MB Financial, Inc. Reports Strong Capital and Liquidity Position, Significant Increase in Core Pre-Tax, Pre-Provision Earnings

MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A ("the Bank” or "MB Financial Bank”), announced today fourth quarter and annual results for 2009. The words "MB Financial,” "the Company,” "we,” "our” and "us” refer to MB Financial, Inc. and its wholly owned subsidiaries, unless indicated otherwise. We had a net loss of $9.8 million for the fourth quarter of 2009 compared to a net loss of $24.8 million in the fourth quarter of 2008, and net income of $7.4 million for the third quarter of 2009. We had a net loss of $26.1 million for the year ended December 31, 2009, compared to net income of $16.2 million for the year ended December 31, 2008.

Key items for the quarter were as follows:

Momentum Building in Core Pre-Tax, Pre-Provision Earnings:

• Core pre-tax, pre-provision earnings increased 41.8% to $37.5 million, compared to $26.4 million for third quarter of 2009.
• Net interest income on a fully tax equivalent basis increased to $77.4 million, or by 22.2%, compared to $63.3 million for third quarter of 2009. For the year ended December 31, 2009, net interest income on a fully tax equivalent basis increased 13.2% to $261.2 million compared to $230.8 million for the year ended December 31, 2008. Our net interest income and net interest margin improved significantly throughout the fourth quarter of 2009.

Credit Quality – Strong Loss Reserve Coverage Ratios, Increased Provision for Loan Losses and Loan Charge-Offs:

• Our provision for loan losses was $70.0 million for the fourth quarter of 2009, while our net charge-offs were $82.2 million. For the third quarter of 2009, our provision for loan losses and net charge-offs were $45.0 million and $37.1 million, respectively. Our provision for loan losses continues to reflect deterioration in our construction loan portfolio and uncertainty regarding the commercial real estate market.
• Our non-performing loans to total loans decreased to 4.17% as of December 31, 2009, compared to 4.41% as of September 30, 2009. The percentage of the allowance for loan losses to non-performing loans was 65.26% as of December 31, 2009 and 66.02% as of September 30, 2009. After factoring in partial charge-offs taken on non-performing loans, the percentage of loan balance reserved was 72.34% and 70.74% as of December 31, 2009 and September 30, 2009, respectively.
• Our non-performing assets to total assets increased to 2.84% as of December 31, 2009, compared to 2.19% as of September 30, 2009. While non-performing assets declined slightly during the fourth quarter of 2009 compared to the third quarter of 2009, the ratio increased due to a significant decrease in total assets during the fourth quarter as a result of the previously anticipated redemption of out-of-market deposits assumed in the Corus transaction in the third quarter, and corresponding asset reduction, as discussed below.
• Our potential problem loans to total loans decreased to 3.59% as of December 31, 2009, compared to 3.94% as of September 30, 2009.
• Our allowance for loan losses to total loans was 2.72% as of December 31, 2009, compared to 2.91% as of September 30, 2009. After factoring in partial charge-offs taken on non-performing loans, the percentage of allowance for loan losses to total loans was 3.75% and 3.60% as of December 31, 2009 and September 30, 2009, respectively.

For purposes of the second and third bullet points above, non-performing loans and non-performing assets exclude loans held for sale and certain purchased credit-impaired loans that we have acquired in recent FDIC assisted transactions. These purchased credit-impaired loans are accounted for on a pool basis, and the pools are considered to be performing. Additionally, non-performing assets exclude other real estate owned related to assets acquired in transactions facilitated by the FDIC.

Benchmark Bank Transaction:

• On December 4, 2009, MB Financial Bank assumed $164 million of deposits of Aurora, Illinois-based Benchmark Bank ("Benchmark”) at no premium, and acquired certain assets totaling approximately $146 million, net of a $34.2 million discount, in a loss-sharing transaction facilitated by the FDIC. This transaction generated a pre-tax gain of $18.3 million, based on preliminary estimates.

Corus and InBank Update:

• Deposits assumed in the Corus Bank ("Corus”) transaction on September 11, 2009 decreased from $4.8 billion at September 30, 2009 to $2.1 billion at December 31, 2009. This decrease was expected and was a result of the redemption of outstanding checks issued for out-of-market certificates of deposit ("CDs”) assumed in the Corus transaction, the withdrawals of out-of-market Corus money market accounts, and some in-market run-off of previously higher rate deposits assumed in the Corus transaction. The decrease in Corus deposits during the fourth quarter resulted in a corresponding reduction in our excess interest earning deposits with banks (cash on deposit at the Federal Reserve).
• During the fourth quarter of 2009, we repositioned the investment portfolio acquired in the Corus transaction to longer duration and higher yielding investment securities.
• We successfully integrated the core systems of Corus and InBank during the fourth quarter of 2009.

Strong Capital Position:

• MB Financial Bank continues to significantly exceed the "Well-Capitalized” threshold established under the regulations of the Office of the Comptroller of the Currency. At December 31, 2009, MB Financial, Inc.’s total risk-based capital ratio was 14.98%, Tier 1 capital to risk-weighted assets ratio was 13.06%, Tier 1 capital to average asset ratio was 8.71% and Tier one common capital to risk-weighted assets was 8.47%. As of December 31, 2009, total capital was approximately $376.8 million in excess of the 10% "Well-Capitalized” threshold.
• Our tangible common equity to assets ratio was 6.19% at December 31, 2009, compared to 4.85% and 5.65% at September 30, 2009 and December 31, 2008, respectively. The increase in our tangible common equity to assets ratio from September 30, 2009 to December 31, 2009, was primarily due to the previously anticipated redemption of out-of-market deposits assumed in the Corus transaction in the third quarter, and corresponding asset reduction. Our tangible common equity to risk-weighted assets ratio was 8.54% at December 31, 2009, compared to 9.01% and 7.10% at September 30, 2009 and December 31, 2008, respectively. The decrease in our tangible common equity to risk-weighted assets ratio from September 30, 2009 to December 31, 2009, was primarily due to an increase in risk-weighted assets during the fourth quarter of 2009, as we repositioned the investment portfolio acquired in the Corus transaction.

Strong Liquidity Position and Improved Deposit Mix:

• Our loan to deposit ratio was 75% as of December 31, 2009, compared to 57% as of September 30, 2009 and 96% as of December 31, 2008. The decrease in our loan to deposit ratio from September 30, 2009 to December 31, 2009 was primarily due to the anticipated redemption of out-of-market deposits assumed in the Corus transaction in the third quarter
• Our percentage of core funding to total funding was 87% at December 31, 2009, compared to 75% at December 31, 2008.
• Our percentage of CDs to total deposits decreased to 45% at December 31, 2009, compared to 57% at December 31, 2008.

RESULTS OF OPERATIONS

Fourth Quarter Results

Net Interest Income

Net interest income on a tax equivalent basis increased $14.1 million from the third quarter of 2009 to the fourth quarter of 2009. Our net interest margin, on fully tax equivalent basis, was 2.86% for the fourth quarter of 2009. During the fourth quarter of 2009, our net interest margin on a tax equivalent basis increased from 2.45% in the month of October to 2.87% in the month of November, and to 3.22% in the month of December. This margin increase was primarily due to significant changes in our balance sheet throughout the fourth quarter from the anticipated run-off of Corus deposits and corresponding reduction in assets, a decrease in our cost of funds throughout the fourth quarter related to a decrease in deposit pricing, and continued improved credit spreads.

Our non-performing loans negatively impacted our net interest margin during the fourth quarter of 2009, the third quarter of 2009 and the fourth quarter of 2008 by approximately 17 basis points, 17 basis points and 13 basis points, respectively.

See the supplemental net interest margin table for further detail.

