%	1.87		%	1.83		%	2.03		%	1.99		%	2.03		%
Non-performing assets⁽⁷⁾ to total assets	1.34			1.49			1.36			1.45			1.59			1.34			1.59
Allowance for loan losses to non-performing loans⁽⁷⁾	91.09			89.88			104.87			115.21			107.32			91.09			107.32
Allowance for loan losses to total loans	1.82			1.92			1.96			2.11			2.18			1.82			2.18
Net loan charge-offs (recoveries) to average loans (annualized)	0.18			0.45			0.23			0.18			(0.02		)	0.32			0.12
Capital Ratios:
Tangible equity to tangible assets⁽⁸⁾	9.89		%	10.07		%	9.65		%	9.87		%	9.58		%	9.89		%	9.58		%
Tangible common equity to risk weighted assets⁽⁹⁾	13.97			13.82			13.27			13.40			13.23			13.97			13.23
Book value per common share⁽¹⁰⁾	$	24.73		$	24.37		$	24.14		$	23.82		$	23.63		$	24.73		$	23.63
Less: goodwill and other intangible assets, net of benefit, per common share	7.92			7.94			7.98			7.99			8.03			7.92			8.03
Tangible book value per common share⁽¹¹⁾	$	16.81		$	16.43		$	16.16		$	15.83		$	15.60		$	16.81		$	15.60

Total capital (to risk-weighted assets)	17.18		%	17.09		%	16.53		%	16.70		%	16.48		%	17.18		%	16.48		%
Tier 1 capital (to risk-weighted assets)	15.92			15.84			15.28			15.44			15.22			15.92			15.22
Tier 1 capital (to average assets)	11.61			11.65			11.22			11.39			11.19			11.61			11.19
Tier 1 common capital (to risk-weighted assets)	13.71			13.59			13.07			13.17			12.94			13.71			12.94


⁽¹⁾	Net cash flow (net income, plus other intangibles amortization expense, net of tax benefit) divided by average tangible equity (average common stockholders' 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 gains and losses on sale of other assets, and increase in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, and net gains and losses recognized on other real estate owned, merger-related expenses, loss on low to moderate income real estate investment and increase 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 gains and losses on sale of other assets, and increase in market value of assets held in trust for deferred compensation from the non-interest income components, and excluding net gains and losses on other real estate owned, merger-related expenses, loss on low to moderate income real estate investment and increase 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—Second Quarter Results.”

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



	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
Stockholders' equity - as reported	$	1,365,316	$	1,343,780	$	1,326,682	$	1,309,468	$	1,296,081
Less: goodwill	423,369		423,369		423,369		423,369		423,369
Less: other intangible assets, net of tax benefit	13,659		14,422		15,228		16,196		17,180
Tangible equity	$	928,288	$	905,989	$	888,085	$	869,903	$	855,532

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



	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
Total assets - as reported	$	9,818,691	$	9,437,303	$	9,641,427	$	9,257,618	$	9,369,659
Less: goodwill	423,369		423,369		423,369		423,369		423,369
Less: other intangible assets, net of tax benefit	13,659		14,422		15,228		16,196		17,180
Tangible assets	$	9,381,663	$	8,999,512	$	9,202,830	$	8,818,053	$	8,929,110

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



											Six Months Ended
											June 30,
	2Q14		1Q14		4Q13		3Q13		2Q13		2014		2013
Average common stockholders' equity - as reported	$	1,351,604	$	1,335,223	$	1,315,804	$	1,297,498	$	1,297,364	$	1,343,458	$	1,289,187
Less: average goodwill	423,369		423,369		423,369		423,369		423,369		423,369		423,369
Less: average other intangible assets, net of tax benefit	13,990		14,758		15,647		16,620		17,605		14,372		18,106
Average tangible common equity	$	914,245	$	897,096	$	876,788	$	857,509	$	856,390	$	905,717	$	847,712

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



											Six Months Ended
											June 30,
	2Q14		1Q14		4Q13		3Q13		2Q13		2014		2013
Net income - as reported	$	23,106	$	19,969	$	23,856	$	24,400	$	25,293	$	43,075	$	50,199
Add: other intangible amortization expense, net of tax benefit	763		806		968		983		1,000		1,569		2,003
Net cash flow	$	23,869	$	20,775	$	24,824	$	25,383	$	26,293	$	44,644	$	52,202

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



	6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013
Tier 1 capital - as reported	$	1,058,504	$	1,038,600	$	1,022,512	$	1,002,883	$	983,997
Less: qualifying trust preferred securities	147,500		147,500		147,500		147,500		147,500
Tier 1 common capital	$	911,004	$	891,100	$	875,012	$	855,383	$	836,497

