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MB Financial, Inc. Reports Loan Growth, Strong Fee Income, And Fourth Quarter Net Income Of $24.0 Million

Stocks in this article: MBFI

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

 
MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
As of the dates indicated
(Dollars in thousands)
           
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
ASSETS
Cash and due from banks $ 176,010 $ 129,326 $ 132,737 $ 128,411 $ 144,228
Interest earning deposits with banks 111,533   327,301   304,075   272,553   100,337  
Total cash and cash equivalents 287,543 456,627 436,812 400,964 244,565
Investment securities:
Securities available for sale, at fair value 1,868,171 1,814,972 1,723,471 1,833,611 1,929,297
Securities held to maturity, at amortized cost 493,421 495,851 497,800 498,767 499,283
Non-marketable securities - FHLB and FRB Stock 55,385   57,653   61,462   65,541   80,832  
Total investment securities 2,416,977 2,368,476 2,282,733 2,397,919 2,509,412
Loans held for sale 7,492 7,221 2,290 3,364 4,727
Loans:
Total loans, excluding covered loans 5,320,829 5,128,683 5,170,411 5,169,237 5,288,451
Covered loans 449,850   496,162   552,838   620,528   662,544  
Total loans 5,770,679 5,624,845 5,723,249 5,789,765 5,950,995
Less: Allowance for loan losses 124,204   121,182   121,756   125,431   126,798  
Net loans 5,646,475 5,503,663 5,601,493 5,664,334 5,824,197
Lease investments, net 129,823 113,180 111,122 124,748 135,490
Premises and equipment, net 221,533 214,301 214,935 212,589 210,705
Cash surrender value of life insurance 128,879 127,985 127,096 126,226 125,309
Goodwill 423,369 387,069 387,069 387,069 387,069
Other intangibles 29,512 25,735 26,986 28,237 29,494
Other real estate owned, net 36,977 42,427 49,690 63,077 78,452
Other real estate owned related to FDIC transactions 22,478 32,607 43,807 53,703 60,363
FDIC indemnification asset 39,345 36,311 56,637 72,161 80,830
Other assets 185,151   147,943   148,896   137,209   142,459  
Total assets $ 9,575,554   $ 9,463,545   $ 9,489,566   $ 9,671,600   $ 9,833,072  
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest bearing $ 2,164,547 $ 2,011,542 $ 1,946,468 $ 1,874,028 $ 1,885,694
Interest bearing 5,378,150   5,467,805   5,524,241   5,760,674   5,761,913  
Total deposits 7,542,697 7,479,347 7,470,709 7,634,702 7,647,607
Short-term borrowings 220,602 289,613 261,729 269,691 219,954
Long-term borrowings 116,050 118,798 221,100 256,456 266,264
Junior subordinated notes issued to capital trusts 152,065 152,065 158,521 158,530 158,538
Accrued expenses and other liabilities 268,370   162,892   139,756   136,791   147,682  
Total liabilities 8,299,784   8,202,715   8,251,815   8,456,170   8,440,045  
Stockholders' Equity
Preferred stock - - - - 194,719
Common stock 550 550 549 549 548
Additional paid-in capital 732,771 731,679 732,297 732,613 731,248
Retained earnings 507,933 489,426 466,812 445,233 427,956
Accumulated other comprehensive income 36,326 40,985 39,035 37,935 39,150
Treasury stock (3,293 ) (3,304 ) (3,353 ) (3,326 ) (3,044 )

Controlling interest stockholders' equity

1,274,287 1,259,336 1,235,340 1,213,004 1,390,577
Noncontrolling interest 1,483   1,494   2,411   2,426   2,450  
Total stockholders' equity 1,275,770   1,260,830   1,237,751   1,215,430   1,393,027  
Total liabilities and stockholders' equity $ 9,575,554   $ 9,463,545   $ 9,489,566   $ 9,671,600   $ 9,833,072  
 
 
MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data) (Unaudited)
                     
 
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011
Interest income:
Loans $ 63,328 $ 67,482 $ 69,250 $ 71,648 $ 75,466 $ 271,708 $ 324,793
Investment securities:
Taxable 6,371 7,287 8,882 10,884 11,608 33,424 41,349
Nontaxable 7,687 7,582 7,303 6,739 6,178 29,311 17,265
Other interest earning accounts   228     312     158     169     181     867     1,153  
Total interest income   77,614     82,663     85,593     89,440     93,433     335,310     384,560  
Interest expense:
Deposits 6,066 7,374 8,058 8,760 9,569 30,258 44,881
Short-term borrowings 294 342 362 206 189 1,204 849
Long-term borrowings and junior subordinated notes   1,738     2,872     3,069     3,381     3,430     11,060     13,557  
Total interest expense   8,098     10,588     11,489     12,347     13,188     42,522     59,287  
Net interest income 69,516 72,075 74,104 77,093 80,245 292,788 325,273
Provision for credit losses   1,000     (13,000 )   -     3,100     8,000     (8,900 )   120,750  
Net interest income after
provision for credit losses   68,516     85,075     74,104     73,993     72,245     301,688     204,523  
Fee income:

Capital markets and international banking service fees

2,593

1,436

912

531

762

5,472

1,870
Commercial deposit and treasury management fees 6,095 5,860 5,784 5,897 6,113 23,636 23,559
Lease financing, net 12,419 9,671 7,334 6,958 7,801 36,382 26,939
Trust and asset management fees 4,623 4,428 4,535 4,404 4,166 17,990 17,324
Card fees 2,505 2,388 2,429 2,046 1,101 9,368 7,032
Loan service fees

2,229

1,039

1,143

1,048

1,069

5,459

6,355
Consumer and other deposit service fees 3,655 3,786 3,534 3,453 3,917 14,428 15,375
Brokerage fees 1,088 1,185 1,264 1,255 1,577 4,792 5,884
Net gain (loss) on investment securities 311 281 (34 ) (3 ) 411 555 640
Increase in cash surrender value of life insurance 893 890 870 917 944 3,570 4,377
Net (loss) gain on sale of assets (905 ) (12 ) (8 ) (17 ) (87 ) (942 ) 283
Accretion of FDIC indemnification asset 154 204 222 475 683 1,055 4,838
Net loss recognized on other real estate owned (1,626 ) (3,938 ) (5,441 ) (6,589 ) (5,478 ) (17,594 ) (13,613 )
Net gain on sale of loans 822 575 554 374 366 2,325 2,607
Other operating income   1,429     760     809     2,105     1,106     5,103     5,636  
Total fee income   36,285     28,553     23,907     22,854     24,451     111,599     109,106  
Other expenses:
Salaries and employee benefits 43,038 42,083 40,146 40,429 39,846 165,696 153,858
Occupancy and equipment expense 8,774 8,274 9,188 9,570 8,498 35,806 35,467
Computer services and telecommunication expense 4,160 3,777 3,909 3,653 4,382 15,499 14,885
Advertising and marketing expense 2,335 1,936 1,839 2,073 1,831 8,183 7,038
Professional and legal expense 1,640 1,554 1,503 1,413 1,422 6,110 6,147
Other intangible amortization expense 1,251 1,251 1,251 1,257 1,410 5,010 5,665
Branch impairment charges 1,432 758 - - 594 2,190 1,594
Other real estate expense, net 449 874 424 1,243 1,464 2,990 4,294
Prepayment fees on interest bearing liabilities - 12,682 - - - 12,682 -
Other operating expenses   8,027     7,976     8,574     7,693     9,986     32,270     40,685  
Total other expense   71,106     81,165     66,834     67,331     69,433     286,436     269,633  
Income before income taxes 33,695 32,463 31,177 29,516 27,263 126,851 43,996
Income tax expense   9,683     9,330     9,034     8,430     7,810     36,477     5,268  
Net income 24,012 23,133 22,143 21,086 19,453 90,374 38,728
Dividends and discount accretion on preferred shares   -     -     -     3,269     2,606     3,269     10,414  
Net income available to
common stockholders $ 24,012   $ 23,133   $ 22,143   $ 17,817   $ 16,847   $ 87,105   $ 28,314  
 
               
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011
Common share data:
Basic earnings allocated to common stock per common share $ 0.44 $ 0.43 $ 0.41 $ 0.39 $ 0.36 $ 1.67 $ 0.71

Impact of preferred stock dividends on basic earnings per common share

- - - (0.06 ) (0.05 ) (0.06 ) (0.19 )
Basic earnings per common share 0.44 0.43 0.41 0.33 0.31 1.61 0.52
 
Diluted earnings allocated to common stock per common share 0.44 0.42 0.41 0.39 0.36 1.66 0.71

Impact of preferred stock dividends on diluted earnings per common share

- - - (0.06 ) (0.05 ) (0.06 ) (0.19 )
Diluted earnings per common share 0.44 0.42 0.41 0.33 0.31 1.60 0.52
 

