TAYLOR CAPITAL GROUP INC - FORM 8-K - EX-99.1 - QUARTERLY EARNINGS RELEASE DATED JUNE 18, 2012

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Exhibit 99.1

LOGO

Taylor Capital Reports Net Income of

$14.2 Million for the Second Quarter of 2012

Results reflect strong mortgage banking results and

continued improvement in credit quality

CHICAGO, IL – July 18, 2012 – Taylor Capital Group, Inc. (the “Company”) (NASDAQ: TAYC), the parent company of Cole Taylor Bank (the “Bank”), today reported results for the second quarter of 2012.

Net income for the second quarter of 2012 was $14.2 million, compared to $9.5 million for the first quarter of 2012. Net income applicable to common stockholders was $12.5 million, or $0.41 per diluted share, for the second quarter of 2012 as compared to $7.7 million, or $0.26 per diluted share, for the first quarter of 2012.

Net income for the six months ended June 30, 2012 was $23.7 million, compared to a net loss of $1.0 million for the six months ended June 30, 2011. Net income applicable to common stockholders was $20.2 million, or $0.66 per diluted share, for the six months ended June 30, 2012, compared to a net loss applicable to common stockholders of $5.9 million, or $0.32 per diluted share, for the six months ended June 30, 2011.

“I am very pleased with our strong and sustained progress, clearly demonstrated by another quarter of outstanding results,” said Mark A. Hoppe, President and Chief Executive Officer of the Company. “It is the sixth consecutive quarter of net income at the Bank, which is a reflection of continued discipline and the successful execution of our strategy. While Cole Taylor Mortgage continued to benefit from the low interest rate environment, it has also made tremendous progress in diversifying its revenue base. Mortgage banking revenue was $23.0 million for the quarter, led by record origination volume, improved margins and increased servicing income. I am also pleased to report that our continued focus on asset quality has driven credit costs down substantially in the second quarter. In addition, Cole Taylor Business Capital achieved its 10^th consecutive quarter of strong loan growth.”

“Despite a highly competitive Midwest market, we continue to establish new credit and deposit relationships,” Hoppe continued. “I attribute these results to our experienced banking staff and our ability to identify new opportunities. We’ve also recently announced steps to further diversify and enhance our overall revenue streams by adding seven retail mortgage offices, expanding commercial lending into the Southeastern Wisconsin market and launching a middle market equipment financing division. Each of these initiatives is being led by highly experienced and proven teams who complement the Bank’s existing business leaders and position us for continued success.”

SECOND QUARTER 2012 HIGHLIGHTS

Reported earnings per diluted share of $0.41 in the second quarter of 2012, up from $0.26 per diluted share in the first quarter of 2012

•

Sixth consecutive quarter of net income at the Bank and fourth consecutive quarter for the Company

•

Revenue(1) increased to a record $65.2 million for the second quarter of 2012, up $6.3 million or 10.7% from the first quarter of 2012

•

Net interest margin on a tax equivalent basis declined by six basis points to 3.23% for the second quarter of 2012 from 3.29% for the first quarter of 2012

•

Mortgage banking revenue grew to $23.0 million, up $5.5 million or 31.3% over the first quarter of 2012

•

Loan fundings in the Bank’s mortgage division, Cole Taylor Mortgage, totaled $960.1 million in the second quarter of 2012, compared to $894.9 million in the first quarter of 2012

•

Cole Taylor Mortgage grew its mortgage servicing book to $4.02 billion in the second quarter of 2012, compared to $2.38 billion in the first quarter of 2012

•

Cole Taylor Business Capital, our asset based lending division, had its 10^th consecutive quarter of loan growth of $32.3 million in loans outstanding in the second quarter of 2012, an increase of 6.2% as compared to the first quarter of 2012

•

Average deposits (excluding time and brokered deposits) grew by $194.2 million in the second quarter of 2012 to $2.01 Billion

•

As a result of the Company’s performance, its regulatory capital ratios increased. The Company’s Tier I Risk Based Capital ratio was 12.59%, while its Total Risk Based Capital ratio was 16.03% and its Tier I Capital to Average Assets leverage ratio was 9.41% as of June 30, 2012.

Credit quality indicators continued to improve, including a 20.7% reduction in nonperforming loans from the first quarter

•

Credit costs(2) were $928,000 for the second quarter of 2012, down from $8.0 million for the first quarter of 2012

•

Nonperforming loans were $74.1 million and 2.29% of total loans at June 30, 2012, down from $93.5 million and 3.00% of total loans at March 31, 2012

•

At June 30, 2012, commercial criticized and classified loans(3) totaled $139.9 million, down from $161.0 million at March 31, 2012

•

The allowance for loan losses as a percent of nonperforming loans was 117.39% at June 30, 2012, compared to 100.01% at March 31, 2012

SECOND QUARTER 2012 PERFORMANCE OVERVIEW

Results of Operations

Net income for the second quarter of 2012 was $14.2 million, compared to net income of $9.5 million for the first quarter of 2012. Net income applicable to common stockholders was $12.5 million, or $0.41 per diluted share, for the second quarter of 2012, as compared to net income applicable to common stockholders of $7.7 million, or $0.26 per diluted share, for the first quarter of 2012.

Income before income taxes was $24.2 million for the second quarter of 2012, as compared to income before income taxes of $15.8 million for the first quarter of 2012, an increase of 53.2%. The improvement from the first quarter of 2012 to the second quarter of 2012 was primarily led by mortgage banking revenue and lower credit costs. The second quarter of 2012 also included $3.0 million of gains on the sale of investment securities, compared to $1.0 million in the first quarter. Offsetting these gains were expenses related to the early extinguishment of debt. The early extinguishments of debt were completed as part of an ongoing effort to lower overall funding costs.

