MB Financial Inc. (MBFI, Financial) filed Quarterly Report for the period ended 2009-03-31.
MB Financial Inc. is a bank holding company which conducts a commercial banking business through Manufacturers Bank. MB Financial Inc. has a market cap of $420.3 million; its shares were traded at around $12.03 with and P/S ratio of 0.8. The dividend yield of MB Financial Inc. stocks is 4%. MB Financial Inc. had an annual average earning growth of 9.2% over the past 5 years.
Income Tax Accounting. In June 2006, the FASB issued FASB interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold that a tax position must meet to be recognized in the financial statements. FIN 48 also provides guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March 31, 2009, the Company had $8.1 million of uncertain tax positions. The Company elects to treat interest and penalties recognized for the underpayment of income taxes as income tax expense. However, interest and penalties imposed by taxing authorities on issues specifically addressed in FIN 48 will be taken out of the tax reserves up to the amount allocated to interest and penalties. The amount of interest and penalties exceeding the amount allocated in the tax reserves will be treated as income tax expense. As of March 31, 2009, the Company had $1.1 million of accrued interest related to tax reserves. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of income.
At March 31, 2009, $1.1 billion of investment securities, or 12.4 percent of total assets, were recorded at fair value on a recurring basis. All but one of these financial instruments used valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements, to measure fair value. One investment security with a fair value of $1.6 million at March 31, 2009, used significant unobservable inputs that are supported by little or no market activity (Level 3) to measure fair value. At March 31, 2009, $27.9 million, or less than one percent of total liabilities, consisted of financial instruments recorded at fair value on a recurring basis.
Net interest income was $56.0 million for the three months ended March 31, 2009, an increase of $2.6 million, or 4.8% from $53.5 million for the comparable period in 2008. See "Net Interest Margin" section below for further analysis.
Provision for loan losses was $89.7 million in the first quarter of 2009 as compared to $22.5 million in first quarter of 2008. Net charge-offs were $54.4 million in the quarter ended March 31, 2009 compared to $8.9 million in the quarter ended March 31, 2008. The increase in our provision for loan losses was primarily due to the increases in non-performing loans and net charge-offs, and the migration of performing loans from lower risk ratings to higher risk ratings during the first quarter of 2009. The migration of performing loans to higher risk ratings was primarily due to worsening macroeconomic factors, declines in the values of collateral and deteriorating business environment during the first quarter of 2009. Also factoring into our provision was our loan growth over the past twelve months.
Other expense increased primarily due to an increase in FDIC insurance premium expense. This was a result of our FDIC credits being fully utilized during the fourth quarter of 2008 combined with the FDIC generally increasing its assessment rates for all institutions for the first quarter of 2009. Additionally, the acquisition of Heritage Community Bank increased operating expenses during the first quarter of 2009 as follows: $275 thousand related to salaries and benefits, $225 thousand related to nonrecurring computer conversion expense and $100 thousand related to occupancy expense.
Read the The complete ReportMBFI is in the portfolios of John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management.
MB Financial Inc. is a bank holding company which conducts a commercial banking business through Manufacturers Bank. MB Financial Inc. has a market cap of $420.3 million; its shares were traded at around $12.03 with and P/S ratio of 0.8. The dividend yield of MB Financial Inc. stocks is 4%. MB Financial Inc. had an annual average earning growth of 9.2% over the past 5 years.
Highlight of Business Operations:
The Company had a net loss available to common shareholders of $30.6 million for the first quarter of 2009, compared to net income available to common shareholders of $5.8 million for the first quarter of 2008. The decrease in earnings was primarily due to a $67.2 million increase in provision for loan losses. Our 2009 first quarter results generated an annualized return on average assets of (1.30%) and an annualized return on average common equity of (14.01%), compared to 0.30% and 2.66%, respectively, for the same period in 2008. Fully diluted earnings per common share for the first quarter of 2009 were ($0.87) compared to $0.17 per common share in the 2008 first quarter.Income Tax Accounting. In June 2006, the FASB issued FASB interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold that a tax position must meet to be recognized in the financial statements. FIN 48 also provides guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of March 31, 2009, the Company had $8.1 million of uncertain tax positions. The Company elects to treat interest and penalties recognized for the underpayment of income taxes as income tax expense. However, interest and penalties imposed by taxing authorities on issues specifically addressed in FIN 48 will be taken out of the tax reserves up to the amount allocated to interest and penalties. The amount of interest and penalties exceeding the amount allocated in the tax reserves will be treated as income tax expense. As of March 31, 2009, the Company had $1.1 million of accrued interest related to tax reserves. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the consolidated balance sheets and statements of income.
At March 31, 2009, $1.1 billion of investment securities, or 12.4 percent of total assets, were recorded at fair value on a recurring basis. All but one of these financial instruments used valuation methodologies involving market-based or market-derived information, collectively Level 1 and 2 measurements, to measure fair value. One investment security with a fair value of $1.6 million at March 31, 2009, used significant unobservable inputs that are supported by little or no market activity (Level 3) to measure fair value. At March 31, 2009, $27.9 million, or less than one percent of total liabilities, consisted of financial instruments recorded at fair value on a recurring basis.
Net interest income was $56.0 million for the three months ended March 31, 2009, an increase of $2.6 million, or 4.8% from $53.5 million for the comparable period in 2008. See "Net Interest Margin" section below for further analysis.
Provision for loan losses was $89.7 million in the first quarter of 2009 as compared to $22.5 million in first quarter of 2008. Net charge-offs were $54.4 million in the quarter ended March 31, 2009 compared to $8.9 million in the quarter ended March 31, 2008. The increase in our provision for loan losses was primarily due to the increases in non-performing loans and net charge-offs, and the migration of performing loans from lower risk ratings to higher risk ratings during the first quarter of 2009. The migration of performing loans to higher risk ratings was primarily due to worsening macroeconomic factors, declines in the values of collateral and deteriorating business environment during the first quarter of 2009. Also factoring into our provision was our loan growth over the past twelve months.
Other expense increased primarily due to an increase in FDIC insurance premium expense. This was a result of our FDIC credits being fully utilized during the fourth quarter of 2008 combined with the FDIC generally increasing its assessment rates for all institutions for the first quarter of 2009. Additionally, the acquisition of Heritage Community Bank increased operating expenses during the first quarter of 2009 as follows: $275 thousand related to salaries and benefits, $225 thousand related to nonrecurring computer conversion expense and $100 thousand related to occupancy expense.
Read the The complete ReportMBFI is in the portfolios of John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management.
