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

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8-K - 8-K - MB FINANCIAL INC /MD	form8-kxer1q13.htm

EXHIBIT 99

MB Financial, Inc.

800 West Madison Street

Chicago, Illinois 60607

(888) 422-6562

NASDAQ: MBFI

PRESS RELEASE

For Information at MB Financial, Inc. contact:

Jill York - Vice President and Chief Financial Officer

E-Mail: jyork@mbfinancial.com

FOR IMMEDIATE RELEASE

MB FINANCIAL, INC. REPORTS FIRST QUARTER NET INCOME OF $24.9 MILLION

AND RETURN ON ASSETS OF 1.07%

CHICAGO, April 22, 2013 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., today announced 2013 first quarter net income of $24.9 million.

"I'm pleased with our strong start to 2013. Our key fee initiatives, especially leasing revenues, continued to deliver and credit costs remained very low. Revenue from our key fee initiatives increased 53% compared to the first quarter of 2012," stated Mitchell Feiger, President and Chief Executive Officer of the Company.

Net income, net income available to common stockholders and fully diluted earnings per share increased in the first quarter of 2013 compared to the fourth and first quarters of 2012 as follows (note that all linked quarter change percentages presented here and throughout this release are not annualized):



	1Q13		4Q12		Change from 4Q12 to 1Q13		1Q12		Change from 1Q12 to 1Q13
(dollars in thousands, except per share data)
Net income	$	24,906	$	24,012	+3.7	%	$	21,086	+18.1	%
Net income available to common stockholders	24,906		24,012		+3.7	%	17,817		+39.8	%
Fully diluted earnings per share	0.46		0.44		+4.5	%	0.33		+39.4	%

Key items are as follows:

Overall Fee Income Growth Continues:


•	Revenues from key fee initiatives increased 7.8% compared to the fourth quarter of 2012, as a result of the 31.0% increase in leasing revenues to $16.3 million. This increase was primarily driven by the addition of Celtic Leasing Corp. ("Celtic"), our recently acquired leasing subsidiary, which contributed $6.0 million in leasing revenues to our first quarter 2013 results.


•	Revenues from key fee initiatives increased 52.5% compared to the first quarter of 2012, primarily as a result of the 133.7% increase in leasing revenues. Capital markets and international banking service fees and card fees increased 57.8% and 31.7%, respectively, compared to the first quarter of 2012.


•	Core non-interest income to total revenues ratio was 34.6% in the first quarter compared to 34.2% in the prior quarter and 26.5% in the first quarter of 2012.

Net Interest Margin Stable Compared to Prior Quarter:


•	Fully taxable equivalent net interest margin was 3.59% for the first quarter of 2013 compared to 3.57% for the prior quarter and 3.87% for the first quarter of 2012. The change from the first quarter of 2012 was due to average yields on interest earning assets declining more than average rates paid on interest bearing liabilities.


•	Net interest income declined compared to the prior quarter primarily due to two fewer days in the first quarter of 2013 compared to the fourth quarter of 2012. Compared to the first quarter of 2012, net interest income declined due to lower average interest earning asset balances (as a result of a decrease in covered loans) as well as a decline in net interest margin.

Non-Performing Loans and Non-Performing Assets Decreased During the Quarter:



	1Q13		4Q12		Change from 4Q12 to 1Q13		1Q12		Change from 1Q12 to 1Q13
(dollars in thousands)
Non-performing loans to total loans	2.00	%	2.03	%	-0.03	%	2.15	%	-0.15	%
Non-performing assets to total assets	1.56		1.62		-0.06		1.94		-0.38
Net loan charge-offs (recoveries) to average loans (annualized)	0.25		(0.17	)	+0.42		0.40		-0.15


•	Provision for credit losses was zero in the quarter, aided by low migrations to nonperforming status and by recoveries.

Improvement in Return on Assets and Return on Equity During the Quarter:


•	Our annualized return on average assets, annualized return on average common equity and annualized cash return on average tangible common equity improved compared to the fourth and first quarters of 2012:



	1Q13		4Q12		Change from 4Q12 to 1Q13		1Q12		Change from 1Q12 to 1Q13
Annualized return on average assets	1.07	%	1.01	%	+0.06	%	0.87	%	+0.20	%
Annualized return on average common equity	7.89		7.55		+0.34		5.94		+1.95
Annualized cash return on average tangible common equity	12.53		11.47		+1.06		9.36		+3.17

RESULTS OF OPERATIONS

First Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis decreased $1.6 million from the fourth quarter of 2012. The decrease from the fourth quarter of 2012 to the first quarter of 2013 was due primarily to two fewer days in the first quarter. Our net interest margin, on a fully tax equivalent basis increased to 3.59% for the first quarter of 2013 compared to 3.57% for the fourth quarter of 2012.

Net interest income on a fully tax equivalent basis decreased $8.6 million from the first quarter of 2012. The decrease from the first quarter of 2012 to the first quarter of 2013 was due to lower average earning asset balances (as a result of a decrease in covered loans) as well as a decline in net interest margin. Our net interest margin, on a fully tax equivalent basis, declined to 3.59% for the first quarter of 2013 compared to 3.87% for the first quarter of 2012. The decrease in the margin was due to average yields on interest earning assets declining more than average rates paid on interest bearing liabilities.

See the supplemental net interest margin tables for further detail.