Pre-tax, Pre-provision Operating Earnings(4)

Pre-tax, pre-provision operating earnings totaled a record $25.1 million for the second quarter of 2012, compared to $24.0 million for the first quarter of 2012. The increase was primarily due to mortgage banking revenue primarily offset by an increase in performance-based incentive compensation expense.

Revenue

Revenue totaled $65.2 million for the second quarter of 2012, compared to $58.9 million for the first quarter of 2012, a 10.7% increase.

Net interest income was $36.4 million for the second quarter of 2012, compared to $35.8 million for the first quarter of 2012. The net interest margin was down six basis points, from 3.29% for the first quarter of 2012 to 3.23% for the second quarter of 2012, primarily as a result of lower commercial loan prepayment fees.

Noninterest income was $28.9 million for the second quarter of 2012, compared to $23.1 million for the first quarter of 2012, excluding investment security gains, losses and impairments. The increase was primarily due to a $5.5 million increase in mortgage banking revenue. The increase in mortgage banking revenue, from $17.5 million in the first quarter of 2012 to $23.0 million in the second quarter of 2012, was primarily a result of increased margins on mortgage originations and sales in the secondary market and a 7.3% increase in loan fundings in the second quarter. Loan fundings were $960.1 million in the second quarter of 2012, up from $894.9 million in the first quarter of 2012.

Noninterest Expense

Noninterest expense was $40.2 million for the second quarter of 2012, compared to $34.9 million for the first quarter of 2012, excluding nonperforming asset expense and early extinguishment of debt expense. The increase was primarily the result of an increase in performance-based incentive compensation expense and salary costs related to additional headcount primarily in the mortgage division.

Credit Quality

Loan Portfolio Performance and Credit Quality

Credit quality continued its steady pace of improvement in the second quarter. Total commercial criticized and classified loans declined $21.1 million to $139.9 million at June 30, 2012, compared to $161.0 million at March 31, 2012. These results were indicative of our continued focus on the loan portfolio performance and credit quality, as criticized and classified loans moved through the remediation process to resolution or charge-off, while the migration of new loans to criticized and classified status continued to slow.

Nonperforming loans decreased to $74.1 million at June 30, 2012, compared to $93.5 million at March 31, 2012. The total decline of $19.4 million in nonperforming loans was primarily due to the payoff of commercial construction nonaccrual loans primarily related to one borrower.

Other real estate owned (“OREO”) and repossessed assets decreased to $32.6 million at June 30, 2012, compared to $36.9 million at March 31, 2012. The OREO assets declined $4.3 million primarily due to sales.

Nonperforming assets were $106.7 million at June 30, 2012, compared to $130.4 million at March 31, 2012. Nonperforming assets to total assets were 2.22% at June 30, 2012, compared to 2.78% at March 31, 2012.

Allowance and Provision for Loan Losses

The allowance for loan losses was $87.0 million at June 30, 2012, down from $93.5 million at March 31, 2012, as credit quality trends continued to improve as demonstrated by declines in nonperforming loans and other commercial criticized and classified loans. The decline in the allowance for loan losses resulted from net charge-offs exceeding the provision for loan losses during the second quarter of 2012 by $6.5 million. Despite this decline, the allowance for loan losses as a percent of nonperforming loans was 117.39% at June 30, 2012, compared to 100.01% at March 31, 2012. The provision for loan losses was $100,000 for the second quarter of 2012, down from $7.4 million for the first quarter of 2012. This decrease was primarily due to a reduction in specific reserves.

Balance Sheet

Assets

Total assets at June 30, 2012 were $4.80 billion, compared to $4.70 billion at March 31, 2012.

Loans at June 30, 2012, excluding allowance for loan losses and loans held for sale, were $2.89 billion, compared to $2.81 billion at March 31, 2012. Cole Taylor Business Capital and Cole Taylor Mortgage had solid loan growth, partially offset by reductions in commercial and residential construction loans. Cole Taylor Business Capital increased loans outstanding by $32.3 million in the second quarter of 2012. Commercial construction loans decreased in the second quarter of 2012 primarily due to the partial payoff of certain nonaccrual loans primarily related to one borrower. The reduction in residential construction loans is the result of the Company’s continued focus on reducing its overall exposure to these types of loans. Consumer-oriented loans were $379.2 million at June 30, 2012, up from $343.9 million at March 31, 2012. This increase was primarily the result of certain mortgages originated by Cole Taylor Mortgage being held in the loan portfolio as part of our diversification strategy.

Investment securities were $1.24 billion at June 30, 2012, compared to $1.30 billion at March 31, 2012.

Loans held for sale were $255.7 million at June 30, 2012, compared to $210.0 million at March 31, 2012. Loans held for sale are a result of continued growth in mortgage originations in the second quarter of 2012 and the timing of loan sales.

Liabilities and Stockholders’ Equity

Total liabilities at June 30, 2012 were $4.36 billion, as compared to $4.28 billion at March 31, 2012.

Total deposits were $3.18 billion at June 30, 2012, compared to $2.99 billion at March 31, 2012.

The increase is primarily due to an increase in noninterest-bearing deposits.

Average total deposits for the second quarter of 2012 increased by $113.1 million compared to the first quarter of 2012, primarily due to an increase in noninterest-bearing deposits, partially offset by a decrease in certificates of deposit. Average deposits, excluding time and brokered deposits, grew by $194.2 million or 10.7% from the first quarter of 2012.

