MB Financial, Inc. Reports Second Quarter Net Income of $25.3 Million and Return on Assets of 1.09%

Before you go, we thought you'd like these...
Before you go close icon

MB Financial, Inc. Reports Second Quarter Net Income of $25.3 Million and Return on Assets of 1.09%

CHICAGO--(BUSINESS WIRE)-- MB Financial, Inc. (NAS: 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 share0.460.460.41+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 stockholders50,19939,960+25.6
Fully diluted earnings per share0.920.73+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 loans2.03%2.00%+0.03%1.98%+0.05%
Non-performing assets to total assets1.591.56+0.031.72-0.13
Net loan (recoveries) charge-offs to average loans - annualized(0.02)0.25-0.270.31-0.33
  • 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 assets1.09%1.07%+0.02%0.94%+0.15%
Annualized return on average common equity7.827.89-0.077.28+0.54
Annualized cash return on average tangible common equity12.3112.53-0.2211.28+1.03
 
 

Six months
ended June
30, 2013

 

Six months
ended June
30, 2012

 

Change
from 2012
to 2013

Annualized return on average assets1.08%0.90%+0.18%
Annualized return on average common equity7.856.61+1.24
Annualized cash return on average tangible common equity12.4210.33+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.

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,
2Q131Q134Q123Q122Q122013 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 fees6,0295,9666,0955,8605,78411,99511,682
Lease financing, net15,10216,26312,4199,6717,33431,36514,292
Trust and asset management fees4,8744,4944,6234,4284,5359,3688,939
Card fees2,735 2,695 2,505 2,388 2,429 5,430 4,473 
Total key fee initiatives29,67930,22628,02823,74720,87059,90540,686
 
Loan service fees1,9111,0112,4361,0751,2672,9222,334
Consumer and other deposit service fees3,5933,2463,6553,7863,5346,8396,987
Brokerage fees1,2341,1571,0881,1851,2642,3912,519
Increase in cash surrender value of life insurance8428448938908701,6861,787
Accretion of FDIC indemnification asset100143154204222243697
Net gain on sale of loans5066398225755541,145928
Other operating income1,039 955 1,325 405 958 1,994 2,563 
Total core non-interest income38,904 38,221 38,401 31,867 29,539 77,125 58,501 
 
Non-core non-interest income: (1)
Net (loss) gain on investment securities14(1)311281(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)222213(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 income2,050 152 (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.

Core non-interest income for the second quarter of 2013 increased approximately 2% from the first quarter of 2013.

  • Net lease financing revenue decreased during the second quarter primarily due to a decrease related to equipment maintenance contracts. As noted in prior quarters, remarketing gains and fees from the sale of equipment maintenance contracts can fluctuate from quarter to quarter.
  • Loan service fees increased due to an increase in letter of credit fees during the second quarter of 2013.

Core non-interest income for the first six months of 2013 rose 32% compared to the first six months of 2012.

  • Net lease financing income increased as a result of the increase in remarketing gains and fees from the sale of equipment maintenance contracts, as well as the impact of leasing revenues attributable to Celtic.
  • Card fee income increased due to fees earned on prepaid, debit and credit cards.
  • Capital markets and international banking service fees increased primarily due to an increase in interest rate swap fees.

Non-core non-interest income for the second quarter and first six months of 2013 was primarily impacted by gains recognized on OREO in 2013, compared to losses recognized on OREO during 2012.

Non-interest Expense (dollars in thousands):

      Six Months Ended
June 30,
2Q131Q134Q123Q122Q122013 2012
Core non-interest expense:
Salaries and employee benefits$43,888$43,031$42,934$41,728$40,295$86,919$80,223
Occupancy and equipment expense9,4089,4048,7748,2749,18818,81218,758
Computer services and telecommunication expense4,6173,8874,1603,7773,9098,5047,562
Advertising and marketing expense2,1672,1032,3351,9361,8394,270 Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Tue, Dec 06
Set Your Location
City, State, or Zip