EX-99 2 exhibit99.htm EXHIBIT 99 exhibit99.htm
 

                                        MB Financial, Inc.
                                        800 West Madison Street
                                        Chicago, Illinois 60607
                                        (888) 422-6562
                                        NASDAQ:  MBFI

PRESS RELEASE


For Information at MB Financial, Inc. contact:
Jill York - Vice President and Chief Financial Officer
E-Mail:  jyork@mbfinancial.com

FOR IMMEDIATE RELEASE

MB FINANCIAL, INC. ANNOUNCES FIRST QUARTER 2008 RESULTS

CHICAGO, April 25, 2008 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A., announced today first quarter results for 2008.  The words “MB Financial,” “the Company,” “we,” “our” and “us” refer to MB Financial, Inc. and its wholly owned subsidiaries, unless we indicate otherwise.  We had net income from continuing operations of $5.8 million for the first quarter of 2008 compared to $17.2 million for the first quarter of 2007, and $7.9 million for the fourth quarter of 2007.  Fully diluted earnings per share from continuing operations for the first quarter of 2008 were $0.17 per share as compared to $0.46 per share for the first quarter of 2007, and $0.22 per share for the fourth quarter of 2007.

Key items for the quarter were as follows:

Credit Quality

-  
Overall credit quality continues to be strong, and other than loans described in the next paragraph, our portfolio (including construction loans) is performing as expected.  Excluding the issues discussed below, our provision for loan losses was $5.5 million and net charge-offs were $3.0 million.  During the first quarter we experienced a $20.5 million increase in non-performing loans for this portion of the portfolio resulting primarily from one $12 million potential problem construction loan migrating to non-performing status.

-  
Two commercial customer loan frauds occurred which resulted in $5.9 million in partial charge-offs, with $5.9 million remaining in non-performing loans.  An extensive internal review revealed that with regard to one of the frauds, an individual loan division was not consistently following our established monitoring and reporting procedures.  Furthermore, all credits in this division’s portfolio were reviewed and while no additional customer frauds were identified, we downgraded to potential problem status three additional commercial loans totaling $42.5 million.  All three loans are current with respect to their payments of principal and interest.  The impact of these events was to increase the provision for loan losses by $17.0 million.
 
-  
The impact of the additional $17.0 million provision for loan losses, as well as the impact of non-core other income and non-core other expenses (detailed in our supplementary schedules) was to reduce net income from continuing operations by $10.3 million or $0.29 per share.

Strong Balance Sheet Growth Continues

-  
Strong commercial loan growth continued in the first quarter.  Commercial related loans increased by 18% compared to the first quarter of 2007 and 16% annualized on a linked quarter basis driven by strong commercial and lease loan growth.  Furthermore, we are seeing significantly better credit spreads on our new and renewed loans.
 
-  
Our liquidity position improved as total deposits grew by 12% annually on a linked quarter basis driven by strong customer and brokered certificate of deposit growth.
 
 
4

 
Positive Operating Leverage, While Investment in Bankers Continues

-  
Net interest income on a tax equivalent basis increased by $1.7 million, or 3.2% from the first quarter of 2007, and remained stable on a linked quarter basis.

-  
Fee income growth continues to be good.  Core fee income increased by $1.8 million or 8% compared to the first quarter of 2007 and 11% on an annualized linked quarter basis.  This increase was driven by robust growth in loan and deposit service fees.

-  
Core expenses increased by $1.9 million or  4% compared to the first quarter of 2007 and declined slightly on a linked quarter basis, even though we continued to hire bankers.  We added 20 bankers in the first quarter of 2008, primarily in commercial banking, in addition to the 7 bankers hired during the fourth quarter of 2007. This added approximately $500 thousand of salary and employee benefits expense in the first quarter of 2008.

-  
We are pleased to announce that on April 18, 2008, we purchased an 80% interest in Cedar Hill Associates, LLC, an asset management firm located in Chicago, Illinois, with approximately $960 million in assets under management.  The purchase of Cedar Hill is expected to complement and expand our wealth management product offerings and revenues.


RESULTS OF OPERATIONS

First Quarter Results

Net Interest Income

Net interest income on a tax equivalent basis remained stable from the fourth quarter of 2007 to the first quarter of 2008.  The increase in average interest earning assets was offset by a six basis point decrease in the net interest margin.    The decline in the net interest margin was primarily due to our interest earning assets adjusting to the decrease in market rates more rapidly than our interest bearing liabilities.  After remaining steady for approximately 15 months, the Fed Funds rate declined 300 basis points from September 2007 to March 2008.  As noted earlier, while we are seeing much better credit spreads on new and renewed loans, fierce competition for deposits continues and has negatively impacted deposit pricing.

See the supplemental net interest margin table for further detail.
 
 
5

Other Income

 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
Core other income:
                    
     Loan service fees
$
2,470
$
2,080
$
1,253
$
1,388
$
1,537
     Deposit service fees
  
6,530
  
6,635
  
6,501
  
5,624
  
5,158
     Lease financing, net
  
3,867
  
4,155
  
3,952
  
3,744
  
3,996
     Brokerage fees
  
985
  
1,399
  
2,067
  
2,716
  
2,452
     Trust and asset management fees
  
2,220
  
2,101
  
2,490
  
2,666
  
2,281
     Increase in cash surrender value of life insurance
  
1,606
  
1,225
  
1,288
  
1,269
  
1,221
     Merchant card processing
  
4,530
  
4,293
  
4,131
  
4,045
  
3,878
     Other operating income
  
1,605
  
1,282
  
1,507
  
1,303
  
1,449
Total core other income
  
23,813
  
23,170
  
23,189
  
22,755
  
21,972
                     
Non-core other income (1):
                    
     Gain on sale of third party brokerage business (A)
  
-
  
447
  
-
  
500
  
-
     Gain on sale of artwork (D)
  
-
  
733
  
-
  
1,634
  
-
     Gain on sale of properties (D)
  
-
  
-
  
-
  
7,439
  
-
     Net gain (loss) on sale of other assets (D)
  
(306)
  
(10)
  
293
  
(14)
  
22
     Net gain (loss) on sale of investment securities
  
1,105
  
(1,529)
  
(114)
  
(2,077)
  
(24)
     Gain on sale of land trust business (B)
  
-
  
-
  
-
  
-
  
909
     Increase (decrease) in market value of assets held in
                    
       trust for deferred compensation (C)
  
(75)
  
170
  
(109)
  
483
  
65
Total non-core other income
  
724
  
(189)
  
70
  
7,965
  
972
                     
Total other income
$
24,537
$
22,981
$
23,259
$
30,720
$
22,944

(1)  
Letters denote the corresponding line items where these non-core other income items reside in the consolidated statements of income as follows: A – Brokerage fees, B – Trust and asset management fees, C – Other Operating Income, and D – Net gain (loss) on sale of other assets.