Weighted average common shares outstanding for basic earnings per common share

54,401,504 54,346,827 54,174,717 54,155,856 54,140,646 54,270,297 54,057,158
 

Weighted average common shares outstanding for diluted earnings per common share

54,597,737 54,556,517 54,448,709 54,411,916 54,360,178 54,505,976 54,337,280
 
             
Selected Financial Data:
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011
Performance Ratios:
Annualized return on average assets 1.01 % 0.97 % 0.94 % 0.87 % 0.78 % 0.95 % 0.39 %
Annualized return on average common equity 7.55 7.38 7.28 5.94 5.66 7.05 2.43
Annualized cash return on average tangible common equity (1) 11.47 11.29 11.28 9.36 9.09 10.87 4.23
Net interest rate spread 3.41 3.48 3.65 3.67 3.71 3.55 3.71
Cost of funds (2) 0.40 0.52 0.57 0.60 0.63 0.52 0.70
Efficiency ratio (3) 61.16 61.43 61.36 60.04 59.94 60.99 58.17
Annualized net other expense to average assets (4) 1.29 1.46 1.57 1.54 1.56 1.47 1.46
Core fee income to revenues (5) 34.18 29.49 27.49 26.46 26.21 29.44 26.56
Net interest margin 3.31 3.42 3.59 3.64 3.71 3.49 3.75
Tax equivalent effect 0.26 0.25 0.24 0.23 0.20 0.24 0.15
Net interest margin - fully tax equivalent basis (6) 3.57 3.67 3.83 3.87 3.91 3.73 3.90
Asset Quality Ratios:
Non-performing loans (7) to total loans 2.03 % 1.87 % 1.98 % 2.15 % 2.17 % 2.03 % 2.17 %
Non-performing assets (7) to total assets 1.62 1.56 1.72 1.94 2.12 1.62 2.12
Allowance for loan losses to non-performing loans (7) 106.17 115.10 107.25 100.59 98.00 106.17 98.00
Allowance for loan losses to total loans 2.15 2.15 2.13 2.17 2.13 2.15 2.13
Net loan (recoveries) charge-offs to average loans (annualized) (0.17 ) (0.64 ) 0.31 0.40 0.95 (0.02 ) 2.90
Capital Ratios:
Tangible equity to tangible assets (8) 9.12 % 9.46 % 9.17 % 8.74 % 10.47 % 9.12 % 10.47 %
Tangible common equity to risk weighted assets (9) 12.96 14.16 13.67 13.17 12.48 12.96 12.48
Tangible common equity to tangible assets (10) 9.12 9.46 9.17 8.74 8.40 9.12 8.40
Book value per common share (11) $ 23.29 $ 23.01 $ 22.64 $ 22.23 $ 21.92 $ 23.29 $ 21.92

Less: goodwill and other intangible assets, net of benefit, per common share

8.08   7.37   7.40 7.41 7.43 8.08   7.43
Tangible book value per common share (12) $ 15.21 $ 15.64 $ 15.24 $ 14.81 $ 14.49 $ 15.21 $ 14.49
 
Total capital (to risk-weighted assets) 16.49 % 17.91 % 17.53 % 17.10 % 19.39 % 16.49 % 19.39 %
Tier 1 capital (to risk-weighted assets) 14.61 15.83 15.45 15.02 17.34 14.61 17.34
Tier 1 capital (to average assets) 10.50 10.60 10.46 9.99 11.73 10.50 11.73
Tier 1 common capital (to risk-weighted assets) 12.31 13.39 12.93 12.54 11.86 12.31 11.86
 
(1)   Net cash flow available to common stockholders (net income available to common stockholders, plus other intangibles amortization expense, net of tax benefit) divided by average tangible common equity (average common equity less average goodwill and average other intangibles, net of tax benefit).
(2) Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits.
(3) Equals total other expense excluding non-core items divided by the sum of net interest income on a fully tax equivalent basis, total fee income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance.
(4) Equals total other expense excluding non-core items less total fee income excluding non-core items, and including tax equivalent adjustment on the increase in cash surrender value of life insurance divided by average assets.
(5) Equals total fee income excluding non-core items and tax equivalent adjustment on the increase in cash surrender value of life insurance divided by the sum of net interest income on a fully tax equivalent basis, total fee income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance.
(6) Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.
(7) Non-performing loans excludes purchased credit-impaired loans and loans held for sale. Non-performing assets excludes purchased credit-impaired loans, loans held for sale, and other real estate owned related to FDIC transactions.
(8) Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.
(9) Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total risk-weighted assets.
(10) Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.
(11) Equals total ending common stockholders’ equity divided by common shares outstanding.
(12) Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding.
 

NON-GAAP FINANCIAL INFORMATION

This press release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include core fee income, core fee income to revenues (with non-core items excluded from both core fee income and revenues), core other expense, non-core fee income and non-core other expense, net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis, efficiency ratio and the ratio of annualized net other expense to average assets with net gains and losses on investment securities, net gains and losses on sale of other assets, net losses on other real estate owned, net gain on sale of loans held for sale and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, prepayment fees on interest bearing liabilities, impairment charges and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the other expense components of these ratios, with tax equivalent adjustment for tax-exempt interest income and increase in cash surrender value of life insurance, as applicable; ratios of tangible equity to tangible assets, tangible common equity to risk-weighted assets, tangible common equity to tangible assets and Tier 1 common capital to risk-weighted assets; tangible book value per common share; and annualized cash return on average tangible common equity. Our management uses these non-GAAP measures, together with the related GAAP measures, in its analysis of our performance and in making business decisions. Management also uses these measures for peer comparisons.

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