Annual Reports

  • 10-K (Feb 24, 2017)
  • 10-K (Feb 19, 2016)
  • 10-K (Feb 27, 2015)
  • 10-K (Feb 21, 2014)
  • 10-K (Feb 20, 2013)
  • 10-K (Feb 8, 2011)

 
Quarterly Reports

 
8-K

 
Other

MB Financial 8-K 2012

Documents found in this filing:

  1. 8-K
  2. Ex-99
  3. Ex-99
exhibit99.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 SECOND QUARTER 2012 NET INCOME OF $22.1 MILLION, IMPROVED RETURN ON ASSETS AND RETURN ON EQUITY AND IMPROVED CREDIT METRICS

CHICAGO, July 17, 2012 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A (“the Bank” or “MB Financial Bank”), announced today second quarter results for 2012.  The words “MB Financial,” “the Company,” “we,” “our” and “us” refer to MB Financial, Inc. and its consolidated subsidiaries, unless indicated otherwise.  We had net income and net income available to common stockholders of $22.1 million for the second quarter of 2012 compared to a net loss of $7.4 million and net loss available to common stockholders of $10.0 million for the second quarter of 2011, and net income of $21.1 million and net income available to common stockholders of $17.8 million for the first quarter of 2012.

Key items for the quarter were as follows:

Improved Return on Assets and Return on Equity:
·  
Annualized return on average assets increased to 0.94% for the second quarter of 2012 compared to 0.87% for the first quarter of 2012, driven by lower credit costs.
·   
Annualized return on average common equity improved to 7.28% for the second quarter of 2012 compared to 5.94% for the first quarter of 2012.  The improvement was a result of lower credit costs and the repurchase in the first quarter of 2012 of all $196 million of preferred stock issued in 2008 to the U.S. Department of Treasury as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program.  As a result, there were no TARP dividends in the second quarter of 2012 compared to $3.3 million in the first quarter of 2012.
·   
Annualized cash return on average tangible common equity increased to 11.28% in the second quarter of 2012 from 9.36% in the first quarter of 2012.

Improved Credit Metrics:
·  
We had no provision for credit losses for the second quarter of 2012, while our net charge-offs were $4.4 million.  Our provision for credit losses and net charge-offs for the first quarter of 2012 were $3.1 million and $5.8 million, respectively.
·  
Losses recognized on other real estate owned (“OREO”), which we view as credit costs, were $5.4 million in the second quarter of 2012 compared to $6.6 million in the first quarter of 2012.
·  
Our non-performing loans improved to $113.5 million or 1.98% of total loans as of June 30, 2012 from $124.7 million or 2.15% of total loans at March 31, 2012, a decrease of $11.2 million (-9.0%)
·  
Our non-performing assets improved to $163.3 million or 1.72% of total assets as of June 30, 2012 from $187.8 million or 1.94% of total assets as of March 31, 2012, a decrease of $24.6 million (-13.1%)
·  
Our allowance for loan losses to non-performing loans was 107.25% as of June 30, 2012 compared to 100.59% as of March 31, 2012.
 
 
 
1

 

 
Balance Sheet Trends:
·  
Gross loan balances as of June 30, 2012, excluding covered loans and loans held for sale, were essentially unchanged compared to March 31, 2012 balances.  Commercial and industrial loans (+3.8%), lease loans (+0.9%), construction loans (+17.7%) and consumer loans (+1.2%) all increased during the quarter, while commercial real estate loans decreased (-4.4%).
·  
Noninterest bearing deposits increased approximately $72 million (+3.9%) from March 31, 2012 to June 30, 2012 due primarily to the addition of new customers.  Money market and NOW accounts decreased approximately $138 million (-5.1%) and certificate of deposit balances decreased approximately $102 million (-4.5%) from the prior quarter as we continued our efforts to lower our funding costs and improve our deposit mix.
·  
During the first quarter of 2012, we entered into and fully utilized a $35 million unsecured line of credit to fund a portion of our TARP repayment.   During the second quarter of 2012, though still available for future borrowing, the outstanding amount on this line of credit was repaid in full.
·  
During the second quarter of 2012, we repurchased in full the ten-year warrant held by the U.S. Department of Treasury to purchase 506,024 shares of the Company’s common stock issued in 2008 to the Treasury as part of TARP.  The price paid by the Company to repurchase the warrant was $1.5 million.


