10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to

Commission file number 0-24566-01

MB FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland	36-4460265
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
800 West Madison Street, Chicago, Illinois	60607
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (888) 422-6562

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes xNoo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YesxNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filerx	Accelerated filero
Non-accelerated filero (Do not check if a smaller reporting company)	Smaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  YesoNox

There were issued and outstanding 54,798,535 shares of the Registrant’s common stock as of April 29, 2013.

1

MB FINANCIAL, INC. AND SUBSIDIARIES

FORM 10-Q

March 31, 2013

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets at March 31, 2013 (Unaudited) and December 31, 2012	3
	Consolidated Statements of Operations for the Three Months Ended March 31, 2013 and 2012 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2013 and 2012 (Unaudited)	6
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2013 and 2012 (Unaudited)	7
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59
Item 4.	Controls and Procedures	63
PART II.	OTHER INFORMATION
Item 1A.	Risk Factors	63
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 6.	Exhibits	65
	Signatures	65

2

PART 1.        FINANCIAL INFORMATION

Item 1.   Financial Statements

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except common share data)

	(Unaudited)
	March 31, 2013			December 31, 2012
ASSETS
Cash and due from banks	$	131,146		$	176,010
Interest earning deposits with banks	108,885			111,533
Total cash and cash equivalents	240,031			287,543
Investment securities:
Securities available for sale, at fair value	1,812,169			1,868,171
Securities held to maturity, at amortized cost ($554,601 and $535,681 fair value at March 31, 2013 and December 31, 2012, respectively)	517,785			493,421
Non-marketable securities - FHLB and FRB stock	52,434			55,385
Total investment securities	2,382,388			2,416,977
Loans held for sale	3,030			7,492
Loans:
Total loans, excluding covered loans	5,306,879			5,317,080
Covered loans	400,789			449,850
Total loans	5,707,668			5,766,930
Less: Allowance for loan loss	121,802			124,204
Net loans	5,585,866			5,642,726
Lease investment, net	117,744			129,823
Premises and equipment, net	219,662			221,533
Cash surrender value of life insurance	129,723			128,879
Goodwill, net	423,369			423,369
Other intangibles, net	27,968			29,512
Other real estate owned, net	31,462			36,977
Other real estate owned related to FDIC-assisted transactions	20,011			22,478
FDIC indemnification asset	29,197			39,345
Other assets	175,379			185,151
Total assets	$	9,385,830		$	9,571,805
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Noninterest bearing	$	2,067,310		$	2,164,547
Interest bearing	5,384,596			5,378,150
Total deposits	7,451,906			7,542,697
Short-term borrowings	224,379			220,602
Long-term borrowings	64,019			116,050
Junior subordinated notes issued to capital trusts	152,065			152,065
Accrued expenses and other liabilities	198,658			264,621
Total liabilities	8,091,027			8,296,035
STOCKHOLDERS’ EQUITY
Common stock, ($0.01 par value; authorized 70,000,000 shares at March 31, 2013 and December 31, 2012; issued 54,984,191 shares at March 31, 2013 and 54,955,284 shares at December 31, 2012)	550			550
Additional paid-in capital	734,057			732,771
Retained earnings	527,332			507,933
Accumulated other comprehensive income	34,928			36,326
Less: 183,700 and 170,567 shares of treasury stock, at cost, at March 31, 2013 and December 31, 2012, respectively	(3,529		)	(3,293		)
Controlling interest stockholders’ equity	1,293,338			1,274,287
Noncontrolling interest	1,465			1,483
Total stockholders’ equity	1,294,803			1,275,770
Total liabilities and stockholders’ equity	$	9,385,830		$	9,571,805

     See Accompanying Notes to Consolidated Financial Statements.

3

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share data)(Unaudited)

	Three Months Ended
	March 31,
	2013			2012
Interest income:
Loans	$	60,793		$	71,648
Investment securities:
Taxable	6,140			10,884
Nontaxable	8,060			6,739
Other interest earning accounts	135			169
Total interest income	75,128			89,440
Interest expense:
Deposits	5,709			8,760
Short-term borrowings	167			206
Long-term borrowings and junior subordinated notes	1,567			3,381
Total interest expense	7,443			12,347
Net interest income	67,685			77,093
Provision for credit losses	—			3,100
Net interest income after provision for credit losses	67,685			73,993
Non-interest income:
Capital markets and international banking fees	808			512
Commercial deposit and treasury management fees	5,966			5,897
Lease financing, net	16,263			6,958
Trust and asset management fees	4,494			4,404
Card fees	2,695			2,046
Loan service fees	1,011			1,067
Consumer and other deposit service fees	3,246			3,453
Brokerage fees	1,157			1,255
Net loss on investment securities	(1		)	(3		)
Increase in cash surrender value of life insurance	844			917
Net loss on sale of assets	—			(17		)
Accretion of FDIC indemnification asset	143			475
Net loss recognized on other real estate owned	(330		)	(6,589		)
Net gain on sale of loans	639			374
Other operating income	1,438			2,105
Total non-interest income	38,373			22,854
Non-interest expenses:
Salaries and employee benefits	43,514			40,429
Occupancy and equipment expense	9,404			9,570
Computer services and telecommunication expense	3,887			3,653
Advertising and marketing expense	2,103			2,073
Professional and legal expense	1,295			1,413
Other intangibles amortization expense	1,544			1,257
Other real estate expense, net	139			1,243
Other operating expenses	9,213			7,693
Total non-interest expenses	71,099			67,331
Income before income taxes	34,959			29,516
Income tax expense	10,053			8,430
Net income	$	24,906		$	21,086
Dividends and discount accretion on preferred shares	—			3,269
Net income available to common stockholders	$	24,906		$	17,817

     See Accompanying Notes to Consolidated Financial Statements.

4

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS - (Continued)

(Amounts in thousands, except share and per share data)(Unaudited)

	Three Months Ended
	March 31,
	2013		2012
Common share data:
Basic earnings per common share	$	0.46	$	0.33
Diluted earnings per common share	0.46		0.33
Weighted average common shares outstanding for basic earnings per common share	54,411,806		54,155,856
Diluted weighted average common shares outstanding for diluted earnings per common share	54,736,644		54,411,916

See Accompanying Notes to Consolidated Financial Statements.

5

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands) (Unaudited)

	Three Months Ended
	March 31,
	2013			2012
Net income	$	24,906		$	21,086
Unrealized holding losses on investment securities, net of tax	(1,399		)	(1,217		)
Reclassification adjustments for losses included in net income, net of tax	1			2
Other comprehensive loss, net of tax	(1,398		)	(1,215		)
Comprehensive income	$	23,508		$	19,871

See Accompanying Notes to Consolidated Financial Statements.

6

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2013 and 2012

(Amounts in thousands, except share and per share data) (Unaudited)

	Preferred Stock			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Treasury Stock			Noncontrolling Interest			Total Stock- holders’ Equity
Balance at December 31, 2011	$	194,719		$	548	$	731,248		$	427,956		$	39,150		$	(3,044	)	$	2,450		$	1,393,027
Net income	—			—		—			21,086			—			—			66			21,152
Other comprehensive loss, net of tax	—			—		—			—			(1,215		)	—			—			(1,215		)
Cash dividends declared on common shares ($0.01 per share)	—			—		—			(548		)	—			—			—			(548		)
Dividends and discount accretion on preferred shares	1,281			—		—			(3,269		)	—			—			—			(1,988		)
Repurchase of preferred shares	(196,000		)	—		—			—			—			—			—			(196,000		)
Restricted common stock activity, net of tax	—			1		(169		)	8			—			172			—			12
Stock option activity, net of tax	—			—		103			—			—			—			—			103
Repurchase of common shares in connection with
employee benefit plans and held in trust for
deferred compensation plan	—			—		166			—			—			(454		)	—			(288		)
Stock-based compensation expense	—			—		1,265			—			—			—			—			1,265
Distributions to noncontrolling interest	—			—		—			—			—			—			(90		)	(90		)
Balance at March 31, 2012	$	—		$	549	$	732,613		$	445,233		$	37,935		$	(3,326	)	$	2,426		$	1,215,430
Balance at December 31, 2012	$	—		$	550	$	732,771		$	507,933		$	36,326		$	(3,293	)	$	1,483		$	1,275,770
Net income	—			—		—			24,906			—			—			38			24,944
Other comprehensive loss, net of tax	—			—		—			—			(1,398		)	—			—			(1,398		)
Cash dividends declared on common shares ($0.10 per share)	—			—		—			(5,507		)	—			—			—			(5,507		)
Restricted common stock activity, net of tax	—			—		14			—			—			—			—			14
Stock option activity, net of tax	—			—		(99		)	—			—			—			—			(99		)
Repurchase of common shares in connection with
employee benefit plans and held in trust for
deferred compensation plan	—			—		111			—			—			(236		)	—			(125		)
Stock-based compensation expense	—			—		1,260			—			—			—			—			1,260
Distributions to noncontrolling interest	—			—		—			—			—			—			(56		)	(56		)
Balance at March 31, 2013	$	—		$	550	$	734,057		$	527,332		$	34,928		$	(3,529	)	$	1,465		$	1,294,803

See Accompanying Notes to Consolidated Financial Statements.

7

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands) (Unaudited)

	Three Months Ended
	March 31,
	2013			2012
Cash Flows From Operating Activities
Net income	$	24,906		$	21,086
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation of premises and equipment	4,191			3,736
Depreciation of leased equipment	8,474			10,134
Compensation expense for restricted stock awards	994			882
Compensation expense for stock option grants	266			383
Gain on sales of premises and equipment and leased equipment	(412		)	(186		)
Amortization of other intangibles	1,544			1,257
Provision for credit losses	—			3,100
Deferred income tax (benefit) expense	(5,109		)	7,118
Amortization of premiums and discounts on investment securities, net	12,517			10,315
Accretion of premiums and discounts on loans, net	(1,507		)	(5,434		)
Accretion of FDIC indemnification asset	(143		)	(475		)
Net loss on sale of investment securities available for sale	1			3
Proceeds from sale of loans held for sale	31,097			19,076
Origination of loans held for sale	(25,972		)	(17,328		)
Net gain on sale of loans held for sale	(639		)	(374		)
Net gain on sales of other real estate owned	(30		)	(416		)
Fair value adjustments on other real estate owned	349			4,764
Net loss on sales of other real estate owned related to FDIC-assisted transactions	11			2,241
Increase in cash surrender value of life insurance	(844		)	(917		)
Decrease (increase) in other assets, net	12,720			(12,782		)
Decrease in other liabilities, net	(64,112		)	(23,551		)
Net cash (used in) provided by operating activities	(1,698		)	22,632
Cash Flows From Investing Activities
Proceeds from sales of investment securities available for sale	635			6
Proceeds from maturities and calls of investment securities available for sale	160,430			134,979
Purchase of investment securities available for sale	(118,412		)	(35,537		)
Proceeds from maturities and calls of investment securities held to maturity	363			—
Purchase of investment securities held to maturity	(21,340		)	(908		)
Redemption of non-marketable securities - FHLB and FRB stock	2,951			15,291
Net decrease in loans	62,955			159,641
Purchases of premises and equipment	(2,483		)	(5,637		)
Purchases of leased equipment	(3,628		)	(6,357		)
Proceeds from sales of leased equipment	1,803			630
Capital improvements on other real estate owned	—			(359		)
Proceeds from sale of other real estate owned	5,907			13,137
Proceeds from sale of other real estate owned related to FDIC-assisted transactions	2,613			5,249
Principal paid on lease investments	(497		)	(969		)
Net proceeds from FDIC related covered assets	7,487			27,528
Net cash provided by investing activities	98,784			306,694
Cash Flows From Financing Activities
Net decrease in deposits	(90,791		)	(12,905		)
Net increase in short-term borrowings	3,777			49,738
Proceeds from long-term borrowings	1,747			1,160
Principal paid on long-term borrowings	(53,778		)	(10,968		)
Repurchase of preferred stock	—			(196,000		)
Treasury stock transactions, net	(125		)	(274		)
Stock options exercised	30			103
Excess tax benefits from share-based payment arrangements	(12		)	—
Dividends paid on preferred stock	—			(3,239		)
Dividends paid on common stock	(5,446		)	(542		)
Net cash used in financing activities	(144,598		)	(172,927		)
Net (decrease) increase in cash and cash equivalents	$	(47,512	)	$	156,399
Cash and cash equivalents:
Beginning of year	287,543			244,565
End of year	$	240,031		$	400,964

8

MB FINANCIAL, INC. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)

(Amounts in Thousands) (Unaudited)

	Three Months Ended
	March 31,
	2013		2012
Supplemental Disclosures of Cash Flow Information:
Cash payments for:
Interest paid to depositors and other borrowed funds	$	7,673	$	12,701
Net income tax payments, net	17,620		70
Supplemental Schedule of Noncash Investing Activities:
Loans transferred to other real estate owned	$	711	$	2,110
Loans transferred to other real estate owned related to FDIC-assisted transactions	872		8,054
Loans transferred to repossessed vehicles	168		256
Operating leases rewritten as direct finance leases included as loans	6,339		7,506

See Accompanying Notes to Consolidated Financial Statements.

9

MB FINANCIAL, INC. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Basis of Presentation

 These unaudited consolidated financial statements include the accounts of MB Financial, Inc., a Maryland corporation (the “Company”), and its subsidiaries, including its wholly owned national bank subsidiary, MB Financial Bank, N.A. (“MB Financial Bank”), based in Chicago, Illinois. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been made. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and industry practice. Certain information in footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP and industry practice has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2012 audited financial statements filed on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ from those estimates.

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications did not result in any changes to previously reported net income or stockholders’ equity.

Note 2. New Authoritative Accounting Guidance

ASC Topic 805 “Business Combinations.” New authoritative accounting guidance under ASC Topic 805, “Business Combinations” amended prior guidance on the subsequent accounting for an indemnification asset recognized at the acquisition date as a result of a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement. The new authoritative guidance requires that at each subsequent reporting date, an acquirer measure an indemnification asset on the same basis as the indemnified liability or asset, subject to any contractual limitations on its amount, and, for an indemnification asset that is not subsequently measured at fair value, management's assessment of the collectability of the indemnification asset. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities.” New authoritative accounting guidance under ASC Topic 210, “Disclosures about Offsetting Assets and Liabilities” amended prior guidance to require an entity to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The instruments and transactions would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. This new authoritative guidance was further amended to clarify the scope of offsetting disclosures. The Company adopted the new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 220 “Comprehensive Income.” New authoritative accounting guidance under ASC Topic 220, “Comprehensive Income” amended prior guidance to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount reclassified is required under U.S. GAAP. The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

10

Note 3.   Earnings Per Common Share

Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards and restricted stock units, though no actual shares of common stock related to restricted stock units are issued until the settlement of such units, to the extent holders of these securities receive non-forfeitable dividends or dividend equivalents at the same rate as holders of the Company's common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share (amounts in thousands, except common share data).

	Three Months Ended March 31,
	2013		2012
Distributed earnings allocated to common stock	$	5,507	$	548
Undistributed earnings	19,399		20,538
Net income	24,906		21,086
Less: preferred stock dividends and discount accretion	—		3,269
Net income available to common stockholders	24,906		17,817
Less: earnings allocated to participating securities	1		1
Earnings allocated to common stockholders	$	24,905	$	17,816
Weighted average shares outstanding for basic earnings per common share	54,411,806		54,155,856
Dilutive effect of equity awards	324,838		256,060
Weighted average shares outstanding for diluted earnings per common share	54,736,644		54,411,916
Basic earnings per common share	$	0.46	$	0.33
Diluted earnings per common share	0.46		0.33

11

Note 4.    Business Combinations

The following business combination was accounted for under the purchase method of accounting.  Accordingly, the results of operations of the acquired company have been included in the Company’s results of operations since the date of acquisition.  Under this method of accounting, assets and liabilities acquired are recorded at their estimated fair values, net of applicable income tax effects.  The excess cost over fair value of net assets acquired is recorded as goodwill.  In the event that the fair value of net assets acquired exceeds the cost, the Company will record a gain on the acquisition.

On December 28, 2012, MB Financial Bank acquired a 100% equity interest in Celtic Leasing Corp. (“Celtic”), a privately held, mid-ticket equipment leasing company. Celtic specializes in solutions for the health care, legal, technology, and manufacturing industries. MB Financial Bank estimated contingent consideration related to the transaction which may be paid out at future dates. This consideration is based on the performance of lease residual values which will be determined in future years over an earn-out period. As the consideration paid for Celtic exceeded the net assets acquired, goodwill was recorded on the acquisition. Goodwill recorded in the transaction is not tax deductible. The purchase accounting entries are preliminary for lease loans, goodwill and other intangibles, as MB Financial Bank continues to analyze the portfolios and the underlying risks and collateral values of the assets. After the purchase accounting is finalized, the impact of any future changes to the amount of contingent consideration will be reflected in the statement of operations.

Estimated fair values of the assets acquired and liabilities assumed in the Celtic transaction, as of the closing date of the transaction were as follows (in thousands):

Assets Acquired and Liabilities Assumed

(Dollar Amounts in Thousands)

	Celtic
	December 28,
	2012
ASSETS
Cash and cash equivalents	$	31,647
Investment securities available for sale	635
Loans and leases	32,933
Premises and equipment	81
Goodwill	36,300
Other intangibles	5,028
Other assets	27,323
Total assets	$	133,947
LIABILITIES
Accrued expenses and other liabilities	$	75,290
Total liabilities	$	75,290
Cash paid on acquisition	$	58,657
Net gain recorded on acquisition	$	—

12

Note 5. Investment Securities

Carrying amounts and fair values of investment securities were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2013
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,478	$	2,471	$	—		$	40,949
States and political subdivisions	680,978		40,150		(1,367		)	719,761
Residential mortgage-backed securities	776,336		14,152		(1,720		)	788,768
Commercial mortgage-backed securities	51,048		2,789		—			53,837
Corporate bonds	197,162		1,197		(684		)	197,675
Equity securities	10,820		366		(7		)	11,179
	1,754,822		61,125		(3,778		)	1,812,169
Held to Maturity
States and political subdivisions	262,310		17,606		(59		)	279,857
Residential mortgage-backed securities	255,475		19,269		—			274,744
	517,785		36,875		(59		)	554,601
Total	$	2,272,607	$	98,000	$	(3,837	)	$	2,366,770
December 31, 2012
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,605	$	2,710	$	—		$	41,315
States and political subdivisions	679,991		45,571		(543		)	725,019
Residential mortgage-backed securities	930,413		14,038		(5,249		)	939,202
Commercial mortgage-backed securities	51,100		3,026		—			54,126
Corporate bonds	97,014		213		(553		)	96,674
Equity securities	11,398		447		(10		)	11,835
	$	1,808,521	$	66,005	$	(6,355	)	$	1,868,171
Held to Maturity
States and political subdivisions	237,563		21,039		—			258,602
Residential mortgage-backed securities	255,858		21,221		—			277,079
	493,421		42,260		—			535,681
Total	$	2,301,942	$	108,265	$	(6,355	)	$	2,403,852

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. 

The Company has no direct exposure to the State of Illinois, but approximately 25% of the state and political subdivisions portfolio consists of securities issued by municipalities located in Illinois as of March 31, 2013.

As of March 31, 2013, approximately 39% of state and political subdivisions securities were insured and approximately 89% of such securities were general obligation issues.

