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

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8-K - 8-K - MB FINANCIAL INC /MD	form8-kearningsrelease1q16.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:

Berry Allen - Investor Relations

E-Mail: beallen@mbfinancial.com

FOR IMMEDIATE RELEASE

MB FINANCIAL, INC. REPORTS EARNINGS FOR THE FIRST QUARTER OF 2016

CHICAGO, April 18, 2016 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., today announced 2016 first quarter net income available to common stockholders of $37.1 million, or $0.50 per diluted common share, compared to $41.6 million, or $0.56 per diluted common share, last quarter and $32.1 million, or $0.43 per diluted common share, in the first quarter a year ago.

Highlights Include:

Growth in Core Earnings for the Quarter

Core (or operating) earnings increased by $1.3 million, or $0.02 per diluted common share, compared to last quarter and $2.6 million, or $0.04 per diluted common share, compared to the first quarter of last year.

The following table presents a reconciliation of net income to operating earnings (in thousands):



	1Q16			4Q15			1Q15
Net income - as reported	$	39,114		$	43,607		$	34,111
Less non-core items:
Net loss on investment securities	—			(3		)	(460		)
Net (loss) gain on sale of other assets	(48		)	—			4
Merger related and repositioning expenses	(3,287		)	4,186			(8,069		)
Prepayment fees on interest bearing liabilities	—			—			(85		)
Total non-core items	(3,335		)	4,183			(8,610		)
Income tax expense on non-core items	(577		)	1,140			(3,417		)
Non-core items, net of tax	(2,758		)	3,043			(5,193		)
Operating earnings	41,872			40,564			39,304
Dividends on preferred shares	2,000			2,000			2,000
Operating earnings available to common stockholders	$	39,872		$	38,564		$	37,304
Diluted operating earnings per common share	$	0.54		$	0.52		$	0.50
Weighted average common shares outstanding for diluted operating earnings per common share	73,966,935			73,953,165			75,164,716

•

Net interest income on a fully tax equivalent basis decreased $2.6 million (-2.0%) to $126.5 million in the first quarter of 2016 compared to the prior quarter due to one less day in the quarter (approximately $1.4 million) and lower accretion income on loans acquired in the Taylor Capital merger ($2.4 million) partially offset by net interest income related to an increase in average interest earning asset balances.


•	Our net interest margin on a fully tax equivalent basis, excluding accretion on loans acquired in the Taylor Capital merger, was stable at 3.55% compared to 3.56% last quarter.

•

Our core non-interest income was $81.7 million compared to $75.1 million in the prior quarter (8.9% increase). The improvement was largely driven by an increase in fees and promotional revenue (lease financing) from the sale of third-party equipment maintenance contracts as well as trust and asset management fees which increased primarily due to $1.7 million in fees from MSA Holdings, LLC ("MSA"), which we acquired on December 31, 2015.


•	Our core non-interest expense increased $1.7 million (+1.3%) compared to the prior quarter primarily due to an increase in leasing commission expense (salaries and employee benefits) as a result of higher lease financing revenues.

Growth in Loan Balances During the Quarter


•	Loan balances, excluding purchased credit-impaired loans, increased $168.3 million (+1.7%, or +7.0% annualized) during the first quarter of 2016.



					Change from 12/31/2015 to 3/31/2016
(Dollars in thousands)	3/31/2016		12/31/2015		Amount			Percent
Commercial-related credits:
Commercial loans	$	3,509,604	$	3,616,286	$	(106,682	)	(3.0	)%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,774,104		1,779,072		(4,968		)	(0.3	)
Commercial real estate	2,831,814		2,695,676		136,138			5.1
Construction real estate	310,278		252,060		58,218			23.1
Total commercial-related credits	8,425,800		8,343,094		82,706			1.0
Other loans:
Residential real estate	677,791		628,169		49,622			7.9
Indirect vehicle	432,915		384,095		48,820			12.7
Home equity	207,079		216,573		(9,494		)	(4.4	)
Consumer loans	77,318		80,661		(3,343		)	(4.1	)
Total other loans	1,395,103		1,309,498		85,605			6.5
Total loans, excluding purchased credit-impaired	9,820,903		9,652,592		168,311			1.7
Purchased credit-impaired	140,445		141,406		(961		)	(0.7	)
Total loans	$	9,961,348	$	9,793,998	$	167,350		1.7	%

Stable Deposit Balances During the Quarter


•	Total low cost deposits continued to represent 84% of total deposits at March 31, 2016 and non-interest bearing deposits continued to comprise 40% of total deposits.



					Change from 12/31/2015 to 3/31/2016
(Dollars in thousands)	3/31/2016		12/31/2015		Amount			Percent
Low cost deposits:
Noninterest bearing deposits	$	4,667,410	$	4,627,184	$	40,226		0.9	%
Money market and NOW	4,048,054		4,144,633		(96,579		)	(2.3	)
Savings	991,300		974,555		16,745			1.7
Total low cost deposits	9,706,764		9,746,372		(39,608		)	(0.4	)
Certificates of deposit:
Certificates of deposit	1,255,457		1,244,292		11,165			0.9
Brokered certificates of deposit	571,605		514,551		57,054			11.1
Total certificates of deposit	1,827,062		1,758,843		68,219			3.9
Total deposits	$	11,533,826	$	11,505,215	$	28,611		0.2	%

Credit Quality Metrics


•	Provision for credit losses was $7.6 million in the first quarter of 2016 compared to $6.8 million in the fourth quarter of 2015.


•	Our net loan charge-offs during the first quarter of 2016 were $1.3 million, or 0.06% of loans (annualized), compared to net loan charge-offs of $3.3 million, or 0.14% of loans (annualized), in the fourth quarter of 2015.


•	Non-performing loans and non-performing assets decreased by $9.9 million and $13.1 million, respectively, from December 31, 2015 primarily due to loans that paid off during the quarter.


•	Potential problem loans decreased by $29.7 million from December 31, 2015 primarily due to loans that paid off during the quarter.


•	Our allowance for loan and lease losses to total loans ratio was 1.35% at March 31, 2016 compared to 1.31% at December 31, 2015.

American Chartered Bancorp, Inc. Pending Merger Update


•	The transaction was approved by American Chartered shareholders in March 2016.


•	The merger remains subject to regulatory approval and is expected to close around June 30, 2016.

RESULTS OF OPERATIONS

First Quarter Results

Net Interest Income



							Change from 4Q15 to 1Q16					Change from 1Q15 to 1Q16

(Dollars in thousands)	1Q16			4Q15					1Q15
Net interest income - fully tax equivalent	$	126,499		$	129,076		-2.0	%	$	119,473		+5.9	%
Net interest income - fully tax equivalent, excluding acquisition accounting discount accretion on Taylor Capital loans	$	119,146		$	119,373		-0.2	%	$	110,897		+7.4	%
Net interest margin - fully tax equivalent	3.79		%	3.86		%	-0.07	%	3.93		%	-0.14
Net interest margin - fully tax equivalent, excluding acquisition accounting discount accretion on Taylor Capital loans	3.55		%	3.56		%	-0.01	%	3.62		%	-0.07

Reconciliations of net interest income - fully tax equivalent to net interest income, as reported, net interest margin - fully tax equivalent to net interest margin and net interest margin - fully tax equivalent, excluding acquisition accounting discount accretion on Taylor Capital loans to net interest margin are set forth in the tables in the "Net Interest Margin" section.

Net interest income on a fully tax equivalent basis decreased in the first quarter of 2016 compared to the prior quarter due to one less day in the quarter (approximately $1.4 million) and lower accretion income on loans acquired in the Taylor Capital merger ($2.4 million) partially offset by net interest income related to an increase in average interest earning asset balances.

Net interest income on a fully tax equivalent basis increased in the first quarter of 2016 compared to the first quarter of 2015 primarily due to an increase in average interest earning assets, partially offset by a decrease in our net interest margin.

Compared to the first quarter of 2015, our net interest margin on a fully tax equivalent basis, excluding accretion of the acquisition accounting discount recorded on loans acquired in the Taylor Capital merger, decreased by seven basis points primarily due to a decrease in average yields earned on loans (excluding accretion) and, to a lesser extent, an increase in cost of funds.

See the supplemental net interest margin tables for further detail.