Total stockholders’ equity increased from $416.8 million at March 31, 2012 to $436.4 million at June 30, 2012 due to an increase in net income available to common stockholders and accumulated other comprehensive income in the second quarter of 2012.

Capital

At June 30, 2012, the Company’s Tier I Risk Based Capital ratio was 12.59%, while its Total Risk Based Capital ratio was 16.03% and its Tier I Capital to Average Assets leverage ratio was 9.41%.

Each of these Company ratios exceeded the regulatory requirements for well-capitalized banks of 6.00% for the Tier I Risk Based Capital ratio, 10.00% for the Total Risk Based Capital ratio and 5.00% for the Tier I Capital to Average Assets leverage ratio.

Conference Call and Slide Presentation

A conference call hosted by Taylor Capital Group President & CEO Mark A. Hoppe will be held on Wednesday, July 18, 2012 at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). Investors, news media and others may access the call by telephone at 866-450-8367 (toll-free) or 412-317-5427 and entering the code 3495231. Participants are encouraged to dial into the call approximately 10 minutes prior to the start time.

This call is being webcast and can be accessed via a live Internet audio broadcast at Taylor Capital Group’s website at www.taylorcapitalgroup.com.

Taylor Capital Group will post presentation slides on its website to be addressed by management during the call. The slides will be available for download on the Company’s Investor Relations web page at www.taylorcapitalgroup.com.

A replay of the conference call will be made available after approximately 1:00 p.m. Central Time (2:00 p.m. Eastern Time) on July 18, 2012 through August 20, 2012, and the instructions for accessing the replay will be available on the Company’s website at that time.

Accompanying Financial Statements and Tables

This press release is accompanied by the following unaudited financial information:

•

Condensed Consolidated Balance Sheets

•

Consolidated Statements of Operations

•

Summary of Key Quarterly Financial Data

•

Summary of Key Year-to-Date Financial Data

•

Summary of Key Period-End Financial Data

•

Composition of Loan Portfolio

•

Credit Quality

•

Loan Portfolio and Held for Sale Aging

•

Funding Liabilities

•

Reconciliation of U.S. GAAP Financial Measures

About Taylor Capital Group, Inc. (NASDAQ: TAYC)

Taylor Capital Group, Inc. is the $4.8 billion bank holding company of Cole Taylor Bank, a commercial bank headquartered in Chicago. Cole Taylor specializes in serving the banking needs of closely held businesses and the people who own and manage them. Through its divisions, Cole Taylor Business

Capital, Cole Taylor Equipment Finance and Cole Taylor Mortgage, the Bank also provides asset based lending, residential mortgage loan, commercial equipment lease and depository services products through a growing network of offices throughout the United States. Cole Taylor is a member of the FDIC and is an Equal Housing Lender.

Endnotes:

(1)

Revenue is defined as net interest income plus noninterest income less gain or loss on investment securities

(2)

Credit costs are defined as provision for loan losses plus nonperforming asset expense

(3)

Commercial criticized and classified loans (special mention, substandard, and nonaccrual loans) in commercial and industrial, commercial real estate, residential construction and land, and commercial construction and land, excludes consumer loans.

(4)

Schedules reconciling earnings in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) to the non-GAAP measurement of pre-tax, pre-provision operating earnings and revenue are provided in the attached tables.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including “may,” “might”, “contemplate”, “plan”, “prudent”, “potential”, “should”, “will,” “expect,” “anticipate,” “believe,” “intend,” “could” and “estimate” and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities in 2012 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements.

These risks, uncertainties and other factors include, without limitation:

•

Our business may be adversely affected by the highly regulated environment in which we operate.

•

Competition from financial institutions and other financial services providers may adversely affect our growth and profitability.

•

Our business is subject to the conditions of the local economy in which we operate and continued weakness in the local economy and the real estate markets may adversely affect us.

•

Our business is subject to domestic and to a lesser extent, international economic conditions and other factors, many of which are beyond our control and could adversely affect our business.

•

The preparation of our consolidated financial statements requires us to make estimates and judgments, which are subject to an inherent degree of uncertainty and which may differ from actual results.

•

Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.

•

Our mortgage loan repurchase reserve for losses could be insufficient.

•

We are subject to interest rate risk, including interest rate fluctuations that could reduce our profitability.

•

Certain hedging strategies that we use to manage investment in mortgage servicing rights may be ineffective to offset any adverse changes in the fair value of these assets due to changes in interest rates and market liquidity.

•

Our residential mortgage lending profitability could be significantly reduced if we are not able to originate and resell a high volume of mortgage loans.

•

We have counterparty risk and therefore we may be adversely affected by the soundness of other financial institutions.

•

We are subject to certain operational risks, including, but not limited to, data processing system failures and errors and customer or employee fraud. The Company’s controls and procedures may fail or be circumvented.

•

The Company is dependent upon outside third parties for processing and handling of Company records and data.

•

System failure or breaches of our network security, including with respect to our internet banking activities, could subject us to increased operating costs as well as litigation and other liabilities.

•

We are subject to lending concentration risks.

•

We may not be able to access sufficient and cost-effective sources of liquidity.

•

We are subject to liquidity risk, including unanticipated deposit volatility.

•

The recent repeal of federal prohibitions on payment of interest on business demand deposits could increase the Company’s interest expense.

•

Changes in our credit ratings could increase our financing costs or make it more difficult for us to obtain funding or capital on commercially acceptable terms.

•

The Company is a bank holding company and its sources of funds are limited.

•

Our business strategy is dependent on our continued ability to attract, develop and retain highly qualified and experienced personnel in senior management and customer relationship positions.