Core other income has grown steadily over the past year.  Core other income increased by 8% compared to the first quarter of 2007 and 11% annualized on a linked quarter basis, driven by higher amounts of loan service and deposit service fees.

Our core business loan service fees increased from the fourth quarter of 2007 to the first quarter of 2008, primarily due to an increase in letter of credit fees and prepayment fees recognized during the first quarter of 2008 compared to the fourth quarter of 2007.  The increase in cash surrender value of life insurance from the fourth quarter of 2007 to the first quarter of 2008 was primarily due to a $436 thousand death benefit on a bank owned life insurance policy that we recognized during the first quarter of 2008.  Our core other operating income increased, primarily due to an increase in ATM and debit card fees.  The decrease in our core business brokerage fee income was primarily due to decreased investment representative production during the first quarter of 2008 compared to the fourth quarter of 2007.

Our core business loan service fees increased from the first quarter of 2007 to the first quarter of 2008, primarily due to an increase in letter of credit fees and prepayment fees recognized during the first quarter of 2008 compared to the first quarter of 2007.  Our core business deposit service fees increased from the first quarter of 2007 to the first quarter of 2008, primarily due to enhancements made to our courtesy overdraft program and a fee increase that was implemented during the second quarter of 2007.  The decrease in our core business brokerage fee income from the first quarter of 2007 to the first quarter of 2008 was primarily due to the sale of our third party brokerage business during the second quarter of 2007.  This decrease was offset by a corresponding reduction this quarter in brokerage expense.

During the first quarter of 2008, we recorded an $832 thousand gain on sale of investment securities related to the partial redemption of our equity interest in Visa.  This redemption was approximately 39% of our interest in Visa and is reflected within the non-core other income schedule.


6

Other Expense

 
Three Months Ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
Core other expense:
                    
     Salaries and employee benefits
$
26,994
$
26,759
$
27,507
$
26,130
$
24,934
     Occupancy and equipment expense
  
7,525
  
7,239
  
6,928
  
7,054
  
7,200
     Computer services expense
  
1,916
  
1,949
  
1,846
  
1,857
  
1,817
     Advertising and marketing expense
  
1,316
  
962
  
1,214
  
1,444
  
1,410
     Professional and legal expense
  
306
  
862
  
593
  
656
  
530
     Brokerage fee expense
  
209
  
432
  
918
  
1,403
  
1,271
     Telecommunication expense
  
762
  
757
  
681
  
689
  
681
     Other intangibles amortization expense
  
815
  
871
  
874
  
878
  
881
     Merchant card processing
  
3,926
  
3,815
  
3,487
  
3,474
  
3,270
     Other operating expenses
  
4,872
  
5,156
  
4,888
  
4,805
  
4,747
Total core other expense
  
48,641
  
48,802
  
48,936
  
48,390
  
46,741
                     
Non-core other expense (1):
                    
     Vision severance payments (E)
  
-
  
-
  
-
  
200
  
-
     Executive separation agreement expense (E)
  
-
  
5,908
  
-
  
-
  
-
     Contribution to MB Financial Charitable Foundation (F)
  
-
  
1,500
  
-
  
3,000
  
-
     Unamortized issuance costs related to redemption of
                    
       trust preferred securities (G)
  
-
  
1,914
  
-
  
-
  
-
     Rent expense (H)
  
-
  
494
  
-
  
-
  
-
     Visa litigation expense (F)
  
(342)
  
342
  
-
  
-
  
-
     Increase in market value of assets held in trust for
                    
       deferred compensation (E)
  
(75)
  
170
  
(109)
  
483
  
65
Total non-core other expense
  
(417)
  
10,328
  
(109)
  
3,683
  
65
                     
Total other expense
$
48,224
$
59,130
$
48,827
$
52,073
$
46,806

(1)  Letters denote the corresponding line items where the non-core other expense items reside in the consolidated statements of income as follows:  E – Salaries and employee benefits, F – Other Operating Expenses, G – Professional and legal expense and H –Occupancy and equipment expense.

Core other expense has grown modestly over the past year, even though we have continued to invest in personnel.  Core other expense increased by 4% compared to the first quarter of 2007 and declined slightly on a linked quarter basis.

Salaries and employee benefits expense increased as we hired 27 bankers from the third quarter of 2007 through the first quarter of 2008.  As a result, we incurred approximately $500 thousand of salary and employee benefits expense (including salaries, signing bonuses, and recruiting fees) during the first quarter of 2008.    In addition, we award officer salary increases at the beginning of each year.  We estimate that our core business salary and employee benefits expense will increase during the second quarter of 2008 by an additional $800 thousand, as many of the bankers were hired towards the end of the first quarter of 2008.  Our core business occupancy and equipment expense increased from the first quarter of 2007 to the first quarter of 2008, primarily due to an increase in snow removal expense during the first quarter of 2008 compared to the first quarter of 2007.  As noted earlier, the decrease in our core business brokerage fee expense from the first quarter of 2007 to the first quarter of 2008 was primarily due to the sale of our third party brokerage business during the second quarter of 2007.

As a result of Visa’s successful initial public offering and establishment of litigation reserves during the first quarter of 2008, we reversed approximately $342 thousand of previously established indemnification liabilities related to Visa litigation.

Income Taxes
 
Income tax expense from continuing operations for the three months ended March 31, 2008, decreased $478 thousand to $1.4 million compared to $1.9 million for the three months ended December 31, 2007.  The effective tax rate was 19.5% and 19.2% for the quarters ended March 31, 2008 and December 31, 2007, respectively.
 