Non-interest Income (in thousands):



	1Q16			4Q15			3Q15			2Q15			1Q15
Core non-interest income:
Key fee initiatives:
Lease financing revenues, net	$	19,046		$	15,937		$	20,000		$	15,564		$	25,080
Mortgage banking revenue	27,482			26,542			30,692			35,648			24,544
Commercial deposit and treasury management fees	11,878			11,711			11,472			11,062			11,038
Trust and asset management fees	7,950			6,077			6,002			5,752			5,714
Card fees	3,525			3,651			3,335			4,409			3,927
Capital markets and international banking service fees	3,227			2,355			2,357			1,508			1,928
Total key fee initiatives	73,108			66,273			73,858			73,943			72,231
Consumer and other deposit service fees	3,025			3,440			3,499			3,260			3,083
Brokerage fees	1,158			1,252			1,281			1,543			1,678
Loan service fees	1,752			1,890			1,531			1,353			1,485
Increase in cash surrender value of life insurance	854			864			852			836			839
Other operating income	1,836			1,344			1,730			2,098			2,102
Total core non-interest income	81,733			75,063			82,751			83,033			81,418
Non-core non-interest income:
Net gain (loss) on investment securities	—			(3		)	371			(84		)	(460		)
Net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
(Decrease) increase in market value of assets held in trust for deferred compensation ⁽¹⁾	8			565			(872		)	7			306
Total non-core non-interest income	(40		)	562			(500		)	(84		)	(150		)
Total non-interest income	$	81,693		$	75,625		$	82,251		$	82,949		$	81,268


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

Core non-interest income for the first quarter of 2016 increased by $6.7 million, or 8.9%, to $81.7 million from the fourth quarter of 2015.


•	Lease financing revenues increased due to an increase in fees and promotional revenue from the sale of third-party equipment maintenance contracts.


•	Trust and asset management fees increased primarily due to the acquisition of MSA.


•	Mortgage banking revenue increased due to higher mortgage servicing fees partly offset by a decrease in mortgage origination fees.


•	Capital markets and international banking services fees increased due to higher swap fees.

Core non-interest income for the first quarter of 2016 increased by $315 thousand, or 0.4%, to $81.7 million from the first quarter of 2015.


•	Mortgage banking revenue increased due to higher mortgage servicing fees partly offset by lower mortgage origination fees.


•	Trust and asset management fees increased due to the addition of new customers as well as the acquisition of MSA.


•	Capital markets and international banking services fees increased due to higher derivatives fees.


•	Commercial deposit and treasury management fees increased due to new customer activity.


•	Lease financing revenues decreased due to lower fees from the sale of third-party equipment maintenance contracts.


•	Card fees decreased due to the impact of becoming subject to the Durbin amendment of the Dodd-Frank Act starting on July 1, 2015. We estimate the quarterly impact of the Durbin amendment, when comparing the first quarter of 2016 with the first quarter of 2015, was $1.2 million.

Non-interest Expense (in thousands):



	1Q16			4Q15			3Q15			2Q15			1Q15
Core non-interest expense:⁽¹⁾
Salaries and employee benefits expense	$	85,502		$	84,356		$	88,760		$	86,138		$	84,447
Occupancy and equipment expense	13,260			12,935			12,456			12,081			12,763
Computer services and telecommunication expense	8,750			8,548			8,558			8,407			8,634
Advertising and marketing expense	2,855			2,549			2,578			2,497			2,446
Professional and legal expense	2,492			2,715			1,496			1,902			2,480
Other intangible amortization expense	1,626			1,546			1,542			1,509			1,518
Net (gain) loss recognized on other real estate owned (A)	(637		)	(256		)	520			662			888
Net loss (gain) recognized on other real estate owned related to FDIC transactions (A)	154			(549		)	65			(88		)	(273		)
Other real estate expense, net (A)	137			76			(8		)	150			281
Other operating expenses	18,366			18,932			18,782			18,238			18,276
Total core non-interest expense	132,505			130,852			134,749			131,496			131,460
Non-core non-interest expense: ⁽¹⁾
Merger related and repositioning expenses (B)	3,287			(4,186		)	389			1,234			8,069
Prepayment fees on interest bearing liabilities	—			—			—			—			85
Increase (decrease) in market value of assets held in trust for deferred compensation (C)	8			565			(872		)	7			306
Total non-core non-interest expense	3,295			(3,621		)	(483		)	1,241			8,460
Total non-interest expense	$	135,800		$	127,231		$	134,266		$	132,737		$	139,920


⁽¹⁾	Letters denote the corresponding line items where these non-core non-interest expense items reside in the consolidated statements of operations as follows: A – Net loss (gain) recognized on other real estate owned and other expense, B – See merger related and repositioning expenses table below, and C – Salaries and employee benefits.

Core non-interest expense increased by $1.7 million, or 1.3%, from the fourth quarter of 2015 to $132.5 million for the first quarter of 2016.


•	Salaries and employee benefits expense was up due to an increase in leasing commission expense as a result of higher lease financing revenues.


•	Occupancy and equipment expense increased due to higher rental operating expenses and real estate taxes offset partly by lower building repair and maintenance expenses.

Core non-interest expense increased by $1.0 million, or 0.8%, from the first quarter of 2015 to $132.5 million for the first quarter of 2016.


•	Salaries and employee benefits expense was up due to annual pay increases as well as an increase in temporary help in our mortgage and IT areas.


•	Occupancy and equipment expense increased due to higher depreciation expense, rental operating expenses and real estate taxes offset partly by lower building repair and maintenance expenses.

The following table presents the detail of the merger related and repositioning expenses (dollars in thousands):



	1Q16		4Q15			3Q15		2Q15		1Q15
Merger related and repositioning expenses:
Salaries and employee benefits	$	81	$	(212	)	$	3	$	—	$	33
Occupancy and equipment expense	—		—			2		96		177
Computer services and telecommunication expense	305		(103		)	9		130		270
Advertising and marketing expense	23		2			—		—		—
Professional and legal expense	97		1,454			305		511		190
Branch exit and facilities impairment charges	44		616			70		438		7,391
Contingent consideration expense - Celtic acquisition ⁽¹⁾	2,703		—			—		—		—
Other operating expenses	34		(5,943		)	—		59		8
Total merger related and repositioning expenses	$	3,287	$	(4,186	)	$	389	$	1,234	$	8,069


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

In the first quarter of 2016, merger related and repositioning expenses included contingent consideration for our acquisition of Celtic Leasing Corp. due to strong lease residual performance. In the fourth quarter of 2015, merger related and repositioning expenses were impacted by the reversal of an accrual for a potential contingent loss we assumed in connection with the Taylor Capital merger.

Operating Segments

The Company's operations consist of three reportable operating segments: Banking, Leasing and Mortgage Banking. Our Banking Segment generates revenues primarily from its lending, deposit gathering and fee business activities. Our Leasing Segment generates revenues through lease originations and related services offered through the Company's leasing subsidiaries: LaSalle Systems Leasing, Inc., Celtic Leasing Corp. and MB Equipment Finance, LLC. Our Mortgage Banking Segment originates residential mortgage loans for sale to investors through its retail and third party origination channels as well as residential mortgage loans held in our loan portfolio. The Mortgage Banking Segment also services residential mortgage loans owned by investors and the Company.

The following tables present summary financial information, adjusted for funds transfer pricing and internal allocations of certain expenses, for the reportable segments (in thousands):



	Banking		Leasing		Mortgage Banking			Non-core Items			Consolidated
Three months ended March 31, 2016
Net interest income	$	109,608	$	2,423	$	7,273		$	—		$	119,304
Provision for credit losses	7,001		437		125			—			7,563
Net interest income after provision for credit losses	102,607		1,986		7,148			—			111,741
Non-interest income:
Lease financing revenues, net	679		18,367		—			—			19,046
Mortgage origination fees	—		—		16,894			—			16,894
Mortgage servicing fees	—		—		10,588			—			10,588
Other non-interest income	34,388		828		(3		)	(48		)	35,165
Total non-interest income	35,067		19,195		27,479			(48		)	81,693
Non-interest expense:
Salaries and employee benefits	53,421		9,072		23,017			81			85,591
Occupancy and equipment expense	10,430		895		1,935			—			13,260
Computer services and telecommunication expense	6,446		363		1,941			305			9,055
Professional and legal expense	1,486		409		597			97			2,589
Other operating expenses	15,570		1,447		5,484			2,804			25,305
Total non-interest expense	87,353		12,186		32,974			3,287			135,800
Income before income taxes	50,321		8,995		1,653			(3,335		)	57,634
Income tax expense	14,927		3,509		661			(577		)	18,520
Net income	$	35,394	$	5,486	$	992		$	(2,758	)	$	39,114