•

Our reputation could be damaged by negative publicity.

•

New lines of business or new products and services may subject us to certain additional risks.

•

We may experience difficulties in managing our future growth.

•

The Company and its subsidiaries are subject to changes in federal and state tax laws and changes in interpretation of existing laws.

•

Regulatory requirements, growth plans or operating results may require us to raise additional capital, which may not be available on favorable terms or at all.

•

We have not paid a dividend on our common stock since the second quarter of 2008. In addition, regulatory restrictions and liquidity constraints at the holding company level could impair our ability to make distributions on our outstanding securities.

For further information about these and other risks, uncertainties and factors, please review the disclosure included in the section captioned “Risk Factors” in our December 31, 2011 Annual Report on Form 10-K filed with the SEC on March 9, 2012 as updated by our Quarterly Reports on Form 10-Q, current reports on Form 8-K and other filings we have made with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or risk factors, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.

LOGO

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


	(Unaudited) June 30, 2012			(Unaudited) March 31, 2012			Dec. 31, 2011
ASSETS
Cash and cash equivalents	$	105,386		$	76,806		$	121,164
Investment securities		1,240,405			1,299,572			1,279,676
Loans held for sale		255,693			210,040			185,984
Loans, net of allowance for loan losses of $86,992 at June 30, 2012, $93,509 at March 31, 2012 and $103,744 at December 31, 2011		2,894,835			2,810,288			2,824,555
Premises, leasehold improvements and equipment, net		15,472			14,627			14,882
Investment in Federal Home Loan Bank and Federal Reserve Bank stock		55,186			63,039			56,781
Other real estate and repossessed assets, net		32,627			36,941			35,622
Other assets		197,497			183,756			167,146

Total assets	$	4,797,101		$	4,695,069		$	4,685,810

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	971,818		$	702,723		$	802,480
Interest-bearing		2,212,792			2,286,916			2,320,731

Total deposits		3,184,610			2,989,639			3,123,211
Accrued interest, taxes and other liabilities		78,247			102,549			61,183
Short-term borrowings		901,138			924,641			768,133
Long-term borrowings		20,000			85,000			147,500
Junior subordinated debentures		86,607			86,607			86,607
Subordinated notes, net		90,091			89,867			89,648

Total liabilities		4,360,693			4,278,303			4,276,282

Stockholders’ equity:
Preferred stock, Series B		102,913			102,474			102,042
Preferred stock, Series D		—			—			4
Preferred stock, Series G		—			—			9
Nonvoting preferred stock		13			13			—
Common stock		299			298			297
Surplus		424,700			424,134			423,674
Accumulated deficit		(98,222	)		(110,699	)		(118,426	)
Accumulated other comprehensive income, net		36,290			30,131			31,513
Treasury stock		(29,585	)		(29,585	)		(29,585	)

Total stockholders’ equity		436,408			416,766			409,528

Total liabilities and stockholders’ equity	$	4,797,101		$	4,695,069		$	4,685,810

LOGO

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(dollars in thousands, except per share data)


	For the Three Months Ended									For the Six Months Ended
	June 30, 2012			Mar. 31, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Interest income:
Interest and fees on loans	$	35,422		$	35,283		$	34,343		$	70,705		$	69,708
Interest and dividends on investment securities:
Taxable		9,889			10,318			11,753			20,207			23,205
Tax-exempt		691			663			722			1,354			1,497
Interest on cash equivalents		3			3			3			6			6

Total interest income		46,005			46,267			46,821			92,272			94,416

Interest expense:
Deposits		4,938			5,411			8,028			10,349			16,652
Short-term borrowings		629			563			527			1,192			1,512
Long-term borrowings		69			500			2,079			569			3,946
Junior subordinated debentures		1,464			1,472			1,446			2,936			2,889
Subordinated notes		2,527			2,519			2,498			5,046			4,987

Total interest expense		9,627			10,465			14,578			20,092			29,986

Net interest income		36,378			35,802			32,243			72,180			64,430
Provision for loan losses		100			7,350			11,822			7,450			22,063

Net interest income after provision for loan losses		36,278			28,452			20,421			64,730			42,367

Noninterest income:
Service charges		3,355			3,291			2,696			6,646			5,586
Mortgage banking revenue		23,014			17,530			2,243			40,544			3,760
Gain on sales of investment securities		3,020			956			—			3,976			—
Other derivative income		815			561			194			1,376			947
Other noninterest income		1,685			1,608			1,254			3,293			2,979

Total noninterest income		31,889			23,946			6,387			55,835			13,272

Noninterest expense:
Salaries and employee benefits		28,278			23,637			15,183			51,915			29,872
Occupancy of premises, furniture and equipment		2,922			2,790			2,603			5,712			5,493
Nonperforming asset expense		828			694			2,013			1,522			5,290
Early extinguishment of debt		2,987			1,001			—			3,988			—
FDIC assessment		1,497			1,702			1,499			3,199			3,447
Legal fees, net		757			856			1,026			1,613			1,820
Other noninterest expense		6,717			5,888			5,522			12,605			10,473

Total noninterest expense		43,986			36,568			27,846			80,554			56,395

Income (loss) before income taxes		24,181			15,830			(1,038	)		40,011			(756	)
Income tax expense		9,956			6,361			355			16,317			249

Net income (loss)		14,225			9,469			(1,393	)		23,694			(1,005	)
Preferred dividends and discounts		(1,748	)		(1,742	)		(2,470	)		(3,490	)		(4,934	)
Implied noncash preferred dividend		—			—			—			—			—