13

Unrealized losses on investment securities and the fair value of the related securities at March 31, 2013 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	98,367	$	(1,367	)	$	—	$	—		$	98,367	$	(1,367	)
Residential mortgage-backed securities	169,576		(1,601		)	12,599		(119		)	182,175		(1,720		)
Corporate bonds	45,158		(684		)	—		—			45,158		(684		)
Equity securities	33		(7		)	—		—			33		(7		)
	313,134		(3,659		)	12,599		(119		)	325,733		(3,778		)
Held to maturity
States and political subdivisions	15,476		(59		)	—		—			15,476		(59		)
	15,476		(59		)	—		—			15,476		(59		)
Totals	$	328,610	$	(3,718	)	$	12,599	$	(119	)	$	341,209	$	(3,837	)

Unrealized losses on investment securities and the fair value of the related securities at December 31, 2012 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	57,540	$	(543	)	$	—	$	—		$	57,540	$	(543	)
Residential mortgage-backed securities	270,539		(5,083		)	16,434		(166		)	286,973		(5,249		)
Corporate bonds	58,241		(553		)	—		—			58,241		(553		)
Equity securities	30		(10		)	—		—			30		(10		)
Totals	$	386,350	$	(6,189	)	$	16,434	$	(166	)	$	402,784	$	(6,355	)

The total number of security positions in the investment portfolio in an unrealized loss position at March 31, 2013 was 142 compared to 117 at December 31, 2012. Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether or not the Company is more likely than not to sell the security before recovery of its cost basis.

As of March 31, 2013, management does not have the intent to sell any of the securities in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2013, management believes the impairments detailed in the table above are temporary.

Net losses recognized on investment securities available for sale were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Realized losses	$	(1	)	$	(3	)
Net losses	$	(1	)	$	(3	)

14

The amortized cost and fair value of investment securities as of March 31, 2013 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.

	Amortized		Fair
(In thousands)	Cost		Value
Available for sale:
Due in one year or less	$	33,798	$	34,326
Due after one year through five years	420,646		442,426
Due after five years through ten years	154,410		161,434
Due after ten years	307,764		320,199
Equity securities	10,820		11,179
Residential and commercial mortgage-backed securities	827,384		842,605
	1,754,822		1,812,169
Held to maturity:
Due in one year or less	983		1,002
Due after one year through five years	4,135		4,189
Due after five years through ten years	23,000		23,677
Due after ten years	234,192		250,989
Residential mortgage-backed securities	255,475		274,744
	517,785		554,601
Total	$	2,272,607	$	2,366,770

Investment securities available for sale with carrying amounts of $1.1 billion and $989.6 million at March 31, 2013 and December 31, 2012, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

15

Note 6. Loans

Loans consist of the following at (in thousands):

	March 31, 2013		December 31, 2012
Commercial loans	$	1,207,638	$	1,220,472
Commercial loans collateralized by assignment of lease payments	1,347,666		1,303,020
Commercial real estate	1,743,329		1,761,832
Residential real estate	312,804		314,359
Construction real estate	101,581		110,261
Indirect vehicle	220,739		208,633
Home equity	291,190		305,186
Other consumer loans	81,932		93,317
Gross loans, excluding covered loans	5,306,879		5,317,080
Covered loans	400,789		449,850
Total loans(1)	$	5,707,668	$	5,766,930

 (1) Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

Loans are made to individuals as well as commercial and tax exempt entities. Specific loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by MB Financial Bank.

The Company's extension of credit is governed by its Credit Risk Policy which was established to control the quality of the Company's loans. These policies and procedures are reviewed and approved by the Board of Directors on a regular basis.

Commercial Loans. Commercial credit is extended primarily to middle market customers. Such credits are typically comprised of working capital loans, loans for physical asset expansion, asset acquisition loans and other business loans. Loans to closely held businesses will generally be guaranteed in full or for a meaningful amount by the businesses' principal owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types.

Lease Loans. The Company makes lease loans to both investment grade and non-investment grade companies. Investment grade lessees are companies rated in one of the four highest categories by Moody's Investor Services or Standard & Poor's Rating Services or, in the event the related lessee has not received any such rating, where the related lessee would be viewed under the underwriting polices of the Company as an investment grade company. Whether or not companies fall into this category, each lease loan is considered on its individual merit based on financial information available at the time of underwriting.

Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type.

Construction Real Estate Loans. The Company defines construction loans as loans where the loan proceeds are controlled by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, they are subject to other industry specific policy guidelines outlined in the Company's Credit Risk Policy.

Consumer Related Loans. The Company originates direct and indirect consumer loans including primarily residential real estate, home equity lines and loans, credit cards, and indirect motorcycle loans using a matrix-based credit analysis as part of the underwriting process. Each loan type has a separate specified matrix which consists of several factors including debt to income, type of collateral and loan to collateral value, credit history and Company relationship with the borrower. Indirect loan and credit card underwriting involves the use of risk-based pricing in the underwriting process.

16

The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	Current		30-59 Days Past Due		60-89 Days Past Due		Loans past due 90 days or more		Total Past Due		Total
March 31, 2013
Commercial	$	1,202,455	$	1,487	$	513	$	3,183	$	5,183	$	1,207,638
Commercial collateralized by assignment of lease payments	1,337,485		6,199		3,393		589		10,181		1,347,666
Commercial real estate
Healthcare	190,062		—		—		3,238		3,238		193,300
Industrial	394,574		3,064		1,765		6,894		11,723		406,297
Multifamily	330,425		821		283		2,391		3,495		333,920
Retail	387,297		1,080		—		6,921		8,001		395,298
Office	170,115		373		962		4,089		5,424		175,539
Other	232,910		409		3,762		1,894		6,065		238,975
Residential real estate	301,609		2,830		1,730		6,635		11,195		312,804
Construction real estate	97,943		700		95		2,843		3,638		101,581
Indirect vehicle	218,794		1,316		305		324		1,945		220,739
Home equity	279,908		2,087		1,306		7,889		11,282		291,190
Other consumer	81,903		20		3		6		29		81,932
Gross loans, excluding covered loans	5,225,480		20,386		14,117		46,896		81,399		5,306,879
Covered loans	264,236		8,038		6,221		122,294		136,553		400,789
Total loans (1)	$	5,489,716	$	28,424	$	20,338	$	169,190	$	217,952	$	5,707,668
Nonperforming loan aging	$	63,416	$	3,295	$	7,147	$	40,100	$	50,542	$	113,958
Non-covered loans related to FDIC transactions (2)	$	14,139	$	82	$	449	$	6,795	$	7,326	$	21,465
December 31, 2012
Commercial	$	1,215,957	$	639	$	754	$	3,122	$	4,515	$	1,220,472
Commercial collateralized by assignment of lease payments	1,288,341		11,252		2,847		580		14,679		1,303,020
Commercial real estate
Healthcare	192,039		—		—		3,238		3,238		195,277
Industrial	402,813		548		424		7,700		8,672		411,485
Multifamily	353,966		1,282		—		3,103		4,385		358,351
Retail	375,900		6,933		518		9,331		16,782		392,682
Office	186,665		742		280		1,125		2,147		188,812
Other	210,456		851		1,837		2,081		4,769		215,225
Residential real estate	306,927		382		1,248		5,802		7,432		314,359
Construction real estate	106,158		1,139		97		2,867		4,103		110,261
Indirect vehicle	206,126		1,588		498		421		2,507		208,633
Home equity	291,737		3,557		1,888		8,004		13,449		305,186
Other consumer	93,266		47		—		4		51		93,317
Gross loans, excluding covered loans	5,230,351		28,960		10,391		47,378		86,729		5,317,080
Covered loans	301,260		5,831		7,478		135,281		148,590		449,850
Total loans (1)	$	5,531,611	$	34,791	$	17,869	$	182,659	$	235,319	$	5,766,930
Nonperforming loan aging	$	69,836	$	3,171	$	3,718	$	40,261	$	47,150	$	116,986
Non-covered loans related to FDIC transactions (2)	$	12,752	$	312	$	1,542	$	7,115	$	8,969	$	21,721

(1)          Includes loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

(2)          Loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

17

The following table presents the recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013				December 31, 2012
			Loans past due				Loans past due
	Nonaccrual		90 days or more and still accruing		Nonaccrual		90 days or more and still accruing
Commercial	$	21,134	$	400	$	23,886	$	229
Commercial collateralized by assignment of lease payments	439		274		1,180		222
Commercial real estate:
Healthcare	3,238		—		3,238		—
Industrial	14,988		3,603		19,179		147
Multifamily	6,131		—		7,225		—
Office	13,577		561		3,263		—
Retail	6,738		—		17,019		—
Other	8,768		—		9,437		—
Residential real estate	12,428		—		10,943		—
Construction real estate	1,025		—		1,028		—
Indirect vehicles	1,499		17		1,494		—
Home equity	18,791		338		17,486		1,000
Other consumer	9		—		9		1
Total	$	108,765	$	5,193	$	115,387	$	1,599

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company's risk rating system, the Company classifies potential problem and problem loans as “Special Mention,” “Substandard,” and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention. Risk ratings are updated at least annually and any time the situation warrants.

18

Loans listed as not rated are included in groups of homogeneous loans with similar risk and loss characteristics. The following tables present the risk category of loans by class of loans based on the most recent analysis performed and the contractual aging as of March 31, 2013 and December 31, 2012 (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2013
Commercial	$	1,106,341	$	53,980	$	47,317	$	—	$	1,207,638
Commercial collateralized by assignment of lease payments	1,339,062		97		8,507		—		1,347,666
Commercial real estate
Healthcare	168,433		21,629		—		3,238		193,300
Industrial	351,514		19,948		34,835		—		406,297
Multifamily	316,962		3,935		13,023		—		333,920
Retail	357,114		14,485		23,699		—		395,298
Office	143,780		5,253		26,506		—		175,539
Other	198,048		19,279		21,648		—		238,975
Construction real estate	88,315		549		12,717		—		101,581
Total	$	4,069,569	$	139,155	$	188,252	$	3,238	$	4,400,214
December 31, 2012
Commercial	$	1,136,294	$	33,068	$	50,895	$	215	$	1,220,472
Commercial collateralized by assignment of lease payments	1,292,241		3,322		7,457		—		1,303,020
Commercial real estate
Healthcare	170,265		21,774		—		3,238		195,277
Industrial	355,218		15,243		41,024		—		411,485
Multifamily	318,991		25,297		14,063		—		358,351
Retail	340,919		25,096		26,667		—		392,682
Office	159,056		7,120		22,636		—		188,812
Other	193,824		2,553		18,848		—		215,225
Construction real estate	97,724		552		11,985		—		110,261
Total	$	4,064,532	$	134,025	$	193,575	$	3,453	$	4,395,585

Approximately $76.0 million and $85.5 million of the substandard and doubtful loans were non-performing as of March 31, 2013 and December 31, 2012, respectively.

For residential real estate, home equity indirect vehicle and other consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2013 and December 31, 2012 (in thousands):

	Performing		Non-performing		Total
March 31, 2013
Residential real estate	$	300,376	$	12,428	$	312,804
Indirect vehicles	219,223		1,516		220,739
Home equity	272,061		19,129		291,190
Other consumer	81,923		9		81,932
Total	$	873,583	$	33,082	$	906,665
December 31, 2012
Residential real estate	$	303,416	$	10,943	$	314,359
Indirect vehicles	207,139		1,494		208,633
Home equity	286,700		18,486		305,186
Other consumer	93,307		10		93,317
Total	$	890,562	$	30,933	$	921,495

19

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,016	$	8,440	$	1,576	$	—	$	9,853	$	—
Commercial collateralized by assignment of lease payments	—		—		—		—		—		—
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		10,943		—
Industrial	11,744		10,873		871		—		11,893		—
Multifamily	779		779		—		—		787		—
Retail	3,986		3,526		460		—		3,482		—
Office	1,366		1,170		196		—		1,499		—
Other	2,285		2,283		2		—		2,707		—
Residential real estate	1,730		1,344		386		—		1,730		—
Construction real estate	—		—		—		—		—		—
Indirect vehicles	—		—		—		—		—		—
Home equity	1,575		1,575		—		—		1,471		—
Other consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial	12,745		12,694		51		2,643		13,916		—
Commercial collateralized by assignment of lease payments	536		536		—		86		760		8
Commercial real estate:
Healthcare	—		—		—		—		—		—
Industrial	4,117		4,117		—		1,026		4,077		—
Multifamily	6,950		6,170		780		2,107		6,738		54
Retail	21,267		15,227		6,040		2,396		14,774		—
Office	5,643		5,568		75		2,004		3,026		—
Other	6,568		6,484		84		1,379		6,424		4
Residential real estate	14,151		13,447		704		2,858		13,696		—
Construction real estate	4,547		2,160		2,387		496		2,305		—
Indirect vehicles	—		—		—		—		—		—
Home equity	24,043		23,483		560		682		24,715		—
Other consumer	—		—		—		—		—		—
Total	$	144,991	$	123,114	$	21,877	$	15,677	$	134,796	$	66

20

	December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,993	$	9,505	$	1,488	$	—	$	14,089	$	105
Commercial collateralized by assignment of lease payments	390		390		—		—		278		9
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		2,751		—
Industrial	16,891		14,940		1,951		—		16,374		29
Multifamily	800		800		—		—		1,340		14
Retail	5,372		4,917		455		—		9,241		—
Office	1,568		1,568		—		—		1,151		—
Other	4,860		4,860		—		—		6,005		—
Residential real estate	3,097		2,711		386		—		6,476		—
Construction real estate	—		—		—		—		577		—
Indirect vehicles	—		—		—		—		—		—
Home equity	2,558		2,558		—		—		8,976		—
Other consumer	—		—		—		—		182		—
With an allowance recorded:
Commercial	14,484		14,381		103		3,620		8,455		—
Commercial collateralized by assignment of lease payments	885		885		—		188		1,130		73
Commercial real estate:
Healthcare	—		—		—		—		3,901		—
Industrial	5,525		4,238		1,287		1,255		2,443		—
Multifamily	8,233		7,249		984		2,284		5,847		130
Retail	23,144		17,257		5,887		3,604		10,058		—
Office	1,706		1,695		11		522		1,904		—
Other	4,661		4,577		84		1,263		6,082		16
Residential real estate	10,565		10,565		—		2,858		3,417		—
Construction real estate	4,552		2,167		2,385		497		3,775		—
Indirect vehicles	—		—		—		—		—		—
Home equity	13,765		13,763		2		850		4,800		—
Other consumer	—		—		—		—		—		—
Total	$	144,992	$	122,264	$	22,728	$	16,941	$	119,252	$	376

Impaired loans included accruing restructured loans of $21.6 million and $21.3 million that have been modified and are performing in accordance with those modified terms as of March 31, 2013 and December 31, 2012, respectively.  In addition, impaired loans included $26.3 million and $28.4 million of non-performing, restructured loans as of March 31, 2013 and December 31, 2012, respectively.

Loans may be restructured in an effort to maximize collections from financially distressed borrowers. We use various restructuring techniques, including, but not limited to, deferral of past due interest or principal, implementing an A/B note structure, redeeming past due taxes, reduction of interest rates, extending maturities and modification of amortization schedules. Residential real estate loans are restructured in an effort to minimize losses while allowing borrowers to remain in their primary residences when possible. Programs that we offer to residential real estate borrowers include the Home Affordable Refinance Program (“HARP”) and a restructuring program similar to the Home Affordable Modification Program (“HAMP”) for first mortgage borrowers as well as the Second Lien Modification Program (“2MP”) and similar programs for home equity borrowers in keeping with the restructuring techniques discussed above.

Periodically, the Company will restructure a note into two separate notes (A/B structure), charging off the entire B portion of the note. The A note is structured with appropriate loan-to-value and cash flow coverage ratios that provide for a high likelihood of

21

repayment. The A note is classified as a non-performing note until the borrower has displayed a historical payment performance for a reasonable time prior to and subsequent to the restructuring. A period of sustained repayment for at least six months generally is required to return the note to accrual status provided that management has determined that the performance is reasonably expected to continue. The A note will be classified as a restructured note (either performing or nonperforming) through the calendar year of the restructuring that the historical payment performance has been established. As of March 31, 2013, there was approximately $3.0 million in recorded investment in relation to one A/B structure. As of December 31, 2012 there was approximately $3.1 million in recorded investment in relation to one A/B structure. 

A loan classified as a troubled debt restructuring will no longer be included in the troubled debt restructuring disclosures in the years after the restructuring if the loan performs in accordance with the terms specified by the restructuring agreement and the interest rate specified in the restructuring agreement represents a market rate at the time of modification. The specified interest rate is considered a market rate when the interest rate is equal or greater than the rate the Company is willing to accept at the time of restructuring for a new loan with comparable risk. If there are concerns that the borrower would not be able to meet the modified terms of the loan, the loan would continue to be included in the troubled debt restructuring disclosures.

Impairment analyses on commercial-related loans classified as troubled debt restructurings are performed in conjunction with the normal allowance for loan loss process. Consumer loans classified as troubled debt restructurings are aggregated in two pools that share common risk characteristics, home equity and residential real estate loans, with impairment measured on a quarterly basis based on the present value of expected future cash flows discounted at the loan's effective interest rate.

The following table presents loans that have been restructured during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Residential real estate	3	$	479	$	479	$	—
Home equity	5	548		548		—
Total	8	$	1,027	$	1,027	$	—
Non-Performing:
Commercial	1	$	42	$	42	$	13
Commercial real estate:
Multifamily	1	187		187		50
Retail	2	657		657		179
Other	1	84		84		23
Residential real estate	4	331		331		—
Home equity	16	2,105		2,105		—
Total	25	$	3,406	$	3,406	$	265

22

The following table presents loans that have been restructured during the three months ended March 31, 2012 (dollars in thousands):

	March 31, 2012
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Commercial real estate:
Multifamily	1	$	155	$	155	$	—
Retail	1	236		236		—
Home equity	22	4,397		4,397		—
Total	24	$	4,788	$	4,788	$	—
Non-Performing:
Commercial	2	$	185	$	185	$	61
Commercial real estate:
Multifamily	1	149		149		40
Retail	2	599		599		—
Home equity	5	950		921		29
Total	10	$	1,883	$	1,854	$	130

Of the troubled debt restructurings entered into during the past twelve months, none subsequently defaulted during the three months ended March 31, 2013.  Performing troubled debt restructurings are considered to have defaulted when they become 90 days or more past due post restructuring or are placed on non-accrual status.

The following tables present the troubled debt restructurings activity during the three months ended March 31, 2013 (dollars in thousands):

	Performing			Non-performing
Beginning balance	$	21,256		$	28,418
Additions	1,027			3,406
Charge-offs	—			(2,039		)
Principal payments, net	(276		)	(3,749		)
Removals	—			—
Transfer to other real estate owned	—			(157		)
Transfer from/to performing	—			377
Transfer from/to nonperforming	(377		)	—
Ending balance	$	21,630		$	26,256

23

Loans removed from trouble debt restructuring status are those that were restructured in a previous calendar year at a market rate of interest and have performed in compliance with the modified terms.