 
7

LOAN PORTFOLIO

The following table sets forth the composition of the loan portfolio as of the dates indicated (dollars in thousands):

 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
 
Amount
% of Total
Amount
% of Total
Amount
% of Total
Amount
% of Total
Amount
% of Total
                     
Commercial related credits:
                    
    Commercial loans
 $1,433,114
25%
    $1,323,455
24%
$1,261,995
23%
$1,161,268
22%
$1,106,806
22%
    Commercial loans collateralized by
                    
        assignment of lease payments (lease loans)
 581,502
10%
         553,138
10%
      453,340
8%
      437,581
8%
       375,763
7%
    Commercial real estate (1)
 2,048,123
35%
      1,994,312
36%
   1,915,845
36%
   1,819,388
36%
    1,819,098
36%
    Construction real estate
 822,312
14%
         825,216
14%
      849,914
16%
      884,560
17%
       841,065
17%
Total commercial related credits
 4,885,051
84%
      4,696,121
84%
   4,481,094
83%
   4,302,797
83%
    4,142,732
82%
Other loans:
                    
    Residential real estate (1)
 379,279
6%
         372,787
6%
      362,963
7%
      354,763
6%
       350,100
8%
    Indirect vehicle
 162,348
3%
         146,311
3%
      142,827
3%
      131,308
3%
       120,342
2%
    Home equity
 347,752
6%
         347,676
6%
      344,116
6%
      348,336
7%
       363,967
7%
    Consumer loans
 54,671
1%
           52,732
1%
        51,532
1%
        52,302
1%
         63,265
1%
Total other loans
 944,050
16%
         919,506
16%
      901,438
17%
      886,709
17%
       897,674
18%
                     
Gross loans
5,829,101
100%
      5,615,627
100%
   5,382,532
100%
   5,189,506
100%
    5,040,406
100%
     Allowance for loan losses
(78,764)
  
        (65,103)
  
      (61,122)
  
      (59,058)
  
       (58,705)
  
Net loans
$5,750,337
  
     $5,550,524
  
$5,321,410
  
    $5,130,448
  
$4,981,701
  

(1)  
During the third quarter of 2007, multifamily residential real estate loans were reclassified from residential real estate loans to commercial real estate loans.  Prior periods have been reclassified to conform to the current period’s presentation.

Commercial related credits increased by 16% on an annualized basis from December 31, 2007 to March 31, 2008.  Total loans increased by 15% on an annualized basis over the same period.  From March 31, 2007 to March 31, 2008, commercial related credits increased by approximately 18% and total loans increased by approximately 16%.  Our strong loan growth was primarily due to growth in both new and existing customer demand.

ASSET QUALITY

The following table presents a summary of non-performing assets as of the dates indicated (dollar amounts in thousands):

 
March 31,
2008
December 31,
2007
September 30,
2007
June 30,
2007
March 31,
2007
Non-performing loans:
          
Non-accrual loans (1)
$          46,666
$          24,459
$          23,901
$          21,799
$          23,222
Loans 90 days or more past due, still accruing interest
4,218
-
-
-
-
Total non-performing loans
24,459
23,901
21,799
23,222
Other real estate owned
1,770
1,120
566
111
319
Repossessed vehicles
225
179
288
188
61
Total non-performing assets
$          25,758
$          24,755
$          22,098
$          23,602
Total non-performing loans to total loans
0.87%
0.44%
0.44%
0.42%
0.46%
Allowance for loan losses to non-performing loans
154.79%
266.17%
255.73%
270.92%
252.80%
Total non-performing assets to total assets
0.65%
0.33%
0.31%
0.28%
0.30%

(1)  
 There were no restructured loans in any period presented.


8

The following table presents data related to non-performing loans by dollar amount and category at March 31, 2008 (dollar amounts in thousands):

 
Commercial and Lease Loans
Construction Real Estate Loans
Commercial Real Estate Loans
Consumer Loans
Total Loans
Dollar Range
Number of Borrowers
Amount
Number of Borrowers
Amount
Number of Borrowers
Amount
Amount
Amount
                 
$5.0 million or more
-
$            -
2
$  20,476
-
$             -
$           -
$  20,476
$3.0 million to $4.9 million
1
3,066
-
-
1
3,037
-
6,103
$1.5 million to $2.9 million
-
-
-
-
1
1,815
-
1,815
Under $1.5 million
21
5,652
1
256
22
9,384
7,198
22,490
 
22
$    8,718
3
$  20,732
24
$    14,236
$   7,198
$  50,884


Below is a reconciliation of the activity in our allowance for loan losses for the periods indicated (dollar amounts in thousands):

 
Three Months Ended
           
 
March 31,
2008
December 31,
2007
September 30,
2007
June 30,
2007
March 31,
2007
           
Balance at beginning of period
$          65,103
$          61,122
$          59,058
$          58,705
$          58,983
Provision for loan losses
           22,540
            8,000
            4,500
                3,000
3,813
           
    Charge-offs
    (10,085)
            (4,512)
            (3,395)
             (4,046)
(4,354)
    Recoveries
             1,206 
             493 
            959
1,399
263
Net charge-offs
            (8,879) 
            (4,019) 
            (2,436)
(2,647)
(4,091)
           
Balance
$          78,764
$          65,103
$          61,122
$          59,058
$          58,705
Total loans
  $     5,829,101
  $     5,615,627
  $     5,382,532
$     5,189,506
$     5,040,406
Average loans
 $     5,687,646
 $     5,459,430
 $     5,275,376
$     5,099,822
$     4,989,817
Ratio of allowance for loan losses to total loans
   1.35%
   1.16%
   1.14%
   1.14%
   1.16%
Net loan charge-offs to average loans (annualized)
0.63%
0.29%
0.18%
0.21%
0.33%

Although management believes that adequate specific and general loan loss allowances have been established, actual losses are dependent upon future events and, as such, further additions to the level of specific and general loan loss allowances may become necessary.

We define potential problem loans as performing loans rated substandard or doubtful, that do not meet the definition of a non-performing loan (See “Asset Quality” section above for non-performing loans).  We do not necessarily expect to realize losses on potential problem loans, but we recognize potential problem loans carry a higher probability of default and require additional attention by management.  The aggregate principal amounts of potential problem loans were $123.0 million, or 2.11% of total loans as of March 31, 2008, and approximately $87.6 million, or 1.56% of total loans as of December 31, 2007.  The increase in potential problem loans was primarily due to the addition of the three commercial credits discussed earlier totaling $42.5 million.