Other Income (in thousands):

			Three Months Ended										Year Ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Core other income:
	Loan service fees		$ 1,723		$ 1,565		$ 1,782		$ 1,843		$ 1,850		$ 6,913		$ 9,180
	Deposit service fees		9,311		7,912		6,978		6,399		7,478		30,600		28,225
	Lease financing, net		5,799		3,937		4,473		4,319		4,604		18,528		16,973
	Brokerage fees		1,272		1,004		1,252		1,078		968		4,606		4,317
	Trust and asset management fees		3,347		3,169		3,262		2,815		2,784		12,593		11,869
	Increase in cash surrender value of life insurance		669		664		670		456		570		2,459		5,299
	Other operating income		1,930		2,078		1,851		2,323		1,442		8,182		6,160
Total core other income			24,051		20,329		20,268		19,233		19,696		83,881		82,023
Non-core other income(1)
	Net gain on sale of investment securities		239		3		4,093		9,694		24		14,029		1,130
	Net gain (loss) on sale of other assets		12		12		(38)		1		(874)		(13)		(1,104)
	Acquisition related gains		18,325		10,222		-		-		-		28,547		-
	Increase (decrease) in market value of assets held in
		trust for deferred compensation(A)	300		334		602		(526)		(1,243)		710		(1,657)
Total non-core other income			18,876		10,571		4,657		9,169		(2,093)		43,273		(1,631)
Total other income(2)			$ 42,927		$ 30,900		$ 24,925		$ 28,402		$ 17,603		$ 127,154		$ 80,392

(1) Letters denote the corresponding line items where these non-core other income items reside in the consolidated statements of income as follows: A – Other operating income.

(2) During the third quarter of 2009, the Company sold its merchant card processing business. In accordance with U.S. GAAP, the results of operations from the Company’s merchant card processing business are reflected in the Company’s statements of income as discontinued operations. Therefore, income from this business is excluded from the table above.

Core other income increased by $3.7 million from the third quarter of 2009 to the fourth quarter of 2009. Core deposit service fees increased during the quarter primarily due to an increase in commercial deposit fees related to the Corus transaction. Net lease financing increased primarily due to an increase in the sales of third party equipment maintenance to customers. Non-core other income was impacted by an $18.3 million gain recorded on the Benchmark transaction, based on preliminary estimates.

Core other income increased by $1.9 million for the year ended December 31, 2009 compared to the year ended December 31, 2008. Core loan service fees decreased, primarily due to a decrease in letter of credit and prepayment fees. Core deposit service fees increased primarily due an increase in commercial deposit fees related to businesses acquired as a result of our FDIC acquisitions. The decrease in cash surrender value of life insurance was primarily due to a decrease in overall interest rates from the year ended December 31, 2008 to the year ended December 31, 2009, and $1.4 million of death benefits on bank owned life insurance policies that we recognized during the year ended December 31, 2008. Core other operating income increased primarily due to an increase in gains recognized on the sale of loans and an increase in debit card fees during the year ended December 31, 2009. Non-core other income was impacted during the year ended December 31, 2009 by $28.5 million in gains generated by the FDIC assisted transactions, as well as a net gain on sale of investment securities of $14.0 million compared with a net gain on sale of investment securities of $1.1 million during the year ended December 31, 2008.

Other Expense (in thousands):

			Three Months Ended										Year Ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Core other expense:
	Salaries and employee benefits		$ 33,091		$ 30,862		$ 28,586		$ 27,405		$ 25,300		$ 119,944		$ 110,492
	Occupancy and equipment expense		8,885		7,803		7,151		7,682		7,298		31,521		28,872
	Computer services expense		2,882		2,829		2,013		2,287		1,973		10,011		7,392
	Advertising and marketing expense		683		1,296		892		1,314		903		4,185		5,089
	Professional and legal expense		1,465		1,126		1,120		969		1,117		4,680		3,110
	Brokerage fee expense		553		478		575		393		476		1,999		1,929
	Telecommunication expense		1,127		812		744		750		664		3,433		2,818
	Other intangibles amortization expense		1,650		966		997		878		913		4,491		3,554
	FDIC insurance premiums		4,099		3,206		2,939		2,668		1,188		12,912		1,877
	Other operating expenses		6,337		5,446		5,039		5,192		5,422		22,014		19,914
Total core other expense			60,772		54,824		50,056		49,538		45,254		215,190		185,047
Non-core other expense (1)
	FDIC special assessment(A)		-		-		3,850		-		-		3,850		-
	Impairment charges		-		4,000		-		-		-		4,000		-
	Increase in market value of assets held in
		trust for deferred compensation(B)	300		334		602		(526)		(1,243)		710		(1,657)
Total non-core other expense			300		4,334		4,452		(526)		(1,243)		8,560		(1,657)
Total other expense(2)			$ 61,072		$ 59,158		$ 54,508		$ 49,012		$ 44,011		$ 223,750		$ 183,390

(1) Letters denote the corresponding line items where these non-core other expense items reside in the consolidated statements of income as follows: A – FDIC insurance premiums, B – Salaries and employee benefits.

(2) During the third quarter of 2009, the Company sold its merchant card processing business. In accordance with U.S. GAAP, the results of operations from the Company’s merchant card processing business are reflected in the Company’s statements of income as discontinued operations. Therefore, expenses from this business are excluded from the table above.

Core other expense increased $5.9 million from the third quarter of 2009 to the fourth quarter of 2009. Our InBank, Corus and Benchmark transactions increased salaries and employee benefits expense, occupancy and equipment expense, other intangibles amortization expense and FDIC insurance premiums by approximately $2.5 million, $1.1 million, $684 thousand and $613 thousand, respectively. Our InBank, Corus and Benchmark transactions increased total core other expense from the third quarter of 2009 to fourth quarter of 2009 by approximately $6.7 million.

Core other expense increased $30.1 million for the year ended December 31, 2009 compared to the year ended December 31, 2008. The increase in core FDIC insurance premiums was primarily due to our FDIC credits being fully utilized during the fourth quarter of 2008 combined with the FDIC increasing its assessment rate during the year ended December 31, 2009. Our Heritage Community Bank, InBank, Corus and Benchmark transactions increased salaries and employee benefits expense, occupancy and equipment expense, and computer services expense by approximately $6.6 million, $2.6 million and $2.1 million, respectively. Our Heritage Community Bank, InBank, Corus and Benchmark transactions increased total core other expense by approximately $17.1 million for the year ended December 31, 2009 compared to the year ended December 31, 2008. Professional and legal expense increased primarily due to loan collection costs during the year ended December 31, 2009. Non-core other expense also was impacted during the year ended December 31, 2009 by a $4.0 million impairment charge relating to the consolidation of three branch offices, and the FDIC special premium imposed on all insured depository institutions based on assets as of June 30, 2009.

Income Taxes

During the fourth quarter of 2009 the Company had a tax benefit of $4.2 million compared to a tax benefit of $15.2 million in the third quarter of 2009. In the third quarter of 2009, the Company increased the amount of benefit recognized with respect to certain previously identified uncertain tax positions as a result of certain developments in pending tax audits. The increase in recognized tax benefit resulted in a $7.8 million increase in income tax benefit in the third quarter of 2009.

LOAN PORTFOLIO

The following table sets forth the composition of the loan portfolio, excluding loans held for sale, as of the dates indicated (dollars in thousands):

			December 31,				September 30,				June 30,				March 31,				December 31,
			2009				2009				2009				2009				2008
					% of				% of				% of				% of				% of
			Amount		Total		Amount		Total		Amount		Total		Amount		Total		Amount		Total
Commercial related credits:
	Commercial loans		$ 1,387,475		21%		$ 1,422,989		22%		$ 1,411,520		22%		$ 1,507,616		23%		$ 1,522,380		24%
	Commercial loans collateralized by assign-
		ment of lease payments (lease loans)	953,452		15%		881,963		13%		853,981		13%		738,527		12%		649,918		11%
	Commercial real estate		2,472,521		38%		2,446,909		38%		2,420,227		38%		2,359,868		37%		2,353,261		38%
	Construction real estate		594,482		9%		697,232		11%		722,399		11%		764,876		12%		757,900		12%
Total commercial related credits			5,407,930		83%		5,449,093		84%		5,408,127		84%		5,370,887		84%		5,283,459		85%
Other loans:
	Residential real estate		291,022		4%		291,889		4%		273,196		4%		287,256		5%		295,336		5%
	Indirect motorcycle		156,853		2%		159,273		2%		160,364		2%		157,081		2%		153,277		2%
	Indirect automobile		23,414		1%		26,226		1%		29,341		1%		32,731		1%		35,950		1%
	Home equity		405,439		6%		408,184		7%		409,147		6%		411,527		6%		401,029		6%
	Consumer loans		66,293		1%		66,600		1%		61,385		1%		56,654		1%		59,512		1%
Total other loans			943,021		14%		952,172		15%		933,433		14%		945,249		15%		945,104		15%
Gross loans excluding covered loans			6,350,951		97%		6,401,265		99%		6,341,560		98%		6,316,136		99%		6,228,563		100%
	Covered loans (1)		156,870		3%		91,230		1%		96,629		2%		91,586		1%		-		-
Gross loans			6,507,821		100%		6,492,495		100%		6,438,189		100%		6,407,722		100%		6,228,563		100%
	Allowance for loan losses		(177,072)				(189,232)				(181,356)				(179,273)				(144,001)
Net loans			$ 6,330,749				$ 6,303,263				$ 6,256,833				$ 6,228,449				$ 6,084,562

(1) Covered loans refer to loans we acquired in the Heritage Community Bank and Benchmark transactions that are subject to loss-sharing agreements with the FDIC.