The following table presents the type of modification for loans that have been restructured and the post-modification recorded investment during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Extended
	Maturity,				Extended		Extended				Delay in
	Amortization		Extended		Maturity and		Maturity and				Payments or
	and Reduction		Maturity and		Reduction of		Delay in		Extended		Reduction of
	of Interest Rate		Amortization		Interest Rate		Payments		Maturity		Interest Rate		Total
Commercial	$	42	$	—	$	—	$	—	$	—	$	—	$	42
Commercial real estate:
Multifamily	187		—		—		—		—		—		187
Retail	256		—		401		—		—		—		657
Other	84		—		—		—		—		—		84
Residential real estate	193		—		—		—		—		618		811
Home equity	595		—		661		—		227		1,169		2,652
Total	$	1,357	$	—	$	1,062	$	—	$	227	$	1,787	$	4,433

24

The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2013 and 2012 (in thousands):

	Commercial			Commercial collateralized  by assignment of lease payments			Commercial real estate		Residential real estate			Construction real estate			Indirect vehicles		Home equity			Other Consumer		Unfunded Commitments			Total
March 31, 2013
Allowance for credit losses:
Beginning balance	$	24,943		$	7,755		$	61,056	$	6,941		$	11,222		$	1,324	$	9,401		$	1,562	$	4,075		$	128,279
Charge-offs	911			—			1,917		962			82			729		787			565		—			5,953
Recoveries	452			144			740		214			276			415		114			52		—			2,407
Provision	(330		)	200			3,268		455			(2,246		)	389		(826		)	234		(1,144		)	—
Ending balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,643		$	86		$	8,912	$	2,858		$	496		$	—	$	682		$	—	$	2,461		$	18,138
Collectively evaluated for impairment	19,475			8,013			52,248		3,681			8,674			1,399		7,220			1,283		470			102,463
Acquired and accounted for under ASC 310-30 (1)	2,036			—			1,987		109			—			—		—			—		—			4,132
Total ending allowance balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Loans:
Individually evaluated for impairment	$	21,134		$	536		$	59,435	$	14,791		$	2,160		$	—	$	25,058		$	—	$	—		$	123,114
Collectively evaluated for impairment	1,168,907			1,347,130			1,683,894		294,145			99,421			220,739		266,132			81,932		—			5,162,300
Acquired and accounted for under ASC 310-30 (1)	52,040			—			223,952		6,414			106,927			—		291			32,630		—			422,254
Total ending loans balance	$	1,242,081		$	1,347,666		$	1,967,281	$	315,350		$	208,508		$	220,739	$	291,481		$	114,562	$	—		$	5,707,668
March 31, 2012
Allowance for credit losses:
Beginning balance	$	21,106		$	7,561		$	68,695	$	3,935		$	15,639		$	1,834	$	7,333		$	695	$	9,177		$	135,975
Transfer to (from) allowance for unfunded credit commitments	—			—			—		—			1,132			—		—			—		(1,132		)	—
Charge-offs	539			—			3,003		294			3,436			715		1,072			258		—			9,317
Recoveries	2,038			256			162		34			565			311		20			111		—			3,497
Provision	(3,446		)	(327		)	8,748		(660		)	(2,745		)	396		745			610		(221		)	3,100
Ending balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,382		$	342		$	10,783	$	—		$	915		$	—	$	312		$	—	$	3,127		$	16,861
Collectively evaluated for impairment	17,777			7,148			61,920		2,848			10,240			1,826		6,714			1,158		4,697			114,328
Acquired and accounted for under ASC 310-30 (1)	—			—			1,899		167			—			—		—			—		—			2,066
Total ending allowance balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Loans:
Individually evaluated for impairment	$	32,468		$	1,849		$	71,977	$	6,883		$	1,553		$	—	$	17,399		$	241	$	—		$	132,370
Collectively evaluated for impairment	985,666			1,208,093			1,805,403		298,535			126,487			186,736		310,051			89,464		—			5,010,435
Acquired and accounted for under ASC 310-30 (1)	103,907			—			312,412		7,808			174,996			—		643			47,194		—			646,960
Total ending loans balance	$	1,122,041		$	1,209,942		$	2,189,792	$	313,226		$	303,036		$	186,736	$	328,093		$	136,899	$	—		$	5,789,765

(1)  Loans acquired in FDIC-assisted transactions and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

Purchased loans acquired in a business combination, including loans purchased in our FDIC-assisted transactions, are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan losses. Purchased credit-impaired loans are loans that have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration

25

as of the purchase date may include factors such as past due and non-accrual status. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reduction of the remaining portion of any allowance for loan losses previously established and/or a reclassification of the difference from non-accretable to accretable with a positive impact on interest income prospectively.

During the three months ended March 31, 2013 there was a provision for credit losses of $425 thousand and net charge-offs of $809 thousand, respectively, in relation to 14 pools of purchased loans with a total carrying amount of $237.8 million as of March 31, 2013. There was $4.1 million in allowance for loan losses related to these purchased loans at March 31, 2013 and $4.5 million at December 31, 2012.  The provision for credit losses and accompanying charge-offs are included in the table above.

Changes in the accretable yield for loans acquired in FDIC-assisted transactions and accounted for under ASC 310-30 were as follows for the three months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended March 31,
	2013			2012
Balance at beginning of period	$	5,685		$	18,703
Accretion	(1,457		)	(5,373		)
Other	92			—
Balance at end of period	$	4,320		$	13,330

In our FDIC-assisted transactions, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were not credit-impaired was determined based on estimates of losses on defaults and other market factors. Due to the loss-share agreements with the FDIC, MB Financial Bank recorded a receivable (FDIC indemnification asset) from the FDIC equal to the present value of the corresponding reimbursement percentages on the estimated losses embedded in the loan portfolio.

When cash flow estimates are adjusted downward for a particular loan pool, the FDIC indemnification asset is increased. An allowance for loan losses is established for the impairment of the loans. A provision for loan losses is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows.

When cash flow estimates are adjusted upward for a particular loan pool, the FDIC indemnification asset is decreased. The difference between the decrease in the FDIC indemnification asset and the increase in cash flows is accreted over the estimated life of the loan pool.

When cash flow estimates are adjusted downward for covered foreclosed real estate, the FDIC indemnification asset is increased. A charge is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows.

When cash flow estimates are adjusted upward for covered foreclosed real estate, the FDIC indemnification asset is decreased. Any write-down after the transfer to covered foreclosed real estate is reversed.

In both scenarios, the clawback liability (the amount the FDIC requires MB Financial Bank to pay back if certain thresholds are met) will increase or decrease accordingly.

26

The carrying amount of covered loans and other purchased non-covered loans at March 31, 2013 consisted of purchased credit-impaired loans and non-credit-impaired loans as shown in the following table (in thousands):

March 31, 2013	Purchased Credit-Impaired Loans		Purchased Non- Credit-Impaired Loans		Total
Covered loans:
Commercial related (1)	$	19,559	$	5,433	$	24,992
Commercial	3,957		5,494		9,451
Commercial real estate	87,016		136,936		223,952
Construction real estate	96,093		10,834		106,927
Other	3,464		32,003		35,467
Total covered loans	$	210,089	$	190,700	$	400,789
Estimated receivable amount from the FDIC under the loss-share agreement (2)	$	9,657	$	17,902	$	27,559
Non covered loans:
Commercial related (3)	$	3,908	$	13,689	$	17,597
Other	88		3,780		3,868
Total non-covered loans	$	3,996	$	17,469	$	21,465

(1) Covered commercial related loans include commercial, commercial real estate and construction real estate loans acquired in connection with the Heritage and Benchmark FDIC-assisted transactions.

(2) Estimated reimbursable amounts from the FDIC under the loss-share agreement exclude $1.6 million in reimbursable amounts related to covered other real estate owned.

(3) Non covered commercial related loans include commercial, commercial real estate and construction real estate for InBank.

Outstanding balances on purchased loans from the FDIC were $454.7 million and $515.7 million as of March 31, 2013 and December 31, 2012, respectively.  The related carrying amount on loans purchased from the FDIC was $422.3 million and $471.6 million as of March 31, 2013 and December 31, 2012, respectively.

Note 7.   Goodwill and Intangibles

The excess of the cost of an acquisition over the fair value of the net assets acquired consists of goodwill, and core deposit and client relationship intangibles. Under ASC Topic 350, goodwill is subject to at least annual assessments for impairment by applying a fair value based test. The Company reviews goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that goodwill might be impaired, by comparing the carrying value of the reporting unit with the fair value of the reporting unit.

The Company's annual assessment date is as of December 31. No impairment losses were recognized during the three months ended March 31, 2013 or 2012. Goodwill is tested for impairment at the reporting unit level. All of our goodwill is allocated to MB Financial, Inc., which is the Company's only applicable reporting unit for purposes of testing goodwill impairment.  The carrying amount of goodwill was $423.4 million at March 31, 2013 and December 31, 2012.

The Company has other intangible assets consisting of core deposit and client relationship intangibles that had a remaining weighted average amortization period of approximately four years, as of March 31, 2013.

27

The following table presents the changes in the carrying amount of core deposit and client relationship intangibles, gross carrying amount, accumulated amortization, and net book value as of March 31, 2013 (in thousands):

	March 31,
	2013
Balance at beginning of period	$	29,512
Amortization expense	(1,544		)
Balance at end of period	$	27,968
Gross carrying amount	$	61,429
Accumulated amortization	(33,461		)
Net book value	$	27,968

The following presents the estimated future amortization expense of other intangible assets (in thousands):

Year ending December 31,	Amount
2013	$	4,540
2014	4,748
2015	4,030
2016	3,418
2017	3,071
Thereafter	8,161
	$	27,968

Note 8. Deposits

The composition of deposits was as follows (in thousands):

	March 31,		December 31,
	2013		2012
Demand deposit accounts, noninterest bearing	$	2,067,310	$	2,164,547
NOW and money market accounts	2,778,916		2,747,273
Savings accounts	833,251		811,333
Certificates of deposit, $100,000 or more	1,006,947		1,020,033
Other certificates of deposit	765,482		799,511
Total	$	7,451,906	$	7,542,697

Certificates of deposit of $100,000 or more included $294.4 million and $294.2 million of brokered deposits at March 31, 2013 and December 31, 2012, respectively.  Brokered deposits typically consist of smaller individual time certificates that have the same liquidity characteristics and yields consistent with time certificates of $100,000 or more.

28

Note 9. Short-Term Borrowings

Short-term borrowings were as follows as of March 31, 2013 and December 31, 2012 (dollars in thousands):

	March 31, 2013				December 31, 2012
	Weighted Average				Weighted Average
	Cost		Amount		Cost		Amount
Customer repurchase agreements	0.21	%	$	219,089	0.23	%	$	208,242
Federal Home Loan Bank advances	3.64	%	5,290		3.58	%	12,360
	0.29	%	$	224,379	0.42	%	$	220,602

Securities sold under agreements to repurchase are agreements in which the Company acquires funds by selling assets to another party under a simultaneous agreement to repurchase the same assets at a specified price and date.  The Company enters into repurchase agreements and also offers a demand deposit account product to customers that sweeps their balances in excess of an agreed upon target amount into overnight repurchase agreements.  All securities sold under agreements to repurchase are recorded on the face of the balance sheet.

The Company had Federal Home Loan Bank advances with maturity dates less than one year consisting of $5.3 million in fixed rate advances at March 31, 2013 and $12.4 million in fixed rate advances at December 31, 2012.  At March 31, 2013, the interest rates on these advances ranged from 3.26% to 3.98% and maturities ranged from April 2013 to July 2013.

On March 9, 2012, the Company entered into a $35.0 million unsecured line of credit with a correspondent bank. Interest is payable at a rate of one month LIBOR + 2.00%. As of March 31, 2013, no amount was outstanding. The line originally matured on March 8, 2013, was renewed and is scheduled to mature on March 7, 2014.

Note 10. Long-term Borrowings

The Company had Federal Home Loan Bank advances with original contractual maturities greater than one year of $4.4 million at March 31, 2013 and December 31, 2012. As of March 31, 2013, the advances had fixed terms with effective interest rates, net of discounts, ranging from 3.23% to 5.87% and maturities ranging from April 2021 to April 2035.

A collateral pledge agreement exists whereby at all times, the Company must keep on hand, free of all other pledges, liens, and encumbrances, first mortgage loans and home equity loans with unpaid principal balances aggregating no less than 133% for first mortgage loans and 250% for home equity loans of the outstanding advances from the Federal Home Loan Bank.  The Company may also pledge certain investment securities as collateral for advances based on market value.  As of March 31, 2013 and December 31, 2012, the Company had $16.3 million and $28.4 million, respectively, of loans pledged as collateral for long-term Federal Home Loan Bank advances.  Additionally, as of March 31, 2013 and December 31, 2012, the Company had $31.7 million and $32.1 million, respectively, of investment securities pledged as collateral for advances from the Federal Home Loan Bank.

The Company had notes payable to banks totaling $19.2 million and $21.1 million at March 31, 2013 and December 31, 2012, respectively, which as of March 31, 2013, were accruing interest at rates ranging from 2.50% to 12.00%.  Lease investments includes equipment with an amortized cost of $27.8 million and $29.7 million at March 31, 2013 and December 31, 2012, respectively, that is pledged as collateral on these notes.

The Company had a $40.0 million10-year structured repurchase agreement as of March 31, 2013, which bears interest at a fixed rate borrowing of 4.75% and expires in 2016.

During the first quarter of 2013, MB Financial Bank pre-paid a $50.0 million subordinated debt facility.  Interest was payable at a rate of 3-month LIBOR +1.70%. 

29

Note 11. Junior Subordinated Notes Issued to Capital Trusts

The Company has established statutory trusts for the sole purpose of issuing trust preferred securities and related trust common securities.  The proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company, which are the sole assets of each trust.  Concurrently with the issuance of the trust preferred securities, the Company issued guarantees for the benefit of the holders of the trust preferred securities.  The Company’s outstanding trust preferred securities qualify, and are treated by the Company, as Tier 1 regulatory capital.  The Company owns all of the common securities of each trust.  The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment.

The table below summarizes the outstanding junior subordinated notes and the related trust preferred securities issued by each trust as of March 31, 2013 (in thousands):

	Coal City Capital Trust I		MB Financial Capital Trust II		MB Financial Capital Trust III		MB Financial Capital Trust IV
Junior Subordinated Notes:
Principal balance	$	25,774	$	36,083	$	10,310	$	20,619
Annual interest rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Stated maturity date	September 1, 2028		September 15, 2035		September 23, 2036		September 15, 2036
Call date	September 1, 2008		December 15, 2010		September 23, 2011		September 15, 2011
Trust Preferred Securities:
Face Value	$	25,000	$	35,000	$	10,000	$	20,000
Annual distribution rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Issuance date	July 1998		August 2005		July 2006		August 2006
Distribution dates (1)	Quarterly		Quarterly		Quarterly		Quarterly

	MB Financial Capital Trust V		MB Financial Capital Trust VI		FOBB Statutory Trust III (2)
Junior Subordinated Notes:
Principal balance	$	30,928	$	23,196	$	5,155
Annual interest rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Stated maturity date	December 15, 2037		October 30, 2037		January 23, 2034
Call date	December 15, 2012		October 30, 2012		January 23, 2009
Trust Preferred Securities:
Face Value	$	30,000	$	22,500	$	5,000
Annual distribution rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Issuance date	September 2007		October 2007		December 2003
Distribution dates (1)	Quarterly		Quarterly		Quarterly

(1) All distributions are cumulative and paid in cash.

(2) FOBB Statutory Trust III was established by First Oak Brook Bancshares, Inc. (“FOBB”) prior to the Company's acquisition of FOBB, and the junior subordinated note issued by FOBB to FOBB Statutory Trust III was assumed by the Company upon completion of the acquisition.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at the stated maturity date or upon redemption on a date no earlier than the call dates noted in the table above.  Prior to these respective redemption dates, the junior subordinated notes could have been redeemed by the Company (in which case the trust preferred securities would also be redeemed) after the occurrence of certain events that would have a negative tax effect on the Company or the trusts, would cause the trust preferred securities to no longer qualify as Tier 1 capital, or would result in a trust being treated as an investment company.  Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes.  The Company’s obligation under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust.  The Company has the right to defer payment of interest on the notes and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity date in the table above.  During any such deferral period the Company may not pay cash dividends on its stock and generally may not repurchase its stock.

30

Note 12. Commitments and Contingencies

Commitments: The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit.  Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments.  The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments.

At March 31, 2013 and December 31, 2012, the following financial instruments were outstanding, the contractual amounts of which represent off-balance sheet credit risk (in thousands):

	Contractual Amount
	March 31, 2013		December 31, 2012
Commitments to extend credit:
Home equity lines	$	238,463	$	239,771
Other commitments	991,668		911,166
Letters of credit:
Standby	73,703		66,247
Commercial	852		465

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require a payment of a fee.  The commitments for home equity lines of credit may expire without being drawn upon.  Therefore, the total commitment amounts do not necessarily represent future cash requirements.  The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

The Company, in the normal course of its business, regularly offers standby and commercial letters of credit to its bank customers.  Standby and commercial letters of credit are a conditional but irrevocable form of guarantee.  Under letters of credit, the Company typically guarantees payment to a third party beneficiary upon the default of payment or nonperformance by the bank customer and upon receipt of complying documentation from that beneficiary.

Both standby and commercial letters of credit may be issued for any length of time, but normally do not exceed a period of five years.  These letters of credit may also be extended or amended from time to time depending on the bank customer’s needs.  As of March 31, 2013, the maximum remaining term for any standby letters of credit was December 31, 2017.  A fee is charged to the bank customer and is recognized as income over the life of the letter of credit, unless considered non-rebatable under the terms of a letter of credit application.

At March 31, 2013, the aggregate contractual amount of these letters of credit, which represents the maximum potential amount of future payments that the Company would be obligated to pay, increased $7.8 million to $74.6 million from $66.7 million at December 31, 2012.  Of the $74.6 million in commitments outstanding at March 31, 2013, approximately $23.8 million of the letters of credit have been issued or renewed since December 31, 2012.

Letters of credit issued on behalf of bank customers may be done on either a secured, partially secured or an unsecured basis.  If a letter credit is secured or partially secured, the collateral can take various forms including bank accounts, investments, fixed assets, inventory, accounts receivable or real estate, among other things.  The Company takes the same care in making credit decisions and obtaining collateral when it issues letters of credit on behalf of its customers, as it does when making other types of loans.

As of March 31, 2013, the Company had approximately $2.2 million in capital expenditure commitments outstanding which relate to various projects to renovate existing branches.

Concentrations of credit risk:  The majority of the loans, commitments to extend credit and standby letters of credit have been granted to customers in the Company’s market area.  As of March 31, 2013, approximately 25% of our investments in securities issued by states and political subdivisions were within the state of Illinois.  We did not hold any direct exposure to the state of

31

Illinois as of March 31, 2013. The distribution of commitments to extend credit approximates the distribution of loans outstanding.  Standby letters of credit are granted primarily to commercial borrowers.

Contingencies: In the normal course of business, the Company is involved in various legal proceedings.  In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company’s consolidated financial statements.

Note 13. Fair Value Measurements

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert expected future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Company's creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company's monthly and/or quarterly valuation process.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Securities Available for Sale. The fair values of securities available for sale are determined by quoted prices in active markets, when available, and classified as Level 1. If quoted market prices are not available, the fair value is determined by a matrix pricing,

32

which is a mathematical technique, widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities and classified as Level 2. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 inputs.

Loans Held for Sale. Mortgage loans originated and held for sale in the secondary market are carried at fair value. The fair value of loans held for sale is determined using quoted secondary market prices and classified as level 2.

Assets Held in Trust for Deferred Compensation and Associated Liabilities.Assets held in trust for deferred compensation are recorded at fair value and included in “Other Assets” on the consolidated balance sheets. These assets are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets.

Derivatives. Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative and classified as Level 2. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including LIBOR rate curves. We also obtain dealer quotations for these derivatives for comparative purposes to assess the reasonableness of the model valuations. We also offer other derivatives, including foreign currency forward contracts and interest rate lock commitments, to our customers and offset our exposure from such contracts by purchasing other financial contracts, which are valued using market consensus prices.