Efficiency Ratio Calculation (Dollars in Thousands)



																Six Months Ended
																June 30,
	2Q14			1Q14			4Q13			3Q13			2Q13			2014			2013
Non-interest expense	$	78,030		$	76,047		$	76,641		$	76,265		$	70,253		$	154,077		$	141,682
Less net loss (gain) recognized on other real estate owned	191			187			(634		)	791			(2,015		)	378			(1,685		)
Less merger related expenses	488			680			724			1,759			—			1,168			—
Less loss on low to moderate income real estate investment	96			2,028			—			—			—			2,124			—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Non-interest expense - as adjusted	$	76,855		$	73,000		$	75,963		$	73,256		$	72,247		$	149,855		$	142,863

Net interest income	$	68,072		$	67,328		$	68,263		$	68,908		$	67,480		$	135,400		$	135,165
Tax equivalent adjustment	5,677			5,581			5,655			5,905			5,594			11,258			11,149
Net interest income on a fully tax equivalent basis	73,749			72,909			73,918			74,813			73,074			146,658			146,314
Plus non-interest income	39,928			36,612			39,045			37,707			38,939			76,540			77,642
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	449			445			457			458			454			894			908
Less net (loss) gain on investment securities	(87		)	317			(15		)	1			14			230			13
Less net (loss) gain on sale of other assets	(24		)	7			(323		)	—			—			(17		)	—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Net interest income plus non-interest income - as adjusted	$	113,837		$	109,490		$	113,170		$	112,518		$	112,432		$	223,327		$	224,347

Efficiency ratio	67.51		%	66.67		%	67.12		%	65.11		%	64.26		%	67.10		%	63.68		%
Efficiency ratio (without adjustments)	72.25		%	73.16		%	71.42		%	71.53		%	66.02		%	72.70		%	66.58		%

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



																Six Months Ended
																June 30,
	2Q14			1Q14			4Q13			3Q13			2Q13			2014			2013
Non-interest expense	$	78,030		$	76,047		$	76,641		$	76,265		$	70,253		$	154,077		$	141,682
Less net loss (gain) recognized on other real estate owned	191			187			(634		)	791			(2,015		)	378			(1,685		)
Less merger related expenses	488			680			724			1,759			—			1,168			—
Less loss on low to moderate income real estate investment	96			2,028			—			—			—			2,124			—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Non-interest expense - as adjusted	76,855			73,000			75,963			73,256			72,247			149,855			142,863

Non-interest income	39,928			36,612			39,045			37,707			38,939			76,540			77,642
Less net (loss) gain on investment securities	(87		)	317			(15		)	1			14			230			13
Less net (loss) gain on sale of other assets	(24		)	7			(323		)	—			—			(17		)	—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Non-interest income - as adjusted	39,639			36,136			38,795			37,247			38,904			75,775			77,125
Less tax equivalent adjustment on the increase in cash surrender value of life insurance	449			445			457			458			454			894			908
Net non-interest expense	$	36,767		$	36,419		$	36,711		$	35,551		$	32,889		$	73,186		$	64,830

Average assets	$	9,575,896		$	9,367,942		$	9,567,388		$	9,261,291		$	9,289,382		$	9,472,493		$	9,369,042

Annualized net non-interest expense to average assets	1.54		%	1.58		%	1.52		%	1.52		%	1.42		%	1.56		%	1.40		%

Annualized net non-interest expense to average assets (without adjustments)	1.60		%	1.71		%	1.56		%	1.65		%	1.35		%	1.65		%	1.38		%

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



																Six Months Ended
																June 30,
	2Q14			1Q14			4Q13			3Q13			2Q13			2014			2013
Non-interest income	$	39,928		$	36,612		$	39,045		$	37,707		$	38,939		$	76,540		$	77,642
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	449			445			457			458			454			894			908
Less net (loss) gain on investment securities	(87		)	317			(15		)	1			14			230			13
Less net (loss) gain on sale of other assets	(24		)	7			(323		)	—			—			(17		)	—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Non-interest income - as adjusted	$	40,088		$	36,581		$	39,252		$	37,705		$	39,358		$	76,669		$	78,033

Net interest income	$	68,072		$	67,328		$	68,263		$	68,908		$	67,480		$	135,400		$	135,165
Tax equivalent adjustment	5,677			5,581			5,655			5,905			5,594			11,258			11,149
Net interest income on a fully tax equivalent basis	73,749			72,909			73,918			74,813			73,074			146,658			146,314
Plus non-interest income	39,928			36,612			39,045			37,707			38,939			76,540			77,642
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	449			445			457			458			454			894			908
Less net (loss) gain on investment securities	(87		)	317			(15		)	1			14			230			13
Less net (loss) gain on sale of other assets	(24		)	7			(323		)	—			—			(17		)	—
Less increase in market value of assets held in trust for deferred compensation	400			152			588			459			21			552			504
Total revenue - as adjusted and on a fully tax equivalent basis	$	113,837		$	109,490		$	113,170		$	112,518		$	112,432		$	223,327		$	224,347