Net income (loss) applicable to common stockholders	$	12,477		$	7,727		$	(3,863	)	$	20,204		$	(5,939	)

Basic income (loss) per common share	$	0.42		$	0.26		$	(0.19	)	$	0.68		$	(0.32	)
Diluted income (loss) per common share		0.41			0.26			(0.19	)		0.66			(0.32	)
Weighted-average common shares outstanding		28,158,487			28,071,406			19,811,006			28,114,947			18,632,360
Weighted-average diluted common shares outstanding		29,083,753			28,622,798			19,811,006			28,870,262			18,632,360

LOGO

SUMMARY OF KEY QUARTERLY FINANCIAL DATA

(dollars in thousands)

Unaudited


	2012						2011
	Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter
Condensed Income Data:
Net interest income	$	36,378		$	35,802		$	35,266		$	34,718		$	32,243
Provision for loan losses		100			7,350			10,955			16,240			11,822
Total noninterest income		31,889			23,946			16,538			19,432			6,387
Total noninterest expense		43,986			36,568			31,846			28,152			27,846

Income (loss) before income taxes		24,181			15,830			9,003			9,758			(1,038	)
Income tax expense (benefit)		9,956			6,361			(73,317	)		(42	)		355

Net income (loss)		14,225			9,469			82,320			9,800			(1,393	)
Preferred dividends and discounts		(1,748	)		(1,742	)		(1,734	)		(2,477	)		(2,470	)
Implied non-cash preferred dividends		—			—			(10,501	)		—			—

Net income (loss) applicable to common stockholders	$	12,477		$	7,727		$	70,085		$	7,323		$	(3,863	)

Non-GAAP Measures of Performance (1)
Revenue	$	65,247		$	58,917		$	51,988		$	50,108		$	39,011
Pre-tax, pre-provision operating earnings		25,076			24,044			21,764			23,752			13,178
Per Share Data:
Basic earnings (loss) per common share	$	0.42		$	0.26		$	3.20		$	0.35		$	(0.19	)
Diluted earnings (loss) per common share		0.41			0.26			3.20			0.35			(0.19	)
Tangible book value per common share		11.66			11.06			10.84			7.37			5.13
Weighted average common shares-basic		28,158,487			28,071,406			20,684,652			19,920,269			19,811,006
Weighted average common shares-diluted		29,083,753			28,622,798			20,709,071			19,924,987			19,811,006
Common shares outstanding-end of period		28,602,394			28,428,015			28,360,076			20,312,842			20,240,408
Performance Ratios (annualized):
Return (loss) on average assets		1.17	%		0.81	%		7.26	%		0.89	%		(0.13	)%
Return (loss) on average equity		13.64	%		9.32	%		112.63	%		15.30	%		(2.36	)%
Efficiency ratio (2)		67.41	%		62.07	%		61.26	%		56.18	%		71.38	%
Average Balance Sheet Data (3):
Total assets	$	4,867,810		$	4,660,021		$	4,533,916		$	4,411,811		$	4,331,166
Investments		1,292,129			1,281,445			1,299,059			1,361,630			1,374,892
Cash equivalents		709			960			1,651			2,049			1,457
Loans		3,277,111			3,129,222			3,066,629			2,936,781			2,869,169
Total interest-earning assets		4,569,949			4,411,627			4,367,339			4,300,460			4,245,518
Interest-bearing deposits		2,260,395			2,286,294			2,365,451			2,276,657			2,393,647
Borrowings		1,214,391			1,151,240			1,080,583			1,177,136			1,043,623
Total interest-bearing liabilities		3,474,786			3,437,534			3,446,034			3,453,793			3,437,270
Noninterest-bearing deposits		892,945			753,995			738,371			646,946			604,018
Total stockholders' equity		417,261			406,559			292,356			256,264			236,180
Tax Equivalent Net Interest Margin:
Net interest income as stated	$	36,378		$	35,802		$	35,266		$	34,718		$	32,243
Add: Tax equivalent adjust. - investment (4)		372			357			365			377			389
Tax equivalent adjust. - loans (4)		32			32			32			33			48

Tax equivalent net interest income	$	36,782		$	36,191		$	35,663		$	35,128		$	32,680

Net interest margin without tax adjust.		3.20	%		3.26	%		3.21	%		3.21	%		3.04	%
Net interest margin—tax equivalent (4)		3.23	%		3.29	%		3.25	%		3.25	%		3.09	%
Yield on earning assets without tax adjust.		4.04	%		4.21	%		4.22	%		4.37	%		4.42	%
Yield on earning assets—tax equivalent (4)		4.08	%		4.25	%		4.26	%		4.41	%		4.46	%
Yield on interest-bearing liabilities		1.11	%		1.22	%		1.28	%		1.45	%		1.70	%
Net interest spread without tax adjust.		2.93	%		2.99	%		2.94	%		2.93	%		2.72	%
Net interest spread—tax equivalent (4)		2.97	%		3.02	%		2.98	%		2.97	%		2.76	%

Footnotes:

(1)	Refer to Reconciliation of U.S. GAAP Financial Measures for a reconciliation to GAAP.

(2)	Efficiency ratio is determined by dividing noninterest expense by an amount equal to net interest income plus noninterest income, adjusted for gains or losses from investment securities.

(3)	Average balances are daily averages.

(4)	Adjustment reflects tax-exempt interest income on an equivalent before-tax basis assuming a tax rate of 35.0%.