33

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets
Securities available for sale:
U.S Government sponsored agencies and enterprises	$	40,949	$	—	$	40,949	$	—
States and political subdivisions	719,761		—		719,761		—
Residential mortgage-backed securities	788,768		—		787,960		808
Commercial mortgage-backed securities	53,837		—		53,837		—
Corporate bonds	197,675		—		192,555		5,120
Equity securities	11,179		11,179		—		—
Loans held for sale	3,030		—		3,030		—
Assets held in trust for deferred compensation	8,730		8,730		—		—
Derivative financial instruments	25,837		—		25,837		—
Financial liabilities
Other liabilities (1)	8,730		8,730		—		—
Derivative financial instruments	25,761		—		25,761		—
December 31, 2012
Financial assets
Securities available for sale:
U.S. Government sponsored agencies and enterprises	$	41,315	$	—	$	41,315	$	—
States and political subdivisions	725,019		—		725,019		—
Residential mortgage-backed securities	939,202		—		938,354		848
Commercial mortgage-backed securities	54,126		—		54,126		—
Corporate bonds	96,674		—		91,451		5,223
Equity securities	11,835		11,835		—		—
Loans held for sale	7,492		—		7,492		—
Assets held in trust for deferred compensation	7,746		7,746		—		—
Derivative financial instruments	29,096		—		29,096		—
Financial liabilities
Other liabilities (1)	7,746		7,746		—		—
Derivative financial instruments	29,055		—		29,055		—

(1) Liabilities associated with assets held in trust for deferred compensation

34

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a recurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Residential mortgage-backed securities	$	808	Discounted cash flows	Constant pre-payment rates
				(CPR) assumption	1% - 3% CPR
Corporate bonds	5,120		Discounted cash flows	Credit assumption	20% Loss

The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2013. The Company's policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels.

The following table presents additional information about financial assets measured at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3):

	Three Months Ended March 31
(in thousands)	2013			2012
Balance, beginning of period	$	6,071		$	6,992
Transfer into Level 3	—			—
Other comprehensive income	(103		)	37
Principal payments	(40		)	(294		)
Balance, ending of period	$	5,928		$	6,735

Financial Instruments Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period.

Impaired Loans.Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC Topic 310. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria. For a majority of impaired real estate loans where an allowance is established based on the fair value of collateral (approximately 85%), the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information.

Non-Financial Assets and Non-Financial Liabilities Recorded at Fair Value

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis include foreclosed assets and non-financial long-lived assets.

Other Real Estate and Repossessed Vehicles Owned (Foreclosed Assets). Foreclosed assets, upon initial recognition, are measured and reported at fair value through a charge-off to the allowance for possible loan losses based upon the fair value of the foreclosed asset. The fair value of foreclosed assets, upon initial recognition, are estimated using Level 3 inputs based on customized discounting criteria.

35

Non-Financial Long-Lived Assets.  Non-financial long-lived assets, when determined to be impaired, are measured and reported at fair value using Level 3 inputs based on customized discounting criteria.

Assets measured at fair value on a nonrecurring basis as of March 31, 2013 and December 31, 2012 are included in the table below (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets:
Impaired loans	$	84,194	$	—	$	—	$	84,194
Non-financial assets:
Foreclosed assets	52,230		—		—		52,230
December 31, 2012
Financial assets:
Impaired loans	$	62,258	$	—	$	—	$	62,258
Non-financial assets:
Foreclosed assets	60,228		—		—		60,228
Long-lived assets	2,314		—		—		2,314

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Impaired loans	$	84,194	Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%
Foreclosed assets	52,230		Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The estimated fair value approximates carrying value for cash and cash equivalents, accrued interest and the cash surrender value of life insurance policies. The methodologies for other financial assets and financial liabilities are discussed below:

The following methods and assumptions were used by the Company in estimating the fair values of its other financial instruments:

Cash and due from banks and interest bearing deposits with banks: The carrying amounts reported in the balance sheet approximate fair value.

Securities held to maturity: The fair values of securities held to maturity are determined by quoted prices in active markets, when available. If quoted market prices are not available, the fair value is determined by a matrix pricing.

Non-marketable securities - FHLB and FRB Stock: The carrying amounts reported in the balance sheet approximate fair value.

Loans: The fair values for loans are estimated using discounted cash flow analyses, using the corporate bond curve adjusted for liquidity for commercial loans and the swap curve adjusted for liquidity for retail loans.

Non-interest bearing deposits: The fair values disclosed are equal to their balance sheet carrying amounts, which represent the amount payable on demand.

36

Interest bearing deposits: The fair values disclosed for deposits with no defined maturities are equal to their carrying amounts, which represent the amounts payable on demand. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies the Company's current incremental borrowing rates for similar terms.

Short-term borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements and other short-term borrowings with maturities of 90 days or less approximate their fair values.  The fair value of short-term borrowings greater than 90 days is based on the discounted value of contractual cash flows.

Long-term borrowings: The fair values of the Company's long-term borrowings (other than deposits) are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.

Junior subordinated notes issued to capital trusts: The fair values of the Company's junior subordinated notes issued to capital trusts are estimated based on the quoted market prices, when available, of the related trust preferred security instruments, or are estimated based on the quoted market prices of comparable trust preferred securities.

Accrued interest: The carrying amount of accrued interest receivable and payable approximate their fair values.

Off-balance-sheet instruments: Fair values for the Company’s off-balance-sheet lending commitments (guarantees, letters of credit and commitments to extend credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements.

The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2013
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	131,146	$	131,146	$	131,146	$	—	$	—
Interest bearing deposits with banks	108,885		108,885		108,885		—		—
Investment securities available for sale	1,812,169		1,812,169		11,179		1,795,062		5,928
Investment securities held to maturity	517,785		554,601		—		554,601		—
Non-marketable securities - FHLB and FRB stock	52,434		52,434		—		—		52,434
Loans held for sale	3,030		3,030		—		3,030		—
Loans, net	5,585,866		5,578,973		—		—		5,578,973
Accrued interest receivable	35,123		35,123		35,123		—		—
Derivative financial instruments	25,837		25,837		—		25,837		—
Financial Liabilities:
Non-interest bearing deposits	$	2,067,310	$	2,067,310	$	2,067,310	$	—	$	—
Interest bearing deposits	5,384,596		5,402,697		—		—		5,402,697
Short-term borrowings	224,379		224,384		—		—		224,384
Long-term borrowings	64,019		70,354		—		—		70,354
Junior subordinated notes issued to capital trusts	152,065		110,616		—		—		110,616
Accrued interest payable	2,598		2,598		2,598		—		—
Derivative financial instruments	25,761		25,761		—		25,761		—

37

	December 31, 2012
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	176,010	$	176,010	$	176,010	$	—	$	—
Interest bearing deposits with banks	111,533		111,533		111,533		—		—
Investment securities available for sale	1,868,171		1,868,171		11,835		1,850,265		6,071
Investment securities held to maturity	493,421		535,681		—		535,681		—
Non-marketable securities - FHLB and FRB stock	55,385		55,385		—		—		55,385
Loans held for sale	7,492		7,492		—		7,492		—
Loans, net	5,642,726		5,659,598		—		—		5,659,598
Accrued interest receivable	36,040		36,040		36,040		—		—
Derivative financial instruments	29,096		29,096		—		29,096		—
Financial Liabilities:
Non-interest bearing deposits	$	2,164,547	$	2,164,547	$	2,164,547	$	—	$	—
Interest bearing deposits	5,378,150		5,399,709		—		—		5,399,709
Short-term borrowings	220,602		220,683		—		—		220,683
Long-term borrowings	116,050		117,809		—		—		117,809
Junior subordinated notes issued to capital trusts	152,065		104,009		—		—		104,009
Accrued interest payable	2,828		2,828		2,828		—		—
Derivative financial instruments	29,055		29,055		—		29,055		—

38

Note 14. Stock Incentive Plans

ASC Topic 718 requires that the grant date fair value of equity awards to employees be recognized as compensation expense over the period during which an employee is required to provide service in exchange for such award.

The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the periods shown (in thousands):

	Three Months Ended March 31,
	2013		2012
Total cost of share-based payment plans during the period	$	1,260	$	1,265
Amount of related income tax benefit recognized in income	$	501	$	506

The Company adopted the Omnibus Incentive Plan (the “Omnibus Plan”) in 1997.  In June 2011, the Company’s stockholders approved an amendment and restatement of the Omnibus Plan to add 2,300,000 authorized shares for a total of 8,300,000 shares of common stock for issuance to directors, officers, and employees of the Company or any of its subsidiaries.  Equity grants under the Omnibus Plan can be in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock-based awards.  Shares awarded in the form of restricted stock, restricted stock units, performance shares, performance units, or other stock-based awards generally will reduce the shares available under the Omnibus Plan on a 2-for-1basis.  As of March 31, 2013, there were 2,214,130 shares available for future grants.

Annual equity-based incentive awards are typically granted to selected officers and employees mid-year.  Options are granted with an exercise price equal to no less than the market price of the Company’s shares at the date of grant; those option awards generally vest over four years of service and have 10-year contractual terms.  Restricted shares and units typically vest over a two or four year period.  Equity awards may also be granted at other times throughout the year in connection with the recruitment and retention of officers and employees.  Directors currently may elect, in lieu of cash, to receive up to 70% of their fees in stock options with a five year term which are fully vested on the grant date (provided that the director may not sell the underlying shares for at least six months after the grant date), and up to 100% of their fees in restricted shares, which vests one year after the grant date.

The following table summarizes stock options outstanding for the three months ended March 31, 2013:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding as of December 31, 2012	2,739,753		$	27.34
Granted	9,719		24.17
Exercised	(1,550	)	19.67
Expired or cancelled	(63,655	)	29.48
Forfeited	(5,497	)	18.98
Options outstanding as of March 31, 2013	2,678,770		$	27.30	4.52	$	4,562
Options exercisable as of March 31, 2013	2,020,953		$	30.13	3.36	$	890

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on certain assumptions.  Expected volatility is based on historical volatility and the expectations of future volatility of Company shares.  The risk free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.  The expected life of options is estimated based on historical employee behavior and represents the period of time that options granted are expected to remain outstanding.

39

 The following assumptions were used for options granted during the three months ended March 31, 2013:

	March 31,
	2013
Risk-free interest rate	0.71		%
Expected volatility of Company’s stock	27.91		%
Expected dividend yield	1.66		%
Expected life of options	4 years
Weighted average fair value per option of options granted during the year	$	4.65

The total intrinsic value of options exercised during the three months ended March 31, 2013 and 2012 was $2 thousand and $11 thousand, respectively.

The following is a summary of changes in restricted shares and units for the three months ended March 31, 2013:

	Number of Shares and Units		Weighted Average Grant Date Fair Value
Shares Outstanding at December 31, 2012	634,211		$	18.82
Granted	32,760		23.52
Vested	(12,286	)	19.90
Forfeited	(4,051	)	19.66
Shares Outstanding at March 31, 2013	650,634		$	19.03

During 2012, the Company issued 65,333 market-based restricted stock units which entitle recipients to shares of common stock at the end of a three year vesting period. Recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on the Company's total stockholder return relative to a specified peer group of financial institutions over the three year period. The market-based restricted stock units are included in the preceding table as if the recipients earned shares equal to 100% of the units issued. A Monte Carlo simulation model was used to value the market-based restricted stock units at the time of issuance.

The Company issued 92,717 shares and 66,193 shares of market-based restricted stock in 2011 and 2010, respectively.  The market component of the vesting terms for each award requires that, for ten consecutive trading days, the closing price of the Company’s stock be at least $27.00 for awards issued in 2011 and $25.80 for awards issued in 2010.  The market components for awards issued in 2011 and 2010 have not been satisfied as of March 31, 2013. A Monte Carlo simulation model was used to value the market-based restricted stock awards at the time of issuance.

Effective January 1, 2010, the Company began issuing shares of common stock under the Omnibus Plan as Salary Stock, classified as other stock-based awards, to certain executive officers. This stock is fully vested as of the grant date and the related expense is included in salaries and employee benefits on the Consolidated Statements of Operations. Holders of Salary Stock have all of the rights of a stockholder, including the right to vote the shares and the right to receive any dividends that may be paid thereon. As a condition of receiving the Salary Stock, the holders entered into agreements with the Company providing that they may not sell or otherwise transfer the shares of Salary Stock for two years, except in the event of disability or death.  During the three months ended March 31, 2013, the Company issued 876 shares of Salary Stock at a weighted average issuance price of $22.39 and subsequently ended the issuance of new shares of Salary Stock.

As of March 31, 2013, there was $9.3 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including share option and nonvested share awards) granted under the Omnibus Plan.  At March 31, 2013, the weighted-average period over which the unrecognized compensation expense is expected to be recognized was approximately 2.5 years.

40

Note 15. Derivative Financial Instruments

The Company offers various derivatives, including interest rate swaps and foreign currency forward contracts, to our customers which can mitigate our exposure to market risk through the execution of off-setting positions with inter-bank dealer counterparties. This also permits the Company to offer customized risk management solutions to our customers. These customer accommodations and any offsetting financial contracts are treated as non-designated derivative instruments and carried at fair value through an adjustment to the income statement.

Interest rate swap and foreign currency forward contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. The net amount payable or receivable under interest rate swaps is accrued as an adjustment to interest income.  The net amount payable for March 31, 2013 was approximately $34 thousand, and the net amount payable for December 31, 2012 was approximately $30 thousand.  The Company's credit exposure on interest rate swaps is limited to the Company's net favorable value and interest payments of all swaps to each counterparty. In such cases, collateral is generally required from the counterparties involved if the net value of the swaps exceeds a nominal amount.  At March 31, 2013, the Company’s credit exposure relating to interest rate swaps was approximately $23.9 million, which is secured by the underlying collateral on customer loans. 

The Company also enters into mortgage banking derivatives which are designated as non-designated derivatives. These derivatives include interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. It is the Company's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rates on its commitments to fund the loans as well as on its portfolio of mortgage loans held-for-sale.

The Company had fair value commercial loan interest rate swaps, to hedge its interest rate risk, with an aggregate notional amount of $3.6 million at March 31, 2013.  For fair value hedges, the changes in fair values of both the hedging derivative and the hedged item were recorded in current earnings as other income.

The Company’s derivative financial instruments are summarized below as of March 31, 2013 and December 31, 2012 (in thousands):

	Asset Derivatives								Liability Derivatives
	March 31, 2013				December 31, 2012				March 31, 2013					December 31, 2012
	Notional		Estimated		Notional		Estimated		Notional		Estimated			Notional		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value			Amount		Fair Value
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts (1)	$	—	$	—	$	—	$	—	$	3,637	$	(62	)	$	3,707	$	(94	)
Stand-alone derivative instruments (2)
Interest rate swap contracts	504,494		23,853		460,956		27,740		505,328		(23,934		)	462,012		(27,832		)
Interest rate options contracts	72,729		164		70,346		157		72,729		(164		)	70,346		(157		)
Foreign exchange contracts	19,888		1,673		20,033		1,062		19,495		(1,567		)	19,337		(961		)
Mortgage banking derivatives	9,898		147		11,400		137		5,000		(34		)	4,000		(11		)
Total non-hedging derivative instruments	607,009		25,837		562,735		29,096		602,552		(25,699		)	555,695		(28,961		)
Total	$	607,009	$	25,837	$	562,735	$	29,096	$	606,189	$	(25,761	)	$	559,402	$	(29,055	)

(1) Hedged fixed-rate commercial real estate loans

(2) These portfolio swaps are not designated as hedging instruments under ASC Topic 815.

41

Amounts included in the other income in the consolidated statements of operations related to derivative financial instruments were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts	$	(1	)	$	(61	)
Stand-alone derivative instruments
Interest rate swap contracts	11			66
Interest rate options contracts	—			—
Foreign exchange contracts	5			2
Mortgage banking derivatives	(13		)	27
Total non-hedging derivative instruments	3			95
Total	$	2		$	34

Methods and assumptions used by the Company in estimating the fair value of its interest rate swaps are discussed in Note 13 to consolidated financial statements.

Note 16.   Common and Preferred Stock

In 2008, the Company issued 196,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A ("the Series A Preferred Stock"), liquidation amount $1,000 per share, for an aggregate purchase price of $196.0 million as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program of the United States Department of the Treasury (the “Treasury”).  The Series A Preferred Stock qualified as Tier 1 capital and provided for cumulative dividends on the liquidation preference amount on a quarterly basis at a rate of 5% per annum for the first five years, and 9% per annum thereafter.  Concurrent with issuing the Series A Preferred Stock, the Company issued to the Treasury a 10 year warrant (the “Warrant”) to purchase 1,012,048 shares (subsequently reduced to 506,024 shares, as described below) of the Company’s Common Stock at an exercise price of $29.05 per share.

On September 17, 2009, the Company completed a public offering of its common stock by issuing 12,578,125 shares of common stock for aggregate gross proceeds of $201.3 million.  The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $190.9 million.  With the proceeds from this offering and the proceeds received by the Company from issuances pursuant to its Dividend Reinvestment and Stock Purchase Plan, the Company has received aggregate gross proceeds from “Qualified Equity Offerings” in excess of the $196.0 million aggregate liquidation preference amount of the Series A Preferred Stock.  As a result, the number of shares of the Company’s common stock underlying the Warrant was reduced by 50%, from 1,012,048 shares to 506,024 shares.

On March 14, 2012, the Company repurchased all $196.0 million of the Series A Preferred Stock. On May 2, 2012, the Company repurchased the Warrant in full for approximately $1.5 million.

42

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion and analysis of MB Financial, Inc.’s financial condition and results of operations and should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. The words “the Company,” “we,” “our” and “us” refer to MB Financial, Inc. and its majority owned subsidiaries, unless we indicate otherwise.

Overview

The profitability of our operations depends primarily on our net interest income after provision for credit losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for credit losses.  The provision for credit losses is dependent on changes in our loan portfolio and management’s assessment of the collectability of our loan portfolio as well as prevailing economic and market conditions.  

Our net income is also affected by non-interest income and non-interest expenses.  During the periods under report, non-interest income included revenue from our key fee initiatives: capital markets and international banking fees, commercial deposit and treasury management fees, net lease financing income, trust and asset management fees, and card fees. Non-interest income also included loan service fees, consumer and other deposit service fees, brokerage fees, net loss on investment securities, increase in cash surrender value of life insurance, net loss on sale of assets, accretion of the FDIC indemnification asset, net loss recognized on other real estate owned, net gains on sale of loans and other operating income.  During the periods under report, non-interest expenses included salaries and employee benefits, occupancy and equipment expense, computer services and telecommunication expense, advertising and marketing expense, professional and legal expense, other intangibles amortization expense, other real estate expenses (net of rental income) and other operating expenses.  Additionally, dividends on preferred shares reduced net income available to common stockholders for the three months ended March 31, 2012.

Net interest income is affected by changes in the volume and mix of interest earning assets, interest earned on those assets, the volume and mix of interest bearing liabilities and interest paid on interest bearing liabilities.  Non-interest income and non-interest expenses are impacted by growth of operations and growth in the number of loan and deposit accounts through both acquisitions and core banking business growth.  Growth in operations affects other expenses primarily as a result of additional employee, branch facility and promotional marketing expense.  Growth in the number of loan and deposit accounts affects other income, including service fees as well as other expenses such as computer services, supplies, postage, telecommunications and other miscellaneous expenses.  Non-performing asset levels impact salaries and benefits, legal expenses and other real estate owned expenses.

The Company had net income and net income available to common stockholders of $24.9 million for the three months ended March 31, 2013 compared to net income and net income available to common stockholders of $21.1 million and $17.8 million, respectively, for the three months ended March 31, 2012. Fully diluted earnings per common share were $0.46 for the three months ended March 31, 2013 compared to $0.33 per common share for the three months ended March 31, 2012.