Non-interest Income (dollars in thousands):



	1Q13			4Q12			3Q12			2Q12			1Q12
Core non-interest income:
Key fee initiatives:
Capital markets and international banking service fees	$	808		$	2,386		$	1,400		$	788		$	512
Commercial deposit and treasury management fees	5,966			6,095			5,860			5,784			5,897
Lease financing, net	16,263			12,419			9,671			7,334			6,958
Trust and asset management fees	4,494			4,623			4,428			4,535			4,404
Card fees	2,695			2,505			2,388			2,429			2,046
Total key fee initiatives	30,226			28,028			23,747			20,870			19,817

Loan service fees	1,011			2,436			1,075			1,267			1,067
Consumer and other deposit service fees	3,246			3,655			3,786			3,534			3,453
Brokerage fees	1,157			1,088			1,185			1,264			1,255
Increase in cash surrender value of life insurance	844			893			890			870			917
Accretion of FDIC indemnification asset	143			154			204			222			475
Net gain on sale of loans	639			822			575			554			374
Other operating income	955			1,325			405			958			1,604
Total core non-interest income	38,221			38,401			31,867			29,539			28,962

Non-core non-interest income: (1)
Net (loss) gain on investment securities	(1		)	311			281			(34		)	(3		)
Net loss on sale of other assets	—			(905		)	(12		)	(8		)	(17		)
Net loss recognized on other real estate owned (A)	(319		)	(1,848		)	(4,151		)	(4,156		)	(4,348		)
Net (loss) gain recognized on other real estate owned related to FDIC transactions (A)	(11		)	222			213			(1,285		)	(2,241		)
Increase (decrease) in market value of assets held in trust for deferred compensation (B)	483			104			355			(149		)	501
Total non-core non-interest income	152			(2,116		)	(3,314		)	(5,632		)	(6,108		)

Total non-interest income	$	38,373		$	36,285		$	28,553		$	23,907		$	22,854


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

Core non-interest income for the first quarter of 2013 was consistent with the fourth quarter of 2012.


•	Net lease financing income increased primarily as a result of the acquisition of Celtic at the end of 2012 and the continued very strong performance from our LaSalle leasing subsidiary. Remarketing gains and fees from the sale of equipment maintenance contracts can fluctuate from quarter to quarter.


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


•	Capital markets and international banking service fees decreased primarily due to a decrease in merger and acquisition advisory fees, as well as a decrease in interest rate swap fees, which can fluctuate based on loan volumes.


•	Loan service fees decreased due to a decrease in prepayment fees.


•	Consumer and other deposit service fees decreased as a result of lower NSF fees.

Core non-interest income for the first quarter of 2013 rose 32.0% compared to the first quarter of 2012.


•	Net lease financing income increased as a result of the increase in remarketing gains and fees from the sale of equipment maintenance contracts, as well as the impact on leasing revenues attributable to Celtic.


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


•	Capital markets and international banking service fees increased primarily due to an increase in loan placement and interest rate swap fees.

Non-core non-interest income for the first quarter of 2013 compared to the fourth and first quarters of 2012 was primarily impacted by lower losses recognized on other real estate owned ("OREO").

Non-interest Expense (dollars in thousands):



	1Q13		4Q12		3Q12		2Q12			1Q12
Core non-interest expense:
Salaries and employee benefits	$	43,031	$	42,934	$	41,728	$	40,295		$	39,928
Occupancy and equipment expense	9,404		8,774		8,274		9,188			9,570
Computer services and telecommunication expense	3,887		4,160		3,777		3,909			3,653
Advertising and marketing expense	2,103		2,335		1,936		1,839			2,073
Professional and legal expense	1,295		1,640		1,554		1,503			1,413
Other intangible amortization expense	1,544		1,251		1,251		1,251			1,257
Other real estate expense, net	139		449		874		424			1,243
Other operating expenses	9,213		8,027		7,976		8,574			7,693
Total core non-interest expense	70,616		69,570		67,370		66,983			66,830

Non-core non-interest expense: (1)
Branch impairment charges	—		1,432		758		—			—
Prepayment fees on interest bearing liabilities	—		—		12,682		—			—
Increase (decrease) in market value of assets held in trust for deferred compensation (A)	483		104		355		(149		)	501
Total non-core non-interest expense	483		1,536		13,795		(149		)	501

Total non-interest expense	$	71,099	$	71,106	$	81,165	$	66,834		$	67,331


(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.

Core non-interest expense, which included a full quarter of Celtic's operating expenses, increased by $1.0 million (+1.5%) from the fourth quarter of 2012 to the first quarter of 2013.


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


•	Occupancy and equipment expense increased due to higher property taxes and building maintenance expense partially offset by a decrease in depreciation expense.


•	Other intangible amortization expense increased due to the Celtic acquisition.


•	Professional and legal expense decreased due to less collection activity.


•	Other real estate expense decreased due to lower construction costs and higher real estate tax refunds received.

Core non-interest expense increased by $3.8 million (+5.7%) from the first quarter of 2012 to the first quarter of 2013.


•	Salaries and employee benefits increased due to annual salary increases, the impact of Celtic and an increase in incentives and commissions on higher lease revenues.


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


•	Other intangible amortization expense increased due to the Celtic acquisition.


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

Non-core non-interest expense decreased from the prior quarter as we did not incur any branch impairment charges in the first quarter of 2013, while in the fourth quarter of 2012, we incurred $1.4 million in branch impairment charges.