Total loans increased by 1% on an annualized basis from the third quarter of 2009 to the fourth quarter of 2009, and 4% from December 31, 2008. The decrease in commercial loans from December 31, 2008 to December 31, 2009, was primarily due to a decrease in the usage of commercial lines. The increase in lease loans from December 31, 2008 to December 31, 2009, resulted from additional staff added during the year and less competitive pressure in the market as some competitors exited the market or reduced lending. We believe that our leasing portfolio tends to perform better than our other lending categories as a result of lessees typically being larger than our typical middle market customer with more staying power during economic downturns and the leased equipment being core to their operations.

The following table sets forth the composition of construction real estate loans by risk category, excluding covered loans and loans held for sale, as of December 31, 2009 (dollars in thousands):

			Risk Category
							Potential Problem and
			Non-Performing				and Other Watch
			Loans (NPLs)				List Loans				Pass Loans				Total
					% of Loan				% of Loan				% of Loan				% of Loan
					Balance				Balance				Balance				Balance
			Amount		Reserved(2)		Amount		Reserved		Amount		Reserved		Amount		Reserved(2)
Residential construction related credits
	Unimproved land		$ 1,600		43%		$ -		0%		$ 3,499		2%		$ 5,099		15%
	Improved lots and single family construction		56,733		41%		24,570		23%		28,840		3%		110,143		30%
	Condominiums		55,171		32%		39,555		19%		36,105		5%		130,832		21%
	Apartments		14,363		35%		964		10%		28,286		4%		43,614		14%
	Townhomes		7,325		58%		6,336		22%		9,338		3%		22,999		35%
Total residential construction related credits			135,192		39%		71,425		20%		106,068		4%		312,685		25%
Commercial construction related credits
	Unimproved land		$ -		-		$ -		-		$ 876		1%		$ 876		1%
	Improved lots and construction		17,271		20%		12,550		18%		24,953		2%		54,774		12%
	Industrial		1,875		28%		12,115		9%		9,665		4%		23,655		9%
	Office, retail and hotel		26,654		19%		30,403		7%		59,327		4%		116,384		8%
	Schools		-		-		-		-		33,700		5%		33,700		5%
	Medical		-		-		-		-		33,495		10%		33,495		10%
Total commercial construction related credits			45,799		20%		55,068		10%		162,016		5%		262,884		9%
Total construction loans, excluding loans acquired
	in the InBank acquisition		$ 180,991		35%		$ 126,493		16%		$ 268,084		5%		$ 575,569		20%
Construction loans acquired in the InBank acquisition(1)															18,913		0%
Total construction loans															$ 594,482		19%

(1) Net of loan discount of $12.4 million.

(2) Includes the impact of partial charge-offs taken.

ASSET QUALITY

The following table presents a summary of total performing loans, excluding covered loans and loans held for sale, greater than 30 days and less than 90 days past due as of the dates indicated (dollars in thousands):

		December 31,		September 30,		June 30,		March 31,		December 31,
		2009		2009		2009		2009		2008
30 - 59 Days Past Due		$ 25,331		$ 35,943		$ 15,574		$ 21,600		$ 14,372
60 - 89 Days Past Due		5,523		15,109		4,838		4,809		8,575
		$ 30,854		$ 51,052		$ 20,412		$ 26,409		$ 22,947

Approximately $12.8 million of performing loans past due are classified as potential problem loans (defined below) as of December 31, 2009, compared to $22.6 million as of September 30, 2009.

The following table presents a summary of non-performing assets, excluding loans held for sale, credit-impaired loans that were acquired as part of our FDIC assisted acquisitions (see definition of "purchased credit-impaired loans” below), and other real estate owned that is related to FDIC transactions, as of the dates indicated (dollar amounts in thousands):

		December 31,		September 30,		June 30,		March 31,		December 31,
		2009		2009		2009		2009		2008
Non-performing loans:
	Non-accrual loans	$ 270,839		$ 286,623		$ 227,681		$ 229,537		$ 145,936
	Loans 90 days or more past due, still accruing interest	477		-		-		-		-
Total non-performing loans		271,316		286,623		227,681		229,537		145,936
Other real estate owned		36,711		22,612		17,111		2,500		4,366
Repossessed vehicles		333		271		203		245		356
Total non-performing assets		$ 308,360		$ 309,506		$ 244,995		$ 232,282		$ 150,658
Specific allowance on non-performing loans		$ 45,967		$ 83,650		$ 77,186		$ 81,540		$ 52,112
Partial charge-offs taken on non-performing loans		69,359		46,258		30,995		23,706		17,429
Total specific allowance and partial charge-offs taken
	on non-performing loans	$ 115,326		$ 129,908		$ 108,181		$ 105,246		$ 69,541
Specific allowance and partial charge-offs taken as a
	percentage of non-performing loans plus partial
	charge-offs taken	33.85%		39.03%		41.82%		41.56%		42.57%
Total non-performing loans to total loans		4.17%		4.41%		3.54%		3.58%		2.34%
Total non-performing assets to total assets		2.84%		2.19%		2.92%		2.57%		1.71%
Allowance for loan losses to non-performing loans		65.26%		66.02%		79.65%		78.10%		98.67%
Allowance for loan losses to non-performing loans,
	including partial charge-offs taken	72.34%		70.74%		82.09%		80.15%		98.82%

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.

At December 31, 2009, the composition of other real estate owned was primarily improved lots and single family construction projects.

The following table presents data related to non-performing loans, by dollar amount and category at December 31, 2009 (dollar amounts in thousands):

	Commercial and Lease Loans				Construction Real Estate Loans				Commercial Real Estate Loans				Consumer Loans		Total Loans
	Number of				Number of				Number of
	Borrowers		Amount		Borrowers		Amount		Borrowers		Amount		Amount		Amount
$10.0 million or more	-		$ -		5		$ 76,243		1		$ 10,101		$ -		$ 86,344
$5.0 million to $9.9 million	-		-		8		52,496		1		5,647		-		58,143
$1.5 million to $4.9 million	2		3,518		11		31,346		6		10,493		1,672		47,029
Under $1.5 million	33		8,933		32		20,906		78		32,419		17,542		79,800
	35		$ 12,451		56		$ 180,991		86		$ 58,660		$ 19,214		$ 271,316
Percentage of individual loan category			0.53%				30.45%				2.37%		2.04%		4.17%

The following table presents data related to non-performing loans, by dollar amount and category at September 30, 2009 (dollar amounts in thousands):

	Commercial and Lease Loans				Construction Real Estate Loans				Commercial Real Estate Loans				Consumer Loans		Total Loans
	Number of				Number of				Number of
	Borrowers		Amount		Borrowers		Amount		Borrowers		Amount		Amount		Amount
$10.0 million or more	-		$ -		5		$ 81,073		1		$ 10,297		$ -		$ 91,370
$5.0 million to $9.9 million	-		-		9		68,237		1		7,216		-		75,453
$1.5 million to $4.9 million	2		6,002		15		41,065		5		12,688		1,703		61,458
Under $1.5 million	38		11,894		21		12,969		48		18,227		15,252		58,342
	40		$ 17,896		50		$ 203,344		55		$ 48,428		$ 16,955		$ 286,623
Percentage of individual loan category			0.78%				29.16%				1.98%		1.78%		4.41%

We define potential problem loans as performing loans rated substandard 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 amount of potential problem loans was $233.4 million, or 3.59% of total loans, as of December 31, 2009, compared to $255.6 million, or 3.94% of total loans, as of September 30, 2009.

"Purchased credit-impaired loans” refer to certain loans acquired in the FDIC assisted transactions during 2009, discussed above, for which deterioration in credit quality occurred before the Company’s acquisition date. Upon acquisition, these loans were recorded at fair value with interest income to be accreted over the estimated life of the loan when cash flows are reasonably estimable, even if the underlying loans are contractually past due. Acquisition fair value incorporates the Company’s estimate, as of the acquisition date, of credit losses over the remaining life of the portfolio. No allowance for loan losses has been recorded for these loans.