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SUMMARY OF KEY YEAR-TO-DATE FINANCIAL DATA

(dollars in thousands)

Unaudited


	Year To Date June 30
	2012			2011
Condensed Income Data:
Net interest income	$	72,180		$	64,430
Provision for loan losses		7,450			22,063
Total noninterest income		55,835			13,272
Total noninterest expense		80,554			56,395

Income (loss) before income taxes		40,011			(756	)
Income tax expense		16,317			249

Net income (loss)		23,694			(1,005	)
Preferred dividends and discounts		(3,490	)		(4,934	)
Implied non-cash preferred dividends		—			—

Net income (loss) applicable to common stockholders	$	20,204		$	(5,939	)

Non-GAAP Measures of Performance (1)
Revenue	$	124,164		$	78,083
Pre-tax, pre-provision operating earnings		49,120			26,978
Per Share Data:
Basic income (loss) per common share	$	0.68		$	(0.32	)
Diluted income (loss) per common share		0.66			(0.32	)
Tangible book value per common share		11.66			5.13
Weighted average common shares-basic		28,114,947			18,632,360
Weighted average common shares-diluted		28,870,262			18,632,360
Shares outstanding-end of period		28,602,394			20,240,408
Performance Ratios (annualized):
Return (loss) on average assets		0.99	%		(0.05	)%
Return (loss) on average equity		11.50	%		(0.91	)%
Efficiency ratio (2)		64.88	%		72.22	%
Average Balance Sheet Data (3):
Total assets	$	4,763,916		$	4,360,213
Investments		1,286,787			1,365,412
Cash equivalents		835			1,284
Loans		3,203,166			2,901,375
Total interest-earning assets		4,490,788			4,268,071
Interest-bearing deposits		2,273,344			2,427,106
Borrowings		1,182,815			1,050,442
Total interest-bearing liabilities		3,456,159			3,477,548
Noninterest-bearing deposits		823,470			608,003
Total stockholders’ equity		411,910			221,410
Tax Equivalent Net Interest Margin:
Net interest income as stated	$	72,180		$	64,430
Add: Tax equivalent adjust. - investment (4)		729			806
Tax equivalent adjust. - loans (4)		64			71

Tax equivalent net interest income	$	72,973		$	65,307

Net interest margin without tax adjust.		3.23	%		3.04	%
Net interest margin—tax equivalent (4)		3.26	%		3.08	%
Yield on earning assets without tax adjust.		4.12	%		4.45	%
Yield on earning assets—tax equivalent (4)		4.16	%		4.49	%
Yield on interest-bearing liabilities		1.17	%		1.74	%
Net interest spread—without tax adjust.		2.96	%		2.71	%
Net interest spread—tax equivalent (4)		2.99	%		2.75	%

Footnotes:

(1)	Refer to Reconciliation of U.S. GAAP Financial Measures for a reconciliation to GAAP.

(2)	Efficiency ratio is determined by dividing noninterest expense by an amount equal to net interest income plus noninterest income, adjusted for gains or losses from investment securities.

(3)	Average balances are daily averages.

(4)	Adjustment reflects tax-exempt interest income on an equivalent before-tax basis assuming a tax rate of 35.0%.

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SUMMARY OF KEY PERIOD-END FINANCIAL DATA

(dollars in thousands)

Unaudited


	June 30,			March 31,			Dec. 31,			Sept. 30,			June 30,
	2012			2012			2011			2011			2011
Condensed Balance Sheet Data:
Investment securities	$	1,240,405		$	1,299,572		$	1,279,676		$	1,309,579		$	1,328,857
Loans		3,237,520			3,113,837			3,114,283			3,022,128			2,916,075
Allowance for loan losses		86,992			93,509			103,744			105,805			109,044
Total assets		4,797,101			4,695,069			4,685,810			4,503,234			4,395,116
Total deposits		3,184,610			2,989,639			3,123,211			2,926,281			2,906,777
Total borrowings		1,097,836			1,186,115			1,091,888			1,229,298			1,186,213
Total stockholders’ equity		436,408			416,766			409,528			288,930			242,554

Asset Quality Ratios:
Nonperforming loans	$	74,104		$	93,498		$	103,061		$	121,534		$	143,058
Nonperforming assets		106,731			130,439			138,683			150,771			170,915
Allowance for loan losses to total loans (excluding loans held for sale)		2.92	%		3.22	%		3.54	%		3.68	%		3.85	%
Allowance for loan losses to nonperforming loans		117.39	%		100.01	%		100.66	%		87.06	%		76.22	%
Nonperforming assets to total loans plus repossessed property		3.26	%		4.14	%		4.40	%		4.94	%		5.81	%

Capital Ratios (Taylor Capital Group, Inc.):
Total Capital (to Risk Weighted Assets)		16.03	%		15.46	%		14.72	%		13.63	%		13.80	%
Tier I Capital (to Risk Weighted Assets)		12.59	%		11.95	%		11.22	%		10.08	%		9.90	%
Leverage (to average assets)		9.41	%		9.08	%		8.84	%		7.83	%		7.78	%

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COMPOSITION OF LOAN PORTFOLIO (unaudited)

(dollars in thousands)

The following table presents the composition of the Company’s loan portfolio as of the dates indicated:


	June 30, 2012						March 31, 2012						December 31, 2011
Loans:	Balance			Percent of Gross Loans			Balance			Percent of Gross Loans			Balance			Percent of Gross Loans
Commercial and industrial	$	1,482,427			49.7	%	$	1,437,379			49.5	%	$	1,426,221			48.8	%
Commercial real estate secured		975,680			32.7			963,300			33.2			1,037,976			35.4
Residential construction & land		54,447			1.9			56,780			2.0			64,824			2.2
Commercial construction & land		90,090			3.0			102,404			3.5			99,021			3.4