On March 14, 2012, we repurchased all $196.0 million of preferred stock issued in 2008 to the U.S. Department of Treasury as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program. The repurchase resulted in a one-time, non-cash after-tax charge of approximately $1.2 million or $0.02 per common share in the first quarter of 2012, related to unaccreted discount recorded at the date of issuance.

43

Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and follow general practices within the industries in which we operate.  This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements.  Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.  Management believes the following policies are both important to the portrayal of our financial condition and results of operations and require subjective or complex judgments; therefore, management considers the following to be critical accounting policies.  Management has reviewed the application of these polices with the Audit Committee of our Board of Directors.

Allowance for Loan Losses.  Subject to the use of estimates, assumptions, and judgments, management's evaluation process used to determine the adequacy of the allowance for loan losses combines several factors: management's ongoing review and grading of the loan portfolio, consideration of past loan loss experience, trends in past due and nonperforming loans, risk characteristics of the various classifications of loans, existing economic conditions, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect probable credit losses. Because current economic conditions can change and future events are inherently difficult to predict, the anticipated amount of estimated loan losses, and therefore the adequacy of the allowance, could change significantly. As an integral part of their examination process, various regulatory agencies also review the allowance for loan losses. Such agencies may require that certain loan balances be charged off when their credit evaluations differ from those of management or require that adjustments be made to the allowance for loan losses, based on their judgments about information available to them at the time of their examination. We believe the allowance for loan losses is adequate and properly recorded in the financial statements.  See “Allowance for Loan Losses” section below for further analysis.

Residual Value of Our Direct Finance, Leveraged, and Operating Leases.  Lease residual value represents the present value of the estimated fair value of the leased equipment at the termination date of the lease.  Realization of these residual values depends on many factors, including management’s use of estimates, assumptions, and judgment to determine such values.  Several other factors outside of management’s control may reduce the residual values realized, including general market conditions at the time of expiration of the lease, whether there has been technological or economic obsolescence or unusual wear and tear on, or use of, the equipment and the cost of comparable equipment.  If, upon the expiration of a lease, we sell the equipment and the amount realized is less than the recorded value of the residual interest in the equipment, we will recognize a loss reflecting the difference.  On a quarterly basis, management reviews the lease residuals for potential impairment.  If we fail to realize our aggregate recorded residual values, our financial condition and profitability could be adversely affected.  At March 31, 2013, the aggregate residual value of the equipment leased under our direct finance, leveraged, and operating leases totaled $74.7 million.  See Note 1 and Note 6 of our December 31, 2012 audited consolidated financial statements contained in our Annual Report Form 10-K for the year ended December 31, 2012 for additional information.

Income Tax Accounting.  ASC Topic 740 provides guidance on accounting for income taxes by prescribing the minimum recognition threshold that a tax position must meet to be recognized in the financial statements.  ASC Topic 740 also provides guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  As of March 31, 2013, the Company had $106 thousand 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 ASC Topic 740 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, 2013, the Company had approximately $11 thousand 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.

Fair Value of Assets and Liabilities.  ASC Topic 820 defines fair value as the price that would be received to sell a financial asset or paid to transfer a financial liability in an orderly transaction between market participants at the measurement date.

The degree of management judgment involved in determining the fair value of assets and liabilities is dependent upon the availability of quoted market prices or observable market parameters. For financial instruments that trade actively and have quoted market prices or observable market parameters, there is minimal subjectivity involved in measuring fair value. When observable market prices and parameters are not fully available, management judgment is necessary to estimate fair value. In

44

addition, changes in market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, the Company would use valuation techniques requiring more management judgment to estimate the appropriate fair value measurement.

See Note 13 to the consolidated financial statements for a complete discussion on the Company’s use of fair valuation of assets and liabilities and the related measurement techniques.

Goodwill.  The excess of the cost of an acquisition over the fair value of the net assets acquired consists of goodwill, and core deposit and client relationship intangibles.  See Note 8 of our December 31, 2012 audited consolidated financial statements contained in our Annual Report Form 10-K for the year ended December 31, 2012 for further information regarding core deposit and client relationship intangibles.  The Company reviews goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that goodwill might be impaired, by comparing the carrying value of the reporting unit with the fair value of the reporting unit.

The Company’s annual assessment date for goodwill impairment testing is as of December 31.  No impairment losses were recognized during the three months ended March 31, 2013 and 2012.

Goodwill is tested for impairment at the reporting unit level. All of our goodwill is allocated to MB Financial, Inc., which is the Company's only applicable reporting unit for purposes of testing goodwill impairment. Fair value was computed by estimating the future cash flows of the Company and present valuing those cash flows at an interest rate equal to our cost of capital. In addition, we compared our fair value calculation with our stock price adjusted for a control premium for reasonableness relative to our fair value calculation. Key assumptions used in estimating future cash flows included loan and deposit growth, the interest rate environment, credit spreads on new and renewed loans, future deposit pricing, loan charge-offs, provision for credit losses, fee income growth and operating expense growth. Our future cash flow estimates assumed a similar economic environment to what we experienced in 2012.

Recent Accounting Pronouncements.  Refer to Note 2 of our consolidated financial statements for a description of recent accounting pronouncements including the respective dates of adoption and effects on results of operations and financial condition.

Net Interest Income

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the related yields, as well as the interest expense on average interest bearing liabilities, and the related costs, expressed both in dollars and rates (dollars in thousands).  The table below and the discussion that follows contain presentations of net interest income and net interest margin on a tax-equivalent basis, which is adjusted for the tax-favored status of income from certain loans and investments.  We believe this measure to be the preferred industry measurement of net interest income, as it provides a relevant comparison between taxable and non-taxable amounts.

Reconciliations of net interest income and net interest margin on a tax-equivalent basis to net interest income and net interest margin in accordance with accounting principles generally accepted in the United States of America are provided in the table.

45

	Three Months Ended March 31,
(dollars in thousands)	2013						2012
	Average				Yield/		Average				Yield/
	Balance		Interest		Rate		Balance		Interest		Rate
Interest Earning Assets:
Loans (1) (2) (3)	$	5,361,881	$	58,536	4.43	%	$	5,543,495	$	69,556	5.05	%
Loans exempt from federal income taxes (4)	311,509		3,472		4.46		260,033		3,219		4.90
Taxable investment securities	1,484,300		6,140		1.65		1,702,766		10,884		2.56
Investment securities exempt from federal income taxes (4)	911,742		12,400		5.44		742,570		10,368		5.58
Other interest bearing deposits	197,057		135		0.28		258,351		169		0.26
Total interest earning assets	8,266,489		$	80,683	3.96		8,507,215		$	94,196	4.45
Non-interest earning assets	1,183,099						1,229,487
Total assets	$	9,449,588					$	9,736,702
Interest Bearing Liabilities:
Deposits:
NOW and money market deposit	$	2,737,494	$	927	0.14	%	$	2,649,671	$	1,207	0.18	%
Savings deposit	822,214		136		0.07		772,335		248		0.13
Time deposits	1,806,895		4,646		1.04		2,332,218		7,305		1.26
Short-term borrowings	191,902		167		0.35		214,212		206		0.39
Long-term borrowings and junior subordinated notes	248,891		1,567		2.52		418,022		3,381		3.20
Total interest bearing liabilities	5,807,396		$	7,443	0.52		6,386,458		$	12,347	0.78
Non-interest bearing deposits	2,145,058						1,851,211
Other non-interest bearing liabilities	216,213						136,412
Stockholders’ equity	1,280,921						1,362,621
Total liabilities and stockholders’ equity	$	9,449,588					$	9,736,702
Net interest income/interest rate spread (5)			$	73,240	3.44	%			$	81,849	3.67	%
Less: taxable equivalent adjustment			5,555						4,756
Net interest income, as reported			$	67,685					$	77,093
Net interest margin (6)					3.32	%					3.64	%
Tax equivalent effect					0.27	%					0.23	%
Net interest margin on a fully tax equivalent basis (6)					3.59	%					3.87	%

(1)       Non-accrual loans are included in average loans.

(2)       Interest income includes amortization of deferred loan origination fees of $981 thousand and $877 thousand for the three months ended March 31, 2013 and 2012, respectively.

(3)       Loans held for sale are included in the average loan balance listed.  Related interest income is included in loan interest income.

(4)       Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate.

(5)       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.

(6)       Net interest margin represents net interest income as a percentage of average interest earning assets.

Net interest income on a fully tax equivalent basis decreased $8.6 million during the three months ended March 31, 2013 compared to the three months ended March 31, 2012, primarily due to lower average earning asset balances (as a result of a decrease in covered loans) as well as the decline in net interest margin. The net interest margin, expressed on a fully tax equivalent basis, was 3.59% for the first quarter of 2013 and 3.87% for the first quarter of 2012. The decrease in the margin was due to average yields on interest earning assets declining more than average rates paid on interest bearing liabilities.

46

Non-interest Income

	Three Months Ended March 31,
	2013			2012			Increase/ (Decrease)			Percentage Change
Non-interest income (in thousands):
Capital markets and international banking fees	$	808		$	512		$	296		57.8	%
Commercial deposit and treasury management fees	5,966			5,897			69			1.2	%
Lease financing, net	16,263			6,958			9,305			133.7	%
Trust and asset management fees	4,494			4,404			90			2.0	%
Card fees	2,695			2,046			649			31.7	%
Loan service fees	1,011			1,067			(56		)	(5.2	)%
Consumer and other deposit service fees	3,246			3,453			(207		)	(6.0	)%
Brokerage fees	1,157			1,255			(98		)	(7.8	)%
Net loss on investment securities	(1		)	(3		)	2			(66.7	)%
Increase in cash surrender value of life insurance	844			917			(73		)	(8.0	)%
Net loss on sale of assets	—			(17		)	17			(100.0	)%
Accretion of FDIC indemnification asset	143			475			(332		)	(69.9	)%
Net loss recognized on other real estate owned	(330		)	(6,589		)	6,259			(95.0	)%
Net gain on sale of loans	639			374			265			70.9	%
Other operating income	1,438			2,105			(667		)	(31.7	)%
Total non-interest income	$	38,373		$	22,854		$	15,519		67.9	%

Non-interest income increased by $15.5 million, or 67.9%, for the three months ended March 31, 2013 compared to the three months ended March 31, 2012, driven by revenue from our key fee initiatives.

• 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 on leasing revenues attributable to Celtic.

• Card fee income increased primarily due to fees earned on prepaid, debit and credit cards.

• Capital markets and international banking fees increased primarily due to an increase in loan placement and interest rate swap fees.

• Non-interest income was also impacted by lower losses on other real estate owned.

47

Non-interest Expenses

	Three Months Ended March 31,
	2013		2012		Increase/ (Decrease)			Percentage Change
Non-interest expenses (in thousands):
Salaries and employee benefits	$	43,514	$	40,429	$	3,085		7.6	%
Occupancy and equipment expense	9,404		9,570		(166		)	(1.7	)%
Computer services and telecommunication expense	3,887		3,653		234			6.4	%
Advertising and marketing expense	2,103		2,073		30			1.4	%
Professional and legal expense	1,295		1,413		(118		)	(8.4	)%
Other intangibles amortization expense	1,544		1,257		287			22.8	%
Other real estate expense, net	139		1,243		(1,104		)	(88.8	)%
Other operating expenses	9,213		7,693		1,520			19.8	%
Total non-interest expenses	$	71,099	$	67,331	$	3,768		5.6	%

Non-interest expenses increased by $3.8 million, or 5.6%, from the three months ended March 31, 2013 to the three months ended March 31, 2012.

• Salaries and employee benefits increased due to annual salary increases, the impact of Celtic and an increase in incentives and commissions on higher lease revenues.

• Other operating expenses were higher as a result of an increase in the clawback liability related to our loss share agreements with the FDIC recorded during the first quarter of 2013.

• Other intangible amortization expense increased due to the Celtic acquisition.

• Other real estate expense decreased due to fewer OREO properties.

Income Taxes

Income tax expense for the three months ended March 31, 2013 was $10.1 million compared to income tax expense of $8.4 million for the three months ended March 31, 2012.  The increase was primarily due to an increase in our pre-tax income during the three months ended March 31, 2013. 

Balance Sheet

Total assets decreased $186.0 million, or 1.9%, from $9.6 billion at December 31, 2012 to $9.4 billion at March 31, 2013.  Investment securities decreased $34.6 million, or 1.4%, from December 31, 2012 to March 31, 2013 mostly as a result of the principal payments received on mortgage-backed securities that were not reinvested in the portfolio. Over the past year, we changed the mix of our investment securities portfolio by allocating a larger portion of the portfolio to municipal securities and corporate bonds. This has helped mitigate the impact of high levels of mortgage-backed security prepayments in the current interest rate environment. 

Gross loans decreased by $59.3 million, or 1.0%, to $5.7 billion at March 31, 2013 from $5.8 billion at December 31, 2012 mainly as a result of the decrease in covered loans. Our loan portfolio mix improved over the past twelve months from the standpoint of lowering our real estate-related exposure, as commercial and lease loan balances increased while commercial real estate and construction loan balances decreased.

Total liabilities decreased by $205.0 million, or 2.5%, from $8.3 billion at December 31, 2012 to $8.1 billion at March 31, 2013. Total deposits decreased by $90.8 million, or 1.2%, to $7.5 billion at March 31, 2013 from December 31, 2012 due to the decline in non-interest bearing deposits. Total borrowings decreased by $48.3 million, or 9.9%, to $440.5 million at March 31, 2013. The decrease in total borrowings was primarily due to the prepayment of the $50.0 million subordinated debt facility in the first quarter of 2013.

Total stockholders’ equity increased $19.0 million to $1.3 billion at March 31, 2013 compared to December 31, 2012 primarily as a result of our first quarter 2013 earnings.

48

Investment Securities

The following table sets forth the amortized cost and fair value of our investment securities, by type of security as indicated (in thousands):

	March 31, 2013				December 31, 2012				March 31, 2012
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
U.S. Government sponsored agencies and enterprises	$	38,478	$	40,949	$	38,605	$	41,315	$	39,503	$	42,070
States and political subdivisions	680,978		719,761		679,991		725,019		547,262		581,720
Residential mortgage-backed securities	776,336		788,768		930,413		939,202		1,117,065		1,140,558
Commercial mortgage-backed securities	51,048		53,837		51,100		54,126		51,275		52,690
Corporate bonds	197,162		197,675		97,014		96,674		5,686		5,686
Equity securities	10,820		11,179		11,398		11,835		10,520		10,887
	1,754,822		1,812,169		1,808,521		1,868,171		1,771,311		1,833,611
Held to maturity
States and political subdivisions	262,310		279,857		237,563		258,602		239,526		249,352
Residential mortgage-backed securities	255,475		274,744		255,858		277,079		259,241		266,292
	517,785		554,601		493,421		535,681		498,767		515,644
Total	$	2,272,607	$	2,366,770	$	2,301,942	$	2,403,852	$	2,270,078	$	2,349,255

Over the past year, we changed the mix of our investment portfolio by allocating a larger portion of the investment portfolio to municipal securities and corporate bonds. This has helped mitigate the impact of high levels of mortgage-backed security prepayments in the current interest rate environment. Municipal securities were 42.2% of total investment securities at March 31, 2013 compared to 40.8% of total investment securities at December 31, 2012 and 35.2% of total investment securities a year ago. 

We do not have any meaningful direct or indirect holdings of subprime residential mortgage investment securities, home equity lines of credit investment securities, or any Fannie Mae or Freddie Mac preferred or common equity securities in our investment portfolio. 

49

Loan Portfolio

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

	March 31, 2013				December 31, 2012				March 31, 2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total
Commercial related credits:
Commercial loans	$	1,207,638	21	%	$	1,220,472	21	%	$	1,040,340	18	%
Commercial loans collateralized by assignment of lease payments	1,347,666		24	%	1,303,020		23	%	1,209,942		21	%
Commercial real estate	1,743,329		30	%	1,761,832		30	%	1,877,380		32	%
Construction real estate	101,581		2	%	110,261		2	%	128,040		2	%
Total commercial related credits	4,400,214		77	%	4,395,585		76	%	4,255,702		73	%
Other loans:
Residential real estate	312,804		5	%	314,359		5	%	309,644		5	%
Indirect vehicle	220,739		4	%	208,633		4	%	186,736		3	%
Home equity	291,190		5	%	305,186		5	%	327,450		6	%
Other consumer loans	81,932		2	%	93,317		2	%	89,705		2	%
Total other loans	906,665		16	%	921,495		16	%	913,535		16	%
Gross loans excluding covered loans	5,306,879		93	%	5,317,080		92	%	5,169,237		89	%
Covered loans (1)	400,789		7	%	449,850		8	%	620,528		11	%
Total loans (2)	$	5,707,668	100	%	$	5,766,930	100	%	$	5,789,765	100	%

(1) Loans that MB Financial Bank will share losses with the FDIC are referred to as “covered loans.”

(2) Gross loan balances at March 31, 2013, December 31, 2012, and March 31, 2012 are net of unearned income, including net deferred loans fees of $1.2 million, $1.1 million, and $934 thousand, respectively.

Our loan portfolio mix improved over the past twelve months from the standpoint of lowering our real estate-related exposure, as commercial and lease loan balances increased by 13.6% while commercial real estate and construction loan balances decreased by 8.0%.

Asset Quality

Non-performing loans include loans accounted for on a non-accrual basis and accruing loans contractually past due 90 days or more as to interest or principal.  Management reviews the loan portfolio for problem loans on an ongoing basis.  During the ordinary course of business, management becomes aware of borrowers that may not be able to meet the contractual requirements of loan agreements.  These loans are placed under close supervision with consideration given to placing the loan on non-accrual status, increasing the allowance for loan losses and (if appropriate) partial or full charge-off.  After a loan is placed on non-accrual status, any interest previously accrued but not yet collected is reversed against current income.  Generally, if interest payments are received on non-accrual loans, these payments will be applied to principal and not taken into income.  Loans will not be placed back on accrual status unless back interest and principal payments are made.  Our general policy is to place loans 90 days past due on non-accrual status, as well as those loans that continue to pay, but display defined material weakness.

Non-performing loans exclude purchased credit-impaired loans that were acquired as part of the FDIC-assisted transactions (Heritage, InBank, and Benchmark completed in 2009 and Broadway and New Century completed in 2010).  Fair value of these loans as of acquisition includes estimates of credit losses.  See Note 6 of the notes to our consolidated financial statements for further information regarding purchased credit-impaired loans.

50

The following table sets forth the amounts of non-performing loans and non-performing assets at the dates indicated (dollars in thousands):

	March 31, 2013			December 31, 2012			March 31, 2012
Non-performing loans:
Non-accruing loans	$	108,765		$	115,387		$	124,011
Loans 90 days or more past due, still accruing interest	5,193			1,599			679
Total non-performing loans	113,958			116,986			124,690
Other real estate owned	31,462			36,977			63,077
Repossessed assets	757			773			81
Total non-performing assets	$	146,177		$	154,736		$	187,848
Total allowance for loan losses	$	121,802		$	124,204		$	125,431
Accruing restructured loans (1)	$	21,630		$	21,256		$	24,145
Total non-performing loans to total loans	2.00		%	2.03		%	2.15		%
Total non-performing assets to total assets	1.56			1.62			1.94
Allowance for loan losses to non-performing loans	106.88			106.17			100.59

(1) Accruing restructured loans consists primarily of residential real estate and home equity loans that have been modified and are performing in accordance with those modified terms.