LOAN PORTFOLIO

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



	3/31/2013				12/31/2012				9/30/2012				6/30/2012				3/31/2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial related credits:
Commercial loans	$	1,207,638	21	%	$	1,220,472	21	%	$	1,073,981	19	%	$	1,079,436	19	%	$	1,040,340	18	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,347,666		24	%	1,303,020		23	%	1,219,361		22	%	1,221,199		21	%	1,209,942		21	%
Commercial real estate	1,743,329		30	%	1,761,832		30	%	1,770,261		31	%	1,794,777		31	%	1,877,380		32	%
Construction real estate	101,581		2	%	110,261		2	%	149,872		3	%	150,665		3	%	128,040		2	%
Total commercial related credits	4,400,214		77	%	4,395,585		76	%	4,213,475		75	%	4,246,077		74	%	4,255,702		73	%
Other loans:
Residential real estate	312,804		5	%	314,359		5	%	308,866		5	%	313,137		5	%	309,644		5	%
Indirect vehicle	220,739		4	%	208,633		4	%	206,973		3	%	198,848		3	%	186,736		3	%
Home equity	291,190		5	%	305,186		5	%	314,718		6	%	323,234		6	%	327,450		6	%
Consumer loans	81,932		2	%	93,317		2	%	84,651		2	%	89,115		2	%	89,705		2	%
Total other loans	906,665		16	%	921,495		16	%	915,208		16	%	924,334		16	%	913,535		16	%
Gross loans excluding covered loans	5,306,879		93	%	5,317,080		92	%	5,128,683		91	%	5,170,411		90	%	5,169,237		89	%
Covered loans (1)	400,789		7	%	449,850		8	%	496,162		9	%	552,838		10	%	620,528		11	%
Total loans	$	5,707,668	100	%	$	5,766,930	100	%	$	5,624,845	100	%	$	5,723,249	100	%	$	5,789,765	100	%


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

Our loan portfolio mix improved over the past twelve months from the standpoint of lowering our real estate-related exposure, as commercial and lease loan balances increased by 13.6% while commercial real estate and construction loan balances decreased by 8.0%.

ASSET QUALITY

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



	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
Non-performing loans:
Non-accrual loans (1)	$	108,765		$	115,387		$	104,813		$	113,077		$	124,011
Loans 90 days or more past due, still accruing interest (2)	5,193			1,599			470			453			679
Total non-performing loans	113,958			116,986			105,283			113,530			124,690
OREO	31,462			36,977			42,427			49,690			63,077
Repossessed assets	757			773			113			60			81
Total non-performing assets	146,177			154,736			147,823			163,280			187,848
Potential problem loans (3)	115,451			111,553			134,289			141,066			159,440
Total classified assets	$	261,628		$	266,289		$	282,112		$	304,346		$	347,288

Total allowance for loan losses	$	121,802		$	124,204		$	121,182		$	121,756		$	125,431
Accruing restructured loans (4)	$	21,881		$	21,256		$	17,929		$	16,536		$	24,145
Total non-performing loans to total loans	2.00		%	2.03		%	1.87		%	1.98		%	2.15		%
Total non-performing assets to total assets	1.56		%	1.62		%	1.56		%	1.72		%	1.94		%
Allowance for loan losses to non-performing loans	106.88		%	106.17		%	115.10		%	107.25		%	100.59		%


(1)	Includes $27.2 million, $28.4 million, $27.1 million, $32.7 million and $34.7 million of restructured loans on non-accrual status at March 31, 2013, December 31, 2012, September 30, 2012, June 30, 2012, and March 31, 2012, respectively.


(2)	Approximately $3.5 million of loans 90 days or more past due, still accruing interest as of March 31, 2013 were paid off in April 2013.


(3)	We define potential problem loans as performing loans rated substandard that do not meet the definition of a non-performing loan (See “Asset Quality” section above for non-performing loans). Potential problem loans carry a higher probability of default and require additional attention by management.


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

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



	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Commercial and lease	$	22,247	$	25,517	$	22,648	$	24,402	$	34,471
Commercial real estate	57,604		59,508		55,387		62,512		70,939
Construction real estate	1,025		1,028		1,225		1,470		1,553
Consumer related	33,082		30,933		26,023		25,146		17,727
Total non-performing loans	$	113,958	$	116,986	$	105,283	$	113,530	$	124,690

Consumer related non-performing loans increased compared to December 31, 2012 and a year ago primarily due to an increase in home equity and residential non-performing loans.

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



	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
Balance at the beginning of quarter	$	36,977		$	42,427		$	49,690		$	63,077		$	78,452
Transfers in at fair value less estimated costs to sell	711			1,811			63			910			1,751
Capitalized OREO costs	—			505			978			967			359
Fair value adjustments	(349		)	(1,982		)	(4,648		)	(4,507		)	(4,764		)
Net gains on sales of OREO	30			134			497			351			416
Cash received upon disposition	(5,907		)	(5,918		)	(4,153		)	(11,108		)	(13,137		)
Balance at the end of quarter	$	31,462		$	36,977		$	42,427		$	49,690		$	63,077

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



	1Q13			4Q12			3Q12			2Q12			1Q12
Allowance for credit losses, balance at the beginning of period	$	128,279		$	124,926		$	128,840		$	133,255		$	135,975
Provision for credit losses	—			1,000			(13,000		)	—			3,100
Charge-offs:
Commercial loans	911			343			75			1,451			539
Commercial loans collateralized by assignment of lease payments (lease loans)	—			1			—			1,720			—
Commercial real estate loans	1,917			2,965			2,994			2,415			3,003
Construction real estate	962			56			71			444			3,436
Residential real estate	82			1,068			474			1,108			294
Indirect vehicle	729			623			433			488			715
Home equity	787			1,394			1,209			876			1,072
Consumer loans	565			485			332			274			258
Total charge-offs	5,953			6,935			5,588			8,776			9,317
Recoveries:
Commercial loans	452			745			306			386			2,038
Commercial loans collateralized by assignment of lease payments (lease loans)	144			6,260			111			93			256
Commercial real estate loans	740			871			12,893			3,061			162
Construction real estate	214			561			752			141			565
Residential real estate	276			271			8			188			34
Indirect vehicle	415			261			224			300			311
Home equity	114			248			303			100			20
Consumer loans	52			71			77			92			111
Total recoveries	2,407			9,288			14,674			4,361			3,497
Total net charge-offs (recoveries)	3,546			(2,353		)	(9,086		)	4,415			5,820
Allowance for credit losses	124,733			128,279			124,926			128,840			133,255
Allowance for unfunded credit commitments	(2,931		)	(4,075		)	(3,744		)	(7,084		)	(7,824		)
Allowance for loan losses	$	121,802		$	124,204		$	121,182		$	121,756		$	125,431