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

			Three Months Ended										Year Ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Balance at the beginning of period			$ 189,232		$ 181,356		$ 179,273		$ 144,001		$ 88,863		$ 144,001		$ 65,103
Provision for loan losses			70,000		45,000		27,100		89,700		72,581		231,800		125,721
Charge-offs:
	Commercial loans		(8,892)		(20,037)		(6,636)		(10,548)		(1,914)		(46,113)		(13,653)
	Commercial loans collateralized by assignment
		of lease payments (lease loans)	(333)		(269)		(1,385)		(3,420)		(440)		(5,407)		(1,258)
	Commercial real estate loans		(11,829)		(2,006)		(817)		(24,190)		(7,076)		(38,842)		(14,872)
	Construction real estate		(59,435)		(14,914)		(14,743)		(14,697)		(7,144)		(103,789)		(14,940)
	Residential real estate		(650)		(290)		(358)		(178)		(117)		(1,476)		(550)
	Indirect vehicle		(1,324)		(937)		(759)		(1,065)		(615)		(4,085)		(2,109)
	Home equity		(1,236)		(650)		(953)		(604)		(503)		(3,443)		(1,801)
	Consumer loans		(479)		(358)		(132)		(155)		(216)		(1,124)		(642)
		Total charge-offs	(84,178)		(39,461)		(25,783)		(54,857)		(18,025)		(204,279)		(49,825)
Recoveries:
	Commercial loans		1,344		71		45		31		354		1,491		891
	Commercial loans collateralized by assignment
		of lease payments (lease loans)	-		-		-		-		67		-		67
	Commercial real estate loans		12		5		5		18		-		40		266
	Construction real estate		154		2,042		511		250		-		2,957		951
	Residential real estate		4		9		28		3		17		44		29
	Indirect vehicle		301		194		151		111		116		757		625
	Home equity		9		13		20		11		17		53		132
	Consumer loans		194		3		6		5		11		208		41
		Total recoveries	2,018		2,337		766		429		582		5,550		3,002
Total net charge-offs			(82,160)		(37,124)		(25,017)		(54,428)		(17,443)		(198,729)		(46,823)
Balance			$ 177,072		$ 189,232		$ 181,356		$ 179,273		$ 144,001		$ 177,072		$ 144,001
Total loans excluding loans held for sale			$ 6,507,521		$ 6,492,495		$ 6,438,189		$ 6,407,722		$ 6,228,563		$ 6,507,521		$ 6,228,563
Average loans, excluding loans held for sale			$ 6,460,195		$ 6,452,094		$ 6,441,050		$ 6,307,496		$ 6,166,152		$ 6,421,249		$ 5,952,591
Ratio of allowance for loan losses to total loans,
	excluding loans held for sale		2.72%		2.91%		2.82%		2.80%		2.31%		2.72%		2.31%
Net loan charge-offs to average loans, excluding loans
	held for sale (annualized)		5.05%		2.28%		1.54%		3.42%		1.13%		3.09%		0.79%

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 December 31,		At September 30,		At June 30,		At March 31,		At December 31,
			2009		2009		2009		2009		2008
Fair Value
U.S. Treasury securities			$ -		$ -		$ -		$ 11,545		$ -
Government sponsored agencies and enterprises			70,239		323,969		51,088		108,227		179,373
Bank notes issued through the TLGP(1)			-		1,578,174		-		-		-
States and political subdivisions			380,235		396,124		394,343		424,541		427,986
Mortgage-backed securities			2,377,051		1,636,275		428,962		539,953		690,298
Corporate bonds			11,395		56,599		6,370		30,726		34,565
Equity securities			4,313		3,839		3,707		3,681		3,607
Debt securities issued by foreign governments			-		-		250		302		301
	Total fair value		$ 2,843,233		$ 3,994,980		$ 884,720		$ 1,118,975		$ 1,336,130
Amortized cost
U.S. Treasury securities			$ -		$ -		$ -		$ 11,546		$ -
Government sponsored agencies and enterprises			69,120		322,620		49,753		105,354		171,385
Bank notes issued through the TLGP(1)			-		1,578,203		-		-		-
States and political subdivisions			366,846		372,772		389,041		416,329		417,595
Mortgage-backed securities			2,382,495		1,625,378		421,172		531,547		682,692
Corporate bonds			11,400		56,655		6,370		31,487		34,546
Equity securities			4,279		3,742		3,668		3,631		3,595
Debt securities issued by foreign governments			-		-		250		302		301
	Total amortized cost		$ 2,834,140		$ 3,959,370		$ 870,254		$ 1,100,196		$ 1,310,114
Unrealized gain (loss)
U.S. Treasury securities			$ -		$ -		$ -		$ (1)		$ -
Government sponsored agencies and enterprises			1,119		1,349		1,335		2,873		7,988
Bank notes issued through the TLGP(1)			-		(29)		-		-		-
States and political subdivisions			13,389		23,352		5,302		8,212		10,391
Mortgage-backed securities			(5,444)		10,897		7,790		8,406		7,606
Corporate bonds			(5)		(56)		-		(761)		19
Equity securities			34		97		39		50		12
Debt securities issued by foreign governments			-		-		-		-		-
	Total unrealized gain		$ 9,093		$ 35,610		$ 14,466		$ 18,779		$ 26,016

(1) Represents bank notes that are guaranteed by the FDIC under the Temporary Liquidity Guarantee Program (TLGP).

The decrease in government sponsored agencies and bank notes issued through the TLGP was a result of sales of these investment securities to fund the redemption/run-off of the out-of-market Corus certificates of deposit and money market accounts. The increase in mortgage-backed securities was a result of deploying a portion of the cash acquired in the Corus transaction.

We do not have any meaningful direct or indirect holdings of subprime residential mortgage loans, home equity lines of credit, or any Fannie Mae or Freddie Mac preferred or common equity securities in our investment portfolio. Additionally, more than 99% of our mortgage-backed securities are agency guaranteed.

We have maintained our disciplined investment management philosophy and have avoided the types of problem securities that have caused many financial institutions to incur large losses.

FUNDING MIX AND LIQUIDITY

The following table shows the composition of our core and wholesale funding resources as of the dates indicated (dollars in thousands):

				December 31,				September 30,				June 30,				March 31,				December 31,
				2009				2009				2009				2009				2008
						% of				% of				% of				% of				% of
				Amount		Total		Amount		Total		Amount		Total		Amount		Total		Amount		Total
Core funding:
	Non-interest bearing deposits			$ 1,552,185		16%		$ 2,925,714		24%		$ 1,152,274		16%		$ 1,018,849		13%		$ 960,117		13%
	Money market and NOW accounts			2,775,468		29%		3,269,505		26%		1,531,149		21%		1,762,340		22%		1,465,436		19%
	Savings accounts			583,783		6%		570,974		5%		447,670		6%		440,326		6%		367,684		5%
	Certificates of deposit			3,153,310		33%		3,968,177		32%		2,383,717		33%		2,690,087		33%		2,604,565		34%
	Customer repurchase agreements			223,917		2%		236,164		2%		248,494		4%		273,718		4%		282,831		4%
Total core funding				8,288,663		87%		10,970,534		89%		5,763,304		80%		6,185,320		78%		5,680,633		75%
Wholesale funding:
	Public funds deposits			90,219		1%		112,554		1%		107,752		1%		166,501		2%		232,994		3%
	Brokered deposit accounts			528,312		6%		583,143		5%		610,963		8%		818,604		10%		864,775		11%
	Other short-term borrowings			100,000		1%		200,842		2%		251,773		4%		200,780		3%		205,787		2%
	Long-term borrowings			281,349		3%		291,315		2%		301,691		4%		312,246		4%		421,466		6%
	Subordinated debt			50,000		1%		50,000		0%		50,000		1%		50,000		1%		50,000		1%
	Junior subordinated notes issued
		to capital trusts		158,677		2%		158,712		1%		158,748		2%		158,784		2%		158,824		2%
Total wholesale funding				1,208,557		13%		1,396,566		11%		1,480,927		20%		1,706,915		22%		1,933,846		25%
		Total funding		$ 9,497,220		100%		$ 12,367,100		100%		$ 7,244,231		100%		$ 7,892,235		100%		$ 7,614,479		100%

The decrease in deposit balances from September 30, 2009 to December 31, 2009 was primarily a result of the redemption of Corus out-of-market deposits. The following table presents by deposit category, the amounts of deposits assumed in the Corus transaction as of the dates indicated (dollar amounts in thousands):

		September 11,		September 30,		December 31,
		2009		2009		2009
Non-interest bearing deposits		$ 367,414		$ 1,699,913		$ 146,491
NOW and money market accounts		1,536,315		1,407,440		949,726
Savings deposits		132,407		96,813		95,730
Certificates of deposit		4,440,320		1,641,898		947,672
Contractual balance of deposits acquired		$ 6,476,456		$ 4,846,064		$ 2,139,619

Shortly after the transaction closing on September 11, 2009, we issued checks to almost all out-of-market Corus certificate of deposit holders of approximately $2.4 billion for the redemption of these deposits and substantially reduced the interest rate paid on out-of-market money market accounts.. There were approximately $1.4 billion of outstanding redemption checks at September 30, 2009. The outstanding redemption checks were reflected as non-interest bearing deposits. Additionally, approximately $500 million of out-of-market money market accounts were outstanding as of September 30, 2009, which ran-off during the fourth quarter of 2009.

