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TheStreet Open House

MB Financial, Inc. Reports Third Quarter 2012 Net Income Of $23.1 Million And An Increase Of The Quarterly Dividend To $0.10 Per Share

Core other expense increased by $387 thousand (+0.6%) from the second quarter of 2012 to the third quarter of 2012. Salaries and employee benefits expense increased primarily due to annual salary increases and higher commissions on lease revenues. Occupancy and equipment expense decreased due to a decrease in real estate taxes and equipment maintenance. Non-core other expense was primarily impacted by the $12.7 million in prepayment fees on interest bearing liabilities. We prepaid certain brokered certificates of deposits and an FHLB advance in an effort to lower our future funding costs and improve our funding mix.

Core other expense increased by $1.9 million (+1.0%) from the nine months ended September 30, 2011 to the nine months ended September 30, 2012. Salaries and employee benefits expense increased primarily due to annual salary increases, higher health insurance claims and an increase in incentive compensation. 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 nine months ended September 30, 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 impacted by the $12.7 million in prepayment fees on interest bearing liabilities discussed above.

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):

    September 30,   June 30,   March 31,   December 31,   September 30,
  2012       2012       2012       2011       2011  
  % of   % of   % of   % of   % of
  Amount   Total     Amount   Total     Amount   Total     Amount   Total     Amount   Total
Commercial related credits:
Commercial loans $ 1,073,981 19 % $ 1,079,436 19 % $ 1,040,340 18 % $ 1,113,123 19 % $ 1,042,583 18 %
Commercial loans collateralized by
assignment of lease payments (lease loans) 1,219,361 22 % 1,221,199 21 % 1,209,942 21 % 1,208,575 20 % 1,067,191 18 %
Commercial real estate 1,770,261 31 % 1,794,777 31 % 1,877,380 32 % 1,853,788 31 % 1,844,894 32 %
Construction real estate 149,872   3 % 150,665   3 % 128,040   2 % 183,789   3 % 210,206   4 %
Total commercial related credits 4,213,475   75 % 4,246,077   74 % 4,255,702   73 % 4,359,275   73 % 4,164,874   72 %
Other loans:
Residential real estate 308,866 5 % 313,137 5 % 309,644 5 % 316,787 5 % 316,305 5 %
Indirect vehicle 206,973 3 % 198,848 3 % 186,736 3 % 187,481 3 % 189,033 4 %
Home equity 314,718 6 % 323,234 6 % 327,450 6 % 336,043 6 % 348,934 6 %
Consumer loans 84,651   2 % 89,115   2 % 89,705   2 % 88,865   2 % 76,025   1 %
Total other loans 915,208   16 % 924,334   16 % 913,535   16 % 929,176   16 % 930,297   16 %
Gross loans excluding covered loans 5,128,683 91 % 5,170,411 90 % 5,169,237 89 % 5,288,451 89 % 5,095,171 88 %
Covered loans (1) 496,162   9 % 552,838   10 % 620,528   11 % 662,544   11 % 718,566   12 %
Total loans $ 5,624,845 100 % $ 5,723,249 100 % $ 5,789,765 100 % $ 5,950,995 100 % $ 5,813,737 100 %

(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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