	Banking		Leasing		Mortgage Banking		Non-core Items			Consolidated
Three months ended December 31, 2015
Net interest income	$	111,691	$	2,714	$	7,364	$	—		$	121,769
Provision for credit losses	6,654		—		104		—			6,758
Net interest income after provision for credit losses	105,037		2,714		7,260		—			115,011
Non-interest income:
Lease financing revenues, net	1,180		14,757		—		—			15,937
Mortgage origination fees	—		—		17,596		—			17,596
Mortgage servicing fees	—		—		8,946		—			8,946
Other non-interest income	32,337		802		10		(3		)	33,146
Total non-interest income	33,517		15,559		26,552		(3		)	75,625
Non-interest expense:
Salaries and employee benefits	54,655		7,474		22,792		(212		)	84,709
Occupancy and equipment expense	10,344		855		1,736		—			12,935
Computer services and telecommunication expense	6,200		340		2,008		(103		)	8,445
Professional and legal expense	1,709		328		678		1,454			4,169
Other operating expenses	15,757		1,501		5,040		(5,325		)	16,973
Total non-interest expense	88,665		10,498		32,254		(4,186		)	127,231
Income before income taxes	49,889		7,775		1,558		4,183			63,405
Income tax expense	14,998		3,037		623		1,140			19,798
Net income	$	34,891	$	4,738	$	935	$	3,043		$	43,607

Net income from our Banking Segment for the first quarter of 2016 increased compared to the prior quarter. This increase was primarily due to higher fee income coupled with better expense control which offset lower accretion income on loans acquired in the Taylor Capital merger.

Net income from our Leasing Segment for the first quarter of 2016 increased compared to the prior quarter. This increase was primarily due to an increase in lease financing revenues due to an increase in fees and promotional revenue from the sale of third-party equipment maintenance contracts partly offset by an increase in commission expense and higher provision for credit losses.

Net income from our Mortgage Banking Segment for the first quarter of 2016 was stable compared to the prior quarter as an increase in mortgage servicing fees was partly offset by a decrease in mortgage origination fees and higher non-interest expenses.

The following table presents additional information regarding the Mortgage Banking Segment (dollars in thousands):



	1Q16			4Q15			3Q15			2Q15			1Q15
Origination volume:	$	1,328,804		$	1,437,057		$	1,880,960		$	2,010,175		$	1,688,541
Refinance	49		%	42		%	34		%	43		%	61		%
Purchase	51			58			66			57			39
Origination volume by channel:
Retail	19		%	18		%	18		%	18		%	18		%
Third party	81			82			82			82			82
Mortgage servicing book (unpaid principal balance of loans serviced for others) at period end ⁽¹⁾	$	16,911,325		$	16,218,613		$	15,582,911		$	23,588,345		$	22,978,750
Mortgage servicing rights, recorded at fair value, at period end	145,800			168,162			148,097			261,034			219,254
Notional value of rate lock commitments, at period end	823,000			622,906			800,162			992,025			1,069,145

⁽¹⁾ 3Q15 does not include the unpaid principal balance of serviced loans sold in July 2015 that continued to be sub-serviced through October 2015.

LOAN PORTFOLIO

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



	3/31/2016				12/31/2015				9/30/2015				6/30/2015				3/31/2015
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial-related credits:
Commercial loans	$	3,509,604	36	%	$	3,616,286	37	%	$	3,440,632	37	%	$	3,354,889	37	%	$	3,258,652	37	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,774,104		18		1,779,072		18		1,693,540		18		1,690,866		18		1,628,031		18
Commercial real estate	2,831,814		28		2,695,676		27		2,580,009		27		2,539,991		28		2,525,640		28
Construction real estate	310,278		3		252,060		3		255,620		3		189,599		2		184,105		2
Total commercial-related credits	8,425,800		85		8,343,094		85		7,969,801		85		7,775,345		85		7,596,428		85
Other loans:
Residential real estate	677,791		7		628,169		6		607,171		6		533,118		6		505,558		5
Indirect vehicle	432,915		4		384,095		4		345,731		4		303,777		3		273,105		3
Home equity	207,079		2		216,573		2		223,173		2		230,478		3		241,078		3
Consumer loans	77,318		1		80,661		1		87,612		1		86,463		1		77,645		1
Total other loans	1,395,103		14		1,309,498		13		1,263,687		13		1,153,836		13		1,097,386		12
Total loans, excluding purchased credit-impaired loans	9,820,903		99		9,652,592		98		9,233,488		98		8,929,181		98		8,693,814		97
Purchased credit-impaired loans	140,445		1		141,406		2		155,693		2		164,775		2		227,514		3
Total loans	$	9,961,348	100	%	$	9,793,998	100	%	$	9,389,181	100	%	$	9,093,956	100	%	$	8,921,328	100	%

Our loan balances, excluding purchased credit-impaired loans, increased $168.3 million (+1.7%, or +7.0% annualized) during the first quarter of 2016. Commercial loan balances decreased due to seasonal borrowings of approximately $100 million that were outstanding at December 31, 2015 and repaid in the first quarter of 2016. Residential real estate loan balances have increased over the past year as a result of retaining adjustable rate mortgages originated by our Mortgage Banking Segment in our loan portfolio.

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



	1Q16				4Q15				3Q15				2Q15				1Q15
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial-related credits:
Commercial loans	$	3,531,441	36	%	$	3,492,161	37	%	$	3,372,279	37	%	$	3,309,519	37	%	$	3,190,755	36	%
Commercial loans collateralized by assignment of lease payments (lease loans)	1,754,558		18		1,708,404		18		1,674,939		18		1,634,583		18		1,647,761		18
Commercial real estate	2,734,148		28		2,627,004		28		2,568,539		28		2,522,473		28		2,538,995		29
Construction real estate	276,797		3		274,188		2		210,506		2		191,935		2		191,257		2
Total commercial-related credits	8,296,944		85		8,101,757		85		7,826,263		85		7,658,510		85		7,568,768		85
Other loans:
Residential real estate	640,231		7		612,275		6		566,115		6		512,766		6		493,366		5
Indirect vehicle	404,473		4		365,744		4		325,323		4		286,107		3		267,265		3
Home equity	210,678		2		219,440		2		226,365		2		233,867		3		246,537		3
Consumer loans	80,569		1		83,869		1		85,044		1		76,189		1		72,374		1
Total other loans	1,335,951		14		1,281,328		13		1,202,847		13		1,108,929		13		1,079,542		12
Total loans, excluding purchased credit-impaired loans	9,632,895		99		9,383,085		98		9,029,110		98		8,767,439		98		8,648,310		97
Purchased credit-impaired loans	139,451		1		154,562		2		156,309		2		202,374		2		240,376		3
Total loans	$	9,772,346	100	%	$	9,537,647	100	%	$	9,185,419	100	%	$	8,969,813	100	%	$	8,888,686	100	%

Our average loan balances, excluding purchased credit-impaired loans, increased $249.8 million (+2.7%, or +10.7% annualized) during the first quarter of 2016.

ASSET QUALITY

The following table presents a summary of criticized assets (excluding loans held for sale) as of the dates indicated (dollars in thousands):



	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Non-performing loans:
Non-accrual loans ⁽¹⁾	$	93,602		$	98,065		$	92,302		$	91,943		$	81,571
Loans 90 days or more past due, still accruing interest	1,112			6,596			4,275			6,112			1,707
Total non-performing loans	94,714			104,661			96,577			98,055			83,278
Other real estate owned	28,309			31,553			29,587			28,517			21,839
Repossessed assets	187			81			216			78			160
Total non-performing assets	$	123,210		$	136,295		$	126,380		$	126,650		$	105,277
Potential problem loans ⁽²⁾	$	110,193		$	139,941		$	122,966		$	116,443		$	107,703
Purchased credit-impaired loans	$	140,445		$	141,406		$	155,693		$	164,775		$	227,514
Total non-performing, potential problem and purchased credit-impaired loans	$	345,352		$	386,008		$	375,236		$	379,273		$	418,495

Total allowance for loan and lease losses	$	134,493		$	128,140		$	124,626		$	120,070		$	113,412
Accruing restructured loans ⁽³⁾	27,269			26,991			20,120			16,875			16,874
Total non-performing loans to total loans	0.95		%	1.07		%	1.03		%	1.08		%	0.93		%
Total non-performing assets to total assets	0.79			0.87			0.85			0.84			0.73
Allowance for loan and lease losses to non-performing loans	142.00			122.43			129.04			122.45			136.18


⁽¹⁾	Includes $24.0 million, $23.6 million, $21.4 million, $24.5 million and $25.5 million of restructured loans on non-accrual status at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively.


⁽²⁾	We define potential problem loans as loans rated substandard that do not meet the definition of a non-performing loan. Potential problem loans carry a higher probability of default and require additional attention by management.