A loan is classified as a troubled debt restructuring when a borrower is experiencing financial difficulties that leads to a restructuring of the loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses.  A loan that is modified at a market rate of interest may no longer be classified as troubled debt restructuring in the calendar year subsequent to the restructuring if it is in compliance with the modified terms.  Payment performance prior and subsequent to the restructuring is taken into account in assessing whether it is likely that the borrower can meet the new terms.  This may result in the loan being returned to accrual at the time of restructuring.  A period of sustained repayment for at least six months generally is required for return to accrual status.

Periodically, the Company will restructure a note into two separate notes (A/B structure), charging off the entire B portion of the note. The A note is structured with appropriate loan-to-value and cash flow coverage ratios that provide for a high likelihood of repayment. The A note is classified as a non-performing note until the borrower has displayed a historical payment performance for a reasonable time prior to and subsequent to the restructuring. A period of sustained repayment for at least six months generally is required to return the note to accrual status provided that management has determined that the performance is reasonably expected to continue. The A note will be classified as a restructured note (either performing or nonperforming) through the calendar year of the restructuring that the historical payment performance has been established.

Non-performing assets consists of non-performing loans as well as other repossessed assets and other real estate owned.  Other real estate owned represents properties acquired through foreclosure or other proceedings and is recorded at fair value less the estimated cost of disposal at the date of acquisition.  Other real estate owned is evaluated regularly to ensure that the recorded amount is supported by its current fair value.  Valuation allowances to reduce the carrying amount to fair value less estimated costs of disposal are recorded as necessary.  Gains and losses and changes in valuations on other real estate owned are included in other income.  Expenses, net of rental income, from the operations of other real estate owned are reflected as a separate line item on the income statement.  Other repossessed assets primarily consist of repossessed vehicles.  Losses on repossessed vehicles are charged-off to the allowance when title is taken and the vehicle is valued.  Once the Bank obtains title, repossessed vehicles are not included in loans, but are classified as “other assets” on the consolidated balance sheets.  The typical holding period for resale of repossessed automobiles is less than 90 days unless significant repairs to the vehicle are needed which occasionally results in a longer holding period.  The typical holding period for motorcycles can be more than 90 days, as the average motorcycle re-sale period is longer than the average automobile re-sale period.  The longer average period for motorcycles is a result of cyclical trends in the motorcycle market.

Other real estate owned that is related to our FDIC-assisted transactions is excluded from non-performing assets.  Other real estate owned related to the Heritage, Benchmark, Broadway, and New Century transactions, which totaled $19.2 million and

51

$21.4 million at March 31, 2013 and December 31, 2012, respectively, is subject to the loss-share agreements with the FDIC.  See Note 6 of the notes to our consolidated financial statements for further information.

The following table presents a summary of other real estate owned (“OREO”), excluding assets related to FDIC-assisted transactions, for the three months ended March 31, 2013 and 2012 (in thousands):

	March 31,
	2013			2012
Beginning balance	$	36,977		$	78,452
Transfers in at fair value less estimated costs to sell	711			1,751
Capitalized OREO costs	—			359
Fair value adjustments	(349		)	(4,764		)
Net (losses) gains on sales of OREO	30			416
Cash received upon disposition	(5,907		)	(13,137		)
Ending balance	$	31,462		$	63,077

Potential Problem Loans

We define potential problem loans as performing loans rated substandard and 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 following table sets forth the aggregate principal amount of potential problem loans at the dates indicated (in thousands):

	March 31, 2013		December 31, 2012
Commercial loans	$	26,182	$	27,224
Commercial loans collateralized by assignment of lease payments	8,067		6,375
Commercial real estate	69,509		66,996
Construction real estate	11,693		10,958
Total	$	115,451	$	111,553

Management believes it has established an adequate allowance for probable loan losses as appropriate under GAAP.

Allowance for Loan Losses

Management believes the allowance for loan losses accounting policy is critical to the portrayal and understanding of our financial condition and results of operations. Selection and application of this “critical accounting policy” involves judgments, estimates, and uncertainties that are subject to change. In the event that different assumptions or conditions were to prevail, and depending upon the severity of such changes, materially different financial condition or results of operations is a reasonable possibility.

We maintain our allowance for loan losses at a level that management believes is appropriate to absorb probable losses on existing loans based on an evaluation of the collectability of loans, underlying collateral and prior loss experience.

Our allowance for loan losses is comprised of commercial related and consumer related elements. Each element is discussed below.

Commercial Related General Loss Reserve.  We maintain a general loan loss reserve for the four categories of commercial-related loans in our portfolio - commercial loans, commercial loans collateralized by the assignment of lease payments (lease loans), commercial real estate loans and construction real estate loans.

52

Under our loan risk rating system, each loan, with the exception of those included in large groups of smaller-balance homogeneous consumer related loans, is risk rated between one and nine by the originating loan officer, Senior Credit Management, Loan Review or any loan committee. Loans rated "one" represent those loans least likely to default and a loan rated "nine" represents a loss. The probability of loans defaulting for each risk rating, sometimes referred to as default factors, are estimated based on the frequency with which loans migrate from one risk rating to another and to default status over time. We use a loan loss reserve model that incorporates the migration of loan risk ratings and historical default data over a multi-year period to develop our estimated default factors (EDFs). The model tracks annual loan rating migrations by loan type and currently uses loan risk rating migrations for 12 years. The migration data is adjusted by using average losses for an economic cycle (approximately 10 years) to develop EDFs by loan type, risk rating and maturity. EDFs are updated annually in December.

Estimated loan default factors are multiplied by individual loan balances in each risk-rating category and again multiplied by an historical loss given default estimate for each loan type (which incorporates estimated recoveries) to determine the appropriate allowance by loan type. This approach is applied to the commercial, lease, commercial real estate, and construction real estate components of the portfolio.

To account for current economic conditions, the general allowance for loan and lease losses (ALLL) also includes adjustments for macroeconomic factors. Macroeconomic factors adjust the ALLL upward or downward based on the current point in the economic cycle using predictive economic data and are applied to the loan loss model through a separate allowance element for the commercial, commercial real estate, construction real estate and lease loan components. Our macroeconomic factors were developed using regression analyses to select economic indicators that have a high correlation with industry-wide charge-off rates. The correlation of over 25 indicators to charge-offs were tested (change in fed funds rate, change in personal income, durable goods orders, etc.). We annually review this data to determine that such a correlation continues to exist. We currently use the following macroeconomic indicators in our macroeconomic factor computation:

Commercial loans and lease loans:  Crude oil prices, our prior period charge-off rates and a manufacturing index.

Commercial real estate loans and construction loans:  Crude oil prices, our prior period charge-off rates and the consumer confidence index.

Using the indicators noted above, a predicted industry wide charge-off rate is calculated. The predicted charge-off percentage is then compared to the cycle average charge-off percentage used in our EDF computation discussed above, and a macroeconomic adjustment factor is calculated. The macroeconomic adjustment factor is applied to each commercial loan type. Each year, we review the predictive nature of the macroeconomic factors by comparing actual charge-offs to the predicted model charge-offs, re-run our regression analysis and re-calibrate the macroeconomic factors as appropriate.

The commercial related general loss reserve was $92.5 million as of March 31, 2013 and $91.7 million as of December 31, 2012. Reserves on impaired commercial loans are included in the “Commercial Related Specific Reserves” section below. 

Commercial Related Specific Reserves.  Our allowance for loan losses also includes specific reserves on impaired commercial loans. A loan is considered to be impaired when management believes, after considering collection efforts and other factors, the borrower's financial condition is such that the collection of all contractual principal and interest payments due is doubtful.

At each quarter-end, impaired commercial loans are reviewed individually, with adjustments made to the general calculated reserve for each loan as deemed necessary. Specific adjustments are made depending on expected cash flows and/or the value of the collateral securing each loan. Generally, the Company obtains a current external appraisal (within 12 months) on real estate secured impaired loans. Our appraisal policy is designed to comply with the Interagency Appraisal and Evaluation Guidelines, most recently updated on December 2010. As part of our compliance with these other regulations, we maintain an internal Appraisal Review Department that engages and reviews all third party appraisals.

In addition, each impaired commercial loan with real estate collateral is reviewed quarterly by our appraisal department to determine that the most recent valuation remains appropriate during subsequent quarters until the next appraisal is received. If considered necessary by our appraisal department, the appraised value may be further discounted by internally applying accepted appraisal methodologies to an older appraisal. Accepted appraisal methodologies include: income capitalization approach adjusting for changes in underlying leases, adjustments related to condominium projects with units sales, adjustments for loan fundings, and “As is” compared to “As Stabilized” valuations.

Other valuation techniques are also used to value non-real estate assets. Discounts may be applied in the impairment analysis used for general business assets (GBA). Examples of GBA include accounts receivable, inventory, and any marketable

53

securities pledged. The discount is used to reflect collection risk in the event of default that may not have been included in the valuation of the asset.

The total commercial related specific reserves component of the allowance decreased from $13.2 million as of December 31, 2012 to $12.1 million as of March 31, 2013. 

Consumer Related Reserves.  Pools of homogenous loans with similar risk and loss characteristics are also assessed for probable losses. These loan pools include consumer, residential real estate, home equity and indirect vehicle loans. Migration probabilities obtained from past due roll rate analyses are applied to current balances to forecast charge-offs over a one-year time horizon. The reserves for consumer related loans totaled $17.2 million at March 31, 2013 and $19.2 million at December 31, 2012.

We consistently apply our methodology for determining the appropriateness of the allowance for loan losses, but may adjust our methodologies and assumptions based on historical information related to charge-offs and management's evaluation of the loan portfolio. In this regard, we periodically review the following to validate our allowance for loan losses: historical net charge-offs as they relate to prior periods allowance for loan loss, comparison of historical loan migration in past years compared to the current year, overall credit trends and ratios and any significant changes in loan concentrations. In reviewing this data, we adjust qualitative factors within our allowance methodology to appropriately reflect any changes warranted by the validation process.

The following table presents an analysis of the allowance for loan losses for the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2013			2012
Balance at beginning of period	$	128,279		$	135,975
Provision for credit losses	—			3,100
Charge-offs:
Commercial loans	911			539
Commercial loans collateralized by assignment of lease payments	—			—
Commercial real estate	1,917			3,003
Residential real estate	962			294
Construction real estate	82			3,436
Indirect vehicles	729			715
Home equity	787			1,072
Other consumer loans	565			258
Total charge-offs	5,953			9,317
Recoveries:
Commercial loans	452			2,038
Commercial loans collateralized by assignment of lease payments	144			256
Commercial real estate	740			162
Residential real estate	214			34
Construction real estate	276			565
Indirect vehicles	415			311
Home equity	114			20
Other consumer loans	52			111
Total recoveries	2,407			3,497
Net charge-offs	3,546			5,820
Allowance for credit losses	124,733			133,255
Allowance for unfunded credit commitments	(2,931		)	(7,824		)
Allowance for loan losses	$	121,802		$	125,431
Total loans	$	5,707,668		$	5,789,765
Ratio of allowance to total loans	2.13		%	2.17		%
Ratio of net charge-offs to average loans	0.25		%	0.40		%

Net charge-offs of $3.5 million were recorded in the three months ended March 31, 2013 compared to net charge-offs of $5.8 million in the three months ended March 31, 2012. As a result of lower downward migration of loans to non-performing

54

status and higher collateral value underlying the loans that did migrate, no provision for credit losses was recorded for the three months ended March 31, 2013 compared to a provision of $3.1 million for the three months ended March 31, 2012.

Additions to the allowance for loan losses, which are charged to earnings through the provision for credit losses, are determined based on a variety of factors, including specific reserves, current loan risk ratings, delinquent loans, historical loss experience and economic conditions in our market area. In addition, federal regulatory authorities, as part of the examination process, periodically review our allowance for loan losses. The regulators may require us to record adjustments to the allowance level based upon their assessment of the information available to them at the time of examination. Although management believes the allowance for loan losses is sufficient to cover probable losses inherent in the loan portfolio, there can be no assurance that the allowance will prove sufficient to cover actual loan losses.

We utilize an internal asset classification system as a means of reporting problem and potential problem assets. At scheduled meetings of the board of directors of MB Financial Bank, a watch list is presented, showing significant loan relationships listed as “Special Mention,” “Substandard,” and “Doubtful.” An asset is classified Substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and viewed as valueless assets and have been charged-off. Assets that do not currently expose us to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention.

Our determination as to the classification of our assets and the amount of our valuation allowances is subject to review by the Office of the Comptroller of the Currency, MB Financial Bank's primary regulator, which can order the establishment of additional general or specific loss allowances. There can be no assurance that regulators, in reviewing our loan portfolio, will not request us to materially adjust our allowance for loan losses. The Office of the Comptroller of the Currency, in conjunction with the other federal banking agencies, has adopted an interagency policy statement on the allowance for loan losses. The policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of adequate allowances and guidance for banking agency examiners to use in determining the adequacy of general valuation guidelines. Generally, the policy statement recommends that (1) institutions have effective systems and controls to identify, monitor and address asset quality problems; (2) management has analyzed all significant factors that affect the collectability of the portfolio in a reasonable manner; and (3) management has established acceptable allowance evaluation processes that meet the objectives set forth in the policy statement. We analyze our process regularly, with modifications made if needed, and report those results four times per year at meetings of our board of directors. However, there can be no assurance that regulators, in reviewing our loan portfolio, will not request us to materially adjust our allowance for loan losses at the time of their examination.

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.

55

Lease Investments

The lease portfolio is comprised of various types of equipment, generally technology related, including computer systems and satellite equipment, material handling and general manufacturing equipment.  Lessees tend to have an investment grade public debt rating by Moody’s or Standard & Poors or the equivalent, though we also provide credit to below investment grade and non-rated companies.

Lease investments by categories follow (in thousands):

	March 31, 2013			December 31, 2012			March 31, 2012
Direct finance leases:
Minimum lease payments	$	97,984		$	90,160		$	50,723
Estimated unguaranteed residual values	11,387			11,140			6,686
Less: unearned income	(7,289		)	(7,135		)	(4,843		)
Direct finance leases (1)	$	102,082		$	94,165		$	52,566
Leveraged leases:
Minimum lease payments	$	158,544		$	154,549		$	25,386
Estimated unguaranteed residual values	22,979			23,586			2,471
Less: unearned income	(3,452		)	(2,879		)	(2,412		)
Less: related non-recourse debt	(149,655		)	(145,719		)	(23,968		)
Leveraged leases (1)	$	28,416		$	29,537		$	1,477
Operating leases:
Equipment, at cost	$	211,485		$	222,083		$	236,285
Less accumulated depreciation	(93,741		)	(92,260		)	(111,537		)
Lease investments, net	$	117,744		$	129,823		$	124,748

(1)          Direct finance and leveraged leases are included as commercial loans collateralized by assignment of lease payments for financial statement purposes.

Leases that transfer substantially all of the benefits and risk related to the equipment ownership to the lessee are classified as direct financing.  If these direct finance leases have non-recourse debt associated with them, they are further classified as leveraged leases, and the associated debt is netted with the outstanding balance in the consolidated financial statements.  Interest income on direct finance and leveraged leases is recognized using methods which approximate a level yield over the term of the lease.

Operating leases are investments in equipment leased to other companies, where the residual component makes up more than 10% of the investment.  The Company funds most of the lease equipment purchases internally, but has some loans at other banks which totaled $19.2 million at March 31, 2013 and $21.1 million at December 31, 2012.

56

At March 31, 2013, the following reflects the residual values for leases by category in the year the initial lease term ends (in thousands):

	Residual Values
	Direct
End of initial lease term	Finance		Leveraged		Operating
December 31,	Leases		Leases		Leases		Total
2013	$	3,189	$	5,453	$	7,837	$	16,479
2014	3,534		6,115		10,988		20,637
2015	2,585		5,685		8,120		16,390
2016	1,148		3,783		7,211		12,142
2017	612		1,408		5,086		7,106
Thereafter	319		535		1,139		1,993
	$	11,387	$	22,979	$	40,381	$	74,747

The lease residual value represents the present value of the estimated fair value of the leased equipment at the termination of the lease.  Lease residual values are reviewed quarterly, and any write-downs or charge-offs deemed necessary are recorded in the period in which they become known. Gains on leased equipment periodically result when a lessee renews a lease or purchases the equipment at the end of a lease or the equipment is sold to a third party at a profit.  Individual lease transactions can, however, result in a loss.  This generally happens when, at the end of a lease, the lessee does not renew the lease or purchase the equipment.  To mitigate this risk of loss, we usually limit individual leased equipment residuals to approximately $500 thousand per transaction and seek to diversify both the type of equipment leased and the industries in which the lessees participate.  Often times, there are several individual lease schedules under one master lease.  There were 3,569 leases at March 31, 2013 compared to 3,464 at December 31, 2012.  The average residual value per lease schedule was approximately $21 thousand at March 31, 2013 and $22 thousand at December 31, 2012.  The average residual value per master lease schedule was approximately $79 thousand at March 31, 2013 and December 31, 2012, respectively.

Liquidity and Sources of Capital

Our cash flows are composed of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Cash flows from operating activities primarily include net income, adjusted for items in net income that did not impact cash.  Net cash flows used in operating activities were $1.7 million for the three months ended March 31, 2013 compared to net cash flows provided by operating activities of $22.6 million for the three months ended March 31, 2012.  The difference was primarily due to changes in other assets and liabilities.

Cash used in investing activities reflects the impact of loans and investment securities acquired for the Company’s interest-earning asset portfolios, as well as cash flows from asset sales and the impact of acquisitions.  For the three months ended March 31, 2013, the Company had net cash flows provided by investing activities of $98.8 million compared to net cash flows provided by investing activities of $306.7 million for the three months ended March 31, 2012.  The change was primarily due to morepurchases of investment securities and a smaller decrease in loans.

Cash flows from financing activities include transactions and events whereby cash is obtained from depositors, creditors or investors.  For the three months ended March 31, 2013, the Company had net cash flows used in financing activities of $144.6 million compared to net cash flows used in financing activities of $172.9 million for the three months ended March 31, 2012.  The change in cash flows from financing activities was primarily due to the repayment of preferred shares in the first quarter of 2012, offset by higher decreases in deposits and long term borrowings.

In the event that additional short-term liquidity is needed, we have established relationships with several large and regional banks to provide short-term borrowings in the form of federal funds purchases.  While, at March 31, 2013, there were no firm lending commitments in place, management believes that we could borrow approximately $280.0 million for a short time from these banks on a collective basis.  Additionally, we are a member of Federal Home Loan Bank of Chicago (FHLB).  As of March 31, 2013, the Company had $9.7 million outstanding in FHLB advances, and could borrow an additional amount of approximately $527.5 million.  As a contingency plan for significant funding needs, the Asset/Liability Committee may also consider the sale of investment securities, selling securities under agreement to repurchase, or the temporary curtailment of lending activities.  As of March 31, 2013, the Company had approximately $1.1 billion of unpledged securities, excluding securities available for pledge at the FHLB.

57

Our main sources of liquidity at the holding company level are dividends from MB Financial Bank and cash on hand. In addition, the Company has a $35.0 million unsecured line of credit with a correspondent bank. As of March 31, 2013, no amount was outstanding. The holding company had $52.5 million in cash as of March 31, 2013.

See Notes 9 and 10 of the Financial Statements presented under Item 1 of this report for details of period end balances and other information for these various funding sources. There were no material changes outside the ordinary course of business in the Company’s contractual obligations at March 31, 2013 as compared to December 31, 2012.