 
2

 


RESULTS OF OPERATIONS

Second Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis decreased $2.7 million from the first quarter of 2012.  The decrease from the first quarter of 2012 to the second quarter of 2012 was due primarily to a decrease in average interest earning assets of approximately $195 million and a four basis point decline in our net interest margin to 3.83% on a fully tax equivalent basis.

Net interest income on a fully tax equivalent basis decreased $9.0 million during the first six months of 2012 compared to the first six months of 2011.  The decrease from the first six months of 2012 to the first six months of 2011 was due primarily to a decrease in average interest earning assets of approximately $382 million and a five basis point decline in our net interest margin to 3.85% on a fully tax equivalent basis.

See the supplemental net interest margin tables for further detail.

Other Income (in thousands):


   
Three Months Ended
Six Months Ended
     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
 
2012
 
2011
Core other income:
                           
 
Loan service fees
 $
 1,683
 $
 1,339
 $
 1,601
 $
 2,159
 $
 2,812
 $
 3,022
 $
 3,938
 
Deposit service fees
 
 9,370
 
 9,408
 
 10,085
 
 9,932
 
 9,023
 
 18,778
 
 19,053
 
Lease financing, net
 
 7,334
 
 6,958
 
 7,801
 
 6,494
 
 6,861
 
 14,292
 
 12,644
 
Brokerage fees
 
 1,264
 
 1,255
 
 1,577
 
 1,273
 
 1,615
 
 2,519
 
 3,034
 
Trust and asset management fees
 
 4,535
 
 4,404
 
 4,166
 
 4,272
 
 4,455
 
 8,939
 
 8,886
 
Increase in cash surrender value of life insurance
 870
 
 917
 
 944
 
 1,014
 
 1,451
 
 1,787
 
 2,419
 
Accretion of FDIC indemnification asset
 
 222
 
 475
 
 683
 
 985
 
 1,339
 
 697
 
 3,170
 
Card fees
 
 2,429
 
 2,044
 
 1,096
 
 2,071
 
 2,062
 
 4,473
 
 3,850
 
Other operating income
 
 1,832
 
 2,162
 
 1,632
 
 1,690
 
 1,979
 
 3,994
 
 3,577
Total core other income
 
 29,539
 
 28,962
 
 29,585
 
 29,890
 
 31,597
 
 58,501
 
 60,571
                               
Non-core other income: (1)
                           
 
Net gain (loss) on investment securities
 
 (34)
 
 (3)
 
 411
 
 -
 
 232
 
 (37)
 
 229
 
Net (loss) gain on sale of other assets
 
 (8)
 
 (17)
 
 (87)
 
 -
 
 13
 
 (25)
 
 370
 
Net gain on sale of loans held for sale (A)
 
 -
 
 -
 
 -
 
 -
 
 1,790
 
 -
 
 1,790
 
Net loss recognized on other real estate owned (B)
 (4,156)
 
 (4,348)
 
 (3,620)
 
 (2,354)
 
 (3,629)
 
 (8,504)
 
 (3,997)
 
Net loss recognized on other real estate owned
                           
 
   related to FDIC transactions (B)
 
 (1,285)
 
 (2,241)
 
 (1,858)
 
 (764)
 
 (1,016)
 
 (3,526)
 
 (1,020)
 
Increase (decrease) in market value of assets held
                           
 
   in trust for deferred compensation (A)
 
 (149)
 
 501
 
 20
 
 (405)
 
 158
 
 352
 
 345
Total non-core other income
 
 (5,632)
 
 (6,108)
 
 (5,134)
 
 (3,523)
 
 (2,452)
 
 (11,740)
 
 (2,283)
                               
Total other income
 $
 23,907
 $
 22,854
 $
 24,451
 $
 26,367
 $
 29,145
 $
 46,761
 $
 58,288

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

Core other income increased by $577 thousand from the first quarter of 2012 to the second quarter of 2012.  Loan service fees increased due to an increase in loan prepayment fees.  Net lease financing increased due to an increase in remarketing revenues.  Accretion of FDIC indemnification asset decreased as accretion is recorded based on the FDIC indemnification asset balance, which has declined as we have received loss-share payments.  Card fee income increased due primarily to fees earned on prepaid cards and credit cards.  Non-core other income was primarily impacted by lower losses recognized on OREO.
 