⁽³⁾	Accruing restructured loans consist primarily of residential real estate and home equity loans that have been modified and are performing in accordance with those modified terms as of the dates indicated.

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



	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Commercial and lease	$	28,590	$	37,076	$	34,465	$	31,053	$	18,315
Commercial real estate	27,786		29,073		25,437		32,358		29,645
Construction real estate	—		—		—		337		337
Consumer related	38,338		38,512		36,675		34,307		34,981
Total non-performing loans	$	94,714	$	104,661	$	96,577	$	98,055	$	83,278

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



	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
Balance at the beginning of quarter	$	31,553		$	29,587		$	28,517		$	21,839		$	19,198
Transfers in at fair value less estimated costs to sell	1,270			5,964			2,402			8,595			4,615
Fair value adjustments	45			(721		)	(565		)	(920		)	(922		)
Net gains on sales of other real estate owned	592			977			45			258			34
Cash received upon disposition	(5,151		)	(4,254		)	(812		)	(1,255		)	(1,086		)
Balance at the end of quarter	$	28,309		$	31,553		$	29,587		$	28,517		$	21,839

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



	1Q16			4Q15			3Q15			2Q15			1Q15
Allowance for credit losses, balance at the beginning of period	$	131,508		$	128,038		$	124,130		$	117,189		$	114,057
Provision for credit losses - legacy	6,409			6,758			1,225			(600		)	(550		)
Provision for credit losses - acquired Taylor Capital loan portfolio renewals	1,154			—			4,133			4,896			5,524
Charge-offs:
Commercial loans	713			710			1,657			57			569
Commercial loans collateralized by assignment of lease payments (lease loans)	574			685			1,980			100			—
Commercial real estate	352			1,251			170			108			2,034
Construction real estate	—			23			5			3			3
Residential real estate	368			261			292			318			579
Home equity	238			407			358			276			444
Indirect vehicle	931			898			581			627			874
Consumer loans	412			550			467			500			424
Total charge-offs	3,588			4,785			5,510			1,989			4,927
Recoveries:
Commercial loans	380			235			456			816			242
Commercial loans collateralized by assignment of lease payments (lease loans)	50			12			11			340			749
Commercial real estate	594			385			2,402			2,561			1,375
Construction real estate	27			19			216			35			2
Residential real estate	24			98			337			8			72
Home equity	318			132			186			160			101
Indirect vehicle	463			499			334			545			475
Consumer loans	393			117			118			169			69
Total recoveries	2,249			1,497			4,060			4,634			3,085
Total net charge-offs (recoveries)	1,339			3,288			1,450			(2,645		)	1,842
Allowance for credit losses	137,732			131,508			128,038			124,130			117,189
Allowance for unfunded credit commitments	(3,239		)	(3,368		)	(3,412		)	(4,060		)	(3,777		)
Allowance for loan and lease losses	$	134,493		$	128,140		$	124,626		$	120,070		$	113,412
Total loans, excluding loans held for sale	$	9,961,348		$	9,793,998		$	9,389,181		$	9,093,956		$	8,921,328
Average loans, excluding loans held for sale	9,772,346			9,537,647			9,185,419			8,969,813			8,888,686
Ratio of allowance for loan and lease losses to total loans, excluding loans held for sale	1.35		%	1.31		%	1.33		%	1.32		%	1.27		%
Net loan charge-offs (recoveries) to average loans, excluding loans held for sale (annualized)	0.06			0.14			0.06			(0.12		)	0.08

The following table presents the three elements of the Company's allowance for loan and lease losses as of the dates indicated (in thousands):



	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Commercial related loans:
General reserve	$	98,001	$	94,164	$	93,903	$	89,642	$	88,425
Specific reserve	20,995		16,173		13,683		11,303		5,658
Consumer related reserve	15,497		17,803		17,040		19,125		19,329
Total allowance for loan and lease losses	$	134,493	$	128,140	$	124,626	$	120,070	$	113,412

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan and lease losses. These acquired loans are segregated into three types: pass rated loans with no discount attributable to credit quality, non-impaired loans with a discount attributable at least in part to credit quality and impaired loans with evidence of significant credit deterioration.


•	Pass rated loans (typically performing loans) are accounted for in accordance with ASC 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination.


•	Non-impaired loans (typically performing substandard loans) are accounted for in accordance with ASC 310-30 if they display at least some level of credit deterioration since origination.


•	Impaired loans (typically substandard loans on non-accrual status) are accounted for in accordance with ASC 310-30 as they display significant credit deterioration since origination.

For pass rated loans (non-purchased credit-impaired loans), the difference between the estimated fair value of the loans (computed on a loan by loan basis) and the principal outstanding is accreted over the remaining life of the loans.

In accordance with ASC 310-30, for both purchased non-impaired loans and purchased credit-impaired loans ("PCI loans"), the difference between contractually required payments at acquisition and the cash flows expected to be collected is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows.

Changes in the purchase accounting discount for loans acquired in the Taylor Capital merger were as follows for the three months ended March 31, 2016 (in thousands):



	Non-Accretable Discount - PCI Loans			Accretable Discount - PCI Loans			Accretable Discount - Non-PCI Loans			Total
Balance at beginning of period	$	14,661		$	12,298		$	34,768		$	61,727
Charge-offs	(123		)	—			—			(123		)
Accretion	—			(2,403		)	(4,950		)	(7,353		)
Transfer	(3,584		)	3,584			—			—
Balance at end of period	$	10,954		$	13,479		$	29,818		$	54,251

Changes in the purchase accounting discount for loans acquired in the Taylor Capital merger were as follows for the three months ended December 31, 2015(in thousands):



	Non-Accretable Discount - PCI Loans			Accretable Discount - PCI Loans			Accretable Discount - Non-PCI Loans			Total
Balance at beginning of period	$	19,747		$	9,368		$	40,961		$	70,076
Recoveries	1,354			—			—			1,354
Accretion	—			(3,510		)	(6,193		)	(9,703		)
Transfer	(6,440		)	6,440			—			—
Balance at end of period	$	14,661		$	12,298		$	34,768		$	61,727

The $3.6 million and $6.4 million purchase accounting discount transfer from non-accretable discount on purchased credit-impaired loans to accretable discount for the three months ended March 31, 2016 and December 31, 2015, respectively, was due to better than expected cash flows on several pools of purchased credit-impaired loans.

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, net of our investment securities available for sale as of the dates indicated (in thousands):



	3/31/2016			12/31/2015			9/30/2015			6/30/2015		3/31/2015
Securities available for sale:
Fair value
Government sponsored agencies and enterprises	$	64,762		$	64,611		$	65,461		$	65,485	$	66,070
States and political subdivisions	398,024			396,367			399,274			395,912		403,628
Mortgage-backed securities	834,559			893,656			847,426			902,017		856,933
Corporate bonds	224,530			219,628			228,251			246,468		252,042
Equity securities	10,969			10,761			10,826			10,669		10,751
Total fair value	$	1,532,844		$	1,585,023		$	1,551,238		$	1,620,551	$	1,589,424

Amortized cost
Government sponsored agencies and enterprises	$	63,600		$	63,805		$	64,008		$	64,211	$	64,411
States and political subdivisions	371,006			373,285			379,015			380,221		381,704
Mortgage-backed securities	820,825			888,325			834,791			890,334		841,727
Corporate bonds	225,657			222,784			228,711			245,506		250,543
Equity securities	10,814			10,757			10,701			10,644		10,587
Total amortized cost	$	1,491,902		$	1,558,956		$	1,517,226		$	1,590,916	$	1,548,972

Unrealized gain, net
Government sponsored agencies and enterprises	$	1,162		$	806		$	1,453		$	1,274	$	1,659
States and political subdivisions	27,018			23,082			20,259			15,691		21,924
Mortgage-backed securities	13,734			5,331			12,635			11,683		15,206
Corporate bonds	(1,127		)	(3,156		)	(460		)	962		1,499
Equity securities	155			4			125			25		164
Total unrealized gain, net	$	40,942		$	26,067		$	34,012		$	29,635	$	40,452

Securities held to maturity, at amortized cost:
States and political subdivisions	$	986,340		$	1,016,519		$	1,002,963		$	974,032	$	764,931
Mortgage-backed securities	205,570			214,291			221,889			229,595		235,928
Total amortized cost	$	1,191,910		$	1,230,810		$	1,224,852		$	1,203,627	$	1,000,859

DEPOSIT MIX

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



	3/31/2016				12/31/2015				9/30/2015				6/30/2015				3/31/2015
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	4,667,410	40	%	$	4,627,184	40	%	$	4,434,067	39	%	$	4,378,005	40	%	$	4,290,499	39	%
Money market, NOW and interest bearing deposits	4,048,054		35		4,144,633		36		4,129,414		37		3,842,264		35		4,002,818		36
Savings	991,300		9		974,555		8		953,746		8		970,875		9		969,560		9
Total low cost deposits	9,706,764		84		9,746,372		84		9,517,227		84		9,191,144		84		9,262,877		84
Certificates of deposit:
Certificates of deposit	1,255,457		11		1,244,292		11		1,279,842		12		1,261,843		12		1,354,633		12
Brokered certificates of deposit	571,605		5		514,551		5		457,509		4		408,827		4		401,991		4
Total certificates of deposit	1,827,062		16		1,758,843		16		1,737,351		16		1,670,670		16		1,756,624		16
Total deposits	$	11,533,826	100	%	$	11,505,215	100	%	$	11,254,578	100	%	$	10,861,814	100	%	$	11,019,501	100	%

Non-interest bearing deposits grew by $40.2 million (+0.9%, or +3.5% annualized) during the first quarter of 2016 and comprised 40% of total deposits at quarter-end. Total low cost deposits decreased $39.6 million (-0.4%, or -1.6% annualized) to $9.7 billion at March 31, 2016 compared to December 31, 2015 and represented 84% of total deposits at quarter-end.