Total loans, excluding loans held for sale	$	5,707,668		$	5,766,930		$	5,624,845		$	5,723,249		$	5,789,765
Average loans, excluding loans held for sale	$	5,668,359		$	5,604,837		$	5,630,232		$	5,712,630		$	5,802,037
Ratio of allowance for loan losses to total loans, excluding loans held for sale	2.13		%	2.15		%	2.15		%	2.13		%	2.17		%
Net loan charge-offs (recoveries) to average loans, excluding loans held for sale (annualized)	0.25		%	(0.17		)%	(0.64		)%	0.31		%	0.40		%

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



	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Commercial related loans:
General reserve	$	92,527	$	91,745	$	95,586	$	93,904	$	98,673
Specific reserve	12,043		13,231		11,300		13,674		13,734
Consumer related reserve	17,232		19,228		14,296		14,178		13,024
Total allowance for loan losses	$	121,802	$	124,204	$	121,182	$	121,756	$	125,431

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

INVESTMENT SECURITIES

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



	3/31/2013		12/31/2012			9/30/2012		6/30/2012		3/31/2012
Securities available for sale:
Fair value
Government sponsored agencies and enterprises	$	40,949	$	41,315		$	42,187	$	42,175	$	42,070
States and political subdivisions	719,761		725,019			668,966		629,173		581,720
Mortgage-backed securities	842,605		993,328			1,075,962		1,035,473		1,193,248
Corporate bonds	197,675		96,674			16,626		5,569		5,686
Equity securities	11,179		11,835			11,231		11,081		10,887
Total fair value	$	1,812,169	$	1,868,171		$	1,814,972	$	1,723,471	$	1,833,611

Amortized cost
Government sponsored agencies and enterprises	$	38,478	$	38,605		$	39,233	$	39,366	$	39,503
States and political subdivisions	680,978		679,991			620,489		589,654		547,262
Mortgage-backed securities	827,384		981,513			1,060,665		1,014,186		1,168,340
Corporate bonds	197,162		97,014			16,617		5,569		5,686
Equity securities	10,820		11,398			10,644		10,584		10,520
Total amortized cost	$	1,754,822	$	1,808,521		$	1,747,648	$	1,659,359	$	1,771,311

Unrealized gain
Government sponsored agencies and enterprises	$	2,471	$	2,710		$	2,954	$	2,809	$	2,567
States and political subdivisions	38,783		45,028			48,477		39,519		34,458
Mortgage-backed securities	15,221		11,815			15,297		21,287		24,908
Corporate bonds	513		(340		)	9		—		—
Equity securities	359		437			587		497		367
Total unrealized gain	$	57,347	$	59,650		$	67,324	$	64,112	$	62,300

Securities held to maturity, at cost:
States and political subdivisions	$	262,310	$	237,563		$	238,211	$	238,869	$	239,526
Mortgage-backed securities	255,475		255,858			257,640		258,931		259,241
Total amortized cost	$	517,785	$	493,421		$	495,851	$	497,800	$	498,767

We do not have any meaningful direct or indirect holdings of subprime residential mortgage loans, home equity lines of credit, or any Fannie Mae or Freddie Mac preferred or common equity securities in our investment securities portfolio. Additionally, more than 95% of our mortgage-backed securities are agency guaranteed.

DEPOSIT MIX

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



	3/31/2013				12/31/2012				9/30/2012				6/30/2012				3/31/2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	2,067,310	28	%	$	2,164,547	29	%	$	2,011,542	27	%	$	1,946,468	26	%	$	1,874,028	25	%
Money market and NOW accounts	2,778,916		37	%	2,747,273		36	%	2,682,608		36	%	2,564,493		34	%	2,702,636		35	%
Savings accounts	833,251		11	%	811,333		11	%	797,741		10	%	790,350		11	%	786,357		10	%
Total low cost deposits	5,679,477		76	%	5,723,153		76	%	5,491,891		73	%	5,301,311		71	%	5,363,021		70	%
Certificates of deposit:
Certificates of deposit	1,478,039		20	%	1,525,366		20	%	1,632,370		22	%	1,718,266		23	%	1,820,266		24	%
Brokered deposit accounts	294,390		4	%	294,178		4	%	355,086		5	%	451,132		6	%	451,415		6	%
Total certificates of deposit	1,772,429		24	%	1,819,544		24	%	1,987,456		27	%	2,169,398		29	%	2,271,681		30	%

Total deposits	$	7,451,906	100	%	$	7,542,697	100	%	$	7,479,347	100	%	$	7,470,709	100	%	$	7,634,702	100	%

Our deposit mix improved over the past twelve months as low cost deposits increased by 5.9% and comprised 76% of total deposits at March 31, 2013 compared to 70% at March 31, 2012 driven by noninterest bearing deposit inflows.

CAPITAL

Tangible book value per common share increased to $15.57 at March 31, 2013 compared to $14.81 a year ago primarily due to retained net income. Our regulatory capital ratios remain strong and MB Financial Bank, N.A. was categorized as “well capitalized” at March 31, 2013 under the Prompt Corrective Action (“PCA”) provisions.