 
3

 


Core other income decreased by $2.1 million from the first six months of 2011 to the first six months of 2012 primarily due to a $2.5 million decrease in accretion of FDIC indemnification asset.   Accretion is recorded based on the FDIC indemnification asset balance which has declined as we have received loss-share payments.  Loan service fees decreased in the first six months of 2012 compared to the same period in 2011 due to a decrease in loan prepayment and exit fees.  Net lease financing increased primarily due to an increase in remarketing revenues.  Cash surrender value of life insurance decreased as a result of a death benefit recorded in the first six months of 2011.  Card fee income increased due primarily to fees earned on prepaid cards and credit cards.  Non-core other income was primarily impacted by higher losses recognized on OREO.

Other Expense (in thousands):

   
Three Months Ended
Six Months Ended
     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
 
2012
 
2011
Core other expense:
                           
 
Salaries and employee benefits
 $
 40,295
 $
 39,928
 $
 39,826
 $
 38,827
 $
 37,657
 $
 80,223
 $
 75,245
 
Occupancy and equipment expense
 
 9,188
 
 9,570
 
 8,498
 
 9,092
 
 8,483
 
 18,758
 
 17,877
 
Computer services and telecommunication expense
 
 3,909
 
 3,653
 
 4,382
 
 3,488
 
 3,570
 
 7,562
 
 7,015
 
Advertising and marketing expense
 
 1,930
 
 2,066
 
 1,831
 
 1,740
 
 1,748
 
 3,996
 
 3,467
 
Professional and legal expense
 
 1,503
 
 1,413
 
 1,422
 
 1,647
 
 1,853
 
 2,916
 
 3,078
 
Other intangible amortization expense
 
 1,251
 
 1,257
 
 1,410
 
 1,414
 
 1,416
 
 2,508
 
 2,841
 
FDIC insurance premiums
 
 2,010
 
 2,643
 
 2,662
 
 2,272
 
 3,502
 
 4,653
 
 6,930
 
Other real estate expense, net
 
 424
 
 1,243
 
 1,464
 
 1,181
 
 1,251
 
 1,667
 
 1,649
 
Other operating expenses
 
 6,473
 
 5,057
 
 7,324
 
 7,352
 
 7,090
 
 11,530
 
 14,145
Total core other expense
 
 66,983
 
 66,830
 
 68,819
 
 67,013
 
 66,570
 
 133,813
 
 132,247
                               
Non-core other expense: (1)
                           
 
Branch impairment charges
 
 -
 
 -
 
 594
 
 -
 
 -
 
 -
 
 1,000
 
Increase (decrease) in market value of assets held
                           
 
   in trust for deferred compensation (A)
 
 (149)
 
 501
 
 20
 
 (405)
 
 158
 
 352
 
 345
Total non-core other expense
 
 (149)
 
 501
 
 614
 
 (405)
 
 158
 
 352
 
 1,345
                               
Total other expense
 $
 66,834
 $
 67,331
 $
 69,433
 $
 66,608
 $
 66,728
 $
 134,165
 $
 133,592

(1)  
Letters denote the corresponding line items where these non-core other expense items reside in the consolidated statements of income as follows:  A – Salaries and employee benefits.

Core other expense in the second quarter of 2012 was consistent with first quarter of 2012.  FDIC insurance premiums decreased due to a change in the assessment computation during the second quarter of 2012.  Other real estate expense decreased as a result of lower holding costs related to OREO given we have fewer OREO properties.  Other operating expenses were unusually low in the first quarter of 2012 as a result of recording a decrease during that period in the clawback liability related to our loss share agreements with the FDIC.

Core other expense increased by $1.6 million from the first six months of 2011 to the first six months of 2012.  Salaries and employee benefits expense increased primarily due to annual salary increases and higher health insurance claims.  FDIC insurance premiums decreased due to a change in the assessment computation during the second quarter of 2012 and the impact of improved credit quality on the computation.  Other operating expenses were favorably impacted in the first half of 2012 by a decrease in the clawback liability related to our loss share agreements with the FDIC recorded during the period.  Non-core other expense was primarily impacted by $1.0 million of fixed asset impairment charges due to our decision to close a branch in the first quarter of 2011.

Income Taxes

The Company had income tax expense of $9.0 million for the three months ended June 30, 2012 compared to $8.4 million for the three months ended March 31, 2012.   Income tax expense was $17.5 million for the six months ended June 30, 2012 compared to a tax benefit of $11.5 million for the six months ended June 30, 2011.  The change was due to the Company’s improvement in pre-tax income.
 