The following table presents data related to potential problem loans by dollar amount and category at March 31, 2008 (dollar amounts in thousands):

 
Commercial and Lease Loans
Construction Real Estate Loans
Commercial Real Estate Loans
Total
Dollar Range
Number of Borrowers
Amount
Number of Borrowers
Amount
Number of Borrowers
Amount
Number of Borrowers
Amount
                 
$5.0 million or more
4
$    51,407
3
$    35,021
-
$              -
7
$    86,428
$3.0 million to $4.9 million
2
8,715
4
12,644
-
-
6
21,359
$1.5 million to $2.9 million
2
3,742
1
1,603
1
1,680
4
7,025
Under $1.5 million
10
2,276
1
718
10
5,184
21
8,178
 
18
$    66,140
9
$    49,986
11
$      6,864
38
$  122,990


9

The following is a summary of charge-offs and non-performing loans for the prior twenty-one quarters (in thousands):

 
Net Charge-Offs
  
Annualized
Net Charge-Offs
to Average Loans
  
End of Period
Non-Performing
Loans
  
Non-Performing
Loans to Total Loans
  
Potential Problem Loans to Total Loans
  
Total Non-Performing Loans and Potential Problem Loans to Total Loans
                       
2003 – 1st Qtr
$     1,219
  
0.20%
  
 $       22,384
  
0.86%
  
1.56%
  
2.42%
2003 – 2nd Qtr
2,872
  
0.44%
  
 $       21,503
  
0.84%
  
1.15%
  
1.99%
2003 – 3rd Qtr
4,538
  
0.69%
  
 $       25,519
  
0.98%
  
1.04%
  
2.02%
2003 –  4th Qtr
1,524
  
0.23%
  
 $       21,073
  
0.79%
  
0.89%
  
1.68%
2003 – Full Year
$   10,153
  
0.39%
                
                       
2004 – 1st Qtr
 $    1,317
  
0.20%
  
 $       25,922
  
0.96%
  
1.45%
  
2.40%
2004 – 2nd Qtr
1,962
  
0.28%
  
 $       28,789
  
0.95%
  
1.34%
  
2.29%
2004 – 3rd Qtr
1,632
  
0.21%
  
 $       25,228
  
0.84%
  
1.45%
  
2.28%
2004 –  4th Qtr
2,416
  
0.31%
  
 $       22,571
  
0.71%
  
1.28%
  
1.99%
2004 – Full Year
$    7,327
  
0.25%
                
                       
2005 – 1st Qtr
 $    2,890
  
0.36%
  
 $       25,623
  
0.79%
  
0.81%
  
1.60%
2005 – 2nd Qtr
2,074
  
0.25%
  
 $       22,883
  
0.67%
  
0.59%
  
1.26%
2005 – 3rd Qtr
1,805
  
0.21%
  
 $       18,212
  
0.53%
  
0.67%
  
1.20%
2005 –  4th Qtr
1,346
  
0.16%
  
 $       20,171
  
0.58%
  
0.61%
  
1.19%
2005 – Full Year
$    8,115
  
0.24%
                
                       
2006 – 1st Qtr
 $    1,035
  
0.12%
  
 $       19,685
  
0.55%
  
0.66%
  
1.21%
2006 – 2nd Qtr
866
  
0.10%
  
 $       15,887
  
0.43%
  
0.88%
  
1.31%
2006 – 3rd Qtr
     4,975
  
0.46%
  
  $       19,912
  
0.41%
  
0.45%
  
0.86%
2006 –  4th Qtr
     2,956
  
0.24%
  
  $       21,468
  
0.43%
  
0.48%
  
0.91%
2006 – Full Year
 $    9,832
  
0.24%
                
                       
2007 – 1st Qtr
$     4,091
  
0.33%
  
  $       23,222
  
0.46%
  
0.63%
  
1.09%
2007 – 2nd Qtr
     2,647
  
0.21%
  
  $       21,799
  
0.42%
  
0.41%
  
0.83%
2007 – 3rd Qtr
     2,436
  
0.18%
  
  $       23,901
  
0.44%
  
0.85%
  
1.29%
2007 –  4th Qtr
     4,019
  
0.29%
  
  $       24,459
  
0.44%
  
1.56%
  
2.00%
2007 – Full Year
$   13,193
  
0.25%
                
                       
2008 – 1st Qtr
$     8,879
  
0.63%
  
  $       50,884
  
0.87%
  
2.11%
  
2.98%

 
10

INVESTMENT SECURITIES AVAILABLE FOR SALE

The following table sets forth the fair value, amortized cost, and total unrealized gain (loss) of our investment securities available for sale, by type (in thousands):

 
At March 31,
At December 31,
At September 30,
At June 30,
At March 31,
 
2008
2007
2007
2007
2007
Fair value
                    
U.S. Treasury securities
$
-
$
-
$
-
$
1,274
$
7,280
Government sponsored agencies and enterprises
  
274,217
  
310,538
  
328,040
  
414,620
  
540,141
States and political subdivisions
  
417,609
  
412,302
  
397,807
  
386,040
  
366,865
Mortgage-backed securities
  
479,383
  
438,056
  
487,747
  
489,345
  
468,092
Corporate bonds
  
11,123
  
13,057
  
22,006
  
27,643
  
30,215
Equity securities
  
3,520
  
3,460
  
9,892
  
6,222
  
6,531
Debt securities issued by foreign governments
  
301
  
301
  
298
  
298
  
547
    Total fair value
  
   1,186,153
  
    1,177,714
  
1,245,790
  
 1,325,442
  
1,419,671
                     
Amortized cost
                    
U.S. Treasury securities
  
-
  
                   -
  
 -
  
1,290
  
7,302
Government sponsored agencies and enterprises
  
266,276
  
305,768
  
326,504
  
417,647
  
538,836
States and political subdivisions
  
408,969
  
407,973
  
396,896
  
392,378
  
365,600
Mortgage-backed securities
  
472,482
  
435,743
  
489,219
  
496,675
  
475,335
Corporate bonds
  
10,779
  
12,797
  
22,120
  
28,024
  
30,327
Equity securities
  
3,484
  
3,446
  
9,950
  
6,434
  
6,590
Debt securities issued by foreign governments
  
301
  
299
  
298
  
298
  
547
    Total amortized cost
  
1,162,291
  
1,166,026
  
   1,244,987
  
1,342,746
  
1,424,537
                     
Unrealized gain (loss)
                    