FORWARD-LOOKING STATEMENTS

When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in other press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to our future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the possibility that the expected benefits of the FDIC-assisted and other transactions we previously completed will not be realized; (3) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses, which could necessitate additional provisions for loan losses, resulting both from loans we originate and loans we acquire from other financial institutions; (4) results of examinations by the Office of Comptroller of Currency, the Board of Governors of the Federal Reserve System and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan losses or write-down assets; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (10) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (11) our ability to access cost-effective funding; (12) changes in financial markets; (13) changes in economic conditions in general and in the Chicago metropolitan area in particular; (14) the costs, effects and outcomes of litigation; (15) new legislation or regulatory changes, including but not limited to the Dodd-Frank Act and regulations adopted thereunder, any 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

(Dollars in thousands)



	3/31/2013			12/31/2012			9/30/2012			6/30/2012			3/31/2012
ASSETS
Cash and due from banks	$	131,146		$	176,010		$	129,326		$	132,737		$	128,411
Interest earning deposits with banks	108,885			111,533			327,301			304,075			272,553
Total cash and cash equivalents	240,031			287,543			456,627			436,812			400,964
Investment securities:
Securities available for sale, at fair value	1,812,169			1,868,171			1,814,972			1,723,471			1,833,611
Securities held to maturity, at amortized cost	517,785			493,421			495,851			497,800			498,767
Non-marketable securities - FHLB and FRB Stock	52,434			55,385			57,653			61,462			65,541
Total investment securities	2,382,388			2,416,977			2,368,476			2,282,733			2,397,919
Loans held for sale	3,030			7,492			7,221			2,290			3,364
Loans:
Total loans, excluding covered loans	5,306,879			5,317,080			5,128,683			5,170,411			5,169,237
Covered loans	400,789			449,850			496,162			552,838			620,528
Total loans	5,707,668			5,766,930			5,624,845			5,723,249			5,789,765
Less: Allowance for loan losses	121,802			124,204			121,182			121,756			125,431
Net loans	5,585,866			5,642,726			5,503,663			5,601,493			5,664,334
Lease investments, net	117,744			129,823			113,180			111,122			124,748
Premises and equipment, net	219,662			221,533			214,301			214,935			212,589
Cash surrender value of life insurance	129,723			128,879			127,985			127,096			126,226
Goodwill	423,369			423,369			387,069			387,069			387,069
Other intangibles	27,968			29,512			25,735			26,986			28,237
Other real estate owned, net	31,462			36,977			42,427			49,690			63,077
Other real estate owned related to FDIC transactions	20,011			22,478			32,607			43,807			53,703
FDIC indemnification asset	29,197			39,345			36,311			56,637			72,161
Other assets	175,379			185,151			147,943			148,896			137,209
Total assets	$	9,385,830		$	9,571,805		$	9,463,545		$	9,489,566		$	9,671,600
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing	$	2,067,310		$	2,164,547		$	2,011,542		$	1,946,468		$	1,874,028
Interest bearing	5,384,596			5,378,150			5,467,805			5,524,241			5,760,674
Total deposits	7,451,906			7,542,697			7,479,347			7,470,709			7,634,702
Short-term borrowings	224,379			220,602			289,613			261,729			269,691
Long-term borrowings	64,019			116,050			118,798			221,100			256,456
Junior subordinated notes issued to capital trusts	152,065			152,065			152,065			158,521			158,530
Accrued expenses and other liabilities	198,658			264,621			162,892			139,756			136,791
Total liabilities	8,091,027			8,296,035			8,202,715			8,251,815			8,456,170
Stockholders' Equity
Common stock	550			550			550			549			549
Additional paid-in capital	734,057			732,771			731,679			732,297			732,613
Retained earnings	527,332			507,933			489,426			466,812			445,233
Accumulated other comprehensive income	34,928			36,326			40,985			39,035			37,935
Treasury stock	(3,529		)	(3,293		)	(3,304		)	(3,353		)	(3,326		)
Controlling interest stockholders' equity	1,293,338			1,274,287			1,259,336			1,235,340			1,213,004
Noncontrolling interest	1,465			1,483			1,494			2,411			2,426
Total stockholders' equity	1,294,803			1,275,770			1,260,830			1,237,751			1,215,430
Total liabilities and stockholders' equity	$	9,385,830		$	9,571,805		$	9,463,545		$	9,489,566		$	9,671,600

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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



	1Q13			4Q12			3Q12			2Q12			1Q12
Interest income:
Loans	$	60,793		$	63,328		$	67,482		$	69,250		$	71,648
Investment securities:
Taxable	6,140			6,371			7,287			8,882			10,884
Nontaxable	8,060			7,687			7,582			7,303			6,739
Other interest earning accounts	135			228			312			158			169
Total interest income	75,128			77,614			82,663			85,593			89,440
Interest expense:
Deposits	5,709			6,066			7,374			8,058			8,760
Short-term borrowings	167			294			342			362			206
Long-term borrowings and junior subordinated notes	1,567			1,738			2,872			3,069			3,381
Total interest expense	7,443			8,098			10,588			11,489			12,347
Net interest income	67,685			69,516			72,075			74,104			77,093
Provision for credit losses	—			1,000			(13,000		)	—			3,100
Net interest income after provision for credit losses	67,685			68,516			85,075			74,104			73,993
Non-interest income:
Capital markets and international banking service fees	808			2,386			1,400			788			512
Commercial deposit and treasury management fees	5,966			6,095			5,860			5,784			5,897
Lease financing, net	16,263			12,419			9,671			7,334			6,958
Trust and asset management fees	4,494			4,623			4,428			4,535			4,404
Card fees	2,695			2,505			2,388			2,429			2,046
Loan service fees	1,011			2,436			1,075			1,267			1,067
Consumer and other deposit service fees	3,246			3,655			3,786			3,534			3,453
Brokerage fees	1,157			1,088			1,185			1,264			1,255
Net (loss) gain on securities available for sale	(1		)	311			281			(34		)	(3		)
Increase in cash surrender value of life insurance	844			893			890			870			917
Net loss on sale of assets	—			(905		)	(12		)	(8		)	(17		)
Accretion of FDIC indemnification asset	143			154			204			222			475
Net loss recognized on other real estate owned	(330		)	(1,626		)	(3,938		)	(5,441		)	(6,589		)
Net gain on sale of loans	639			822			575			554			374
Other operating income	1,438			1,429			760			809			2,105
Total non-interest income	38,373			36,285			28,553			23,907			22,854
Non-interest expense:
Salaries and employee benefits	43,514			43,038			42,083			40,146			40,429
Occupancy and equipment expense	9,404			8,774			8,274			9,188			9,570
Computer services and telecommunication expense	3,887			4,160			3,777			3,909			3,653
Advertising and marketing expense	2,103			2,335			1,936			1,839			2,073
Professional and legal expense	1,295			1,640			1,554			1,503			1,413
Other intangible amortization expense	1,544			1,251			1,251			1,251			1,257
Branch impairment charges	—			1,432			758			—			—
Other real estate expense, net	139			449			874			424			1,243
Prepayment fees on interest bearing liabilities	—			—			12,682			—			—
Other operating expenses	9,213			8,027			7,976			8,574			7,693
Total non-interest expense	71,099			71,106			81,165			66,834			67,331
Income before income taxes	34,959			33,695			32,463			31,177			29,516
Income tax expense	10,053			9,683			9,330			9,034			8,430
Net income	24,906			24,012			23,133			22,143			21,086
Dividends and discount accretion on preferred shares	—			—			—			—			3,269
Net income available to common stockholders	$	24,906		$	24,012		$	23,133		$	22,143		$	17,817