 
 
4

 


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):

     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
     
Amount
% of Total
 
Amount
% of Total
 
Amount
% of Total
 
Amount
% of Total
 
Amount
% of Total
Commercial related credits:
                             
 
Commercial loans
$
 1,079,436
19%
$
 1,040,340
18%
$
 1,113,123
19%
$
 1,042,583
18%
$
 1,108,295
19%
 
Commercial loans collateralized by
                             
 
   assignment of lease payments (lease loans)
 
 1,221,199
21%
 
 1,209,942
21%
 
 1,208,575
20%
 
 1,067,191
18%
 
 1,031,677
17%
 
Commercial real estate
 
 1,794,777
31%
 
 1,877,380
32%
 
 1,853,788
31%
 
 1,844,894
32%
 
 1,863,223
32%
 
Construction real estate
 
 150,665
3%
 
 128,040
2%
 
 183,789
3%
 
 210,206
4%
 
 246,557
4%
Total commercial related credits
 
 4,246,077
74%
 
 4,255,702
73%
 
 4,359,275
73%
 
 4,164,874
72%
 
 4,249,752
72%
Other loans:
                             
 
Residential real estate
 
 313,137
5%
 
 309,644
5%
 
 316,787
5%
 
 316,305
5%
 
 317,821
5%
 
Indirect vehicle
 
 198,848
3%
 
 186,736
3%
 
 187,481
3%
 
 189,033
4%
 
 182,536
3%
 
Home equity
 
 323,234
6%
 
 327,450
6%
 
 336,043
6%
 
 348,934
6%
 
 357,181
6%
 
Consumer loans
 
 89,115
2%
 
 89,705
2%
 
 88,865
2%
 
 76,025
1%
 
 75,069
1%
Total other loans
 
 924,334
16%
 
 913,535
16%
 
 929,176
16%
 
 930,297
16%
 
 932,607
15%
Gross loans excluding covered loans
 
 5,170,411
90%
 
 5,169,237
89%
 
 5,288,451
89%
 
 5,095,171
88%
 
 5,182,359
87%
 
Covered loans (1)
 
 552,838
10%
 
 620,528
11%
 
 662,544
11%
 
 718,566
12%
 
 755,670
13%
Total loans
$
 5,723,249
100%
$
 5,789,765
100%
$
 5,950,995
100%
$
 5,813,737
100%
$
 5,938,029
100%

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

 
ASSET QUALITY

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

   
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
   
2012
 
2012
 
2011
 
2011
 
2011
Non-performing loans:
                   
   Non-accrual loans (1)
$
113,077
$
124,011
$
129,309
$
140,979
$
149,905
   Loans 90 days or more past due, still accruing interest
 
453
 
679
 
82
 
-
 
1,121
Total non-performing loans
 
113,530
 
124,690
 
129,391
 
140,979
 
151,026
                     
OREO
 
49,690
 
63,077
 
78,452
 
87,469
 
88,185
Repossessed vehicles
 
60
 
81
 
156
 
249
 
55
Total non-performing assets
$
163,280
$
187,848
$
207,999
$
228,697
$
239,266
                     
Total allowance for loan losses
$
121,756
$
125,431
$
126,798
$
128,610
$
130,057
                     
Accruing restructured loans (2)
$
16,536
$
24,145
$
37,996
$
34,321
$
35,037
                     
Total non-performing loans to total loans
 
1.98%
 
2.15%
 
2.17%
 
2.42%
 
2.54%
Total non-performing assets to total assets
 
1.72%
 
1.94%
 
2.12%
 
2.30%
 
2.40%
Allowance for loan losses to non-performing loans
 
107.25%
 
100.59%
 
98.00%
 
91.23%
 
86.12%

(1)  
Includes $32.7 million, $34.7 million, $42.5 million, $36.0 million and $22.5 million of restructured loans on non-accrual status at June 30, 2012, March 31, 2012, December 31, 2011, September 30, 2011 and June 30, 2011, respectively.
(2)  
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.