FORWARD-LOOKING STATEMENTS

When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in press releases or other public stockholder 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, synergies and other benefits from our merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the possibility that the expected benefits of the Heritage Community Bank, InBank, Corus, and Benchmark transactions will not be realized; (3) the possibility that the amounts of the gains, if any, we ultimately realize on the Benchmark and InBank transactions will differ materially from the gain amounts currently estimated; (4) 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, which could necessitate additional provisions for loan losses, resulting both from loans we originate and loans we acquire from other financial institutions; (5) results of examinations by the Office of Comptroller of Currency and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan losses or write-down assets; (6) competitive pressures among depository institutions; (7) interest rate movements and their impact on customer behavior and net interest margin; (8) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (9) fluctuations in real estate values; (10) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (11) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (12) our ability to access cost-effective funding; (13) changes in financial markets; (14) changes in economic conditions in general and in the Chicago metropolitan area in particular; (15) the costs, effects and outcomes of litigation; (16) new legislation or regulatory changes, including but not limited to changes in federal and/or state tax laws or interpretations thereof by taxing authorities, changes in laws, rules or regulations applicable to companies that have participated in the TARP Capital Purchase Program of the U.S. Department of the Treasury and other governmental initiatives affecting the financial services industry ; (17) changes in accounting principles, policies or guidelines; (18) our future acquisitions of other depository institutions or lines of business; and (19) future goodwill impairment due to changes in our business, changes in market conditions, or other factors.

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

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
As of the dates indicated
(Amounts in thousands, except per share data)
			December 31,		September 30,		June 30,		March 31,		December 31,
			2009		2009		2009		2009		2008
ASSETS
Cash and due from banks			$ 136,763		$ 125,010		$ 103,276		$ 108,416		$ 79,824
Interest earning deposits with banks			265,257		2,549,562		13,440		416,404		261,834
		Total cash and cash equivalents	402,020		2,674,572		116,716		524,820		341,658
Investment securities:
	Securities available for sale, at fair value		2,843,233		3,994,980		884,720		1,118,975		1,336,130
	Non-marketable securities - FHLB and FRB Stock		70,361		70,031		66,994		65,752		64,246
		Total investment securities	2,913,594		4,065,011		951,714		1,184,727		1,400,376
Loans held for sale			-		6,250		4,008		18,406		-
Loans:
	Total loans excluding covered loans		6,350,951		6,401,265		6,341,560		6,316,136		6,228,563
	Covered loans(1)		156,870		91,230		96,629		91,586		-
	Total loans		6,507,821		6,492,495		6,438,189		6,407,722		6,228,563
	Less allowance for loan loss		177,072		189,232		181,356		179,273		144,001
		Net loans	6,330,749		6,303,263		6,256,833		6,228,449		6,084,562
Lease investments, net			144,966		135,201		114,570		117,648		125,034
Premises and equipment, net			179,641		178,586		184,129		185,941		186,474
Cash surrender value of life insurance			121,946		121,278		120,614		119,943		119,526
Goodwill, net			387,069		387,069		387,069		387,069		387,069
Other intangibles, net			37,708		39,357		25,996		26,993		25,776
Other real estate owned			36,711		22,612		17,111		2,500		4,366
Other real estate owned related to FDIC transactions			18,759		7,695		1,891		1,197		-
FDIC indemnification asset(1)			58,939		31,353		43,162		65,565		-
Other assets			221,973		162,965		178,252		161,874		144,922
		Total assets	$ 10,854,075		$ 14,135,212		$ 8,402,065		$ 9,025,132		$ 8,819,763
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
	Noninterest bearing		$ 1,552,185		$ 2,925,714		$ 1,152,274		$ 1,018,849		$ 960,117
	Interest bearing		7,131,091		8,504,353		5,081,251		5,877,859		5,535,454
		Total deposits	8,683,276		11,430,067		6,233,525		6,896,708		6,495,571
Short-term borrowings			323,917		437,004		500,267		474,498		488,619
Long-term borrowings			331,349		341,315		351,691		362,246		471,466
Junior subordinated notes issued to capital trusts			158,677		158,712		158,748		158,784		158,824
Investment securities purchased but not yet settled			-		348,632		-		2,031		27,218
Accrued expenses and other liabilities			105,676		147,605		108,451		96,283		109,241
		Total liabilities	9,602,895		12,863,335		7,352,682		7,990,550		7,750,939
Stockholders' Equity
Preferred stock			193,522		193,381		193,242		193,105		193,025
Common stock			511		507		375		375		375
Additional paid-in capital			656,595		648,230		447,770		446,909		445,692
Retained earnings			395,170		408,048		419,373		450,983		495,505
Accumulated other comprehensive income			5,546		21,723		8,824		11,456		16,910
Treasury stock			(2,715)		(2,603)		(22,795)		(70,831)		(85,312)
		Controlling interest stockholders' equity	1,248,629		1,269,286		1,046,789		1,031,997		1,066,195
Noncontrolling interest			2,551		2,591		2,594		2,585		2,629
		Total stockholders' equity	1,251,180		1,271,877		1,049,383		1,034,582		1,068,824
Total liabilities and stockholders' equity			$ 10,854,075		$ 14,135,212		$ 8,402,065		$ 9,025,132		$ 8,819,763

(1) "Covered loans” and "FDIC indemnification asset” refer to assets MB Financial Bank acquired during 2009 in loss-share transactions facilitated by the Federal Deposit Insurance Corporation. The "FDIC indemnification asset” represents amounts the Company expects MB Financial Bank to collect from the FDIC under the loss-share agreements.