	1Q13		4Q12		3Q12		2Q12		1Q12
Common share data:
Basic earnings per common share	$	0.46	$	0.44	$	0.43	$	0.41	$	0.33

Diluted earnings per common share	0.46		0.44		0.42		0.41		0.33

Weighted average common shares outstanding for basic earnings per common share	54,411,806		54,401,504		54,346,827		54,174,717		54,155,856

Weighted average common shares outstanding for diluted earnings per common share	54,736,644		54,597,737		54,556,517		54,448,709		54,411,916



Selected Financial Data:
	1Q13			4Q12			3Q12			2Q12			1Q12
Performance Ratios:
Annualized return on average assets	1.07		%	1.01		%	0.97		%	0.94		%	0.87		%
Annualized return on average equity	7.89			7.55			7.38			7.28			5.94
Annualized cash return on average tangible equity⁽¹⁾	12.53			11.47			11.29			11.28			9.36
Net interest rate spread	3.44			3.41			3.48			3.65			3.67
Cost of funds⁽²⁾	0.38			0.40			0.52			0.57			0.60
Efficiency ratio⁽³⁾	63.10			61.16			61.43			61.36			60.04
Annualized net non-interest expense to average assets⁽⁴⁾	1.37			1.29			1.46			1.57			1.54
Core non-interest income to revenues ⁽⁵⁾	34.56			34.18			29.49			27.49			26.46
Net interest margin	3.32			3.31			3.42			3.59			3.64
Tax equivalent effect	0.27			0.26			0.25			0.24			0.23
Net interest margin - fully tax equivalent basis⁽⁶⁾	3.59			3.57			3.67			3.83			3.87
Asset Quality Ratios:
Non-performing loans⁽⁷⁾ to total loans	2.00		%	2.03		%	1.87		%	1.98		%	2.15		%
Non-performing assets⁽⁷⁾ to total assets	1.56			1.62			1.56			1.72			1.94
Allowance for loan losses to non-performing loans⁽⁷⁾	106.88			106.17			115.10			107.25			100.59
Allowance for loan losses to total loans	2.13			2.15			2.15			2.13			2.17
Net loan charge-offs (recoveries) to average loans (annualized)	0.25			(0.17		)	(0.64		)	0.31			0.40
Capital Ratios:
Tangible equity to tangible assets⁽⁸⁾	9.54		%	9.13		%	9.46		%	9.17		%	8.74		%
Tangible common equity to risk weighted assets⁽⁹⁾	13.29			13.07			14.16			13.67			13.17
Book value per common share⁽¹⁰⁾	$	23.63		$	23.29		$	23.01		$	22.64		$	22.23
Less: goodwill and other intangible assets, net of benefit, per common share	8.06			8.08			7.37			7.40			7.42
Tangible book value per common share⁽¹¹⁾	$	15.57		$	15.21		$	15.64		$	15.24		$	14.81

Total capital (to risk-weighted assets)	16.22		%	16.62		%	17.91		%	17.53		%	17.10		%
Tier 1 capital (to risk-weighted assets)	14.96			14.73			15.83			15.45			15.02
Tier 1 capital (to average assets)	10.74			10.50			10.60			10.46			9.99
Tier 1 common capital (to risk-weighted assets)	12.66			12.42			13.39			12.93			12.54


(1)	Net cash flow available to common stockholders (net income available to common stockholders, plus other intangibles amortization expense, net of tax benefit) divided by average tangible equity (average equity less average goodwill and average other intangibles, net of tax benefit).


(2)	Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits.


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


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


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


(6)	Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.


(7)	Non-performing loans excludes purchased credit-impaired loans and loans held for sale. Non-performing assets excludes purchased credit-impaired loans, loans held for sale, and other real estate owned related to FDIC transactions.


(8)	Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.


(9)	Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total risk-weighted assets.


(10)	Equals total ending stockholders’ equity divided by common shares outstanding.


(11)	Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding.

