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MB Financial, Inc. Reports Second Quarter Net Income Of $25.3 Million And Return On Assets Of 1.09%

MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., today announced 2013 second quarter net income of $25.3 million.

"Our earnings were strong during the second quarter, driven by fee income and low credit costs," stated Mitchell Feiger, President and Chief Executive Officer of the Company. "Our return on assets increased to 1.09%. Net income available to common shareholders increased for the sixth consecutive quarter, while year to date net income increased 16.1% compared to the first half of 2012. In addition, revenues from our key fee initiatives for the first six months of 2013 increased 47% over the first six months of 2012."

Net income increased in the second quarter of 2013 compared to the first quarter of 2013 and second quarter of 2012. Fully diluted earnings per share were consistent with the first quarter of 2013, and increased from the second quarter of 2012 as follows (note that all linked quarter change percentages presented here and throughout this release are not annualized):

  2Q13   1Q13  

Change from 1Q13 to 2Q13

  2Q12  

Change from 2Q12 to 2Q13

(dollars in thousands, except per share data)
Net income $ 25,293 $ 24,906 +1.6 % $ 22,143 +14.2 %
Fully diluted earnings per share 0.46 0.46 0.41 +12.2
 

Net income, net income available to common stockholders and fully diluted earnings per share increased in the six months ended June 30, 2013 compared to the six months ended June 30, 2012 as follows:

 

Six months ended June 30, 2013

 

Six months ended June 30, 2012

 

Change from 2012 to 2013

(dollars in thousands, except per share data)
Net income $ 50,199 $ 43,229 +16.1 %
Net income available to common stockholders 50,199 39,960 +25.6
Fully diluted earnings per share 0.92 0.73 +26.0
 

Key items for the quarter include:

Overall Fee Income Growth Continues:

  • Core non-interest income to total revenues ratio was 35.0% in the second quarter compared to 34.6% in the prior quarter and 27.5% in the second quarter of 2012.
  • Revenues from key fee initiatives decreased 2% compared to the first quarter of 2013, as leasing revenues were exceptionally strong during the first quarter. Excluding leasing, fee initiatives increased approximately 4% from the prior quarter.
  • Revenues from key fee initiatives increased 47% in the first six months of 2013 compared to the first six months of 2012, primarily as a result of a 119% increase in leasing revenues. This increase was driven by the addition of Celtic Leasing Corp. ("Celtic"), a recently acquired leasing subsidiary, which contributed $13 million in leasing revenues during the first six months of 2013. Excluding Celtic, leasing revenues increased 28% in the first six months of 2013 compared to the first six months of 2012.

Net Interest Margin Stable Compared to Prior Quarter:

  • Fully taxable equivalent net interest margin was 3.61% for the second quarter of 2013 compared to 3.59% for the prior quarter and 3.83% for the second quarter of 2012. The decrease from the second quarter of 2012 was due to average yields on interest earning assets declining more than average rates paid on interest bearing liabilities.
  • Net interest income was relatively stable compared to the prior quarter. Compared to the second quarter of 2012, net interest income declined due to lower average interest earning asset balances (as a result of a decrease in covered loans) as well as a 22 basis point decline in net interest margin.

Small Increase in Non-Performing Loans and Non-Performing Assets During the Quarter; Net Recoveries for the Quarter:

  2Q13   1Q13  

Change from 1Q13 to 2Q13

  2Q12  

Change from 2Q12 to 2Q13

 
Non-performing loans to total loans 2.03 % 2.00 % +0.03 % 1.98 % +0.05 %
Non-performing assets to total assets 1.59 1.56 +0.03 1.72 -0.13
Net loan (recoveries) charge-offs to average loans - annualized (0.02 ) 0.25 -0.27 0.31 -0.33
  • Provision for credit losses was $500 thousand in the quarter, aided by approximately $6 million in recoveries.

Improvement in Return on Assets During the Quarter and for the First Six Months of 2013:

  2Q13   1Q13  

Change from 1Q13 to 2Q13

  2Q12  

Change from 2Q12 to 2Q13

Annualized return on average assets 1.09 % 1.07 % +0.02 % 0.94 % +0.15 %
Annualized return on average common equity 7.82 7.89 -0.07 7.28 +0.54
Annualized cash return on average tangible common equity 12.31 12.53 -0.22 11.28 +1.03
 
 

Six months ended June 30, 2013

 

Six months ended June 30, 2012

 

Change from 2012 to 2013

Annualized return on average assets 1.08 % 0.90 % +0.18 %
Annualized return on average common equity 7.85 6.61 +1.24
Annualized cash return on average tangible common equity 12.42 10.33 +2.09
 

RESULTS OF OPERATIONS

Second Quarter Results

Net Interest Income

Net interest income on a fully tax equivalent basis decreased $166 thousand from the first quarter of 2013. Our net interest margin, on a fully tax equivalent basis for the second quarter of 2013 increased two basis points compared to the first quarter of 2013.

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