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



	1Q16				4Q15				3Q15				2Q15				1Q15
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Low cost deposits:
Noninterest bearing deposits	$	4,606,008	40	%	$	4,617,076	40	%	$	4,428,065	39	%	$	4,273,931	39	%	$	4,199,948	38	%
Money market, NOW and interest bearing deposits	4,109,150		36		4,214,099		37		4,119,625		36		3,940,201		36		3,937,707		36
Savings	984,019		9		959,049		8		965,060		9		972,327		9		952,345		9
Total low cost deposits	9,699,177		85		9,790,224		85		9,512,750		84		9,186,459		84		9,090,000		83
Certificates of deposit:
Certificates of deposit	1,237,971		11		1,245,947		11		1,304,516		12		1,302,031		12		1,420,320		13
Brokered certificates of deposit	534,910		4		492,839		4		427,649		4		412,517		4		476,245		4
Total certificates of deposit	1,772,881		15		1,738,786		15		1,732,165		16		1,714,548		16		1,896,565		17
Total deposits	$	11,472,058	100	%	$	11,529,010	100	%	$	11,244,915	100	%	$	10,901,007	100	%	$	10,986,565	100	%

CAPITAL

Tangible book value per common share was $17.04 at March 31, 2016 compared to $16.53 at December 31, 2015 and $16.08 at March 31, 2015.

Our regulatory capital ratios remain strong. MB Financial Bank, N.A. (the "Bank") was categorized as “well capitalized” at March 31, 2016 under the Prompt Corrective Action (“PCA”) provisions. The Bank would be categorized as "well capitalized" under the fully phased in rules under the Basel III regulatory capital reform.

FORWARD-LOOKING STATEMENTS

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

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from the pending MB Financial-American Chartered merger might not be realized within the expected 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 requisite regulatory approvals for the pending MB Financial-American Chartered merger might not be obtained, or may take longer to obtain than expected; (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 originated loans and loans acquired from other financial institutions; (4) competitive pressures among depository institutions; (5) interest rate movements and their impact on customer behavior, net interest margin and the value of our mortgage servicing rights; (6) the possibility that our mortgage banking business may experience increased volatility in its revenues and earnings and the possibility that the profitability of our mortgage banking business could be significantly reduced if we are unable to originate and sell mortgage loans at profitable margins or if changes in interest rates negatively impact the value of our mortgage servicing rights; (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) the possibility that security measures implemented might not be sufficient to mitigate the risk of a cyber attack or cyber theft, and that such security measures might not protect against systems failures or interruptions; (11) our ability to realize the residual values of its direct finance, leveraged and operating leases; (12) the ability to access cost-effective funding; (13) changes in financial markets; (14) changes in economic conditions in general and in the Chicago metropolitan area in particular; (15) the costs, effects and outcomes of litigation; (16) new legislation or regulatory changes, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act, changes in the interpretation and/or application of laws and regulations by regulatory authorities, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (17) changes in accounting principles, policies or guidelines; (18) our future acquisitions of other depository institutions or lines of business; and (19) future goodwill impairment due to changes in our business, changes in market conditions, or other factors.

We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.

ADDITIONAL INFORMATION

In connection with the proposed merger between MB Financial and American Chartered, MB Financial filed a registration statement on Form S-4 with the SEC, which was declared effective by the SEC on February 4, 2016. The registration statement includes a proxy statement/prospectus, which was sent to the shareholders of American Chartered. Investors and shareholders of American Chartered are advised to read the proxy statement/prospectus, which was filed by MB Financial with the SEC on February 4, 2016, and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain, or will contain, as the case may be, important information about MB Financial, American Chartered and the proposed transaction. Copies of all documents relating to the merger filed by MB Financial can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing MB Financial’s website at www.mbfinancial.com under the tab “Investor Relations” and then under “SEC Filings.” Alternatively, these documents, when available, can be obtained free of charge from MB Financial upon written request to MB Financial, Inc., Corporate Secretary, 6111 North River Road, Rosemont, Illinois 60018 or by calling (847) 653-1992.

TABLES TO FOLLOW

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

As of the dates indicated

(In thousands)



	3/31/2016			12/31/2015			9/30/2015			6/30/2015			3/31/2015
ASSETS
Cash and due from banks	$	271,732		$	307,869		$	234,220		$	290,266		$	248,840
Interest earning deposits with banks	113,785			73,572			66,025			144,154			52,212
Total cash and cash equivalents	385,517			381,441			300,245			434,420			301,052
Federal funds sold	—			—			—			5			—
Investment securities:
Securities available for sale, at fair value	1,532,844			1,585,023			1,551,238			1,620,551			1,589,424
Securities held to maturity, at amortized cost	1,191,910			1,230,810			1,224,852			1,203,627			1,000,859
Non-marketable securities - FHLB and FRB Stock	121,750			114,233			91,400			111,400			87,677
Total investment securities	2,846,504			2,930,066			2,867,490			2,935,578			2,677,960
Loans held for sale	632,196			744,727			676,020			801,343			686,838
Loans:
Total loans, excluding purchased credit-impaired loans	9,820,903			9,652,592			9,233,488			8,929,181			8,693,814
Purchased credit-impaired loans	140,445			141,406			155,693			164,775			227,514
Total loans	9,961,348			9,793,998			9,389,181			9,093,956			8,921,328
Less: Allowance for loan and lease losses	134,493			128,140			124,626			120,070			113,412
Net loans	9,826,855			9,665,858			9,264,555			8,973,886			8,807,916
Lease investments, net	216,046			211,687			184,223			167,966			159,191
Premises and equipment, net	238,578			236,013			234,115			234,651			234,077
Cash surrender value of life insurance	137,807			136,953			136,089			135,237			134,401
Goodwill	725,068			725,070			711,521			711,521			711,521
Other intangibles	43,186			44,812			37,520			34,979			36,488
Mortgage servicing rights, at fair value	145,800			168,162			148,097			261,034			219,254
Other real estate owned, net	28,309			31,553			29,587			28,517			21,839
Other real estate owned related to FDIC transactions	10,397			10,717			13,825			13,867			17,890
Other assets	339,390			297,948			346,814			285,190			319,883
Total assets	$	15,575,653		$	15,585,007		$	14,950,101		$	15,018,194		$	14,328,310
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing	$	4,667,410		$	4,627,184		$	4,434,067		$	4,378,005		$	4,290,499
Interest bearing	6,866,416			6,878,031			6,820,511			6,483,809			6,729,002
Total deposits	11,533,826			11,505,215			11,254,578			10,861,814			11,019,501
Short-term borrowings	884,101			1,005,737			940,529			1,382,635			615,231
Long-term borrowings	439,615			400,274			95,175			89,639			85,477
Junior subordinated notes issued to capital trusts	185,820			186,164			186,068			185,971			185,874
Accrued expenses and other liabilities	409,406			400,333			410,523			420,396			363,934
Total liabilities	13,452,768			13,497,723			12,886,873			12,940,455			12,270,017
Stockholders' Equity
Preferred stock	115,280			115,280			115,280			115,280			115,280
Common stock	756			756			756			754			754
Additional paid-in capital	1,284,438			1,280,870			1,277,348			1,273,333			1,268,851
Retained earnings	756,272			731,812			702,789			677,246			651,178
Accumulated other comprehensive income	24,687			15,777			20,968			18,778			26,101
Treasury stock	(59,863		)	(58,504		)	(55,258		)	(9,035		)	(5,277		)
Controlling interest stockholders' equity	2,121,570			2,085,991			2,061,883			2,076,356			2,056,887
Noncontrolling interest	1,315			1,293			1,345			1,383			1,406
Total stockholders' equity	2,122,885			2,087,284			2,063,228			2,077,739			2,058,293
Total liabilities and stockholders' equity	$	15,575,653		$	15,585,007		$	14,950,101		$	15,018,194		$	14,328,310

