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MB Financial, Inc. Reports Net Income Of $19.7 Million, A Reduction In Non-Performing Loans And Continued Strong Capital Position

MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A (“the Bank” or “MB Financial Bank”), announced today third quarter results for 2011. 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 of $19.7 million and net income available to common stockholders of $17.1 million for the third quarter of 2011 compared to a net loss of $2.8 million and a net loss available to common stockholders of $5.4 million for the third quarter of 2010, and a net loss of $7.4 million and a net loss available to common stockholders of $10.0 million for the second quarter of 2011.

Key items for the quarter were as follows:

Credit Quality – Decreased Non-Performing Loans and Non-Performing Assets:

  • Our non-performing loans were $141.0 million or 2.42% of total loans as of September 30, 2011, a decrease of $10.0 million from $151.0 million or 2.54% of total loans at June 30, 2011. Our allowance for loan losses to non-performing loans was 91.23% as of September 30, 2011 compared to 86.12% as of June 30, 2011.
  • Our non-performing assets were $228.7 million or 2.30% of total assets as of September 30, 2011, a decrease of $10.6 million from $239.3 million or 2.40% of total assets as of June 30, 2011.
  • Our allowance for loan losses to total loans was 2.21% as of September 30, 2011 compared to 2.19% as of June 30, 2011.
  • Our provision for credit losses was $11.5 million for the third quarter of 2011, while our net charge-offs were $16.7 million. Our provision for credit losses and net charge-offs for the second quarter of 2011 were $61.3 million and $92.6 million, respectively. Excluding the previously disclosed second quarter 2011 loan sale, our provision for credit losses and net charge-offs for the second quarter of 2011 would have been approximately $11.3 million and $6.0 million, respectively.

Pre-Tax, Pre-Provision Operating Earnings Remain Strong:

  • Pre-tax, pre-provision operating earnings (on a fully tax equivalent basis) were $46.6 million, or 3.00% of risk-weighted assets, for the third quarter of 2011 compared to $50.2 million, or 3.25% of risk-weighted assets, for the second quarter of 2011. Pre-tax, pre-provision operating earnings (on a tax equivalent basis) to average assets decreased to 1.89% for the third quarter of 2011 from 2.02% for the second quarter of 2011.
  • Net interest income on a fully tax equivalent basis decreased $1.4 million compared to the second quarter of 2011 due to a slightly lower level of interest earning assets.
  • Net interest margin on a fully tax equivalent basis was 3.90% for the third quarter of 2011 compared to 3.92% in the third quarter of 2010 and 3.92% in the second quarter of 2011.
  • Core other income was $29.9 million for the third quarter of 2011, a decrease of $1.7 million, or 5.4%, compared to the second quarter of 2011. Core other expense was $67.0 million for the third quarter of 2011, a slight increase from $66.6 million for the second quarter of 2011.

Strong Capital Position:

  • MB Financial Bank significantly exceeds the “Well-Capitalized” threshold established under the regulations of the Office of the Comptroller of the Currency. At September 30, 2011, MB Financial, Inc.’s consolidated total risk-based capital ratio was 19.61%, Tier 1 capital to risk-weighted assets ratio was 17.54% and Tier 1 capital to average asset ratio was 11.59%, compared with 19.18%, 17.11% and 11.16%, respectively, as of June 30, 2011. As of September 30, 2011, total capital was approximately $593.5 million in excess of the “Well-Capitalized” threshold, compared with $569.5 million as of June 30, 2011. Our tangible common equity to tangible assets ratio was 8.06% at September 30, 2011 compared to 7.76% at June 30, 2011.

RESULTS OF OPERATIONS

Third Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis decreased $1.4 million from the second quarter of 2011 and decreased by $6.5 million from the third quarter of 2010 to the third quarter of 2011. The decrease from the second quarter of 2011 and from the third quarter of 2010 was due primarily to a decrease in interest earning assets.

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