U.S. Treasury securities
  
-
 
-
  
-
  
(16)
  
(22)
Government sponsored agencies and enterprises
  
7,941
  
4,770
  
1,536
  
(3,027)
  
1,305
States and political subdivisions
  
8,640
  
          4,329
  
911
  
(6,338)
  
         1,265
Mortgage-backed securities
  
6,901
  
          2,313
  
(1,472)
  
(7,330)
  
(7,243)
Corporate bonds
  
344
  
             260
  
(114)
  
(381)
  
(112)
Equity securities
  
36
  
               14
  
(58)
  
(212)
  
(59)
Debt securities issued by foreign governments
  
-
  
                 2
  
-
  
-
  
-
    Total unrealized gain (loss)
$
23,862
$
11,688
$
803
$
(17,304)
$
(4,866)

We do not have any meaningful direct or indirect holdings of subprime residential mortgage loans or home equity lines of credit in our investment portfolio.


11

CAPITAL MANAGEMENT

The Company did not repurchase any shares during the quarter.

At March 31, 2008, our total risk-based capital ratio was 11.81%, Tier 1 capital to risk-weighted assets ratio was 9.78% and Tier 1 capital to average asset ratio was 8.29%, compared to 11.58%, 9.75% and 8.18%, respectively, at December 31, 2007.  MB Financial Bank, N.A. was categorized as “Well-Capitalized” under Federal Deposit Insurance Corporation regulations at March 31, 2008.


FORWARD-LOOKING STATEMENTS

When used in this press release and in filings with the Securities and Exchange Commission, in other press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "believe," "will," "should," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made.  These statements may relate to our future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items.  By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following (1) expected cost savings and synergies from our merger and acquisition activities, including our recently completed acquisition of Cedar Hill Associates, might not be realized within the expected time frames; (2) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (3) competitive pressures among depository institutions; (4) interest rate movements and their impact on customer behavior and net interest margin; (5) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (6) the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place; (7) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (8) our ability to access cost-effective funding; (9) changes in financial markets; (10) changes in economic conditions in general and in the Chicago metropolitan area in particular; (11) the costs, effects and outcomes of litigation; (12) new legislation or regulatory changes, including but not limited to changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (13) changes in accounting principles, policies or guidelines; (14) our future acquisitions of other depository institutions or lines of business.

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
 
 

 
12
 

    MB FINANCIAL, INC. & SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    March 31, 2008, December 31, 2007, September 30, 2007,
    June 30, 2007, and March 31, 2007
    (Amounts in thousands, except common share data)
    (Unaudited)

 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
                     
ASSETS
                    
Cash and due from banks
$
187,116
$
141,248
$
119,961
$
153,496
$
96,541
Interest bearing deposits with banks
  
16,054
  
9,093
  
7,582
  
3,622
  
4,576
Federal funds sold
  
-
  
-
  
-
  
-
  
45,000
Investment securities:
                    
           Securities available for sale, at fair value
  
1,186,153
  
1,177,714
  
1,245,790
  
1,325,442
  
1,419,671
           Non-marketable securities - FHLB and FRB Stock
  
63,671
  
63,671
  
63,634
  
63,634
  
51,558
                Total investment securities
  
1,249,824
  
1,241,385
  
1,309,424
  
1,389,076
  
1,471,229
Loans (net of allowance for loan losses of $78,764 at March 31, 2008,
                    
           $65,103 at December 31, 2007, $61,122 at September 30, 2007,
                    
$59,058 at June 30, 2007, and $58,705 at March 31, 2007)
    
5,550,524
  
5,321,410
  
5,130,448
  
4,981,701
Assets held for sale
  
-
  
-
  
353,028
  
375,149
  
410,840
Lease investments, net
  
91,675
  
97,321
  
90,670
  
80,353
  
71,308
Premises and equipment, net
  
184,257
  
183,722
  
183,506
  
184,090
  
196,525
Cash surrender value of life insurance
  
118,296
  
116,690
  
117,900
  
116,624
  
115,354
Goodwill, net
    
379,047
  
379,047
  
379,047
  
379,047
Other intangibles, net
    
25,352
  
26,223
  
27,097
  
27,975
Other assets
  
89,213
  
90,321
  
91,745
  
82,306
  
87,691
                     
Total assets
$
$
7,834,703
$
8,000,496
$
7,921,308
$
7,887,787
                     
LIABILITIES AND STOCKHOLDERS' EQUITY
                    
Liabilities
                    
Deposits:
                    
Noninterest bearing
$
865,665
$
875,491
$
846,699
$
879,338
$
856,106
Interest bearing
  
4,814,621
  
4,638,292
  
4,703,589
  
4,643,906
  
4,646,703
Total deposits
    
5,513,783
  
5,550,288
  
5,523,244
  
5,502,809
Short-term borrowings
    
977,721
  
809,935
  
783,153
  
722,416
Long-term borrowings
    
208,865
  
187,577
  
186,322
  
175,006
Junior subordinated notes issued to capital trusts
    
159,016
  
197,537
  
166,657
  
179,096
Liabilities held for sale
  
-
  
-
  
321,144
  
344,643
  
379,294
Accrued expenses and other liabilities
  
102,060
  
112,949
  
79,112
  
74,972
  
72,464
Total liabilities
    
6,972,334
  
7,145,593
  
7,078,991
  
7,031,085
                     
Stockholders' Equity
                    
Common stock, ($0.01 par value; authorized 43,000,000 shares at March,
                    
           31, 2008, December 31, 2007, September 30, 2007, and June 30, 2007,
                    
           and 40,000,000 at March 31, 2007; issued 37,414,091,
                    
37,401,023, 37,404,087, 37,345,661 and 37,342,031 shares at
                    
March 31, 2008, December 31, 2007, September 30, 2007,
                    
June 30, 2007, and March 31, 2007, respectively)
  
374
  
374
  
374
  
373
  
373
Additional paid-in capital
  
441,405
  
441,201
  
440,655
  
439,450
  
439,164
Retained earnings
  
504,861
  
505,260
  
475,208
  
463,359
  
448,855
Accumulated other comprehensive income (loss)
  