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)



(Dollars in thousands, except per share data)	1Q16			4Q15			3Q15		2Q15			1Q15
Interest income:
Loans:
Taxable	$	104,923		$	106,137		$	100,573	$	98,768		$	98,846
Nontaxable	2,586			2,602			2,283		2,259			2,174
Investment securities:
Taxable	9,566			9,708			9,655		10,002			9,934
Nontaxable	10,776			10,969			10,752		10,140			9,113
Federal funds sold	—			1			—		—			—
Other interest earning accounts	141			110			89		57			62
Total interest income	127,992			129,527			123,352		121,226			120,129
Interest expense:
Deposits	5,622			5,357			5,102		4,554			4,645
Short-term borrowings	721			385			395		355			277
Long-term borrowings and junior subordinated notes	2,345			2,016			1,886		1,844			1,812
Total interest expense	8,688			7,758			7,383		6,753			6,734
Net interest income	119,304			121,769			115,969		114,473			113,395
Provision for credit losses	7,563			6,758			5,358		4,296			4,974
Net interest income after provision for credit losses	111,741			115,011			110,611		110,177			108,421
Non-interest income:
Lease financing revenue, net	19,046			15,937			20,000		15,564			25,080
Mortgage banking revenue	27,482			26,542			30,692		35,648			24,544
Commercial deposit and treasury management fees	11,878			11,711			11,472		11,062			11,038
Trust and asset management fees	7,950			6,077			6,002		5,752			5,714
Card fees	3,525			3,651			3,335		4,409			3,927
Capital markets and international banking service fees	3,227			2,355			2,357		1,508			1,928
Consumer and other deposit service fees	3,025			3,440			3,499		3,260			3,083
Brokerage fees	1,158			1,252			1,281		1,543			1,678
Loan service fees	1,752			1,890			1,531		1,353			1,485
Increase in cash surrender value of life insurance	854			864			852		836			839
Net (loss) gain on investment securities	—			(3		)	371		(84		)	(460		)
Net (loss) gain on sale of assets	(48		)	—			1		(7		)	4
Other operating income	1,844			1,909			858		2,105			2,408
Total non-interest income	81,693			75,625			82,251		82,949			81,268
Non-interest expense:
Salaries and employee benefits expense	85,591			84,709			87,891		86,145			84,786
Occupancy and equipment expense	13,260			12,935			12,458		12,177			12,940
Computer services and telecommunication expense	9,055			8,445			8,567		8,537			8,904
Advertising and marketing expense	2,878			2,551			2,578		2,497			2,446
Professional and legal expense	2,589			4,169			1,801		2,413			2,670
Other intangible amortization expense	1,626			1,546			1,542		1,509			1,518
Branch exit and facilities impairment charges	44			616			70		438			7,391
Net (gain) loss recognized on other real estate owned and other expense	(346		)	(729		)	577		724			896
Prepayment fees on interest bearing liabilities	—			—			—		—			85
Other operating expenses	21,103			12,989			18,782		18,297			18,284
Total non-interest expense	135,800			127,231			134,266		132,737			139,920
Income before income taxes	57,634			63,405			58,596		60,389			49,769
Income tax expense	18,520			19,798			18,318		19,437			15,658
Net income	39,114			43,607			40,278		40,952			34,111
Dividends on preferred shares	2,000			2,000			2,000		2,000			2,000
Net income available to common stockholders	$	37,114		$	41,607		$	38,278	$	38,952		$	32,111



	1Q16		4Q15		3Q15		2Q15		1Q15
Common share data:
Basic earnings per common share	$	0.51	$	0.57	$	0.52	$	0.52	$	0.43
Diluted earnings per common share	0.50		0.56		0.51		0.52		0.43
Weighted average common shares outstanding for basic earnings per common share	73,330,731		73,296,602		74,297,281		74,596,925		74,567,104
Weighted average common shares outstanding for diluted earnings per common share	73,966,935		73,953,165		75,029,827		75,296,029		75,164,716
Common shares outstanding (at end of period)	73,639,487		73,678,329		73,776,196		75,073,292		75,122,076



Selected Financial Data:
	1Q16			4Q15			3Q15			2Q15			1Q15
Performance Ratios:
Annualized return on average assets	1.02		%	1.13		%	1.06		%	1.12		%	0.96		%
Annualized operating return on average assets ⁽¹⁾	1.09			1.06			1.06			1.14			1.11
Annualized return on average common equity	7.52			8.48			7.75			8.02			6.78
Annualized operating return on average common equity ⁽¹⁾	8.08			7.86			7.75			8.19			7.87
Annualized cash return on average tangible common equity ⁽²⁾	12.47			13.97			12.74			13.21			11.31
Annualized cash operating return on average tangible common equity ⁽³⁾	13.37			12.97			12.74			13.47			13.09
Net interest rate spread	3.63			3.72			3.60			3.72			3.80
Cost of funds ⁽⁴⁾	0.27			0.24			0.23			0.22			0.23
Efficiency ratio ⁽⁵⁾	63.49			63.95			65.35			64.26			65.29
Annualized net non-interest expense to average assets ⁽⁶⁾	1.31			1.44			1.36			1.32			1.40
Core non-interest income to revenues ⁽⁷⁾	39.38			36.91			40.35			40.80			40.66
Net interest margin	3.57			3.64			3.52			3.63			3.73
Tax equivalent effect	0.22			0.22			0.21			0.21			0.20
Net interest margin - fully tax equivalent basis ⁽⁸⁾	3.79			3.86			3.73			3.84			3.93
Loans to deposits	86.37			85.13			83.43			83.72			80.96
Asset Quality Ratios:
Non-performing loans ⁽⁹⁾ to total loans	0.95		%	1.07		%	1.03		%	1.08		%	0.93		%
Non-performing assets ⁽⁹⁾ to total assets	0.79			0.87			0.85			0.84			0.73
Allowance for loan and lease losses to non-performing loans ⁽⁹⁾	142.00			122.43			129.04			122.45			136.18
Allowance for loan and lease losses to total loans	1.35			1.31			1.33			1.32			1.27
Net loan (recoveries) charge-offs to average loans (annualized)	0.06			0.14			0.06			(0.12		)	0.08
Capital Ratios:
Tangible equity to tangible assets ⁽¹⁰⁾	9.24		%	8.99		%	9.34		%	9.41		%	9.73		%
Tangible common equity to tangible assets ⁽¹¹⁾	8.46			8.21			8.53			8.60			8.89
Tangible common equity to risk weighted assets ⁽¹²⁾	9.56			9.34			9.69			10.02			10.09
Total capital (to risk-weighted assets) ⁽¹³⁾	12.66			12.54			12.94			13.07			13.22
Tier 1 capital (to risk-weighted assets) ⁽¹³⁾	11.62			11.54			11.92			12.06			12.24
Common equity tier 1 capital (to risk-weighted assets) ⁽¹³⁾	9.34			9.27			9.56			9.66			9.79
Tier 1 capital (to average assets) ⁽¹³⁾	10.38			10.40			10.43			10.69			10.80
Per Share Data:
Book value per common share ⁽¹⁴⁾	$	27.26		$	26.77		$	26.40		$	26.14		$	25.86
Less: goodwill and other intangible assets, net of benefit, per common share	10.22			10.24			9.97			9.78			9.78
Tangible book value per common share ⁽¹⁵⁾	$	17.04		$	16.53		$	16.43		$	16.36		$	16.08
Cash dividends per common share	$	0.17		$	0.17		$	0.17		$	0.17		$	0.14


⁽¹⁾	Annualized operating return on average assets is computed by dividing annualized operating earnings by average total assets. Annualized operating return on average common equity is computed by dividing annualized operating earnings by average common equity. Operating earnings is defined as net income as reported less non-core items, net of tax.


⁽²⁾	Annualized cash return on average tangible equity is computed by dividing net cash flow available to common stockholders (net income available to common stockholders, plus other intangibles amortization expense, net of tax benefit) by average tangible common equity (average common stockholders' equity less average goodwill and average other intangibles, net of tax benefit).