MB FINANCIAL, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Interest income:
	Loans		$ 84,015		$ 82,820		$ 82,941		$ 81,494		$ 87,474		$ 331,270		$ 357,075
	Investment securities available for sale:
		Taxable	22,039		6,444		6,978		10,316		9,927		45,777		40,468
		Nontaxable	3,498		3,585		3,796		3,875		3,944		14,754		15,502
	Federal funds sold		-		-		-		-		2		-		276
	Other interest bearing accounts		698		760		149		130		188		1,737		467
		Total interest income	110,250		93,609		93,864		95,815		101,535		393,538		413,788
Interest expense:
	Deposits		31,396		27,662		28,977		33,579		38,996		121,614		151,370
	Short-term borrowings		1,142		1,222		1,256		1,546		1,406		5,166		17,590
	Long-term borrowings & junior subordinated notes		3,511		3,791		4,242		4,662		6,387		16,206		23,940
		Total interest expense	36,049		32,675		34,475		39,787		46,789		142,986		192,900
Net interest income			74,201		60,934		59,389		56,028		54,746		250,552		220,888
Provision for loan losses			70,000		45,000		27,100		89,700		72,581		231,800		125,721
Net interest income (loss) after provision for loan losses			4,201		15,934		32,289		(33,672)		(17,835)		18,752		95,167
Other income:
	Loan service fees		1,723		1,565		1,782		1,843		1,850		6,913		9,180
	Deposit service fees		9,311		7,912		6,978		6,399		7,478		30,600		28,225
	Lease financing, net		5,799		3,937		4,473		4,319		4,604		18,528		16,973
	Brokerage fees		1,272		1,004		1,252		1,078		968		4,606		4,317
	Trust & asset management fees		3,347		3,169		3,262		2,815		2,784		12,593		11,869
	Net gain on sale of investment securities		239		3		4,093		9,694		24		14,029		1,130
	Increase in cash surrender value of life insurance		669		664		670		456		570		2,459		5,299
	Net gain (loss) on sale of other assets		12		12		(38)		1		(874)		(13)		(1,104)
	Acquisition related gains		18,325		10,222		-		-		-		28,547		-
	Other operating income		2,230		2,412		2,453		1,797		199		8,892		4,503
	Total other income		42,927		30,900		24,925		28,402		17,603		127,154		80,392
Other expense:
	Salaries & employee benefits		33,391		31,196		29,188		26,879		24,057		120,654		108,835
	Occupancy & equipment expense		8,885		7,803		7,151		7,682		7,298		31,521		28,872
	Computer services expense		2,882		2,829		2,013		2,287		1,973		10,011		7,392
	Advertising & marketing expense		683		1,296		892		1,314		903		4,185		5,089
	Professional & legal expense		1,465		1,126		1,120		969		1,117		4,680		3,110
	Brokerage fee expense		553		478		575		393		476		1,999		1,929
	Telecommunication expense		1,127		812		744		750		664		3,433		2,818
	Other intangible amortization expense		1,650		966		997		878		913		4,491		3,554
	FDIC insurance premiums		4,099		3,206		6,789		2,668		1,188		16,762		1,877
	Impairment charges		-		4,000		-		-		-		4,000		-
	Other operating expenses		6,337		5,446		5,039		5,192		5,422		22,014		19,914
	Total other expense		61,072		59,158		54,508		49,012		44,011		223,750		183,390
Income (loss) before income taxes			(13,944)		(12,324)		2,706		(54,282)		(44,243)		(77,844)		(7,831)
Income tax benefit			(4,164)		(15,183)		(1,480)		(26,025)		(19,374)		(46,852)		(23,555)
Income (loss) from continuing operations			(9,780)		2,859		4,186		(28,257)		(24,869)		(30,992)		15,724
Income from discontinued operations, net of tax			-		4,585		129		152		48		4,866		440
Net income (loss)			(9,780)		7,444		4,315		(28,105)		(24,821)		(26,126)		16,164
Preferred stock dividends and discount accretion			2,591		2,589		2,587		2,531		789		10,298		789
		Net income (loss) available to common shareholders	$ (12,371)		$ 4,855		$ 1,728		$ (30,636)		$ (25,610)		$ (36,424)		$ 15,375

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Common share data:
Basic earnings (loss) per common share from continuing operations			$ (0.19)		$ 0.07		$ 0.12		$ (0.81)		$ (0.72)		$ (0.77)		$ 0.45
Basic earnings (loss) per common share from discontinued operations			$ -		$ 0.12		-		-		-		$ 0.12		$ 0.01
Impact of preferred stock dividends on basic earnings (loss) per common share			$ (0.05)		$ (0.07)		$ (0.07)		$ (0.07)		$ (0.02)		$ (0.26)		$ (0.02)
Basis earnings (loss) per common share			$ (0.25)		$ 0.12		$ 0.05		$ (0.88)		$ (0.74)		$ (0.91)		$ 0.44
Diluted earnings (loss) per common share from continuing operations			$ (0.19)		$ 0.07		$ 0.12		$ (0.81)		$ (0.72)		$ (0.77)		$ 0.45
Diluted earnings (loss) per common share from discontinued operations			$ -		$ 0.12		$ 0.00		$ 0.00		$ 0.00		$ 0.12		$ 0.01
Impact of preferred stock dividends on diluted earnings (loss) per common share			$ (0.05)		$ (0.07)		$ (0.07)		$ (0.07)		$ (0.02)		$ (0.26)		$ (0.02)
Diluted earnings (loss) per common share			$ (0.25)		$ 0.12		$ 0.05		$ (0.88)		$ (0.74)		$ (0.91)		$ 0.44
Weighted average common shares outstanding			50,279,008		39,104,894		35,726,879		34,914,012		34,777,651		40,042,650		34,706,092
Diluted weighted average common shares outstanding			50,537,002		39,299,168		35,876,483		35,053,352		35,164,585		40,226,847		35,061,712

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Performance Ratios:
	Annualized return on average assets		(0.33%)		0.30%		0.20%		(1.30%)		(1.15%)		(0.27%)		0.20%
	Annualized return on average common equity		(4.54)		2.13		0.81		(14.01)		(11.38)		(3.91)		1.74
	Annualized cash return on average tangible common equity(1)		(6.69)		4.33		2.12		(25.25)		(20.14)		(6.36)		3.65
	Net interest rate spread		2.54		2.51		2.82		2.64		2.63		2.62		2.77
	Cost of funds(2)		1.38		1.50		1.83		2.12		2.47		1.67		2.72
	Efficiency ratio(3)		60.02		65.68		61.21		63.42		58.06		62.44		59.44
	Annualized net non-interest expense to average assets(4)		1.24		1.40		1.37		1.40		1.23		1.34		1.25
	Core pre-tax pre-provision earnings to risk-weighted assets(5)		1.96		1.46		1.78		1.55		1.74		1.58		1.77
	Net interest margin		2.74		2.74		3.05		2.88		2.86		2.85		3.03
	Tax equivalent effect		0.12		0.11		0.13		0.13		0.14		0.12		0.13
	Net interest margin - fully tax equivalent basis(6)		2.86		2.85		3.18		3.01		3.00		2.97		3.16
Asset Quality Ratios:
	Non-performing loans(7) to total loans		4.17%		4.41%		3.54%		3.58%		2.34%		4.17%		2.34%
	Non-performing assets(7) to total assets		2.84		2.19		2.92		2.57		1.71		2.84		1.71
	Allowance for loan losses to non-performing loans(7)		65.26		66.02		79.65		78.10		98.67		65.26		98.67
	Allowance for loan losses to non-performing loans,(7)
		including partial charge-offs taken	72.34		70.74		82.09		80.15		98.82		72.34		98.82
	Allowance for loan losses to total loans		2.72		2.91		2.82		2.80		2.31		2.72		2.31
	Net loan charge-offs to average loans (annualized)		5.05		2.28		1.54		3.42		1.13		3.09		0.79
Capital Ratios:
	Tangible equity to assets(8)		8.04%		6.26%		8.07%		7.31%		7.90%		8.04%		7.90%
	Tangible common equity to risk weighted assets(9)		8.54		9.27		6.79		6.49		7.10		8.54		7.10
	Tangible common equity to assets(10)		6.19		4.85		5.65		5.07		5.61		6.19		5.61
	Book value per common share(11)		$20.91		$21.48		$23.30		$23.82		$25.17		$20.91		$25.17
	Less: goodwill and other intangible assets, net of tax
		benefit, per common share	8.14		8.22		10.99		11.45		11.56		8.14		11.56
	Tangible book value per share(12)		12.77		13.26		12.30		12.37		13.61		12.77		13.61
	Total capital (to risk-weighted assets)		14.98%		15.76%		13.89%		13.48%		14.08%		14.98%		14.08%
	Tier 1 capital (to risk-weighted assets)		13.06		13.80		11.88		11.48		12.07		13.06		12.07
	Tier 1 capital (to average assets)		8.71		10.60		9.55		9.25		9.85		8.71		9.85
	Tier 1 common capital (to risk-weighted assets)		8.47		8.72		6.66		6.32		6.85		8.47		6.85

(1)		Net cash flow available to common stockholders (net income available to common stockholders or net income, as appropriate, plus other intangibles amortization expense, net of tax benefit) / Average tangible common equity (average common equity less average goodwill and average other intangibles, net of tax benefit).
(2)		Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits.
(3)		Equals total other expense excluding FDIC special assessment and impairment charges 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, net gains (losses) on sale of other assets, and acquisition related gains.
(4)		Equals total other expense excluding FDIC special assessment and impairment charges less total other income excluding net gains (losses) on securities available for sale, net gain (losses) on sale of other assets, and acquisition related gains divided by average assets.
(5)		Equal net income before taxes excluding loan loss provision expense, FDIC special assessment, impairment charges, net gains (losses) on securities available for sale, net gain (losses) on sale of other assets, and acquisition related gains divided by risk-weighted assets.
(6)		Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets.
(7)		Excludes purchased credit-impaired loans and loans held for sale. Non-performing assets excludes other real estate owned related to FDIC transactions.
(8)		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.
(9)		Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total risk weighted assets.
(10)		Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit.
(11)		Equals total ending common stockholders’ equity divided by common shares outstanding.
(12)		Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding.