MB Financial Bank is subject to various regulatory capital requirements which affect its ability to pay dividends to us.  Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements.  Additionally, our current internal policy effectively limits the amount of dividends our subsidiary bank may pay to us by requiring the bank to maintain total risk-based capital, Tier 1 risk-based capital and Tier 1 leverage capital ratios of 12%, 9% and 8%, respectively.  The minimum ratios required for a bank to be considered “well capitalized” for regulatory purposes are 10%, 6% and 5%, respectively.  In addition to adhering to our policy, there are regulatory restrictions on the ability of national banks to pay dividends.  See “Item 1. Business — Supervision and Regulation” in our Annual Report on Form 10-K for the year ended December 31, 2012.

At March 31, 2013, the Company’s total risk-based capital ratio was 16.22%; Tier 1 capital to risk-weighted assets ratio was 14.96% and Tier 1 capital to average asset ratio was 10.74%. MB Financial Bank’s total risk-based capital ratio was 15.19%; Tier 1 capital to risk-weighted assets ratio was 13.93% and Tier 1 capital to average asset ratio was 9.99%. MB Financial Bank, N.A. was categorized as “Well-Capitalized” at March 31, 2013 under the regulations of the Office of the Comptroller of the Currency.

Non-GAAP Financial Information

This report contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include net interest income on a fully tax equivalent basis and net interest margin on a fully tax equivalent basis. Our management uses these non-GAAP measures, together with the related GAAP measures, in its analysis of our performance and in making business decisions. Management also uses these measures for peer comparisons. 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. 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. Reconciliations of net interest income on a fully tax equivalent basis to net interest income and net interest margin on a fully tax equivalent basis to net interest margin are contained in the tables under “Net Interest Margin.”

Forward-Looking Statements

When used in this Annual Report on Form 10-Q and in other documents filed or furnished with the Securities and Exchange Commission, in press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to MB Financial, Inc.’s 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 revenues, 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,

58

including but not limited to customer and employee retention, might be greater than expected; (2) the possibility that the expected benefits of the FDIC-assisted and other transactions we previously completed will not be realized; (3) 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; (4) results of examinations by the Office of Comptroller of Currency, the Federal Reserve Board 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; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market-place; (10) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (11) our ability to access cost-effective funding; (12) changes in financial markets; (13) changes in economic conditions in general and in the Chicago metropolitan area in particular; (14) the costs, effects and outcomes of litigation; (15) new legislation or regulatory changes, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder, any changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (16) changes in accounting principles, policies or guidelines; (17) our future acquisitions of other depository institutions or lines of business; and (18) 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.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Market Risk and Asset Liability Management

Market Risk.  Market risk is the risk that the market value or estimated fair value of our assets, liabilities, and derivative financial instruments will decline as a result of changes in interest rates or financial market volatility, or that our net income will be significantly reduced by interest rate changes.  Market risk is managed operationally in our Treasury Group, and is addressed through a selection of funding and hedging instruments supporting balance sheet growth, as well as monitoring our asset investment strategies.

Asset Liability Management.  Management and our Treasury Group continually monitor our sensitivity to interest rate changes.  It is our policy to maintain an acceptable level of interest rate risk over a range of possible changes in interest rates while remaining responsive to market demand for loan and deposit products.  The strategy we employ to manage our interest rate risk is to measure our risk using an asset/liability simulation model.  The model considers several factors to determine our potential exposure to interest rate risk, including measurement of repricing gaps, duration, convexity, value at risk, and the market value of portfolio equity under assumed changes in the level of interest rates, shape of the yield curves, and general market volatility.  Management controls our interest rate exposure using several strategies, which include adjusting the maturities of securities in our investment portfolio, and limiting fixed rate loans or fixed rate deposits with terms of more than five years.  We also use derivative instruments, principally interest rate swaps, to manage our interest rate risk.  See Note 15 to the Consolidated Financial Statements.

Interest Rate Risk.  Interest rate risk can come in a variety of forms, including repricing risk, yield curve risk, basis risk, and prepayment risk.  We experience repricing risk when the change in the average yield of our interest earning assets or average rate of our interest bearing liabilities is more sensitive than the other to changes in market interest rates.  Such a change in sensitivity could reflect a number of possible mismatches in the repricing opportunities of our assets and liabilities.

In the event that yields on our assets and liabilities do adjust to changes in market rates to the same extent, we may still be exposed to yield curve risk.  Yield curve risk reflects the possibility the changes in the shape of the yield curve could have different effects on our assets and liabilities.

Variable rate assets and liabilities that reprice at similar times, have similar maturities or repricing dates, are based on different indexes still have interest rate risk.  Basis risk reflects the possibility that indexes will not move in a coordinated manner.

We hold mortgage-related investments, including mortgage loans and mortgage-backed securities.  Prepayment risk is associated with mortgage-related investments and results from homeowners’ ability to pay off their mortgage loans prior to maturity. 

59

We limit this risk by restricting the types of mortgage-backed securities we own to those with limited average life changes under certain interest-rate shock scenarios, or securities with embedded prepayment penalties.

Measuring Interest Rate Risk.  As noted above, interest rate risk can be measured by analyzing the extent to which the repricing of assets and liabilities are mismatched to create an interest sensitivity gap.  An asset or liability is said to be interest rate sensitive within a specific period if it will mature or reprice within that period.  The interest rate sensitivity gap is defined as the difference between the amount of interest earning assets maturing or repricing within a specific time period and the amount of interest bearing liabilities maturing or repricing within that same time period.  A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities.  A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets.  During a period of rising interest rates, therefore, a negative gap would tend to adversely affect net interest income.  Conversely, during a period of falling interest rates, a negative gap position would tend to result in an increase in net interest income.

The following table sets forth the amounts of interest earning assets and interest bearing liabilities outstanding at March 31, 2013 that we anticipate, based upon certain assumptions, to reprice or mature in each of the future time periods shown.  Except as stated below, the amount of assets and liabilities shown which reprice or mature during a particular period were determined based on the earlier of the term to repricing or the term to repayment of the asset or liability.  The table is intended to provide an approximation of the projected repricing of assets and liabilities at March 31, 2013 based on contractual maturities and scheduled rate adjustments within a three-month period and subsequent selected time intervals.  The loan amounts in the table reflect principal balances expected to be reinvested and/or repriced because of contractual amortization and rate adjustments on adjustable-rate loans.  Loan and investment securities’ contractual maturities and amortization reflect expected prepayment assumptions.  While NOW, money market and savings deposit accounts have adjustable rates, it is assumed that the interest rates on some of the accounts will not adjust immediately to changes in other interest rates.

60

Therefore, the information in the table is calculated assuming that NOW, money market and savings deposits will reprice as follows: 4%, 10%, and 5%, respectively, in the first three months, 12%, 26%, and 15%, respectively, in the next nine months, 51%, 58%, and 58%, respectively, from one year to five years, and 33%, 6%, and 22%, respectively over five years (dollars in thousands):

	Time to Maturity or Repricing
	0 – 90			91 - 365			1 – 5			Over 5
	Days			Days			Years			Years			Total
Interest Earning Assets:
Interest earning deposits with banks	$	107,241		$	949		$	695		$	—		$	108,885
Investment securities	217,132			285,638			1,189,163			690,455			2,382,388
Loans held for sale	3,030			—			—			—			3,030
Loans, including covered loans	2,493,521			1,177,630			1,935,905			100,612			5,707,668
Total interest earning assets	$	2,820,924		$	1,464,217		$	3,125,763		$	791,067		$	8,201,971
Interest Bearing Liabilities:
NOW and money market deposit accounts	$	213,055		$	575,314		$	1,541,341		$	449,206		$	2,778,916
Savings deposits	45,644			128,670			473,248			185,689			833,251
Time deposits	476,016			769,457			470,356			56,600			1,772,429
Short-term borrowings	26,949			57,213			127,072			13,145			224,379
Long-term borrowings	2,739			6,673			52,044			2,563			64,019
Junior subordinated notes issued to capital trusts	152,065			—			—			—			152,065
Total interest bearing liabilities	$	916,468		$	1,537,327		$	2,664,061		$	707,203		$	5,825,059
Rate sensitive assets (RSA)	$	2,820,924		$	4,285,141		$	7,410,904		$	8,201,971		$	8,201,971
Rate sensitive liabilities (RSL)	$	916,468		$	2,453,795		$	5,117,856		$	5,825,059		$	5,825,059
Cumulative GAP (GAP=RSA-RSL)	$	1,904,456		$	1,831,346		$	2,293,048		$	2,376,912		$	2,376,912
RSA/Total assets	30.06		%	45.66		%	78.96		%	87.39		%	87.39		%
RSL/Total assets	9.76		%	26.14		%	54.53		%	62.06		%	62.06		%
GAP/Total assets	20.29		%	19.51		%	24.43		%	25.32		%	25.32		%
GAP/RSA	67.51		%	42.74		%	30.94		%	28.98		%	28.98		%

Certain shortcomings are inherent in the method of analysis presented in the foregoing table.  For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates.  Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types of assets may lag behind changes in market rates.  Additionally, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table.  Therefore, we do not rely on a gap analysis to manage our interest rate risk, but rather we use what we believe to be the more reliable simulation model relating to changes in net interest income.

Based on simulation modeling which assumes gradual changes in interest rates over a one-year period, we believe that our net interest income would change due to changes in interest rates as follows (dollars in thousands):

Gradual	Changes in Net Interest Income Over Once Year Horizon
Changes in	March 31, 2013				December 31, 2012
Levels of	Dollar		Percentage		Dollar		Percentage
Interest Rates	Change		Change		Change		Change
+ 2.00%	$	10,818	3.96	%	$	7,932	2.72	%
+ 1.00%	$	5,922	2.17	%	$	4,174	1.43	%

In the interest rate sensitivity table above, changes in net interest income between March 31, 2013 and December 31, 2012 reflect changes in the composition of interest earning assets and interest bearing liabilities, related interest rates, repricing frequencies, and the fixed or variable characteristics of the interest earning assets and interest bearing liabilities.  The changes in

61

net interest income incorporate the impact of loan floors as well as shifts from low cost deposits to certificates of deposit in a rising rate environment.

The assumptions used in our interest rate sensitivity simulation discussed above are inherently uncertain and, as a result, the simulations cannot precisely measure net interest income or precisely predict the impact of changes in interest rates on net interest income.  Our model assumes that a portion of our variable rate loans that have minimum interest rates will remain in our portfolio regardless of changes in the interest rate environment.  Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and management strategies.

As a result of the current interest rate environment, the Company does not anticipate any significant declines in interest rates over the next twelve months.  For this reason, we did not use an interest rate sensitivity simulation that assumes a gradual decline in the level of interest rates over the next twelve months.

62

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures: An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Act”)) was carried out as of March 31, 2013 under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management.  Our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2013, our disclosure controls and procedures were effective in ensuring that the information we are required to disclose in the reports we file or submit under the Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) to allow timely decisions regarding required disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting: During the quarter ended March 31, 2013, no change occurred in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud.  A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met.  Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns in controls or procedures can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

PART II

Item 1A.   Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2012.

63

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information for the three months ended March 31, 2013 with respect to our repurchases of our outstanding common shares:

	Total Number of Shares Purchased (1)	Average Price Paid per Share		Number of Shares Purchased as Part Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January1, 2013 — January 31, 2013	1,433	$	21.12	—	1,000,000
February 1, 2013 — February 28, 2013	582	22.57		—	1,000,000
March 1, 2013 — March 31, 2013	3,381	24.04		—	1,000,000
Total	5,396	$	23.10	—

(1)          Represents shares withheld to satisfy tax withholding obligations upon the exercise of stock options and vesting of restricted stock awards.

In the fourth quarter of 2012, the Company's board of directors authorized the Company to purchase up to one million shares of common stock from time to time over the next two years, subject to market conditions and other factors.

64

Item 6.   Exhibits

See Exhibit Index.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MB FINANCIAL, INC.

(registrant)

Date:	April 29, 2013	By:	/s/Mitchell Feiger
			Mitchell Feiger
			President and Chief Executive Officer
			(Principal Executive Officer)
Date:	April 29, 2013	By:	/s/Jill E. York
			Jill E. York
			Vice President and Chief Financial Officer
			(Principal Financial and Principal Accounting Officer)

65

EXHIBIT INDEX
Exhibit Number	Description
2.2	Agreement and Plan of Merger, dated as of May 1, 2006, by and among the Registrant, MBFI Acquisition Corp. and First Oak Brook Bancshares, Inc. (“First Oak Brook”)(incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 2, 2006 (File No.0-24566-01))
2.3	Purchase and Assumption Agreement among Federal Deposit Insurance Corporation, Receiver of Corus Bank, National Association, Chicago, Illinois, Federal Deposit Insurance Corporation and MB Financial Bank, N.A., dated as of September 11, 2009 (incorporated herein by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on September 17, 2010 (File No.0-24566-01))
2.4	Purchase and Assumption Agreement among Federal Deposit Insurance Corporation, Receiver of Broadway Bank, Chicago, Illinois, Federal Deposit Insurance Corporation and MB Financial Bank, N.A., dated as of April 23, 2010 (incorporated herein by reference to Exhibit 2.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (File No. 0-24566-01))
2.5	Purchase and Assumption Agreement among Federal Deposit Insurance Corporation, Receiver of New Century Bank, Chicago, Illinois, Federal Deposit Insurance Corporation and MB Financial Bank, N.A., dated as of April 23, 2010 (incorporated herein by reference to Exhibit 2.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (File No. 0-24566-01))
3.1	Charter of the Registrant, as amended (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 0-24566-01))
3.1A	Articles Supplementary to the Charter of the Registrant for the Registrant’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 (File No.0-24566-01))
3.2	Bylaws of the Registrant, as amended (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 2, 2012 (File No. 0-24566-01))
4.1	The Registrant hereby agrees to furnish to the Commission, upon request, the instruments defining the rights of the holders of each issue of long-term debt of the Registrant and its consolidated subsidiaries
4.2	Certificate of Registrant’s Common Stock (incorporated herein by reference to Exhibit 4.1 to Amendment No. One to the Registrant’s Registration Statement on Form S-4 (No. 333-64584))
4.3	Warrant to purchase shares of the Registrant’s Common Stock (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 (File No.0-24566-01))
10.1	Letter Agreement, dated as of December 5, 2008, between the Registrant and the United States Department of the Treasury (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 8, 2008 (File No.0-24566-01))
10.2	Amended and Restated Employment Agreement between the Registrant and Mitchell Feiger (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))

66

EXHIBIT INDEX
Exhibit Number	Description
10.3	Employment Agreement between MB Financial Bank, N.A. and Burton J. Field (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 0-24566-01))
10.4	Form of Change and Control Severance Agreement between MB Financial Bank, National Association and Jill E. York (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.4B	Form of Change and Control Severance Agreement between MB Financial Bank, National Association and each of Burton Field, Larry J. Kallembach, Brian Wildman, Rosemarie Bouman and Susan Peterson (incorporated herein by reference to Exhibit 10.4B to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.4C	Form of Change in Control Severance Agreement between MB Financial Bank, National Association and each of Mark A. Heckler and Edward F. Milefchik (incorporated herein by reference to Exhibit 10.4C to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 0-24566-01))
10.5	Form of Letter Agreement dated December 4, 2008 between MB Financial, Inc. and each of Mitchell Feiger, Jill E. York, Burton Field, Larry J. Kallembach, Brian Wildman, Rosemarie Bouman, and Susan Peterson relating to the TARP Capital Purchase Program (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.5A	Form of Compensation Amendment and Waiver Agreement under the TARP Capital Purchase Program between MB Financial, Inc. and certain employees (incorporated herein by reference to Exhibit 10.5A to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 0-24566-01))
10.5B	Form of Compensation Amendment and Waiver Agreement under the TARP Capital Purchase Program between MB Financial, Inc. and each of Mark A. Heckler and Edward F. Milefchik (incorporated herein by reference to Exhibit 10.5B to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 0-24566-01))
10.7	MB Financial, Inc. Second Amended and Restated Omnibus Incentive Plan (the “Omnibus Incentive Plan”) (incorporated herein by reference to Appendix A to the Registrant’s definitive proxy statement filed on April 27, 2011 (File No. 0-24566-01))
10.8	MB Financial Stock Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.9	MB Financial Non-Stock Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.10	Avondale Federal Savings Bank Supplemental Executive Retirement Plan Agreement (incorporated herein by reference to Exhibit 10.2 to Old MB Financial’s (then known as Avondale Financial Corp.) Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 0-24566))
10.11	Agreement Regarding Salary Adjustment and Portion of Salary Payable by Stock, dated as of December 21, 2009, between MB Financial, Inc. and Mitchell Feiger (incorporated herein by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 0-24566-01))

67

EXHIBIT INDEX
Exhibit Number	Description
10.11A	Form of Agreement Regarding Salary Adjustment and Portion of Salary Payable by Stock between MB Financial, Inc. and Rosemarie Bouman, Burton J. Field, Mark A. Heckler, Larry J. Kallembach, Edward F. Milefchik, Susan G. Peterson and Brian J. Wildman (incorporated herein by reference to Exhibit 10.11A to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 0-24566-01))
10.12	Agreement Regarding Salary Adjustment and Portion of Salary Payable by Stock, dated as of December 21, 2009, between MB Financial, Inc. and Jill E. York (incorporated herein by reference to Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 0-24566-01))
10.13	Amended and Restated Employment Agreement between MB Financial Bank, N.A. and Ronald D. Santo (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 14, 2004 (File No. 0-24566-01))
10.13A	Amendment to Amended and Restated Employment Agreement between MB Financial Bank, N.A. and Ronald D. Santo ((incorporated herein by reference to Exhibit 10.13A to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2006, filed on March 2, 2007 (File No. 0-24566-01))
10.15	Tax Gross Up Agreements between the Registrant and each of Mitchell Feiger, Burton J. Field, Jill E. York, Larry J. Kallembach, Brian Wildman, and Susan Peterson (incorporated herein by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.15A	Tax Gross Up Agreement between the Registrant and Rosemarie Bouman (incorporated herein by reference to Exhibit 10.15A to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.16	Form of Incentive Stock Option Agreement for Executive Officers under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 0-24566-01))
10.17	Form of Non-Qualified Stock Option Agreement for Directors under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 0-24566-01))
10.18	Form of Restricted Stock Agreement for Executive Officers under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 0-24566-01))
10.18A	Amendment to Form of Incentive Stock Option Agreement and Form of Restricted Stock Agreement for Executive Officers under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.18A to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 0-24566-01))
10.18B	Form of Performance-Based Restricted Stock Agreement for Executive Officers under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.18B to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 (File No. 0-24566-01))
10.18C	Form of Restricted Stock Agreement for grants on December 2, 2009 to Mitchell Feiger, Jill E. York and Burton J. Field (incorporated herein by reference to Exhibit 10.18C to the Registrant’s Current Report on Form 8-K filed on December 7, 2009 (File No. 0-24566-01))