 
 
5

 
 
 
The following table represents a summary of OREO, excluding OREO related to assets acquired in FDIC-assisted transactions (in thousands):

   
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
   
2012
 
2012
 
2011
 
2011
 
2011
                     
Balance at the beginning of quarter
$
63,077
$
78,452
$
87,469
$
88,185
$
80,107
Transfers in at fair value less estimated costs to sell
1,877
 
2,110
 
4,209
 
15,658
 
15,761
Fair value adjustments
 
(4,507)
 
(4,764)
 
(3,733)
 
(2,524)
 
(3,417)
Net gains (losses) on sales of OREO
 
351
 
416
 
113
 
170
 
(212)
Cash received upon disposition
 
(11,108)
 
(13,137)
 
(9,606)
 
(14,020)
 
(4,054)
Balance at the end of quarter
$
49,690
$
63,077
$
78,452
$
87,469
$
88,185


The following table presents data related to non-performing loans, by dollar amount and category at June 30, 2012, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):

 
Commercial and Lease Loans
 
Construction Real Estate Loans
 
Commercial Real Estate Loans
 
Consumer Loans
 
Total Loans
 
Number of Relationships
 
Amount
 
Number of Relationships
 
Amount
 
Number of Relationships
 
Amount
 
Amount
 
Amount
$10.0 million or more
 -
 $
 -
 
 -
 $
 -
 
 -
 $
 -
 $
 -
 $
 -
$5.0 million to $9.9 million
 1
 
 6,182
 
 -
 
 -
 
 1
 
 5,431
 
 -
 
 11,613
$1.5 million to $4.9 million
 5
 
 10,984
 
 -
 
 -
 
 11
 
 30,324
 
 -
 
 41,308
Under $1.5 million
 34
 
 7,236
 
 4
 
 1,470
 
 77
 
 26,757
 
 25,146
 
 60,609
 
 40
 $
 24,402
 
 4
 $
 1,470
 
 89
 $
 62,512
 $
 25,146
 $
 113,530
                               
Percentage of individual loan category
 
1.06%
     
0.98%
     
3.48%
 
2.72%
 
1.98%


The following table presents data related to non-performing loans, by dollar amount and category at March 31, 2012, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):

 
Commercial and Lease Loans
 
Construction Real Estate Loans
 
Commercial Real Estate Loans
 
Consumer Loans
 
Total Loans
 
Number of Relationships
 
Amount
 
Number of Relationships
 
Amount
 
Number of Relationships
 
Amount
 
Amount
 
Amount
$10.0 million or more
 -
 $
 -
 
 -
 $
 -
 
 -
 $
 -
 $
 -
 $
 -
$5.0 million to $9.9 million
 3
 
 21,476
 
 -
 
 -
 
 1
 
 5,431
 
 -
 
 26,907
$1.5 million to $4.9 million
 2
 
 3,577
 
 -
 
 -
 
 15
 
 40,603
 
 1,603
 
 45,783
Under $1.5 million
 43
 
 9,418
 
 4
 
 1,553
 
 68
 
 24,905
 
 16,124
 
 52,000
 
 48
 $
 34,471
 
 4
 $
 1,553
 
 84
 $
 70,939
 $
 17,727
 $
 124,690
                               
Percentage of individual loan category
 
1.53%
     
1.21%
     
3.78%
 
1.94%
 
2.15%

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.  The aggregate principal amount of potential problem loans was $141.0 million, or 2.46% of total loans, as of June 30, 2012, compared to $159.4 million, or 2.75% of total loans, as of March 31, 2012.
 

 
6

 


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

     
Three Months Ended
Six Months Ended
     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
June 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
 
2012
 
2011
                               
Allowance for credit losses, balance at the beginning of period
$
133,255
$
135,975
$
141,861
$
147,107
$
178,410
$
135,975
$
192,217
Provision for credit losses
 
-
 
3,100
 
8,000
 
11,500
 
61,250
 
3,100
 
101,250
Charge-offs:
                           
 
Commercial loans
 
(1,451)
 
(539)
 
(2,932)
 
(3,497)
 
(7,991)
 
(1,990)
 
(11,142)
 
Commercial loans collateralized by
                           
 
   assignment of lease payments (lease loans)
 
(1,720)
 
-
 
(1,373)
 
-
 
(93)
 
(1,720)
 
(93)
 
Commercial real estate loans
 
(2,415)
 
(3,003)
 
(3,793)
 
(7,815)
 
(55,250)
 
(5,418)
 
(85,025)
 
Construction real estate
 
(444)
 