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 pre-tax, pre-provision earnings; core pre-tax, pre-provision earnings; net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis; efficiency ratio, ratio of annualized net non-interest expense to average assets, and ratio of core pre-tax, pre-provision earnings, with net gains and losses on securities available for sale, net gains and losses on sale of assets, and acquisitions related gains excluded from the non-interest income components and the FDIC special assessment expense and impairment charges excluded from the non-interest expense components of these ratios; ratios of tangible equity to assets, tangible common equity to risk weighted assets and tangible common equity to assets ratio; tangible book value per common share; and annualized cash return on average tangible common equity. Our management uses these non-GAAP measures in its analysis of our performance. Management believes that pre-tax, pre-provision earnings are a useful measure in assessing our core operating performance, particularly during times of economic stress. 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. Management also believes that by excluding net gains and losses on securities available for sale from the non-interest income component and excluding the FDIC special assessment expense from other non-interest expense of the efficiency ratio and the ratio of annualized net non-interest expense to average assets, these ratios better reflect our core operating performance. 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 equity (in thousands):

			December 31,		September 30,		June 30,		March 31,		December 31,
			2009		2009		2009		2009		2008
Stockholders' equity - as reported			$ 1,251,180		$ 1,271,877		$ 1,049,383		$ 1,034,582		$ 1,068,824
	Less: goodwill		387,069		387,069		387,069		387,069		387,069
	Less: other intangible, net of tax benefit		24,510		25,582		16,897		17,545		16,754
Tangible equity			$ 839,601		$ 859,226		$ 645,417		$ 629,968		$ 665,001

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

			December 31,		September 30,		June 30,		March 31,		December 31,
			2009		2009		2009		2009		2008
Common stockholders' equity - as reported			$ 1,057,658		$ 1,078,496		$ 856,141		$ 841,477		$ 875,799
	Less: goodwill		387,069		387,069		387,069		387,069		387,069
	Less: other intangible, net of tax benefit		24,510		25,582		16,897		17,545		16,754
Tangible common equity			$ 646,079		$ 665,845		$ 452,175		$ 436,863		$ 471,976

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

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Average common stockholders' equity - as reported			$ 1,081,794		$ 905,897		$ 853,782		$ 886,740		$ 898,246		$ 932,509		$ 885,548
	Less: average goodwill		387,069		387,069		387,069		387,069		387,069		387,069		383,737
	Less: average other intangible assets,
	net of tax benefit		25,128		16,630		17,186		16,872		16,999		18,971		16,788
Average tangible common equity			$ 669,597		$ 502,198		$ 449,527		$ 482,799		$ 494,178		$ 526,469		$ 485,023

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

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Net (loss) income available to common
		shareholders - as reported	$ (12,370)		$ 4,855		$ 1,728		$ (30,636)		$ (25,610)		$ (36,424)		$ 15,375
	Add: other intangible amortization
		expense, net of tax benefit	1,073		628		648		571		593		2,919		2,310
Net cash flow available to common shareholders			$ (11,298)		$ 5,483		$ 2,376		$ (30,065)		$ (25,017)		$ (33,505)		$ 17,685

Efficiency Ratio Calculation (Dollars in Thousands)

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Non-interest expense			$ 61,072		$ 59,158		$ 54,508		$ 49,012		$ 44,011		$ 223,750		$ 183,390
Adjustment for FDIC special assessment			-		-		3,850		-		-		3,850		-
Adjustment for impairment charges			-		4,000		-		-		-		4,000		-
	Non-interest expense - as adjusted		$ 61,072		$ 55,158		$ 50,658		$ 49,012		$ 44,011		$ 215,900		$ 183,390
Net interest income			$ 74,201		$ 60,934		$ 59,389		$ 56,028		$ 54,746		$ 250,552		$ 220,888
Tax equivalent adjustment			3,195		2,383		2,496		2,551		2,606		10,625		7,284
Net interest income on a fully tax equivalent basis			77,396		63,317		61,885		58,579		57,352		261,177		228,172
Plus other income			42,927		30,900		24,925		28,402		17,603		127,154		80,392
Less net gains on securities available for sale			239		3		4,093		9,694		24		14,029		1,130
Less net gains (losses) on sale of other assets			12		12		(38)		1		(874)		(13)		(1,104)
Less acquisition related gains			18,325		10,222		-		-		-		28,547		-
Net interest income plus non-interest income -
	as adjusted		$ 101,747		$ 83,980		$ 82,755		$ 77,286		$ 75,805		$ 345,768		$ 308,538
Efficiency ratio			60.02%		65.68%		61.21%		63.42%		58.06%		62.44%		59.44%
Efficiency ratio (without adjustments)			52.14%		64.42%		64.65%		58.05%		60.83%		59.24%		60.87%

Annualized Net Non-interest Expense to Average Assets Calculation (Dollars in Thousands)

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Non-interest expense			$ 61,072		$ 59,158		$ 54,508		$ 49,012		$ 44,011		$ 223,750		$ 183,390
Adjustment for FDIC special assessment			-		-		3,850		-		-		3,850		-
Adjustment for impairment charges			-		4,000		-		-		-		4,000		-
	Non-interest expense - as adjusted		61,072		55,158		50,658		49,012		44,011		215,900		183,390
Other income			42,927		30,900		24,925		28,402		17,603		127,154		80,392
Less net gains on securities available for sale			239		3		4,093		9,694		24		14,029		1,130
Less net gains (loss) on sale of other assets			12		12		(38)		1		(874)		(13)		(1,104)
Less acquisition related gains			18,325		10,222		-		-		-		28,547		-
Other income - as adjusted			24,351		20,663		20,870		18,707		18,453		84,591		80,366
Net non-interest expense			$ 36,721		$ 34,495		$ 29,788		$ 30,305		$ 25,558		$ 131,309		$ 103,024
Average assets			11,786,792		9,795,125		8,701,857		8,792,275		8,240,344		9,777,287		8,240,344
Annualized net non-interest expense to average assets			1.24%		1.40%		1.37%		1.40%		1.23%		1.34%		1.25%
Annualized net non-interest expense to average assets
	(without adjustments)		0.61%		1.14%		1.36%		0.95%		1.27%		0.99%		1.25%

Core Pre-Tax, Pre-Provision Earnings

			Three months ended										Year ended
			December 31,		September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2009		2009		2009		2009		2008		2009		2008
Income (loss) before income taxes			$ (13,944)		$ (12,324)		$ 2,706		$ (54,282)		$ (44,243)		$ (77,844)		$ (7,831)
Provision for loan losses			70,000		45,000		27,100		89,700		72,581		231,800		125,721
	Pre-tax, pre-provision earnings		56,056		32,676		29,806		35,418		28,338		153,956		117,890
Non-core other income
	Net gains on sale of investment securities		239		3		4,093		9,694		24		14,029		1,130
	Net gain (loss) on sale of other assets		12		12		(38)		1		(874)		(13)		(1,104)
	Acquisition related gains		18,325		10,222		-		-		-		28,547		-
Total non-core other income			18,576		10,237		4,055		9,695		(850)		42,563		26
Non-core other expense
	FDIC special assessment		-		-		3,850		-		-		3,850		-
	Impairment charges		-		4,000		-		-		-		4,000		-
Total non-core other expense			-		4,000		3,850		-		-		7,850		-
Core pre-tax, pre-provision earnings			$ 37,480		$ 26,439		$ 29,601		$ 25,723		$ 29,188		$ 119,243		$ 117,864
Risk-weighted assets			7,568,022		7,186,343		6,657,692		6,733,859		6,649,603		7,568,022		6,649,603
Annualized pre-tax, pre-provision earnings to risk-
	weighted assets		1.96%		1.46%		1.78%		1.55%		1.75%		1.58%		1.77%
Annualized pre-tax, pre-provision earnings to risk-
	weighted assets (without adjustments)		2.94%		1.80%		1.80%		2.13%		1.69%		2.03%		1.77%