Total revenue - unadjusted	$	108,000		$	103,940		$	107,308		$	106,615		$	106,419		$	211,940		$	212,807

Core non-interest income to revenues ratio	35.22		%	33.41		%	34.68		%	33.51		%	35.01		%	34.33		%	34.78		%

Non-interest income to revenues ratio (without adjustments)	36.97		%	35.22		%	36.39		%	35.37		%	36.59		%	36.11		%	36.48		%

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):



	2Q14						2Q13						1Q14
	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	$	1,229,799	$	11,912	3.83	%	$	1,206,740	12,613		4.18	%	$	1,232,562	$	12,312	4.00	%
Commercial loans collateralized by assignment of lease payments	1,476,618		14,693		3.98		1,340,854		12,987		3.87		1,479,998		14,319		3.87
Real estate commercial	1,620,658		17,008		4.15		1,718,979		19,736		4.54		1,631,041		17,332		4.25
Real estate construction	133,557		1,274		3.77		133,705		1,270		3.76		140,920		1,278		3.63
Total commercial related credits	4,460,632		44,887		3.98		4,400,278		46,606		4.19		4,484,521		45,241		4.04
Other loans
Real estate residential	310,345		2,809		3.62		306,978		3,042		3.96		311,760		2,992		3.84
Home equity	252,891		2,678		4.25		286,640		3,076		4.30		263,283		2,712		4.18
Indirect	269,556		3,579		5.33		231,577		3,176		5.50		263,510		3,391		5.22
Consumer loans	65,437		725		4.44		70,603		624		3.54		62,616		676		4.38
Total other loans	898,229		9,791		4.37		895,798		9,918		4.44		901,169		9,771		4.40
Total loans, excluding covered loans	5,358,861		54,678		4.09		5,296,076		56,524		4.28		5,385,690		55,012		4.14
Covered loans	158,371		2,441		6.18		335,148		4,255		5.09		221,481		2,470		4.52
Total loans	5,517,232		57,119		4.15		5,631,224		60,779		4.33		5,607,171		57,482		4.16
Taxable investment securities	1,434,300		8,794		2.45		1,377,368		6,280		1.82		1,384,371		8,146		2.35
Investment securities exempt from federal income taxes ⁽³⁾	966,518		12,748		5.28		933,442		12,559		5.38		935,863		12,410		5.30
Federal funds sold	4,359		4		0.36		2,879		2		0.27		5,889		5		0.34
Other interest earning deposits	448,173		277		0.25		183,010		92		0.20		187,049		113		0.25
Total interest earning assets	$	8,370,582	$	78,942	3.78	%	$	8,127,923	$	79,712	3.93	%	$	8,120,343	$	78,156	3.90	%
Non-interest earning assets	1,205,314						1,161,459						1,247,599
Total assets	$	9,575,896					$	9,289,382					$	9,367,942
Interest Bearing Liabilities:
Core funding:
Money market and NOW accounts	$	2,880,910	$	899	0.13	%	$	2,675,189	$	833	0.12	%	$	2,727,620	$	848	0.13	%
Savings accounts	868,694		97		0.04		840,154		136		0.06		862,197		109		0.05
Certificates of deposit	1,157,805		1,124		0.40		1,406,693		1,893		0.55		1,210,189		1,174		0.40
Customer repurchase agreements	184,178		95		0.21		187,496		101		0.22		190,466		96		0.20
Total core funding	5,091,587		2,215		0.17		5,109,532		2,963		0.23		4,990,472		2,227		0.18
Wholesale funding:
Brokered accounts (includes fee expense)	220,396		1,634		2.97		294,277		2,271		3.10		223,926		1,638		2.97
Other borrowings	236,292		1,344		2.25		216,372		1,404		2.57		231,805		1,382		2.38
Total wholesale funding	456,688		2,978		2.33		510,649		3,675		2.55		455,731		3,020		2.38
Total interest bearing liabilities	$	5,548,275	$	5,193	0.38	%	$	5,620,181	$	6,638	0.47	%	$	5,446,203	$	5,247	0.39	%
Non-interest bearing deposits	2,476,396						2,179,284						2,372,866
Other non-interest bearing liabilities	199,621						192,553						213,650
Stockholders' equity	1,351,604						1,297,364						1,335,223
Total liabilities and stockholders' equity	$	9,575,896					$	9,289,382					$	9,367,942
Net interest income/interest rate spread ⁽⁴⁾			$	73,749	3.40	%			$	73,074	3.46	%			$	72,909	3.51	%
Taxable equivalent adjustment			5,677						5,594						5,581
Net interest income, as reported			$	68,072					$	67,480					$	67,328
Net interest margin ⁽⁵⁾					3.26	%					3.33	%					3.36	%
Tax equivalent effect					0.27	%					0.28	%					0.28	%
Net interest margin on a fully tax equivalent basis ⁽⁵⁾					3.53	%					3.61	%					3.64	%