NON-GAAP FINANCIAL INFORMATION

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

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

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

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

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

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

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

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



	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Stockholders' equity - as reported	$	1,294,803	$	1,275,770	$	1,260,830	$	1,237,751	$	1,215,430
Less: goodwill	423,369		423,369		387,069		387,069		387,069
Less: other intangible assets, net of tax benefit	18,179		19,183		16,728		17,541		18,354
Tangible equity	$	853,255	$	833,218	$	857,033	$	833,141	$	810,007

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



	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Total assets - as reported	$	9,385,830	$	9,571,805	$	9,463,545	$	9,489,566	$	9,671,600
Less: goodwill	423,369		423,369		387,069		387,069		387,069
Less: other intangible assets, net of tax benefit	18,179		19,183		16,728		17,541		18,354
Tangible assets	$	8,944,282	$	9,129,253	$	9,059,748	$	9,084,956	$	9,266,177

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



	1Q13		4Q12		3Q12		2Q12		1Q12
Average common stockholders' equity - as reported	$	1,280,921	$	1,264,772	$	1,247,846	$	1,223,667	$	1,206,364
Less: average goodwill	423,369		387,464		387,069		387,069		387,069
Less: average other intangible assets, net of tax benefit	18,611		16,238		17,018		17,903		18,721
Average tangible common equity	$	838,941	$	861,070	$	843,759	$	818,695	$	800,574

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



		1Q13		4Q12		3Q12		2Q12		1Q12
Net income available to common stockholders - as reported		$	24,906	$	24,012	$	23,133	$	22,143	$	17,817
	Add: other intangible amortization expense, net of tax benefit	1,004		813		813		813		817
Net cash flow available to common stockholders		$	25,910	$	24,825	$	23,946	$	22,956	$	18,634

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



	3/31/2013		12/31/2012		9/30/2012		6/30/2012		3/31/2012
Tier 1 capital - as reported	$	960,803	$	939,087	$	958,123	$	941,888	$	925,089
Less: qualifying trust preferred securities	147,500		147,500		147,500		153,500		153,500
Tier 1 common capital	$	813,303	$	791,587	$	810,623	$	788,388	$	771,589

Efficiency Ratio Calculation (Dollars in Thousands)



	1Q13			4Q12			3Q12			2Q12			1Q12
Non-interest expense	$	71,099		$	71,106		$	81,165		$	66,834		$	67,331
Adjustment for prepayment fees on interest bearing liabilities	—			—			12,682			—			—
Adjustment for impairment charges	—			1,432			758			—			—
Adjustment for increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Non-interest expense - as adjusted	$	70,616		$	69,570		$	67,370		$	66,983		$	66,830

Net interest income	$	67,685		$	69,516		$	72,075		$	74,104		$	77,093
Tax equivalent adjustment	5,555			5,360			5,256			5,057			4,756
Net interest income on a fully tax equivalent basis	73,240			74,876			77,331			79,161			81,849
Tax equivalent adjustment on the increase in cash surrender value of life insurance	454			481			479			468			494
Plus non-interest income	38,373			36,285			28,553			23,907			22,854
Less net loss on other real estate owned	(330		)	(1,626		)	(3,938		)	(5,441		)	(6,589		)
Less net (loss) gain on investment securities	(1		)	311			281			(34		)	(3		)
Less net loss on sale of other assets	—			(905		)	(12		)	(8		)	(17		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Net interest income plus non-interest income - as adjusted	$	111,915		$	113,758		$	109,677		$	109,168		$	111,305

Efficiency ratio	63.10		%	61.16		%	61.43		%	61.36		%	60.04		%
Efficiency ratio (without adjustments)	67.04		%	67.21		%	80.66		%	68.19		%	67.37		%

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



	1Q13			4Q12			3Q12			2Q12			1Q12
Non-interest expense	$	71,099		$	71,106		$	81,165		$	66,834		$	67,331
Adjustment for prepayment fees on interest bearing liabilities	—			—			12,682			—			—
Adjustment for impairment charges	—			1,432			758			—			—
Adjustment for increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Non-interest expense - as adjusted	70,616			69,570			67,370			66,983			66,830

Non-interest income	38,373			36,285			28,553			23,907			22,854
Less net losses on other real estate owned	(330		)	(1,626		)	(3,938		)	(5,441		)	(6,589		)
Less net (loss) gain on investment securities	(1		)	311			281			(34		)	(3		)
Less net loss on sale of other assets	—			(905		)	(12		)	(8		)	(17		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Non-interest income - as adjusted	38,221			38,401			31,867			29,539			28,962
Less tax equivalent adjustment on the increase in cash surrender value of life insurance	454			481			479			468			494
Net non-interest expense	$	31,941		$	30,688		$	35,024		$	36,976		$	37,374

Average assets	$	9,449,588		$	9,461,895		$	9,516,159		$	9,478,480		$	9,736,702

Annualized net non-interest expense to average assets	1.37		%	1.29		%	1.46		%	1.57		%	1.54		%

Annualized net non-interest expense to average assets (without adjustments)	1.40		%	1.46		%	2.20		%	1.82		%	1.84		%

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



	1Q13			4Q12			3Q12			2Q12			1Q12
Non-interest income	$	38,373		$	36,285		$	28,553		$	23,907		$	22,854
Less net losses on other real estate owned	(330		)	(1,626		)	(3,938		)	(5,441		)	(6,589		)
Less net (loss) gain on investment securities	(1		)	311			281			(34		)	(3		)
Less net loss on sale of other assets	—			(905		)	(12		)	(8		)	(17		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	454			481			479			468			494
Non-interest income - as adjusted	$	38,675		$	38,882		$	32,346		$	30,007		$	29,456

Net interest income	$	67,685		$	69,516		$	72,075		$	74,104		$	77,093
Tax equivalent adjustment	5,555			5,360			5,256			5,057			4,756
Net interest income on a fully tax equivalent basis	73,240			74,876			77,331			79,161			81,849
Tax equivalent adjustment on the increase in cash surrender value of life insurance	454			481			479			468			494
Plus non-interest income	38,373			36,285			28,553			23,907			22,854
Less net loss on other real estate owned	(330		)	(1,626		)	(3,938		)	(5,441		)	(6,589		)
Less net (loss) gain on investment securities	(1		)	311			281			(34		)	(3		)
Less net loss on sale of other assets	—			(905		)	(12		)	(8		)	(17		)
Less increase (decrease) in market value of assets held in trust for deferred compensation	483			104			355			(149		)	501
Total revenue - as adjusted and on a fully tax equivalent basis	$	111,915		$	113,758		$	109,677		$	109,168		$	111,305