15,511
  
7,597
  
120
  
(12,028)
  
(3,690)
                   
           treasury stock, at cost, at March 31, 2008, December 31, 2007,
                    
September 30,2007, June 30, 2007 and March 31, 2007, respectively
  
(90,104)
  
(92,063)
  
(61,454)
  
(48,837)
  
(28,000)
Total stockholders' equity
    
862,369
  
854,903
  
842,317
  
856,702
                     
Total liabilities and stockholders' equity
$
8,090,356
$
7,834,703
$
8,000,496
$
7,921,308
$
7,887,787

 
13
 

    MB FINANCIAL, INC. & SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME
    (Amounts in thousands, except common share data)
    (Unaudited)
 
Three months ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
Interest income:
          
Loans
$    93,877
$    100,802
$    101,488
$         96,793
$         93,933
Investment securities available for sale:
          
Taxable
9,971
10,181
11,983
13,163
14,348
Nontaxable
3,753
3,649
3,586
3,325
3,302
Federal funds sold
95
95
52
67
235
Other interest bearing accounts
106
102
63
49
50
Total interest income
107,802
114,829
117,172
113,397
111,868
Interest expense:
          
Deposits
40,849
45,917
47,942
46,337
45,453
Short-term borrowings
7,867
9,729
9,617
9,390
8,618
Long-term borrowings and junior subordinated notes
5,623
5,211
5,530
5,316
5,900
Total interest expense
54,339
60,857
63,089
61,043
59,971
Net interest income
53,463
53,972
54,083
52,354
51,897
Provision for loan losses
22,540
8,000
4,500
3,000
3,813
Net interest income after provision for loan losses
30,923
45,972
49,583
49,354
48,084
Other income:
          
Loan service fees
2,470
2,080
1,253
1,388
1,537
Deposit service fees
6,530
6,635
6,501
5,624
5,158
Lease financing, net
3,867
4,155
3,952
3,744
3,996
Brokerage fees
985
1,846
2,067
3,216
2,452
Trust and asset management fees
2,220
2,101
2,490
2,666
3,190
        Net (loss) gain on sale of investment securities
1,105
(1,529)
(114)
(2,077)
(24)
Increase in cash surrender value of life insurance
1,606
1,225
1,288
1,269
 1,221
Net gain (loss) on sale of other assets
(306)
723
293
9,059
22
Merchant card processing
4,530
4,293
4,131
4,045
3,878
Other operating income
1,530
1,452
1,398
1,786
1,514
 
24,537
22,981
23,259
30,720
22,944
Other expense:
          
Salaries and employee benefits
26,994
32,837
27,398
26,813
24,999
Occupancy and equipment expense
7,525
7,733
6,928
7,054
7,200
Computer services expense
1,916
1,949
1,846
1,857
1,817
Advertising and marketing expense
1,316
962
1,214
1,444
1,410
Professional and legal expense
306
2,776
593
656
530
Brokerage fee expense
209
432
918
1,403
1,271
Telecommunication expense
762
757
681
689
681
Other intangibles amortization expense
815
871
874
878
881
Merchant card processing
3,926
3,815
3,487
3,474
3,270
Charitable contributions
15
1,512
31
3,034
109
Other operating expenses
4,440
5,486
4,857
4,771
4,638
 
48,224
59,130
48,827
52,073
46,806
Income before income taxes
7,236
9,823
24,015
28,001
24,222
Income taxes
1,412
1,890
6,709
8,394
7,043
Income from continuing operations
$       5,824
$      7,933
$    17,306
$    19,607
          $         17,179
Discontinued operations
          
     Income (loss)  from discontinued operations before income taxes
-
(741)
1,499
1,803
1,429
     Gain on disposal of discontinued operations before income taxes
-
46,485
-
-
-
        Income before income taxes
-
45,744
1,499
1,803
1,429
   Income taxes
-
17,281
500
369
487
        Income from discontinued operations
-
28,463
999
1,434
942
          Net income
$      5,824
$    36,396
$    18,305
$    21,041
$         18,121

 
 
14
 


 
Three months ended
 
March 31,
December 31,
September 30,
June 30,
March, 31
 
2008
2007
2007
2007
2007
Common share data:
          
     Basic earnings per common share from continuing operations
$        0.17
$        0.23
$        0.48
$        0.54
$             0.47
     Basic earnings per common share from discontinued operations
$              -
$        0.81
$        0.03
$        0.04
$             0.02
     Basic earnings per common share
$        0.17
$        1.04
$        0.51
$        0.58
$             0.49
     Diluted earnings per common share from continuing operations
$        0.17
$        0.22
$        0.48
$        0.53
$             0.46
     Diluted earnings per common share from discontinued operations
$              -
$        0.80
$        0.03
$        0.04
$             0.03
     Diluted earnings per common share
$        0.17
$        1.02
$        0.51
$        0.57
$             0.49
     Weighted average common shares outstanding
34,620,435
35,095,301
35,733,165
36,239,731
36,630,323
     Diluted weighted average common shares outstanding
34,994,731
35,536,449
36,213,532
36,744,473
37,180,928


 
15
 


                     
 
Three months ended
 
March 31,
  
December 31,
  
September 30,
  
June 30,
  
March 31,
  
 
2008
  
2007
  
2007
  
2007
  
2007
  
                     
Performance Ratios (continuing operations):
                  
    Annualized return on average assets
             0.30
%
             0.40
%
             0.86
%
   1.00
%
        0.88
%
    Annualized return on average equity
             2.66
  
             3.68
  
             8.10
  
        9.25
  
            8.18
  
    Annualized return on average tangible equity (1)
           5.28
  
           7.32
  
           15.72
  
      17.87
  
          15.85
  
    Net interest rate spread
             2.75
  
             2.76
  
             2.81
  
        2.79
  
            2.80
  
    Efficiency ratio (2)
           61.07
  
           73.46
  
           61.47
  
      59.86
  
          60.98
  
    Net interest margin
             3.10
  
             3.16
  
             3.22
  
        3.20
  
            3.21
  
    Tax equivalent effect
             0.12
  
             0.12
  
             0.12
  
        0.11
  
            0.12
  
    Net interest margin – fully tax equivalent basis (3)
             3.22
  
             3.28
  
             3.34
  
        3.31
  
            3.33
  
                     
Performance Ratios (total):
                  