Total commercial loans		2,602,644			87.3			2,559,863			88.2			2,628,042			89.8
Consumer-oriented loans		379,183			12.7			343,934			11.8			300,257			10.2

Gross loans		2,981,827			100.0	%		2,903,797			100.0	%		2,928,299			100.0	%

Less: Unearned discount		—						—						—

Total loans		2,981,827						2,903,797						2,928,299
Less: Loan loss allowance		(86,992	)					(93,509	)					(103,744	)

Net loans	$	2,894,835					$	2,810,288					$	2,824,555

Loans Held for Sale	$	255,693					$	210,040					$	185,984

The following table provides details of the Company's commercial real estate portfolio:


	June 30, 2012					March 31, 2012					December 31, 2011
Commercial real estate secured:	Balance		Percent of Total			Balance		Percent of Total			Balance		Percent of Total
Commercial non-owner occupied:
Retail strip centers or malls	$	124,150		12.7	%	$	127,795		13.2	%	$	143,052		13.8	%
Office/mixed use property		117,048		12.0			111,647		11.6			113,429		10.9
Commercial properties		121,155		12.4			120,143		12.5			129,921		12.5
Specialized – other		70,096		7.2			76,845		8.0			80,971		7.8
Other commercial properties		18,937		2.0			20,228		2.1			40,270		3.9

Subtotal commercial non-owner occupied		451,386		46.3			456,658		47.4			507,643		48.9
Commercial owner-occupied		429,643		44.0			425,004		44.1			446,259		43.0
Multi-family properties		94,651		9.7			81,638		8.5			84,074		8.1

Total commercial real estate secured	$	975,680		100.0	%	$	963,300		100.0	%	$	1,037,976		100.0	%

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CREDIT QUALITY (unaudited)

(dollars in thousands)


	At or for the Three Months Ended
	June 30, 2012			Mar. 31, 2012			Dec. 31, 2011
Nonperforming Assets:
Loans contractually past due 90 days or more but still accruing interest	$	—		$	—		$	—
Nonaccrual loans:
Commercial and industrial		20,193			21,076			42,909
Commercial real estate secured		30,264			30,185			35,159
Residential construction and land		7,003			7,113			7,810
Commercial construction and land		6,679			26,046			5,279
All other loan types		9,965			9,078			11,904

Total nonaccrual loans		74,104			93,498			103,061

Total nonperforming loans		74,104			93,498			103,061
Other real estate owned and repossessed assets		32,627			36,941			35,622

Total nonperforming assets	$	106,731		$	130,439		$	138,683

Other Credit Quality Information:
Loans contractually past due 30 through 89 days and still accruing	$	5,841		$	6,274		$	7,409
Commercial criticized and classified loans (1)		139,853			161,048			182,570
Performing restructured loans		13,937			14,828			14,176
Recorded balance of impaired loans		79,490			99,286			108,535
Allowance for loan losses related to impaired loans		17,462			22,470			32,044

Allowance for Loan Losses Summary:
Allowance at beginning of period	$	93,509		$	103,744		$	105,805
Charge-offs, net of recoveries:
Commercial and commercial real estate		(2,584	)		(15,346	)		(10,898	)
Real estate – construction and land		(3,184	)		(1,197	)		(1,498	)
Consumer		(849	)		(1,042	)		(620	)

Total net charge-offs		(6,617	)		(17,585	)		(13,016	)
Provision for loan losses		100			7,350			10,955

Allowance at end of period	$	86,992		$	93,509		$	103,744

Key Credit Ratios:
Nonperforming loans to total loans		2.29	%		3.00	%		3.31	%
Nonperforming assets to total loans plus repossessed property		3.26	%		4.14	%		4.40	%
Nonperforming assets to total assets		2.22	%		2.78	%		2.96	%
Annualized net charge-offs to average total loans		1.51	%		2.25	%		2.37	%
Allowance to total loans at end of period (excluding loans held for sale)		2.92	%		3.22	%		3.54	%
Allowance to nonperforming loans		117.39	%		100.01	%		100.66	%
30 – 89 days past due to total loans		0.18	%		0.20	%		0.24	%

(1)	Commercial criticized and classified loans (special mention, substandard and nonaccrual loans) in commercial & industrial, commercial real estate, residential construction and land and commercial construction and land. Excludes consumer loans.

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LOAN PORTFOLIO AND HELD FOR SALE AGING (unaudited)

(dollars in thousands)


	As of June 30, 2012
	30-89 Days Past Due		>90 Days Past Due and Still Accruing		Nonaccrual		Current		Total Loans		% of Total Loans			Allowance for Loan Loss Allocation
Commercial and industrial		$ 181		$ —		$20,193		$1,462,053		$1,482,427		45	%		$36,502

Commercial real estate secured:
Commercial non-owner occupied:
Retail strip centers or malls		—		—		8,048		116,102		124,150		4	%		5,877
Office/mixed use property		—		—		2,803		114,245		117,048		3	%		3,698
Commercial properties		—		—		583		120,572		121,155		4	%		2,294
Specialized – other		—		—		5,011		65,085		70,096		2	%		1,150
Other commercial properties		—		—		340		18,597		18,937		1	%		373

Subtotal commercial non-owner occupied		—		—		16,785		434,601		451,386		14	%		13,392
Commercial owner-occupied		196		—		6,169		423,278		429,643		13	%		8,899
Multi-family properties		—		—		7,310		87,341		94,651		3	%		3,241

