- Wintrust Financial (WTFC) of Rosemont, Ill., with $17.6 billion in total assets as of Dec. 31, and a 4% Chicago-area deposit market share as of June 30.
- PrivateBancorp (PVTB) of Chicago, with $14.1 billion in assets and a 2.9% deposit market share.
- MB Financial (MBFI) of Chicago, with $9.6 billion in assets and a 2.4% deposit market share.
- First Midwest Bancorp (FMBI) of Itasca, Ill., with $8.1 billion in assets and a 1.9% deposit market share.
- Taylor Capital Group (TAYC) of Rosemont, Ill., with $5.8 billion in assets and a 1% deposit market share.
Shares of MB Financial closed at $23.78 Friday, returning 20% this year, following a 16% gain in 2012. The shares trade for 1.6 times tangible book value, and for 13.1 times the consensus 2014 earnings estimate of $1.82 a share, among analysts polled by Thomson Reuters. The consensus 2013 EPS estimate is $1.75. Based on a quarterly payout of $0.10, the shares have a dividend yield of 1.68%. The company earned $90.4 million, or $1.60 a share, in 2012, improving from $33.7 million, or 52 cents, in 2011. The main factor in the earnings increase was lower credit costs. During 2011, MB Financial's provision for credit losses totaled $120.8 million. During 2012, the company actually transferred $8.9 million from loan loss reserves. The company reported a 2012 ROA of 0.95% and a return on average common equity of 7.05%. The return on average tangible common equity was 10.87%. McGratty said that "for investors looking to play an M&A rebound in Chicago, outperform-rated MBFI is our preferred vehicle." After purchasing six failed institutions from the FDIC in 2009 and 2010, "more recently MBFI has taken a pause from bank M&A and recent management commentary suggests that incremental assisted transactions are less likely," McGratty wrote. "In fact, the company switched gears in the fourth quarter of 2012 when it acquired Celtic Leasing in a transaction that is expected to augment its fee-income platform going forward." With the company getting close to the $10 billion asset threshold, after which it will face a greater regulatory burden, "there has been considerable speculation about independence at MBFI," according to McGratty. "Management is fairly vocal about its fiduciary responsibility to shareholders and we believe there would be considerable interest in the bank should the board elect to pursue a sale," he wrote. KBW's price target for MB Financial's shares is $26. McGratty said "we could certainly envision a takeout value above these levels should a partnership with a larger regional bank occur." -- Written by Philip van Doorn in Jupiter, Fla. >Contact by Email. Follow @PhilipvanDoorn