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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2004

Commission file number 0-24566-01

MB FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
(State or other jurisdiction of
incorporation or organization)
 
36-4460265
(I.R.S. Employer Identification No.)
 

801 West Madison Street, Chicago, Illinois 60607
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (312) 633-0333    


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
 
YES: x NO: o
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
 
YES: x NO: o
 
 
There were outstanding 28,620,667 shares of the registrant’s common stock as of November 8, 2004.
 

  
     
 

MB FINANCIAL, INC. AND SUBSIDIARIES
 
FORM 10-Q

September 30, 2004

INDEX


     
PART I.
FINANCIAL INFORMATION
  
     
Item 1.
Financial Statements
  
     
 
Consolidated Balance Sheets at September 30, 2004 and December 31, 2003 (Unaudited)
3 
     
 
Consolidated Statements of Income for the Three and Nine Months ended September 30, 2004 and 2003 (Unaudited)
4 
     
 
Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2004 and 2003 (Unaudited)
5 - 6 
     
 
Notes to Consolidated Financial Statements (Unaudited)
7 - 15 
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15 - 28 
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
29 - 31 
     
Item 4.
Controls and Procedures
31 
     
PART II.
OTHER INFORMATION
  
     
Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
32 
     
Item 6.
Exhibits
32 
     
 
Signatures
33 
     
 
     
 

PART I. - FINANCIAL INFORMATION

Item 1. - Financial Statements

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 2004 and December 31, 2003
(Amounts in thousands, except common share data)
(Unaudited)


 
September 30,
December 31,
 
2004
2003
     
ASSETS
    
Cash and due from banks
$                                94,607 
$                             91,283 
Interest bearing deposits with banks
8,306 
6,647 
Investment securities available for sale
1,380,803 
1,112,110 
Loans held for sale
593 
3,830 
Loans (net of allowance for loan losses of $44,392 at September 30, 2004 and $39,572 at December 31, 2003)
3,143,927 
2,786,222 
Lease investments, net
60,105 
73,440 
Premises and equipment, net
105,656 
80,410 
Cash surrender value of life insurance
85,298 
82,547 
Goodwill, net
123,644 
70,293 
Other intangibles, net
13,815 
7,560 
Other assets
52,657 
40,751 
     
Total assets
$                           5,069,411 
$                        4,355,093 
     
LIABILITIES AND STOCKHOLDERS' EQUITY
    
Liabilities
    
Deposits:
    
Noninterest bearing
$                              635,506 
$                           598,961 
Interest bearing
3,206,922 
2,833,074 
Total deposits
3,842,428 
3,432,035 
Short-term borrowings
493,136 
391,600 
Long-term borrowings
121,917 
21,464 
Junior subordinated notes issued to capital trusts
87,443 
87,443 
Accrued expenses and other liabilities
53,164 
47,058 
Total liabilities
4,598,088 
3,979,600 
     
Stockholders' Equity
    
 
Common stock, ($0.01 par value; authorized 40,000,000 shares; issued 28,846,986 shares at September 30, 2004 and 26,807,430 at December 31, 2003)
288 
268 
Additional paid-in capital
137,413 
71,837 
Retained earnings
333,523 
296,906 
Unearned compensation
(1,168)
(198)
Accumulated other comprehensive income
7,976 
8,531 
Less: 188,843 and 57,300 shares of treasury stock, at cost, at September 30, 2004 and December 31, 2003, respectively
(6,709)
(1,851)
Total stockholders' equity
471,323 
375,493 
     
Total liabilities and stockholders' equity
$                           5,069,411 
$                        4,355,093 
 
 
See Accompanying Notes to Consolidated Financial Statements.

  
  3  
 

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except common share data)
(Unaudited)
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
 
2004
2003
2004
2003
Interest income:
        
Loans
$                         47,546 
$                          40,767 
$                       128,452 
$                    124,219 
Investment securities:
        
Taxable
10,783 
9,418 
31,045 
27,458 
Nontaxable
2,242 
1,526 
5,873 
3,579 
Federal funds sold
4 
1 
48 
187 
Other interest bearing accounts
26 
8 
61 
44 
Total interest income
60,601 
51,720 
165,479 
155,487 
         
Interest expense:
        
Deposits
13,891 
12,185 
38,298 
41,385 
Short-term borrowings
1,752 
1,134 
4,359 
2,947 
Long-term borrowings and junior subordinated notes
2,547 
1,972 
6,564 
6,177 
Total interest expense
18,190 
15,291 
49,221 
50,509 
Net interest income
42,411 
36,429 
116,258 
104,978 
         
Provision for loan losses
1,750 
5,405 
5,550 
10,219 
         
Net interest income after provision for loan losses
40,661 
31,024 
110,708 
94,759 
         
Other income:
        
Loan service fees
1,064 
1,615 
3,248 
4,576 
Deposit service fees
4,873 
4,745 
13,801 
12,942 
Lease financing, net
3,624 
4,683 
11,902 
11,136 
Trust, asset management and brokerage fees
3,837 
3,498 
11,830 
9,980 
Net gain on sale of securities available for sale
- 
827 
1,082 
529 
Increase in cash surrender value of life insurance
910 
872 
2,751 
2,690 
Gain on sale of bank subsidiary
- 
- 
- 
3,083 
Other operating income
1,163 
919 
4,031 
4,631 
 
15,471 
17,159 
48,645 
49,567 
Other expense:
        
Salaries and employee benefits
17,941 
15,927 
51,011 
46,706 
Occupancy and equipment expense
5,392 
4,190 
14,553 
13,325 
Computer services expense
1,268 
942 
3,590 
3,074 
Advertising and marketing expense
1,220 
1,053 
3,633 
3,018 
Professional and legal expense
474 
585 
1,905 
4,167 
Brokerage fee expense
1,151 
1,130 
3,578 
2,739 
Telecommunication expense
674 
696 
2,008 
1,846 
Other intangibles amortization expense
231 
296 
787 
867 
Prepayment fee on Federal Home Loan Bank advances
- 
- 
- 
1,146 
Other operating expenses
3,858 
3,718 
11,164 
10,444 
 
32,209 
28,537 
92,229 
87,332 
         
Income before income taxes
23,923 
19,646 
67,124 
56,994 
         
Income taxes
7,198 
6,028 
20,341 
17,882 
Net Income
$                         16,725 
$                         13,618 
$                         46,783 
$                      39,112 
         
Common share data:
    
Basic earnings per common share
$                             0.58 
$                             0.51 
$              &n