Total commercial real estate secured		196		—		30,264		945,220		975,680		30	%		25,532
Residential construction & land:
Residential construction		—		—		5,826		31,587		37,413		1	%		5,204
Land		—		—		1,177		15,857		17,034		1	%		2,441

Total residential construction and land		—		—		7,003		47,444		54,447		2	%		7,645

Commercial construction and land		—		—		6,679		83,411		90,090		3	%		6,582

Total commercial loans		377		—		64,139		2,538,128		2,602,644		80	%		76,261
Consumer loans		5,464		—		9,965		619,447		634,876		20	%		10,731

Total loans		$5,841		$ —		$74,104		$3,157,575		$3,237,520		100	%		$86,992

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FUNDING LIABILITIES (unaudited)

(dollars in thousands)

The following table presents the distribution of the Company’s average deposit account balances for the periods indicated:


	For the Quarter Ended
	June 30, 2012					March 31, 2012					June 30, 2011
	Average Balance		Percent of Deposits			Average Balance		Percent of Deposits			Average Balance		Percent of Deposits
Noninterest-bearing deposits	$	892,945		28.3	%	$	753,995		24.8	%	$	604,018		20.1	%
Interest-bearing deposits:
NOW accounts		371,188		11.8			348,723		11.5			237,119		7.9
Savings deposits		39,603		1.2			39,107		1.3			38,440		1.3
Money market accounts		702,775		22.3			670,496		22.1			620,457		20.7
Brokered money market deposits		18,386		0.6			—		—			5,191		0.2
Certificates of deposit		596,784		18.9			673,361		22.1			787,520		26.2
Brokered certificates of deposit		325,952		10.3			372,835		12.2			445,202		14.9
CDARS time deposits		174,613		5.6			133,869		4.4			189,215		6.3
Public time deposits		31,094		1.0			47,903		1.6			70,503		2.4

Total interest-bearing deposits		2,260,395		71.7			2,286,294		75.2			2,393,647		79.9

Total deposits	$	3,153,340		100.0	%	$	3,040,289		100.0	%	$	2,997,665		100.0	%

The following table sets forth the period end balances of total deposits as of each of the dates indicated below.


	June 30, 2012		Mar. 31, 2012		Dec. 31, 2011
Noninterest-bearing deposits	$	971,818	$	702,723	$	802,480
Interest-bearing deposits:
NOW accounts		339,156		392,659		324,877
Savings accounts		39,770		39,630		38,370
Money market accounts		710,754		689,912		657,500
Brokered money market deposits		48,016		—		—
Certificates of deposit		570,557		637,773		694,712
Brokered certificates of deposit		301,748		339,037		407,068
CDARS time deposits		181,371		148,396		144,118
Public time deposits		21,420		39,509		54,086

Total interest-bearing deposits		2,212,792		2,286,916		2,320,731

Total deposits	$	3,184,610	$	2,989,639	$	3,123,211

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RECONCILIATION OF U.S. GAAP FINANCIAL MEASURES (unaudited)

(dollars in thousands)

The following, as of the dates indicated, reconciles the income (loss) before income taxes to pre-tax, pre-provision operating earnings.


	For the Three Months Ended
	June 30, 2012			Mar. 31, 2012			Dec. 31, 2011			Sept. 30, 2011			June 30, 2011
Income (loss) before income taxes	$	24,181		$	15,830		$	9,003		$	9,758		$	(1,038	)
Add back (subtract):
Credit costs:
Provision for loan losses		100			7,350			10,955			16,240			11,822
Nonperforming asset expense		828			694			1,622			(1,648	)		2,013

Credit costs subtotal		928			8,044			12,577			14,592			13,835
Other:
Gain on sales of investment securities		(3,020	)		(956	)		(6	)		(4,938	)		—
Derivative termination fees		—			—			—			896			—
Early extinguishment of debt		2,987			1,001			—			3,444			—
Impairment of investment securities		—			125			190			—			381

Other subtotal		(33	)		170			184			(598	)		381

Pre-tax, pre-provision operating earnings	$	25,076		$	24,044		$	21,764		$	23,752		$	13,178

The following, as of the dates indicated, details the components of revenue.


	For the Three Months Ended
	June 30, 2012			Mar. 31, 2012			Dec. 31, 2011			Sept. 30, 2011			June 30, 2011
Net interest income	$	36,378		$	35,802		$	35,266		$	34,718		$	32,243
Noninterest income		31,889			23,946			16,538			19,432			6,387
Add back (subtract):
Gain on sales of investment securities		(3,020	)		(956	)		(6	)		(4,938	)		—
Derivative termination fees		—			—			—			896			—
Impairment of investment securities		—			125			190			—			381

Revenue	$	65,247		$	58,917		$	51,988		$	50,108		$	39,011

The Company’s accounting and reporting policies conform to U.S. generally accepted accounting principles (“GAAP”) and general practice within the banking industry. Management uses certain non-GAAP financial measures to evaluate the Company’s financial performance and has provided the non-GAAP measures of pre-tax, pre-provision operating earnings and of revenue. In the pre-tax, pre-provision operating earnings non-GAAP financial measure, the provision for loan losses, nonperforming asset expense and certain non-recurring items, such as gains and losses on investment securities, derivative termination fees, early extinguishment of debt and impairment of investment securities are excluded from the determination of operating results. The non-GAAP measure of revenue is calculated as the sum of net interest income and noninterest income adjusted by investment securities gains and losses, derivative termination fees and impairment of investment securities. Management believes that these measures are useful because they provide a more comparable basis for evaluating financial performance from period to period.

Investor Relations and Media Contact:

Tom Decker

(847) 653-7399