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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

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
March 31,   December 31, September 30, June 30, March 31,
  2012     2011     2011     2011     2011
 
Allowance for credit losses, balance at the beginning of period $ 135,975 $ 141,861 $ 147,107 $ 178,410 $ 192,217
Provision for credit losses 3,100 8,000 11,500 61,250 40,000
Charge-offs:
Commercial loans (539 ) (2,932 ) (3,497 ) (7,991 ) (3,151 )

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

- (1,373 ) - (93 ) -
Commercial real estate loans (3,003 ) (3,793 ) (7,815 ) (55,250 ) (29,775 )
Construction real estate (3,436 ) (6,989 ) (6,008 ) (18,826 ) (21,094 )
Residential real estate (294 ) (860 ) (141 ) (8,080 ) (3,562 )
Indirect vehicle (715 ) (954 ) (611 ) (553 ) (718 )
Home equity (1,072 ) (2,061 ) (1,605 ) (5,493 ) (1,907 )
Consumer loans (258 ) (285 ) (475 ) (344 ) (544 )
Total charge-offs (9,317 ) (19,247 ) (20,152 ) (96,630 ) (60,751 )
Recoveries:
Commercial loans 2,038 634 1,413 758 2,565

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

256 1 5 153 66
Commercial real estate loans 162 747 739 312 1,534
Construction real estate 565 3,519 681 2,364 2,026
Residential real estate 34 9 7 26 7
Indirect vehicle 311 378 327 369 325
Home equity 20 6 151 19 48
Consumer loans 111   67   83   76   373  
Total recoveries 3,497   5,361   3,406   4,077   6,944  
 
Total net charge-offs (5,820 ) (13,886 ) (16,746 ) (92,553 ) (53,807 )
 
Allowance for credit losses 133,255 135,975 141,861 147,107 178,410
 
Allowance for unfunded credit commitments (1) (7,824 ) (9,177 ) (13,251 ) (17,050 ) -  
 
Allowance for loan losses (2) $ 125,431   $ 126,798   $ 128,610   $ 130,057   $ 178,410  
 
Total loans, excluding loans held for sale $ 5,789,765 $ 5,950,995 $ 5,813,737 $ 5,938,029 $ 6,367,996
Average loans, excluding loans held for sale $ 5,802,037 $ 5,818,425 $ 5,827,181 $ 6,293,073 $ 6,460,508
 
Ratio of allowance for loan losses to total loans, excluding loans held for sale 2.17 % 2.13 % 2.21 % 2.19 % 2.80 %
 
Ratio of allowance for credit losses to total loans, excluding loans held for sale, and unfunded credit commitments 2.27 % 2.26 % 2.40 % 2.43 % 2.75 %
 
Net loan charge-offs to average loans, excluding loans held for sale (annualized) 0.40 % 0.95 % 1.14 % 5.90 % 3.38 %

(1) The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011.

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