⁽³⁾	Annualized cash operating return on average tangible common equity is computed by dividing annualized cash operating earnings (operating earnings plus other intangibles amortization expense, net of tax benefit, less dividends on preferred shares) by average tangible common equity. Operating earnings is defined as net income as reported less non-core items, net of tax.


⁽⁴⁾	Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits.


⁽⁵⁾	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.


⁽⁶⁾	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.


⁽⁷⁾	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.


⁽⁸⁾	Represents net interest income on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.


⁽⁹⁾	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.


⁽¹⁰⁾	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.


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


⁽¹²⁾	Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by risk-weighted assets. Current quarter risk-weighted assets are estimated.


⁽¹³⁾	Current quarter ratios are estimated.


⁽¹⁴⁾	Equals total ending common stockholders’ equity divided by common shares outstanding.


⁽¹⁵⁾	Equals total ending common 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 (or operating) earnings, 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, net interest margin on a fully tax equivalent basis excluding acquisition accounting discount accretion on Taylor Capital loans, efficiency ratio and the ratio of annualized net non-interest expense to average assets with net gains and losses on investment securities, net gains and losses on sale of other assets, and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, and prepayment fees on interest bearing liabilities, merger related and repositioning expenses, and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest expense components of these ratios, with tax equivalent adjustment for tax-exempt interest income and increase in cash surrender value of life insurance, as applicable; ratios of tangible equity to tangible assets, tangible common equity to risk-weighted assets and Tier 1 common capital to risk-weighted assets; tangible book value per common share; annualized operating return on average assets, annualized operating return on average common equity, annualized cash return on average tangible common equity and annualized cash operating 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 operating earnings, core and non-core non-interest income and core and non-core non-interest expense are useful in assessing our core operating performance and in understanding the primary drivers of our non-interest income and non-interest expense when comparing periods.

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

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

In addition, management believes that presenting the ratio of Tier 1 common equity to risk-weighted assets is useful for assessing our capital strength and for peer comparison purposes. The other measures exclude the acquisition-related goodwill and other

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

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

Reconciliations of net interest margin on a fully tax equivalent basis to net interest margin and net interest margin on a fully tax equivalent basis excluding acquisition accounting discount accretion on Taylor Capital loans to net interest margin are 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 stockholders' equity (in thousands):



	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Stockholders' equity - as reported	$	2,122,885	$	2,087,284	$	2,063,228	$	2,077,739	$	2,058,293
Less: goodwill	725,068		725,070		711,521		711,521		711,521
Less: other intangible assets, net of tax benefit	28,071		29,128		24,388		22,736		23,717
Tangible equity	$	1,369,746	$	1,333,086	$	1,327,319	$	1,343,482	$	1,323,055

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



	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Total assets - as reported	$	15,575,653	$	15,585,007	$	14,950,101	$	15,018,194	$	14,328,310
Less: goodwill	725,068		725,070		711,521		711,521		711,521
Less: other intangible assets, net of tax benefit	28,071		29,128		24,388		22,736		23,717
Tangible assets	$	14,822,514	$	14,830,809	$	14,214,192	$	14,283,937	$	13,593,072

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



	3/31/2016		12/31/2015		9/30/2015		6/30/2015		3/31/2015
Common stockholders' equity - as reported	$	2,007,605	$	1,972,004	$	1,947,948	$	1,962,459	$	1,943,013
Less: goodwill	725,068		725,070		711,521		711,521		711,521
Less: other intangible assets, net of tax benefit	28,071		29,128		24,388		22,736		23,717
Tangible common equity	$	1,254,466	$	1,217,806	$	1,212,039	$	1,228,202	$	1,207,775

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



	1Q16		4Q15		3Q15		2Q15		1Q15
Average common stockholders' equity - as reported	$	1,984,379	$	1,945,772	$	1,958,947	$	1,947,231	$	1,922,151
Less: average goodwill	725,070		711,669		711,521		711,521		711,521
Less: average other intangible assets, net of tax benefit	28,511		23,826		23,900		23,092		24,157
Average tangible common equity	$	1,230,798	$	1,210,277	$	1,223,526	$	1,212,618	$	1,186,473

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



	1Q16		4Q15		3Q15		2Q15		1Q15
Net income available to common stockholders - as reported	$	37,114	$	41,607	$	38,278	$	38,952	$	32,111
Add: other intangible amortization expense, net of tax benefit	1,057		1,005		1,002		981		987
Net cash flow available to common stockholders	$	38,171	$	42,612	$	39,280	$	39,933	$	33,098

The following table presents a reconciliation of net income to operating earnings (in thousands):



	1Q16			4Q15			3Q15			2Q15			1Q15
Net income - as reported	$	39,114		$	43,607		$	40,278		$	40,952		$	34,111
Less non-core items:
Net (loss) gain on investment securities	—			(3		)	371			(84		)	(460		)
Net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
Merger related and repositioning expenses	(3,287		)	4,186			(389		)	(1,234		)	(8,069		)
Prepayment fees on interest bearing liabilities	—			—			—			—			(85		)
Total non-core items	(3,335		)	4,183			(17		)	(1,325		)	(8,610		)
Income tax expense on non-core items	(577		)	1,140			(6		)	(526		)	(3,417		)
Non-core items, net of tax	(2,758		)	3,043			(11		)	(799		)	(5,193		)
Operating earnings	41,872			40,564			40,289			41,751			39,304
Dividends on preferred shares	2,000			2,000			2,000			2,000			2,000
Operating earnings available to common stockholders	$	39,872		$	38,564		$	38,289		$	39,751		$	37,304
Diluted operating earnings per common share	$	0.54		$	0.52		$	0.51		$	0.53		$	0.50
Weighted average common shares outstanding for diluted operating earnings per common share	73,966,935			73,953,165			75,029,827			75,296,029			75,164,716

Efficiency Ratio Calculation (Dollars in Thousands)



	1Q16			4Q15			3Q15			2Q15			1Q15
Non-interest expense	$	135,800		$	127,231		$	134,266		$	132,737		$	139,920
Less merger related and repositioning expenses	3,287			(4,186		)	389			1,234			8,069
Less prepayment fees on interest bearing liabilities	—			—			—			—			85
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Non-interest expense - as adjusted	$	132,505		$	130,852		$	134,749		$	131,496		$	131,460

Net interest income	$	119,304		$	121,769		$	115,969		$	114,473		$	113,395
Tax equivalent adjustment	7,195			7,307			7,019			6,676			6,078
Net interest income on a fully tax equivalent basis	126,499			129,076			122,988			121,149			119,473
Plus non-interest income	81,693			75,625			82,251			82,949			81,268
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	460			465			459			450			452
Less net (loss) gain on investment securities	—			(3		)	371			(84		)	(460		)
Less net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Net interest income plus non-interest income - as adjusted	$	208,692		$	204,604		$	206,198		$	204,632		$	201,343
Efficiency ratio	63.49		%	63.95		%	65.35		%	64.26		%	65.29		%
Efficiency ratio (without adjustments)	67.56		%	64.46		%	67.74		%	67.24		%	71.88		%

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



	1Q16			4Q15			3Q15			2Q15			1Q15
Non-interest expense	$	135,800		$	127,231		$	134,266		$	132,737		$	139,920
Less merger related and repositioning expenses	3,287			(4,186		)	389			1,234			8,069
Less prepayment fees on interest bearing liabilities	—			—			—			—			85
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Non-interest expense - as adjusted	132,505			130,852			134,749			131,496			131,460

Non-interest income	81,693			75,625			82,251			82,949			81,268
Less net (loss) gain on investment securities	—			(3		)	371			(84		)	(460		)
Less net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Non-interest income - as adjusted	81,733			75,063			82,751			83,033			81,418
Less tax equivalent adjustment on the increase in cash surrender value of life insurance	460			465			459			450			452
Net non-interest expense	$	50,312		$	55,324		$	51,539		$	48,013		$	49,590
Average assets	$	15,487,565		$	15,244,633		$	15,059,429		$	14,631,999		$	14,363,244
Annualized net non-interest expense to average assets	1.31		%	1.44		%	1.36		%	1.32		%	1.40		%
Annualized net non-interest expense to average assets (without adjustments)	1.41		%	1.34		%	1.37		%	1.36		%	1.66		%

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



	1Q16			4Q15			3Q15			2Q15			1Q15
Non-interest income	$	81,693		$	75,625		$	82,251		$	82,949		$	81,268
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	460			465			459			450			452
Less net (loss) gain on investment securities	—			(3		)	371			(84		)	(460		)
Less net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Non-interest income - as adjusted	$	82,193		$	75,528		$	83,210		$	83,483		$	81,870