Total revenue - unadjusted	$	106,058		$	105,801		$	100,628		$	98,011		$	99,947

Core non-interest income to revenues ratio	34.56		%	34.18		%	29.49		%	27.49		%	26.46		%

Core non-interest income to revenues ratio (without adjustments)	36.18		%	34.30		%	28.37		%	24.39		%	22.87		%

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):



	1Q13						1Q12						4Q12
	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	$	1,205,903	$	12,559	4.17	%	$	1,062,246	12,774		4.76	%	$	1,117,323	$	12,711	4.45	%
Commercial loans collateralized by assignment of lease payments	1,300,818		12,799		3.94	%	1,176,901		13,757		4.68	%	1,204,431		12,797		4.25	%
Real estate commercial	1,735,082		20,744		4.78	%	1,863,892		23,906		5.07	%	1,766,332		21,636		4.79	%
Real estate construction	113,573		1,120		3.94	%	145,728		1,540		4.18	%	146,717		1,614		4.30	%
Total commercial related credits	4,355,376		47,222		4.34	%	4,248,767		51,977		4.84	%	4,234,803		48,758		4.51	%
Other loans
Real estate residential	312,748		3,285		4.20	%	313,602		3,650		4.66	%	312,189		3,417		4.38	%
Home equity	298,061		3,190		4.34	%	332,909		3,670		4.43	%	308,854		3,336		4.30	%
Indirect	212,153		3,022		5.78	%	186,359		2,935		6.33	%	207,429		3,061		5.87	%
Consumer loans	70,364		607		3.50	%	69,747		529		3.05	%	69,554		623		3.56	%
Total other loans	893,326		10,104		4.59	%	902,617		10,784		4.81	%	898,026		10,437		4.62	%
Total loans, excluding covered loans	5,248,702		57,326		4.43	%	5,151,384		62,761		4.90	%	5,132,829		59,195		4.59	%
Covered loans	424,688		4,682		4.47	%	652,146		10,014		6.18	%	479,011		5,354		4.45	%
Total loans	5,673,390		62,008		4.43	%	5,803,530		72,775		5.04	%	5,611,840		64,549		4.58	%
Taxable investment securities	1,484,300		6,140		1.65	%	1,702,766		10,884		2.56	%	1,508,774		6,371		1.69	%
Investment securities exempt from federal income taxes (3)	911,742		12,400		5.44	%	742,568		10,368		5.58	%	865,653		11,826		5.46	%
Other interest earning deposits	197,057		135		0.28	%	258,351		169		0.26	%	361,371		228		0.25	%
Total interest earning assets	$	8,266,489	$	80,683	3.96	%	$	8,507,215	$	94,196	4.45	%	$	8,347,638	$	82,974	3.95	%
Non-interest earning assets	1,183,099						1,229,487						1,114,257
Total assets	$	9,449,588					$	9,736,702					$	9,461,895
Interest Bearing Liabilities:
Core funding:
Money market and NOW accounts	$	2,737,494	$	927	0.14	%	$	2,649,671	$	1,207	0.18	%	$	2,726,718	$	1,007	0.15	%
Savings accounts	822,214		136		0.07	%	772,335		248		0.13	%	804,158		144		0.07	%
Certificates of deposit	1,512,600		2,397		0.66	%	1,892,328		3,883		0.86	%	1,570,147		2,562		0.67	%
Customer repurchase agreements	181,658		98		0.22	%	203,003		134		0.27	%	233,532		147		0.25	%
Total core funding	5,253,966		3,558		0.27	%	5,517,337		5,472		0.40	%	5,334,555		3,860		0.29	%
Wholesale funding:
Brokered accounts (includes fee expense)	294,295		2,249		3.10	%	439,890		3,422		3.13	%	302,565		2,353		3.09	%
Other borrowings	259,135		1,636		2.53	%	429,231		3,453		3.18	%	286,952		1,885		2.57	%
Total wholesale funding	553,430		3,885		2.52	%	869,121		6,875		2.76	%	589,517		4,238		2.49	%
Total interest bearing liabilities	$	5,807,396	$	7,443	0.52	%	$	6,386,458	$	12,347	0.78	%	$	5,924,072	$	8,098	0.54	%
Non-interest bearing deposits	2,145,058						1,851,211						2,119,632
Other non-interest bearing liabilities	216,213						136,412						153,419
Stockholders' equity	1,280,921						1,362,621						1,264,772
Total liabilities and stockholders' equity	$	9,449,588					$	9,736,702					$	9,461,895
Net interest income/interest rate spread (4)			$	73,240	3.44	%			$	81,849	3.67	%			$	74,876	3.41	%
Taxable equivalent adjustment			5,555						4,756						5,360
Net interest income, as reported			$	67,685					$	77,093					$	69,516
Net interest margin (5)					3.32	%					3.64	%					3.31	%
Tax equivalent effect					0.27	%					0.23	%					0.26	%
Net interest margin on a fully tax equivalent basis (5)					3.59	%					3.87	%					3.57	%


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


(2)	Interest income includes amortization of deferred loan origination fees of $981 thousand, $877 thousand, and $1.0 million for the three months ended March 31, 2013, March 31, 2012, and December 31, 2012, respectively.


(3)	Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate.


(4)	Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.


(5)	Net interest margin represents net interest income as a percentage of average interest earning assets.

MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EARNINGS RELEASE - April 22, 2013

Attached files

MB FINANCIAL INC /MD Reports