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

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 December 31,												Month Ended December 31,
			2009						2008						2009
			Average				Yield/		Average				Yield/		Average				Yield/
			Balance		Interest		Rate		Balance		Interest		Rate		Balance		Interest		Rate
Interest Earning Assets:
Loans (1) (2) (3):
Commercial related credits
	Commercial		$ 1,385,281		$ 18,118		5.19%		$ 1,538,266		$ 21,303		5.49%		$ 1,373,897		$ 5,783		4.96%
	Commercial loans collateralized by assignment
		of lease payments	892,789		13,849		6.20		611,390		10,065		6.58		914,498		4,744		6.23
	Real estate commercial		2,456,381		33,513		5.34		2,339,641		34,981		5.85		2,474,471		11,274		5.29
	Real estate construction		681,868		5,455		3.13		730,342		8,816		4.72		662,102		1,831		3.21
Total commercial related credits			5,416,319		70,935		5.12		5,219,639		75,165		5.63		5,424,968		23,632		5.06
Other loans
	Real estate residential		287,296		4,036		5.62		297,204		3,374		4.54		289,828		1,296		5.37
	Home equity		407,044		4,496		4.38		394,865		5,552		5.59		406,050		1,511		4.38
	Indirect		182,601		3,175		6.90		192,016		3,116		6.46		181,298		1,056		6.86
	Consumer loans		58,768		582		3.93		62,428		748		4.77		60,892		195		3.77
Total other loans			935,709		12,289		5.21		946,513		12,790		5.38		938,068		4,058		5.09
	Total loans, excluding covered loans		6,352,028		83,224		5.20		6,166,152		87,955		5.67		6,363,036		27,690		5.12
	Covered loans		108,167		2,103		7.71		-		-		-		143,647		986		8.08
	Total loans		6,460,195		85,327		5.22		6,166,152		87,955		5.67		6,506,683		28,676		5.19
Taxable investment securities			3,086,737		22,039		2.86		856,852		9,927		4.63		2,491,924		7,704		3.71
Investment securities exempt from federal income taxes (3)			367,848		5,381		5.72		421,025		6,069		5.64		365,329		1,771		5.63
Federal funds sold			-		-		0.00		761		2		1.03		-		-		0.00
Other interest bearing deposits			812,261		698		0.34		159,414		188		0.47		766,532		175		0.27
	Total interest earning assets		$ 10,727,041		$ 113,445		4.20		$ 7,604,204		$ 104,141		5.45		$ 10,130,468		$ 38,326		4.45
Non-interest earning assets			1,059,751						951,683						1,110,159
	Total assets		$ 11,786,792						$ 8,555,887						$ 11,240,627
Interest Bearing Liabilities:
Core funding:
	Money market and NOW accounts		$ 3,047,721		$ 5,523		0.72%		$ 1,421,131		$ 6,319		1.77%		$ 2,907,539		$ 1,380		0.56%
	Savings accounts		573,784		495		0.34		369,587		257		0.28		577,960		156		0.32
	Certificate of deposit		3,529,995		20,225		2.27		2,590,821		21,460		3.30		3,319,041		5,822		2.07
	Customer repurchase agreements		220,432		259		0.47		266,354		486		0.73		226,645		99		0.51
Total core funding			7,371,932		26,502		1.43		4,647,893		28,522		2.44		7,031,185		7,457		1.25
Whole sale funding:
	Public funds		100,246		257		1.02		218,821		1,474		2.68		89,092		72		0.95
	Brokered accounts (includes fee expense)		546,457		4,896		3.55		950,163		9,486		3.97		528,004		1,609		3.59
	Other short-term borrowings		138,434		883		2.53		156,384		920		2.34		100,103		288		3.39
	Long-term borrowings		494,398		3,511		2.78		633,787		6,387		3.94		492,064		1,163		2.74
Total wholesale funding			1,279,535		9,547		2.96		1,959,155		18,267		3.71		1,209,263		3,132		3.05
Total interest bearing liabilities			$ 8,651,467		$ 36,049		1.65		$ 6,607,048		$ 46,789		2.82		$ 8,240,448		$ 10,589		1.51
Non-interest bearing deposits			1,737,347						914,720						1,603,512
Other non-interest bearing liabilities			122,731						82,840						105,638
Stockholders' equity			1,275,247						951,279						1,291,029
		Total liabilities and stockholders' equity	$ 11,786,792						$ 8,555,887						$ 11,240,627
		Net interest income/interest rate spread (4)			$ 77,396		2.54%				$ 57,352		2.63%				$ 27,737		2.94%
		Taxable equivalent adjustment			3,195						2,606						746
		Net interest income, as reported			$ 74,201						$ 54,746						$ 26,991
		Net interest margin (5)					2.74%						2.86%						3.14%
		Tax equivalent effect					0.12%						0.14%						0.08%
		Net interest margin on a fully equivalent basis (5)					2.86%						3.00%						3.22%

(1)		Non-accrual loans are included in average loans.
(2)		Interest income includes amortization of deferred loan origination fees of $1.2 million, $1.7 million and $1.2 million for the three months ended December 31, 2009, December 31, 2008, and September 30, 2009, 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.

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):

			Year Ended December 31,
			2009						2008
			Average				Yield/		Average				Yield/
			Balance		Interest		Rate		Balance		Interest		Rate
Interest Earning Assets:
Loans (1) (2) (3):
Commercial related credits
	Commercial		$ 1,445,313		$ 70,850		4.90%		$ 1,458,714		$ 86,837		5.95%
	Commercial loans collateralized by assignment
		of lease payments	808,759		50,155		6.20		586,074		38,971		6.65
	Real estate commercial		2,407,377		130,426		5.34		2,184,554		134,565		6.06
	Real estate construction		733,718		26,742		3.59		782,562		43,994		5.53
Total commercial related credits			5,395,167		278,173		5.09		5,011,904		304,367		5.97
Other loans
	Real estate residential		285,550		15,998		5.60		329,637		19,274		5.85
	Home equity		407,793		17,947		4.40		377,320		19,212		5.09
	Indirect		187,455		12,737		6.79		177,828		12,952		7.28
	Consumer loans		57,985		2,337		4.03		55,902		2,812		5.03
Total other loans			938,783		49,019		5.22		940,687		54,250		5.77
	Total loans, excluding covered assets		6,333,950		327,192		5.17		5,952,591		358,617		6.02
	Covered assets		87,299		6,759		7.74		-		-		-
	Total loans		6,421,249		333,951		5.20		5,952,591		358,617		6.02
Taxable investment securities			1,444,552		45,777		3.17		868,700		40,468		4.66
Investment securities exempt from federal income taxes (3)			391,071		22,698		5.72		414,234		23,850		5.66
Federal funds sold			-		-		-		12,849		276		2.11
Other interest bearing deposits			545,314		1,737		0.32		52,497		467		0.89
	Total interest earning assets		$ 8,802,186		$ 404,163		4.59		$ 7,300,871		$ 423,678		5.80
Non-interest earning assets			975,101						939,473
	Total assets		$ 9,777,287						$ 8,240,344
Interest Bearing Liabilities:
Core funding:
	Money market and NOW accounts		$ 2,098,530		$ 17,773		0.85%		$ 1,292,407		$ 23,176		1.79%
	Savings accounts		473,477		1,717		0.36		383,534		1,239		0.32
	Certificate of deposit		2,924,218		75,416		2.58		2,399,403		87,794		3.66
	Customer repurchase agreements		247,998		1,138		0.46		290,817		4,326		1.49
Total core funding			5,744,223		96,044		1.67		4,366,161		116,535		2.67
Whole sale funding:
	Public funds		133,547		2,026		1.52		238,599		7,957		3.33
	Brokered accounts (includes fee expense)		667,560		24,682		3.70		788,329		31,204		3.96
	Other short-term borrowings		201,550		4,028		2.00		390,257		13,264		3.40
	Long-term borrowings		512,267		16,206		3.12		581,027		23,940		4.05
Total wholesale funding			1,514,924		46,942		3.10		1,998,212		76,365		3.82
Total interest bearing liabilities			$ 7,259,147		$ 142,986		1.97		$ 6,364,373		$ 192,900		3.03
Non-interest bearing deposits			1,307,021						891,072
Other non-interest bearing liabilities			85,890						86,884
Stockholders' equity			1,125,229						898,015
		Total liabilities and stockholders' equity	$ 9,777,287						$ 8,240,344
		Net interest income/interest rate spread (4)			$ 261,177		2.62%				$ 230,778		2.77%
		Taxable equivalent adjustment			10,625						7,284
		Net interest income, as reported			$ 250,552						$ 223,494
		Net interest margin (5)					2.85%						3.03%
		Tax equivalent effect					0.12%						0.13%
		Net interest margin on a fully equivalent basis (5)					2.97%						3.16%

(1)		Non-accrual loans are included in average loans.
(2)		Interest income includes amortization of deferred loan origination fees of $5.1 million and $7.0 million for the year ended December 31, 2009, and December 31, 2008, 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.