(3,436)
 
(6,989)
 
(6,008)
 
(18,826)
 
(3,880)
 
(39,920)
 
Residential real estate
 
(1,108)
 
(294)
 
(860)
 
(141)
 
(8,080)
 
(1,402)
 
(11,642)
 
Indirect vehicle
 
(488)
 
(715)
 
(954)
 
(611)
 
(553)
 
(1,203)
 
(1,271)
 
Home equity
 
(876)
 
(1,072)
 
(2,061)
 
(1,605)
 
(5,493)
 
(1,948)
 
(7,400)
 
Consumer loans
 
(274)
 
(258)
 
(285)
 
(475)
 
(344)
 
(532)
 
(888)
 
Total charge-offs
 
(8,776)
 
(9,317)
 
(19,247)
 
(20,152)
 
(96,630)
 
(18,093)
 
(157,381)
Recoveries:
                           
 
Commercial loans
 
386
 
2,038
 
634
 
1,413
 
758
 
2,424
 
3,323
 
Commercial loans collateralized by
                           
 
   assignment of lease payments (lease loans)
 
93
 
256
 
1
 
5
 
153
 
349
 
219
 
Commercial real estate loans
 
3,061
 
162
 
747
 
739
 
312
 
3,223
 
1,846
 
Construction real estate
 
141
 
565
 
3,519
 
681
 
2,364
 
706
 
4,390
 
Residential real estate
 
188
 
34
 
9
 
7
 
26
 
222
 
33
 
Indirect vehicle
 
300
 
311
 
378
 
327
 
369
 
611
 
694
 
Home equity
 
100
 
20
 
6
 
151
 
19
 
120
 
67
 
Consumer loans
 
92
 
111
 
67
 
83
 
76
 
203
 
449
 
Total recoveries
 
4,361
 
3,497
 
5,361
 
3,406
 
4,077
 
7,858
 
11,021
                               
Total net charge-offs
 
(4,415)
 
(5,820)
 
(13,886)
 
(16,746)
 
(92,553)
 
(10,235)
 
(146,360)
                               
Allowance for credit losses
 
128,840
 
133,255
 
135,975
 
141,861
 
147,107
 
128,840
 
147,107
                               
Allowance for unfunded credit commitments
 
(7,084)
 
(7,824)
 
(9,177)
 
(13,251)
 
(17,050)
 
(7,084)
 
(17,050)
                               
Allowance for loan losses
$
121,756
$
125,431
$
126,798
$
128,610
$
130,057
$
121,756
$
130,057
                               
Total loans, excluding loans held for sale
$
5,723,249
$
5,789,765
$
5,950,995
$
5,813,737
$
5,938,029
$
5,723,249
$
5,938,029
Average loans, excluding loans held for sale
$
5,712,630
$
5,802,037
$
5,818,425
$
5,827,181
$
6,293,073
$
5,757,333
$
6,376,329
                               
Ratio of allowance for loan losses to total loans, excluding loans held for sale
 
2.13%
 
2.17%
 
2.13%
 
2.21%
 
2.19%
 
2.13%
 
2.19%
                               
Net loan charge-offs to average loans, excluding loans held for sale (annualized)
 
0.31%
 
0.40%
 
0.95%
 
1.14%
 
5.90%
 
0.36%
 
4.63%

During the second quarter of 2011, we sold certain performing, sub-performing and non-performing loans.  The loans sold had an aggregate carrying amount of $281.6 million prior to the transfer to loans held for sale.  This sale resulted in approximately $87.6 million in charge-offs and an increase in the provision for credit losses of approximately $50 million in the second quarter of 2011.


 
7

 
 

Our allowance for loan losses is comprised of three elements: a general loss reserve, a specific reserve for impaired loans and a reserve for smaller-balance homogenous loans.  The following table presents these three elements of our allowance for loan losses (in thousands):
 
   
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
   
2012
 
2012
 
2011
 
2011
 
2011
                     
General loss reserve
$
93,904
$
98,673
$
102,196
$
102,752
$
104,002
Specific reserve
 
13,674
 
13,734
 
10,804
 
11,416
 
12,111
Smaller-balance homogenous loans reserve
 
14,178
 
13,024
 
13,798
 
14,442
 
13,944
Total allowance for loan losses
$
121,756
$
125,431
$
126,798
$
128,610
$
130,057

