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MB Financial, Inc. Reports First Quarter 2012 Net Income Of $21.1 Million, Strong Pre-Tax, Pre-Provision Operating Earnings And Improving Credit Costs

Core other expense decreased by $2.0 million in the first quarter of 2012 compared with the fourth quarter of 2011. Occupancy and equipment expense increased as a result of higher maintenance costs. Computer services and telecommunication expense decreased primarily due to product and system enhancement activities completed in the fourth quarter of 2011. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC.

Core other expense increased by $1.2 million from the first quarter of 2011 to the first quarter of 2012. Salaries and employee benefits expense increased due to officer raises, higher health insurance claims and one extra day in the first quarter of 2012. FDIC insurance premiums decreased due to lower deposits, a change in the assessment computation during the second quarter of 2011, and the impact of improved credit quality on the computation. Other real estate expense increased as a result of increased holding costs related to other real estate owned. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC. 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 $8.4 million for the three months ended March 31, 2012. Tax expense in the first quarter of 2011 included $2.1 million of income tax benefit due to an increase in deferred tax assets as a result of an increase in the Illinois corporate income tax rate enacted in the first quarter of 2011.

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):

                     

 

March 31, December 31, September 30, June 30, March 31,
  2012     2011     2011     2011     2011
% of % of % of % of % of
  Amount   Total     Amount   Total     Amount   Total     Amount   Total     Amount   Total
Commercial related credits:
Commercial loans $ 1,040,340 18 % $ 1,113,123 19 % $ 1,042,583 18 % $ 1,108,295 19 % $ 1,154,451 18 %

Commercial loans collateralized by assignment of lease payments (lease loans)

1,209,942 21 % 1,208,575 20 % 1,067,191 18 % 1,031,677 17 % 1,038,507 16 %
Commercial real estate 1,877,380 32 % 1,853,788 31 % 1,844,894 32 % 1,863,223 32 % 2,084,651 33 %
Construction real estate 128,040   2 % 183,789   3 % 210,206   4 % 246,557   4 % 356,579   6 %
Total commercial related credits 4,255,702   73 % 4,359,275   73 % 4,164,874   72 % 4,249,752   72 % 4,634,188   73 %
Other loans:
Residential real estate 309,644 5 % 316,787 5 % 316,305 5 % 317,821 5 % 335,423 5 %
Indirect vehicle 186,736 3 % 187,481 3 % 189,033 4 % 182,536 3 % 175,058 3 %
Home equity 327,450 6 % 336,043 6 % 348,934 6 % 357,181 6 % 371,108 6 %
Consumer loans 89,705   2 % 88,865   2 % 76,025   1 % 75,069   1 % 74,585   1 %
Total other loans 913,535   16 % 929,176   16 % 930,297   16 % 932,607   15 % 956,174   15 %
Gross loans excluding covered loans 5,169,237 89 % 5,288,451 89 % 5,095,171 88 % 5,182,359 87 % 5,590,362 88 %
Covered loans (1) 620,528   11 % 662,544   11 % 718,566   12 % 755,670   13 % 777,634   12 %
Total loans $ 5,789,765 100 % $ 5,950,995 100 % $ 5,813,737 100 % $ 5,938,029 100 % $ 6,367,996 100 %

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

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