    Annualized return on average assets
             0.30
%
             1.82
%
             0.91
%
    1.07
%
         0.93
%
    Annualized return on average equity
             2.66
  
             16.86
  
             8.57
  
        9.93
  
            8.63
  
    Annualized return on average tangible equity (1)
           5.28
  
           31.83
  
           16.60
  
      19.14
  
          16.69
  
    Net interest rate spread
             2.75
  
             2.76
  
             2.81
  
        2.80
  
            2.82
  
    Efficiency ratio (2)
           61.07
  
           47.60
  
           61.29
  
      59.44
  
          60.71
  
    Net interest margin
             3.10
  
               3.17
  
             3.24
  
        3.22
  
            3.24
  
    Tax equivalent effect
             0.12
  
               0.12
  
             0.12
  
        0.12
  
            0.11
  
    Net interest margin – fully tax equivalent basis (3)
             3.22
  
               3.29
  
             3.36
  
        3.34
  
            3.35
  
                     
Asset Quality Ratios:
                  
    Non-performing loans to total loans
             0.87
%
             0.44
%
             0.44
%
     0.42
%
0.46
%
    Non-performing assets to total assets
             0.65
  
             0.33
  
             0.31
  
        0.28
  
        0.30
  
    Allowance for loan losses to total loans
             1.35
  
             1.16
  
             1.14
  
        1.14
  
        1.16
  
    Allowance for loan losses to  non-performing loans
         154.79
  
         266.17
  
         255.73
  
    270.92
  
    252.80
  
    Net loan charge-offs to average loans (annualized)
             0.63
  
             0.29
  
             0.18
  
        0.21
  
        0.33
  
                     
Capital Ratios:
                  
    Tangible equity to assets (4)
             6.20
%
             6.28
%
             6.03
%
     5.92
%
     6.13
%
    Equity to total assets
           10.78
  
           11.01
  
           10.69
  
     10.63
  
      10.86
  
    Book value per share (5)
           25.15
  
           24.91
  
           24.02
  
      23.46
  
      23.46
  
    Less: goodwill and other intangible assets, net of
                    
       tax benefit, per common share
           11.39
  
           11.43
  
           11.13
  
      11.05
  
      10.88
  
    Tangible book value per share (6)
           13.76
  
           13.48
  
           12.89
  
      12.41
  
      12.58
  
                     
    Total capital (to risk–weighted assets)
           11.81
%
           11.58
%
           11.83
%
   11.62
%
   11.89
%
    Tier 1 capital (to risk-weighted assets)
           9.78
  
           9.75
  
           10.31
  
      10.09
  
      10.58
  
    Tier 1 capital (to average assets)
             8.29
  
             8.18
  
             8.61
  
        8.25
  
        8.50
  

(1)  
Net cash flow available to stockholders (net income or net income on continuing operations, as appropriate, plus other intangibles amortization expense, net of tax benefit) / Average tangible equity (average equity less average goodwill and average other intangibles, net of tax benefit)
(2)  
Equals total other expense divided by the sum of net interest income on a fully tax equivalent basis and total other income less net gains (losses) on securities available for sale.
(3)  
Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.
(4)  
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.
(5)  
Equals total ending stockholders’ equity divided by common shares outstanding.
(6)  
Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding.


16

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 net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis, tangible equity to assets ratio, tangible book value per share, and annualized cash return on average tangible equity.  Our management uses these non-GAAP measures in its analysis of our performance.  The tax equivalent adjustment to net interest income recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate.  Management believes that it is a standard practice in the banking industry to present net interest income and net interest margin on a fully tax equivalent basis, and accordingly believes that providing these measures may be useful for peer comparison purposes.  The other measures exclude the ending balances of acquisition-related goodwill and other intangible assets, net of tax benefit, in determining tangible stockholders’ equity.  Management believes the presentation of these other financial measures excluding the impact of such items provides useful supplemental information that is helpful in understanding our financial results, as they provide a method to assess management’s success in utilizing our tangible capital.  These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The following table presents a reconciliation of tangible equity to stockholders’ equity (in thousands):

   
March 31,
  
December 31,
  
September 30,
  
June 30,
  
March 31,
   
2008
  
2007
  
2007
  
2007
  
2007
                     
Stockholders’ equity – as reported
$
872,047
$
862,369
$
854,903
$
842,317
$
856,702
   Less: goodwill
  
379,047
  
379,047
  
379,047
  
379,047
  
379,047
   Less: other intangible assets, net of tax benefit
  
15,949
  
16,479
  
17,045
  
17,613
  
18,184
Tangible equity
$
$
466,843
$
458,811
$
445,657
$
459,471

The following table presents a reconciliation of average tangible equity to average stockholders’ equity (in thousands):

 
Three months ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
           
Average Stockholders’ equity – as reported
$  879,056
$  856,362
$  847,326
$  849,816
$  851,785
   Less: average goodwill
379,047
379,047
379,047
379,047
379,047
   Less: average other intangible assets, net of tax benefit
16,131
16,671
17,245
17,805
18,396
Average tangible equity
$  460,644
$  451,034
$  452,964
$  454,342


17


The following table presents a reconciliation of net cash flow available to stockholders to net income from continuing operations (in thousands):

 
Three months ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
           
Net income – as reported
   $     5,824
   $     7,933
  $   17,306
 $   19,607
$      17,179
   Add: other intangible amortization
          
     expense, net of tax benefit
530
566
568
571
573
Net cash flow available to stockholders
$     6,354
$     8,499
$   17,874
$ 20,178
$      17,752

The following table presents a reconciliation of net cash flow available to stockholders to net income (in thousands):

 
Three months ended
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2008
2007
2007
2007
2007
           
Net income – as reported
   $     5,824
   $   36,396
   $   18,305
 $   21,041
$      18,121
   Add: other intangible amortization
          
     expense, net of tax benefit
530
566
568
571
573
Net cash flow available to stockholders
$     6,354
$   36,962
$   18,873
$   21,612
$      18,694


Reconciliations of net interest income on a fully tax equivalent basis to net interest income and net interest margin on a fully tax equivalent basis to net interest margin are contained in the tables under “Net Interest Margin.”  A reconciliation of tangible book value per share to book value per share is contained in the “Selected Financial Ratios” table.