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


⁽²⁾	Interest income includes amortization of deferred loan origination fees of $28 thousand and $817 thousand for the three months ended June 30, 2014 and June 30, 2013, respectively, deferred loan origination costs of $55 thousand for the three months ended March 31, 2014.


⁽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.



	Six Months Ended June 30,
	2014						2013
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Interest Earning Assets:
Loans ^{(1) (2) (3)}:
Commercial related credits
Commercial	$	1,231,171	$	24,224	3.91	%	$	1,206,324	25,172		4.15	%
Commercial loans collateralized by assignment of lease payments	1,478,299		29,012		3.93		1,320,946		25,786		3.90
Real estate commercial	1,625,821		34,340		4.20		1,726,986		40,480		4.66
Real estate construction	137,219		2,552		3.70		123,694		2,390		3.84
Total commercial related credits	4,472,510		90,128		4.01		4,377,950		93,828		4.26
Other loans
Real estate residential	311,049		5,801		3.73		309,847		6,327		4.08
Home equity	258,060		5,390		4.21		292,319		6,266		4.32
Indirect	266,549		6,970		5.27		221,919		6,198		5.63
Consumer loans	64,034		1,401		4.41		70,484		1,231		3.52
Total other loans	899,692		19,562		4.38		894,569		20,022		4.51
Total loans, excluding covered loans	5,372,202		109,690		4.12		5,272,519		113,850		4.35
Covered loans	189,751		4,911		5.22		379,671		8,937		4.75
Total loans	5,561,953		114,601		4.16		5,652,190		122,787		4.38
Taxable investment securities	1,409,473		16,940		2.40		1,430,539		12,419		1.74
Investment securities exempt from federal income taxes ⁽³⁾	951,275		25,158		5.29		922,652		24,960		5.41
Federal funds sold	5,120		9		0.35		1,448		2		0.27
Other interest earning deposits	318,332		390		0.25		189,994		227		0.24
Total interest earning assets	$	8,246,153	$	157,098	3.84	%	$	8,196,823	$	160,395	3.95	%
Non-interest earning assets	1,226,340						1,172,219
Total assets	$	9,472,493					$	9,369,042
Interest Bearing Liabilities:
Core funding:
Money market and NOW accounts	$	2,804,688	$	1,747	0.13	%	$	2,706,169	$	1,760	0.13	%
Savings accounts	865,463		206		0.05		831,233		272		0.07
Certificates of deposit	1,183,852		2,298		0.40		1,459,354		4,290		0.61
Customer repurchase agreements	187,305		191		0.21		184,593		199		0.22
Total core funding	5,041,308		4,442		0.18		5,181,349		6,521		0.25
Wholesale funding:
Brokered accounts (includes fee expense)	222,151		3,272		2.97		294,286		4,520		3.10
Other borrowings	234,062		2,726		2.32		237,636		3,040		2.54
Total wholesale funding	456,213		5,998		2.36		531,922		7,560		2.53
Total interest bearing liabilities	$	5,497,521	$	10,440	0.38	%	$	5,713,271	$	14,081	0.50	%
Non-interest bearing deposits	2,424,917						2,162,266
Other non-interest bearing liabilities	206,597						204,318
Stockholders' equity	1,343,458						1,289,187
Total liabilities and stockholders' equity	$	9,472,493					$	9,369,042
Net interest income/interest rate spread ⁽⁴⁾			$	146,658	3.46	%			$	146,314	3.45	%
Taxable equivalent adjustment			11,258						11,149
Net interest income, as reported			$	135,400					$	135,165
Net interest margin (5)					3.31	%					3.33	%
Tax equivalent effect					0.28	%					0.27	%
Net interest margin on a fully tax equivalent basis ⁽⁵⁾					3.59	%					3.60	%


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


⁽²⁾	Interest income includes amortization of deferred loan origination costs of $27 thousand and deferred loan origination fees $1.8 million for the six months ended June 30, 2014 and 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.

MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EXHIBIT 99 - July 23, 2014

Attached files

MB FINANCIAL INC /MD Reports