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

Net interest income on a fully tax equivalent basis decreased $6.1 million from the second quarter of 2012 due to lower average earning asset balances (as a result of a decrease in covered loans) as well as a decline in net interest margin. Our net interest margin, on a fully tax equivalent basis, declined to 3.61% for the second quarter of 2013 compared to 3.83% for the second quarter of 2012.

Net interest income on a fully tax equivalent basis decreased $14.7 million in the six months ended June 30, 2013 compared to the same period in 2012. The decrease from the six months ended June 30, 2012 was due to lower average earning asset balances (as a result of a decrease in covered loans) as well as a decline in net interest margin. Our net interest margin, on a fully tax equivalent basis, declined to 3.60% for the six months ended June 30, 2013 compared to 3.85% for the same period in 2012.

See the supplemental net interest margin tables for further detail.

Non-interest Income (dollars in thousands):

            Six Months Ended
June 30,
2Q13 1Q13 4Q12 3Q12 2Q12 2013   2012
Core non-interest income:
Key fee initiatives:
Capital markets and international banking service fees $ 939 $ 808 $ 2,386 $ 1,400 $ 788 $ 1,747 $ 1,300
Commercial deposit and treasury management fees 6,029 5,966 6,095 5,860 5,784 11,995 11,682
Lease financing, net 15,102 16,263 12,419 9,671 7,334 31,365 14,292
Trust and asset management fees 4,874 4,494 4,623 4,428 4,535 9,368 8,939
Card fees 2,735   2,695   2,505   2,388   2,429   5,430   4,473  
Total key fee initiatives 29,679 30,226 28,028 23,747 20,870 59,905 40,686
 
Loan service fees 1,911 1,011 2,436 1,075 1,267 2,922 2,334
Consumer and other deposit service fees 3,593 3,246 3,655 3,786 3,534 6,839 6,987
Brokerage fees 1,234 1,157 1,088 1,185 1,264 2,391 2,519
Increase in cash surrender value of life insurance 842 844 893 890 870 1,686 1,787
Accretion of FDIC indemnification asset 100 143 154 204 222 243 697
Net gain on sale of loans 506 639 822 575 554 1,145 928
Other operating income 1,039   955   1,325   405   958   1,994   2,563  
Total core non-interest income 38,904   38,221   38,401   31,867   29,539   77,125   58,501  
 
Non-core non-interest income: (1)
Net (loss) gain on investment securities 14 (1 ) 311 281 (34 ) 13 (37 )
Net loss on sale of other assets (905 ) (12 ) (8 ) (25 )
Net gain (loss) recognized on other real estate owned (A) 2,130 (319 ) (1,848 ) (4,151 ) (4,156 ) 1,811 (8,504 )
Net (loss) gain recognized on other real estate owned related to FDIC transactions (A) (115 ) (11 ) 222 213 (1,285 ) (126 ) (3,526 )
Increase (decrease) in market value of assets held in trust for deferred compensation (B) 21   483   104   355   (149 ) 504   352  
Total non-core non-interest income 2,050   152   (2,116 ) (3,314 ) (5,632 ) 2,202   (11,740 )
 
Total non-interest income $ 40,954   $ 38,373   $ 36,285   $ 28,553   $ 23,907   $ 79,327   $ 46,761  

(1) Letter denotes the corresponding line item where this non-core non-interest income item resides in the consolidated statements of income as follows: A – Net loss recognized on other real estate owned, B – Other operating income.

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