18

NET INTEREST MARGIN

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, and the resultant costs, expressed both in dollars and rates (dollars in thousands):

 
Three Months Ended March 31,
Three Months Ended December 31,
 
2008
2007
2007
 
Average Balance
Interest
Yield/ Rate
Average Balance
Interest
Yield/ Rate
Average Balance
Interest
Yield/ Rate
                     
Interest Earning Assets:
                    
Loans (1) (2):
                    
Commercial related credits
                    
    Commercial
 $  1,365,694
 $  22,771
    6.60%
 $      1,031,079
 $        20,406
  7.92%
  
 $  1,270,259
 $  24,523
    7.55%
    Commercial – nontaxable (3)
            7,560
          141
    7.38
              15,168
                336
  8.86
  
            7,237
          136
    7.35
    Commercial loans collateralized by assignment of lease  payments
        555,076
       9,411
    6.78
            387,006
             6,613
  6.84
  
        482,851
       8,214
    6.80
    Real estate commercial
     2,003,039
    32,969
    6.51
        1,811,729
          32,944
  7.27
  
     1,954,755
    35,022
    7.01
    Real estate construction
        827,220
     14,124
    6.75
            853,203
           18,186
  8.53
  
        837,266
     17,367
    8.12
Total commercial related credits
     4,758,589
     79,416
    6.60
        4,098,185
          78,485
  7.66
  
     4,552,368
     85,262
    7.33
Other loans
                    
    Real estate residential
         373,989
       5,587
    5.98
           351,668
            5,294
  6.02
  
         365,441
       5,553
    6.08
    Home equity
         348,789
       5,082
    5.86
            370,708
            7,044
  7.71
  
         345,278
       6,105
    7.01
    Indirect
        152,774
       3,028
    7.97
           114,317
             2,214
  7.85
  
        144,939
       3,016
    8.26
    Consumer loans
          53,505
         813
    6.11
             54,939
            1,014
  7.49
  
          51,404
         914
    7.05
Total other loans
929,057
14,510
    6.28
891,632
15,566
  7.08
  
907,062
15,588
    6.82
                     
Total loans
5,687,646
   93,926
    6.64
4,989,817
          94,051
  7.64
  
5,459,430
   100,850
    7.33
                     
Taxable investment securities
      819,845
     9,971
    4.86
         1,183,744
           14,348
  4.85
  
      896,613
     10,181
    4.54
Investments securities exempt from federal income taxes (3)
         401,207
      5,774
    5.69
            360,015
            5,080
  5.64
  
         391,272
      5,614
    5.61
Federal funds sold
           15,220
            95
    2.47
              18,003
               235
  5.22
  
           8,253
            95
    4.50
Other interest bearing deposits
           15,387
          106
    2.77
              6,579
               50
  3.08
  
           11,075
          102
    3.65
            Total interest earning assets
      6,939,305
   109,872
    6.37
         6,558,158
        113,764
  7.04
  
      6,766,643
   116,842
    6.85
Assets held for sale
-
    
387,919
      
220,281
    
Non-interest earning assets
925,512
    
933,684
      
931,324
    
            Total assets
$    7,864,817
    
$     7,879,761
      
$    7,918,248
    
                     
Interest Bearing Liabilities:
                    
Core  funding:
                    
    Money market and NOW accounts
     1,234,965
    6,602
    2.15
        1,070,252
             7,730
  2.93
  
     1,299,002
    9,615
    2.94
    Savings accounts
388,956
443
    0.46
459,109
864
  0.76
  
398,589
611
    0.61
    Certificates of deposit
2,218,570
24,899
    4.51
2,325,728
27,582
  4.81
  
2,194,238
25,953
    4.69
    Customer repos
334,464
1,830
    2.20
309,051
2,893
  3.80
  
361,524
2,932
    3.22
Total core funding
4,176,955
33,774
    3.25
4,164,140
39,069
  3.81
  
4,253,353
39,111
    3.65
                     
Wholesale funding:
                    
    Public funds
282,793
3,013
    4.29
257,445
3,320
  5.23
  
302,206
3,834
    5.03
    Brokered accounts (includes fee expense)
516,841
5,892
    4.59
489,449
5,957
  4.94
  
458,278
5,904
    5.11
    Other short-term borrowings
605,282
6,037
    4.01
435,620
5,725
  5.33
  
532,206
6,797
    5.07
    Long-term borrowings
461,053
5,623
    4.82
394,780
5,900
  5.98
  
354,309
5,211
    5.76
Total wholesale funding
1,865,969
20,565
    4.43
1,577,294
20,902
  5.37
  
1,646,999
21,746
    5.24
Total interest bearing liabilities
 $   6,042,924
    54,339
    3.62
 $      5,741,434
       59,971
  4.24
  
 $   5,900,352
    60,857
    4.09
Non-interest bearing deposits
839,386
    
859,141
      
870,300
    
Liabilities held for sale
-
    
356,299
      
200,462
    
Other non-interest bearing liabilities
103,451
    
71,102
      
90,772
    
Stockholders’ equity
879,056
    
851,785
      
856,362
    
   Total liabilities and stockholders’ equity
$    7,864,817
    
$    7,879,761
      
$    7,918,248
    
   Net interest income/interest rate spread (4)
  
$   55,533
  2.75%
  
$         53,793
  2.80%
    
$   55,985
  2.76%
   Taxable equivalent adjustment
  
2,070
    
1,896
      
2,013
  
   Net interest income, as reported
  
$   53,463
    
 $        51,897
      
$   53,972
  
   Net interest margin (5)
    
  3.10%
    
3.21%
      
3.16%
   Tax equivalent effect
    
  0.12%
    
0.12%
      
0.12%
   Net interest margin on a fully tax equivalent basis (5)
    
  3.22%
    
3.33%
      
3.28%
(1)  
Non-accrual loans are included in average loans.
(2)  
Interest income includes amortization of deferred loan origination fees of $2.0 million, $1.7 million and $2.0 million for the three months ended March 31, 2008, March 31, 2007, and December 31, 2007, respectively.
(3)  
Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate.
(4)  
Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis.
(5)  
Net interest margin represents net interest income as a percentage of average interest earning assets.

 
 
19