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

 
INVESTMENT SECURITIES

The following table sets forth the fair value, amortized cost, and total unrealized gain of our investment securities, by type (in thousands):

   
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
   
2012
 
2012
 
2011
 
2011
 
2011
                     
Securities available for sale:
                   
Fair value
                   
Government sponsored agencies and enterprises
$
42,175
$
42,070
$
42,401
$
56,007
$
55,656
States and political subdivisions
 
629,173
 
581,720
 
535,660
 
394,279
 
392,670
Mortgage-backed securities
 
1,035,473
 
1,193,248
 
1,334,491
 
1,421,789
 
1,424,302
Corporate bonds
 
5,569
 
5,686
 
5,899
 
5,899
 
6,019
Equity securities
 
11,081
 
10,887
 
10,846
 
10,764
 
10,435
Total fair value
$
1,723,471
$
1,833,611
$
1,929,297
$
1,888,738
$
1,889,082
                     
Amortized cost
                   
Government sponsored agencies and enterprises
$
39,366
$
39,503
$
39,640
$
53,016
$
54,423
States and political subdivisions
 
589,654
 
547,262
 
500,979
 
366,651
 
371,598
Mortgage-backed securities
 
1,014,186
 
1,168,340
 
1,308,020
 
1,399,801
 
1,401,975
Corporate bonds
 
5,569
 
5,686
 
5,899
 
5,899
 
6,019
Equity securities
 
10,584
 
10,520
 
10,457
 
10,324
 
10,246
Total amortized cost
$
1,659,359
$
1,771,311
$
1,864,995
$
1,835,691
$
1,844,261
                     
Unrealized gain
                   
Government sponsored agencies and enterprises
$
2,809
$
2,567
$
2,761
$
2,991
$
1,233
States and political subdivisions
 
39,519
 
34,458
 
34,681
 
27,628
 
21,072
Mortgage-backed securities
 
21,287
 
24,908
 
26,471
 
21,988
 
22,327
Corporate bonds
 
-
 
-
 
-
 
-
 
-
Equity securities
 
497
 
367
 
389
 
440
 
189
Total unrealized gain
$
64,112
$
62,300
$
64,302
$
53,047
$
44,821
                     
Securities held to maturity, at cost:
                   
States and political subdivisions
$
238,869
$
239,526
$
240,183
$
240,839
$
-
Mortgage-backed securities
 
258,931
 
259,241
 
259,100
 
258,199
 
230,154
Total amortized cost
$
497,800
$
498,767
$
499,283
$
499,038
$
230,154

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 99% of our mortgage-backed securities are agency guaranteed.
 
 
 
8

 
 
 
DEPOSIT MIX

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

     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
       
% of
   
% of
   
% of
   
% of
   
% of
     
Amount
Total
 
Amount
Total
 
Amount
Total
 
Amount
Total
 
Amount
Total
Low cost deposits:
                             
 
Noninterest bearing deposits
$
 1,946,468
26%
$
 1,874,028
25%
$
 1,885,694
25%
$
 1,803,141
23%
$
 1,776,873
23%
 
Money market and NOW accounts
 
 2,564,493
34%
 
 2,702,636
35%
 
 2,645,334
34%
 
 2,722,162
35%
 
 2,645,953
34%
 
Savings accounts
 
 790,350
11%
 
 786,357
10%
 
 753,610
10%
 
 751,062
10%
 
 729,222
9%
Total low cost deposits
 
 5,301,311
71%
 
 5,363,021
70%
 
 5,284,638
69%
 
 5,276,365
68%
 
 5,152,048
66%
                                 
Certificates of deposit:
                             
 
Certificates of deposit
 
 1,718,266
23%
 
 1,820,266
24%
 
 1,925,608
25%
 
 2,001,210
26%
 
 2,124,815
28%
 
Brokered deposit accounts
 
 451,132
6%
 
 451,415
6%
 
 437,361
6%
 
 444,332
6%
 
 441,720
6%
Total certificates of deposit
 
 2,169,398
29%
 
 2,271,681
30%
 
 2,362,969
31%
 
 2,445,542
32%
 
 2,566,535
34%
                                 
Total deposits
$
 7,470,709
100%
$
 7,634,702
100%
$
 7,647,607
100%
$
 7,721,907
100%
$
 7,718,583
100%

 
 
9

 
 