Net interest income	$	119,304		$	121,769		$	115,969		$	114,473		$	113,395
Tax equivalent adjustment	7,195			7,307			7,019			6,676			6,078
Net interest income on a fully tax equivalent basis	126,499			129,076			122,988			121,149			119,473
Plus non-interest income	81,693			75,625			82,251			82,949			81,268
Plus tax equivalent adjustment on the increase in cash surrender value of life insurance	460			465			459			450			452
Less net (loss) gain on investment securities	—			(3		)	371			(84		)	(460		)
Less net (loss) gain on sale of other assets	(48		)	—			1			(7		)	4
Less increase (decrease) in market value of assets held in trust for deferred compensation	8			565			(872		)	7			306
Total revenue - as adjusted and on a fully tax equivalent basis	$	208,692		$	204,604		$	206,198		$	204,632		$	201,343

Total revenue - unadjusted	$	200,997		$	197,394		$	198,220		$	197,422		$	194,663

Core non-interest income to revenues ratio	39.38		%	36.91		%	40.35		%	40.80		%	40.66		%
Non-interest income to revenues ratio (without adjustments)	40.64		%	38.31		%	41.49		%	42.02		%	41.75		%

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):



	1Q16						1Q15						4Q15
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Interest Earning Assets:
Loans held for sale	$	661,021	$	5,966	3.61	%	$	658,169	$	5,785	3.52	%	$	681,682	$	6,276	3.68	%
Loans ^{(1) (2) (3)}:
Commercial-related credits
Commercial	3,531,441		37,357		4.18		3,190,755		32,623		4.09		3,492,161		35,890		4.02
Commercial loans collateralized by assignment of lease payments	1,754,558		16,577		3.78		1,647,761		15,438		3.75		1,708,404		15,901		3.72
Real estate commercial	2,734,148		28,039		4.06		2,538,995		27,548		4.34		2,627,004		27,759		4.13
Real estate construction	276,797		2,902		4.15		191,257		4,081		8.54		274,188		3,736		5.33
Total commercial-related credits	8,296,944		84,875		4.05		7,568,768		79,690		4.21		8,101,757		83,286		4.02
Other loans
Real estate residential	640,231		5,695		3.56		493,366		5,028		4.08		612,275		5,490		3.59
Home equity	210,678		2,033		3.88		246,537		2,468		4.06		219,440		2,142		3.87
Indirect	404,473		4,758		4.73		267,265		3,485		5.29		365,744		4,403		4.78
Consumer loans	80,569		794		3.97		72,374		797		4.47		83,869		777		3.67
Total other loans	1,335,951		13,280		4.00		1,079,542		11,778		4.42		1,281,328		12,812		3.97
Total loans, excluding purchased credit-impaired loans	9,632,895		98,155		4.10		8,648,310		91,468		4.29		9,383,085		96,098		4.06
Purchased credit-impaired loans	139,451		4,780		13.75		240,376		4,937		8.33		154,562		7,766		19.93
Total loans	9,772,346		102,935		4.24		8,888,686		96,405		4.40		9,537,647		103,864		4.32
Taxable investment securities	1,524,583		9,566		2.51		1,556,530		9,934		2.55		1,510,047		9,708		2.57
Investment securities exempt from federal income taxes ⁽³⁾	1,362,468		16,579		4.87		1,126,133		14,021		4.98		1,383,592		16,875		4.88
Federal funds sold	42		—		1.00		16		—		—		100		1		1.00
Other interest earning deposits	113,748		141		0.50		102,346		62		0.25		141,891		110		0.31
Total interest earning assets	$	13,434,208	$	135,187	4.05	%	$	12,331,880	$	126,207	4.15	%	$	13,254,959	$	136,834	4.10	%
Non-interest earning assets	2,053,357						2,031,364						1,989,674
Total assets	$	15,487,565					$	14,363,244					$	15,244,633
Interest Bearing Liabilities:
Core funding:
Money market, NOW and interest bearing deposits	$	4,109,150	$	2,086	0.20	%	$	3,937,707	$	1,595	0.16	%	$	4,214,099	$	1,999	0.19	%
Savings deposits	984,019		159		0.06		952,345		120		0.05		959,049		123		0.05
Certificates of deposit	1,237,971		1,413		0.46		1,420,320		1,452		0.42		1,245,947		1,431		0.46
Customer repurchase agreements	190,114		94		0.20		245,875		119		0.20		230,412		115		0.20
Total core funding	6,521,254		3,752		0.23		6,556,247		3,286		0.20		6,649,507		3,668		0.22
Wholesale funding:
Brokered certificates of deposit (includes fee expense)	534,910		1,964		1.48		476,245		1,478		1.26		492,839		1,804		1.45
Other borrowings	1,327,274		2,972		0.89		731,688		1,970		1.08		1,031,301		2,286		0.87
Total wholesale funding	1,862,184		4,936		1.07		1,207,933		3,448		1.12		1,524,140		4,090		1.06
Total interest bearing liabilities	$	8,383,438	$	8,688	0.42	%	$	7,764,180	$	6,734	0.35	%	$	8,173,647	$	7,758	0.38	%
Non-interest bearing deposits	4,606,008						4,199,948						4,617,076
Other non-interest bearing liabilities	398,460						361,685						392,858
Stockholders' equity	2,099,659						2,037,431						2,061,052
Total liabilities and stockholders' equity	$	15,487,565					$	14,363,244					$	15,244,633
Net interest income/interest rate spread ⁽⁴⁾			$	126,499	3.63	%			$	119,473	3.80	%			$	129,076	3.72	%
Taxable equivalent adjustment			7,195						6,078						7,307
Net interest income, as reported			$	119,304					$	113,395					$	121,769
Net interest margin ⁽⁵⁾					3.57	%					3.73	%					3.64	%
Tax equivalent effect					0.22	%					0.20	%					0.22	%
Net interest margin on a fully tax equivalent basis ⁽⁵⁾					3.79	%					3.93	%					3.86	%


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


⁽²⁾	Interest income includes amortization of deferred loan origination fees and costs.


⁽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.

The table below reflects the impact the acquisition accounting loan discount accretion on Taylor Capital loans had on the loan yield and net interest margin on a fully tax equivalent basis for the three months ended March 31, 2016, March 31, 2015 and December 31, 2015 (dollars in thousands):



	1Q16							1Q15							4Q15
	Average Balance			Interest		Yield		Average Balance			Interest		Yield		Average Balance			Interest		Yield
Loan yield excluding acquisition accounting discount accretion on Taylor Capital loans:
Total loans, as reported	$	9,772,346		$	102,935	4.24	%	$	8,888,686		$	96,405	4.40	%	$	9,537,647		$	103,864	4.32	%
Less acquisition accounting discount accretion on non-PCI loans	(32,293		)	4,950				(57,802		)	7,948				(37,865		)	6,193
Less acquisition accounting discount accretion on PCI loans	(25,696		)	2,403				(35,092		)	628				(28,037		)	3,510
Total loans, excluding acquisition accounting discount accretion on Taylor Capital loans	$	9,830,335		$	95,582	3.91	%	$	8,981,580		$	87,829	3.97	%	$	9,603,549		$	94,161	3.89	%

Net interest margin on a fully tax equivalent basis, excluding acquisition accounting discount accretion on Taylor Capital loans:
Total interest earning assets, as reported	$	13,434,208		$	126,499	3.79	%	$	12,331,880		$	119,473	3.93	%	$	13,254,959		$	129,076	3.86	%
Less acquisition accounting discount accretion on non-PCI loans	(32,293		)	4,950				(57,802		)	7,948				(37,865		)	6,193
Less acquisition accounting discount accretion on PCI loans	(25,696		)	2,403				(35,092		)	628				(28,037		)	3,510
Total interest earning assets/net interest margin on a fully tax equivalent basis, excluding acquisition accounting discount accretion on Taylor Capital loans	$	13,492,197		$	119,146	3.55	%	$	12,424,774		$	110,897	3.62	%	$	13,320,861		$	119,373	3.56	%

The table below reflects the impact that the loan discount accretion and provision for credit losses on Taylor Capital loans had on earnings for the three months ended March 31, 2016 and December 31, 2015 (dollars in thousands):



	1Q16		4Q15
Acquisition accounting discount accretion on Taylor Capital loans	$	7,353	$	9,703
Provision for credit losses on Taylor Capital loans	1,154		—
Earnings impact of discount accretion and merger related provision	6,199		9,703
Tax expense	2,460		3,850
Earnings impact of discount accretion and merger related provision, net of tax	$	3,739	$	5,853

MB FINANCIAL INC /MD - FORM 8-K - EX-99 - EXHIBIT 99 - April 18, 2016

Attached files

MB FINANCIAL INC /MD Reports