 
FORWARD-LOOKING STATEMENTS

When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in 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 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 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 Wall Street Reform and Consumer Protection Act and regulations adopted thereunder, 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
 

 
10

 
 
 
MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
As of the dates indicated
(Amounts in thousands)

     
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
     
2012
 
2012
 
2011
 
2011
 
2011
ASSETS
                   
Cash and due from banks
 $
 132,737
 $
 128,411
 $
 144,228
 $
 133,755
 $
 129,942
Interest earning deposits with banks
 
 304,075
 
 272,553
 
 100,337
 
 347,055
 
 513,378
          Total cash and cash equivalents
 
 436,812
 
 400,964
 
 244,565
 
 480,810
 
 643,320
Investment securities:
                   
 
Securities available for sale, at fair value
 
 1,723,471
 
 1,833,611
 
 1,929,297
 
 1,888,738
 
 1,889,082
 
Securities held to maturity, at amortized cost
 
 497,800
 
 498,767
 
 499,283
 
 499,038
 
 230,154
 
Non-marketable securities - FHLB and FRB Stock
 
 61,462
 
 65,541
 
 80,832
 
 80,815
 
 80,815
          Total investment securities
 
 2,282,733
 
 2,397,919
 
 2,509,412
 
 2,468,591
 
 2,200,051
Loans held for sale
 
 2,290
 
 3,364
 
 4,727
 
 -
 
 -
Loans:
                   
 
Total loans, excluding covered loans
 
 5,170,411
 
 5,169,237
 
 5,288,451
 
 5,095,171
 
 5,182,359
 
Covered loans
 
 552,838
 
 620,528
 
 662,544
 
 718,566
 
 755,670
 
      Total loans
 
 5,723,249
 
 5,789,765
 
 5,950,995
 
 5,813,737
 
 5,938,029
 
Less: Allowance for loan losses
 
 121,756
 
 125,431
 
 126,798
 
 128,610
 
 130,057
Net loans
 
 5,601,493
 
 5,664,334
 
 5,824,197
 
 5,685,127
 
 5,807,972
Lease investments, net
 
 111,122
 
 124,748
 
 135,490
 
 133,345
 
 139,391
Premises and equipment, net
 
 214,935
 
 212,589
 
 210,705
 
 211,062
 
 210,901
Cash surrender value of life insurance
 
 127,096
 
 126,226
 
 125,309
 
 124,364
 
 126,938
Goodwill, net
 
 387,069
 
 387,069
 
 387,069
 
 387,069
 
 387,069
Other intangibles, net
 
 26,986
 
 28,237
 
 29,494
 
 30,904
 
 32,318
Other real estate owned, net
 
 49,690
 
 63,077
 
 78,452
 
 87,469
 
 88,185
Other real estate owned related to FDIC transactions
 
 43,807
 
 53,703
 
 60,363
 
 69,311
 
 69,920
FDIC indemnification asset
 
 56,637
 
 72,161
 
 80,830
 
 94,542
 
 119,837
Other assets
 
 148,896
 
 137,209
 
 142,459
 
 149,767
 
 151,833
Total assets
 $
 9,489,566
 $
 9,671,600
 $
 9,833,072
 $
 9,922,361
 $
 9,977,735
LIABILITIES AND STOCKHOLDERS' EQUITY
                   
Liabilities
                   
Deposits:
                   
 
Noninterest bearing
$
1,946,468
$
1,874,028
$
1,885,694
$
1,803,141
$
1,776,873
 
Interest bearing
 
5,524,241
 
5,760,674
 
5,761,913
 
5,918,766
 
5,941,710
          Total deposits
 
7,470,709
 
7,634,702
 
7,647,607
 
7,721,907
 
7,718,583
Short-term borrowings
 
261,729
 
269,691
 
219,954
 
257,418
 
235,733
Long-term borrowings
 
221,100
 
256,456
 
266,264
 
274,378
 
275,559
Junior subordinated notes issued to capital trusts
 
158,521
 
158,530
 
158,538
 
158,546
 
158,554
Accrued expenses and other liabilities
 
139,756
 
136,791
 
147,682
 
141,490
 
243,962
          Total liabilities
 
8,251,815
 
8,456,170
 
8,440,045
 
8,553,739
 
8,632,391
Stockholders' Equity
                   
Preferred stock
 
-
 
-
 
194,719
 
194,562
 
194,407
Common stock