68

EXHIBIT INDEX
Exhibit Number	Description
10.19	Form of Restricted Stock Agreement for Directors under the Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 0-24566-01))
10.20	First Oak Brook Bancshares, Inc. Incentive Compensation Plan (incorporated herein by reference to Appendix A to the definitive proxy statement filed by First Oak Brook on March 30, 2004 (File No. 0-14468))
10.20A	Amendment to First Oak Brook Bancshares, Inc. Incentive Compensation Plan ((incorporated herein by reference to Exhibit 10.20A to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2006, filed on March 2, 2007 (File No. 0-24566-01))
10.21	First Oak Brook Bancshares, Inc. 2001 Stock Incentive Plan (incorporated herein by reference to Appendix A to the definitive proxy statement filed by First Oak Brook on April 2, 2001 (File No. 0-14468))
10.21A	Amendment to First Oak Brook Bancshares, Inc. 2001 Stock Incentive Plan ((incorporated herein by reference to Exhibit 10.21A to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2006, filed on March 2, 2007 (File No. 0-24566-01))
10.22	First Oak Brook Bancshares, Inc. Directors Stock Plan (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-8 filed by First Oak Brook on October 25, 1999 (File No. 333-89647))
10.22A	Amendment to First Oak Brook Bancshares, Inc. Directors Stock Plan (incorporated herein by reference to Exhibit 10.22A to the Registrant’s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2007 filed on May 15, 2007 (File No. 0-24566-01))
10.23	Reserved.
10.24	Reserved.
10.25	Reserved.
10.26	Reserved.
10.27	First Oak Brook Bancshares, Inc. Executive Deferred Compensation Plan (incorporated by reference to Exhibit 10.3 to First Oak Brook’s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 0-14468))
10.27A	Amendment to First Oak Brook Bancshares, Inc. Executive Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.27A to the Registrant’s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2007 filed on May 15, 2007)
10.29	Form of Transitional Employment Agreement between the Registrant (as successor to First Oak Brook) and Rosemarie Bouman (incorporated herein by reference to Exhibit 10.10 to First Oak Brook’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 0-14468))

69

EXHIBIT INDEX
Exhibit Number	Description
10.29A	First Amendment to Transitional Employment Agreement between the Registrant (as successor to First Oak Brook) and Rosemarie Bouman ((incorporated herein by reference to Exhibit 10.28A to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2006, filed March 2, 2007 (File No. 0-24566-01))
10.29B	Second Amendment to Transitional Employment Agreement between the Registrant (as successor to First Oak Brook) and Rosemarie Bouman ((incorporated herein by reference to Exhibit 10.28B to the Registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2006, filed March 2, 2007 (File No. 0-24566-01))
10.30	Form of Performance Share Unit Award Agreement (incorporated herein by reference to Exhibit 10.30 to the Registrant's Current Report on Form 8-K filed on September 5, 2012 (File No. 0-24566-01))
10.31	Form of Incentive Stock Option Agreement (Management Committee) (incorporated herein by reference to Exhibit 10.31 to the Registrant's Current Report on Form 8-K filed on September 5, 2012 (File No. 0-24566-01))
10.32	Form of Restricted Stock Agreement (Management Committee) (incorporated herein by reference to Exhibit 10.32 to the Registrant's Current Report on Form 8-K filed on September 5, 2012 (File No. 0-24566-01))
10.32A	Form of Restricted Stock Unit Agreement (Management Committee) (incorporated herein by reference to Exhibit 10.32A to the Registrant's Current Report on Form 8-K filed on September 5, 2012 (File No. 0-24566-01))
31.1	Rule 13a — 14(a)/15d — 14(a) Certification (Chief Executive Officer)*
31.2	Rule 13a — 14(a)/15d — 14(a) Certification (Chief Financial Officer)*
32	Section 1350 Certifications*
101	The following financial statements from the MB Financial, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, formatted in Extensive Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of cash flows and (v) the notes to consolidated financial statements*

*  Filed herewith

70

EX-31.1

EXHIBIT 31.1

CERTIFICATION 

I, Mitchell Feiger, certify that: 

1.           I have reviewed this Quarterly Report on Form 10-Q of MB Financial, Inc.; 

2.          Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and  

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): 

a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

Date:  April 29, 2013

/s/ Mitchell Feiger

Mitchell Feiger

President and Chief Executive Officer 

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jill E. York, certify that: 

 1.           I have reviewed this Quarterly Report on Form 10-Q of MB Financial, Inc.; 

 2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and  

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

  a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

 b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.  

 Date:  April 29, 2013

/s/ Jill E. York

Jill E. York

Vice President and Chief Financial Officer 

EX-32

EXHIBIT 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his or her capacity as an officer of MB Financial, Inc. (the Company) that the Quarterly Report of the Company on Form 10-Q for the quarter ended March 31, 2013 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date:	April 29, 2013	/s/Mitchell Feiger
		Mitchell Feiger
		President and Chief Executive Officer
Date:	April 29, 2013	/s/Jill E. York
		Jill E. York
		Vice President and Chief Financial Officer

XML

Business Combinations (Details) (Celtic [Member], USD $) In Thousands, unless otherwise specified	1 Months Ended
	Dec. 31, 2012	Dec. 28, 2012
Celtic [Member]
Assets Acquired and Liabilities Assumed
Cash and cash equivalents		$ 31,647
Investment securities available for sale		635
Loans, net of discount		32,933
Premises and equipment		81
Goodwill		36,300
Other intangible		5,028
Other assets		27,323
Total assets		133,947
Accrued expenses and other liabilities		75,290
Total liabilities		75,290
Cash paid (received) on acquisition		58,657
Net gain recorded on acquisition	$ 0

XML

Long-term Borrowings (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Long-term borrowings
Federal Home Loan Bank advances	$ 4,400,000
Effective interest rates on Federal Home Loan Bank advances, low end of range (as a percent)	3.23%
Effective interest rates on Federal Home Loan Bank advances, high end of range (as a percent)	5.87%
Loans pledged as collateral for long-term Federal Home Loan Bank advances	16,300,000	28,400,000
Investment securities pledged as collateral for long-term Federal Home Loan Bank advances	31,700,000	32,100,000
Principal payments due on long-term borrowings
Long-term Debt	64,019,000	116,050,000
Notes payable to banks
Long-term borrowings
Minimum interest rates (as a percent)	2.50%
Maximum interest rates (as a percent)	12.00%
Equipment pledged as collateral	27,800,000	29,700,000
Principal payments due on long-term borrowings
Long-term Debt	19,200,000	21,100,000
Structured repurchase agreement
Long-term borrowings
Term of structured repurchase agreement (in years)	10 years
Fixed interest rate, if option not exercised (as a percent)	4.75%
Principal payments due on long-term borrowings
Long-term Debt	40,000,000
Subordinated debt facility
Principal payments due on long-term borrowings
Long-term Debt	$ 50,000,000
Description of interest rate basis	3-month LIBOR
Interest rate, basis spread (as a percent)	1.70%
Minimum
Long-term borrowings
Percentage of collateral pledge of first mortgage loans as per agreement	133.00%
Percentage of collateral pledge of home equity loans as per agreement	250.00%

XML

Loans (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Allowance for credit losses [Roll Forward]
Beginning Balance	$ 124,204
Transfer to (from) allowance for unfunded credit commitments			(1,132)
Allowance for unfunded credit commitments, ending balance	2,931		7,824
Allowance for credit losses, ending balance	124,733		133,255
Ending Balance	121,802
Ending allowance balance attributable to loans:
Acquired and accounted for under ASC 310-30	4,132	[1]	2,066	[1]
Loans:
Individually evaluated for impairment	123,114		132,370
Collectively evaluated for impairment	5,162,300		5,010,435
Acquired and accounted for under ASC 310-30	422,254	[1]	646,960	[1]
Unfunded Commitments
Allowance for unfunded credit commitments, beginning balance	4,075		9,177
Transfer to (from) allowance for unfunded credit commitments			(1,132)
Allowance for unfunded commitments, Provision	(1,144)		(221)
Unfunded commitments collectively evaluated for impairment	470		4,697
Individually evaluated for impairment for unfunded commitments	2,461		3,127
Allowance for unfunded credit commitments, ending balance	2,931		7,824
Allowance for credit losses
Allowance for loan losses and unfunded commitments charge offs	5,953		9,317
Allowance for loan losses and unfunded commitments recoveries	2,407		3,497
Allowance for loan losses and unfunded commitments provision	0		3,100
Allowance for credit losses, beginning balance	128,279		135,975
Allowance for credit losses, ending balance	124,733		133,255
Allowance for credit losses, individually evaluated for impairment	18,138		16,861
Allowance for credit losses, collectively evaluated for impairment	102,463		114,328
Total loans	5,707,668	[2]	5,789,765		5,766,930	[2]
Commercial loans
Allowance for credit losses [Roll Forward]
Beginning Balance	24,943		21,106
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	911		539
Provision	(330)		(3,446)
Ending Balance	24,154		19,159
Ending allowance balance attributable to loans:
Individually evaluated for impairment	2,643		1,382
Collectively evaluated for impairment	19,475		17,777
Acquired and accounted for under ASC 310-30	2,036	[1]
Loans:
Individually evaluated for impairment	21,134		32,468
Collectively evaluated for impairment	1,168,907		985,666
Acquired and accounted for under ASC 310-30	52,040	[1]	103,907	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	452		2,038
Total loans	1,242,081		1,122,041
Commercial loans collateralized by assignment of lease payments
Allowance for credit losses [Roll Forward]
Beginning Balance	7,755		7,561
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	0
Provision	200		(327)
Ending Balance	8,099		7,490
Ending allowance balance attributable to loans:
Individually evaluated for impairment	86		342
Collectively evaluated for impairment	8,013		7,148
Acquired and accounted for under ASC 310-30		[1]
Loans:
Individually evaluated for impairment	536		1,849
Collectively evaluated for impairment	1,347,130		1,208,093
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	144		256
Total loans	1,347,666		1,209,942
Commercial real estate
Allowance for credit losses [Roll Forward]
Beginning Balance	61,056		68,695
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	1,917		3,003
Provision	3,268		8,748
Ending Balance	63,147		74,602
Ending allowance balance attributable to loans:
Individually evaluated for impairment	8,912		10,783
Collectively evaluated for impairment	52,248		61,920
Acquired and accounted for under ASC 310-30	1,987	[1]	1,899	[1]
Loans:
Individually evaluated for impairment	59,435		71,977
Collectively evaluated for impairment	1,683,894		1,805,403
Acquired and accounted for under ASC 310-30	223,952	[1]	312,412	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	740		162
Total loans	1,967,281		2,189,792
Allowance for loan losses and unfunded commitments acquired with deteriorated credit quality	4,132				4,516
Residential real estate
Allowance for credit losses [Roll Forward]
Beginning Balance	6,941		3,935
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	962		294
Provision	455		(660)
Ending Balance	6,648		3,015
Ending allowance balance attributable to loans:
Individually evaluated for impairment	2,858		0
Collectively evaluated for impairment	3,681		2,848
Acquired and accounted for under ASC 310-30	109	[1]	167	[1]
Loans:
Individually evaluated for impairment	14,791		6,883
Collectively evaluated for impairment	294,145		298,535
Acquired and accounted for under ASC 310-30	6,414	[1]	7,808	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	214		34
Total loans	315,350		313,226
Construction real estate
Allowance for credit losses [Roll Forward]
Beginning Balance	11,222		15,639
Transfer to (from) allowance for unfunded credit commitments			1,132
Charge-offs	82		3,436
Provision	(2,246)		(2,745)
Ending Balance	9,170		11,155
Ending allowance balance attributable to loans:
Individually evaluated for impairment	496		915
Collectively evaluated for impairment	8,674		10,240
Acquired and accounted for under ASC 310-30		[1]
Loans:
Individually evaluated for impairment	2,160		1,553
Collectively evaluated for impairment	99,421		126,487
Acquired and accounted for under ASC 310-30	106,927	[1]	174,996	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments			1,132
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	276		565
Total loans	208,508		303,036
Indirect vehicle
Allowance for credit losses [Roll Forward]
Beginning Balance	1,324		1,834
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	729		715
Provision	389		396
Ending Balance	1,399		1,826
Ending allowance balance attributable to loans:
Individually evaluated for impairment			0
Collectively evaluated for impairment	1,399		1,826
Acquired and accounted for under ASC 310-30		[1]
Loans:
Collectively evaluated for impairment	220,739		186,736
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	415		311
Total loans	220,739		186,736
Home equity lines
Allowance for credit losses [Roll Forward]
Beginning Balance	9,401		7,333
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	787		1,072
Provision	(826)		745
Ending Balance	7,902		7,026
Ending allowance balance attributable to loans:
Individually evaluated for impairment	682		312
Collectively evaluated for impairment	7,220		6,714
Acquired and accounted for under ASC 310-30		[1]
Loans:
Individually evaluated for impairment	25,058		17,399
Collectively evaluated for impairment	266,132		310,051
Acquired and accounted for under ASC 310-30	291	[1]	643	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	114		20
Total loans	291,481		328,093
Other consumer
Allowance for credit losses [Roll Forward]
Beginning Balance	1,562		695
Transfer to (from) allowance for unfunded credit commitments
Charge-offs	565		258
Provision	234		610
Allowance for unfunded credit commitments, ending balance			7,824
Ending Balance	1,283		1,158
Ending allowance balance attributable to loans:
Individually evaluated for impairment			0
Collectively evaluated for impairment	1,283		1,158
Acquired and accounted for under ASC 310-30		[1]
Loans:
Individually evaluated for impairment	0		241
Collectively evaluated for impairment	81,932		89,464
Acquired and accounted for under ASC 310-30	32,630	[1]	47,194	[1]
Unfunded Commitments
Transfer to (from) allowance for unfunded credit commitments
Allowance for unfunded credit commitments, ending balance			7,824
Allowance for credit losses
Financing receivable, allowance for credit losses, recovery	52		111
Total loans	114,562		136,899
Purchased loans
Allowance for credit losses [Roll Forward]
Provision	425
Allowance for credit losses
Provision and charge-offs related to the number of pools	14
Allowance for loan losses and unfunded commitments write offs net of recoveries	809
Total loans	$ 237,800

[1] Loans acquired in FDIC-assisted transactions and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

[2] Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

XML

Junior Subordinated Notes Issued to Capital Trusts (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Junior Subordinated Notes Maximum	Mar. 31, 2013 Coal City Capital Trust I Junior Subordinated Notes	Mar. 31, 2013 MB Financial Capital Trust II Junior Subordinated Notes	Mar. 31, 2013 MB Financial Capital Trust III Junior Subordinated Notes	Mar. 31, 2013 MB Financial Capital Trust IV Junior Subordinated Notes	Mar. 31, 2013 MB Financial Capital Trust V Junior Subordinated Notes	Mar. 31, 2013 MB Financial Capital Trust VI Junior Subordinated Notes	Mar. 31, 2013 FOBB Statutory Trust III Junior Subordinated Notes
Outstanding junior subordinated notes
Principal balance	$ 152,065	$ 152,065		$ 25,774	$ 36,083	$ 10,310	$ 20,619	$ 30,928	$ 23,196	$ 5,155
Debt Instrument, Basis Spread on Variable Rate				1.80%	1.40%	1.50%	1.52%	1.30%	1.30%	2.80%
Description of annual interest rate basis				3-mo LIBOR	3-mo LIBOR	3-mo LIBOR	3-mo LIBOR	3-mo LIBOR	3-mo LIBOR	3-mo LIBOR
Period for deferment of payment of interest on notes (in years)			5 years

XML

Loans (Details 4) (USD $)	3 Months Ended	12 Months Ended	3 Months Ended					3 Months Ended			3 Months Ended				3 Months Ended				3 Months Ended		3 Months Ended			3 Months Ended
	Mar. 31, 2013 loan note	Dec. 31, 2012 loan	Mar. 31, 2013 Performing loan	Mar. 31, 2012 Performing loan	Mar. 31, 2013 Non-performing loan	Mar. 31, 2012 Non-performing loan	Mar. 31, 2013 Commercial loans	Mar. 31, 2013 Commercial loans Non-performing loan	Mar. 31, 2012 Commercial loans Non-performing loan	Mar. 31, 2013 Multifamily	Mar. 31, 2012 Multifamily Performing loan	Mar. 31, 2013 Multifamily Non-performing loan	Mar. 31, 2012 Multifamily Non-performing loan	Mar. 31, 2013 Retail	Mar. 31, 2012 Retail Performing loan	Mar. 31, 2013 Retail Non-performing loan	Mar. 31, 2012 Retail Non-performing loan	Mar. 31, 2013 Other	Mar. 31, 2013 Other Non-performing loan	Mar. 31, 2013 Residential real estate	Mar. 31, 2013 Residential real estate Performing loan	Mar. 31, 2013 Residential real estate Non-performing loan	Mar. 31, 2013 Home equity lines	Mar. 31, 2013 Home equity lines Performing loan	Mar. 31, 2012 Home equity lines Performing loan	Mar. 31, 2013 Home equity lines Non-performing loan	Mar. 31, 2012 Home equity lines Non-performing loan
Restructured loans
Number of separate notes restructured into A/B by the company	2
Minimum period of sustained repayment required to return the note to accrual status (in months)	6 months
Restructured loans representing A/B structures	$ 3,000,000	$ 3,100,000
Number of A/B structures represented by restructured loans	1	1
Number of loans			8	24	25	10		1	2		1	1	1		1	2	2		1		3	4		5	22	16	5
Pre-Modification Recorded Investment			1,027,000	4,788,000	3,406,000	1,883,000		42,000	185,000		155,000	187,000	149,000		236,000	657,000	599,000		84,000		479,000	331,000		548,000	4,397,000	2,105,000	950,000
Post-Modification Recorded Investment			1,027,000	4,788,000	3,406,000	1,854,000		42,000	185,000		155,000	187,000	149,000		236,000	657,000	599,000		84,000		479,000	331,000		548,000	4,397,000	2,105,000	921,000
Charge-offs and Specific Reserves			0	0	265,000	130,000		13,000	61,000		0	50,000	40,000		0	179,000	0		23,000		0	0		0	0	0	29,000
Redefaulted loans	0
Period past due of recorded redefaulted loans (in days)	90 days
Troubled Debt Restructuring Activity [Roll Forward]
Beginning balance			21,256,000		28,418,000		42,000			187,000				657,000				84,000		811,000			2,652,000
Additions			1,027,000		3,406,000
Charge-offs			0		(2,039,000)
Principal payments, net			(276,000)		(3,749,000)
Removals			0		0
Transfer to other real estate owned			0		(157,000)
Transfer from/to performing			0		377,000
Transfer from/to nonperforming			(377,000)		0
Ending balance	$ 4,433,000		$ 21,630,000		$ 26,256,000		$ 42,000			$ 187,000				$ 657,000				$ 84,000		$ 811,000			$ 2,652,000

XML

Junior Subordinated Notes Issued to Capital Trusts (Tables)

3 Months Ended

Mar. 31, 2013

JUNIOR SUBORDINATED NOTES ISSUED TO CAPITAL TRUSTS

Outstanding junior subordinated notes and the related trust preferred securities issued by each trust

The table below summarizes the outstanding junior subordinated notes and the related trust preferred securities issued by each trust as of March 31, 2013 (in thousands):

	Coal City Capital Trust I		MB Financial Capital Trust II		MB Financial Capital Trust III		MB Financial Capital Trust IV
Junior Subordinated Notes:
Principal balance	$	25,774	$	36,083	$	10,310	$	20,619
Annual interest rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Stated maturity date	September 1, 2028		September 15, 2035		September 23, 2036		September 15, 2036
Call date	September 1, 2008		December 15, 2010		September 23, 2011		September 15, 2011
Trust Preferred Securities:
Face Value	$	25,000	$	35,000	$	10,000	$	20,000
Annual distribution rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Issuance date	July 1998		August 2005		July 2006		August 2006
Distribution dates (1)	Quarterly		Quarterly		Quarterly		Quarterly

	MB Financial Capital Trust V		MB Financial Capital Trust VI		FOBB Statutory Trust III (2)
Junior Subordinated Notes:
Principal balance	$	30,928	$	23,196	$	5,155
Annual interest rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Stated maturity date	December 15, 2037		October 30, 2037		January 23, 2034
Call date	December 15, 2012		October 30, 2012		January 23, 2009
Trust Preferred Securities:
Face Value	$	30,000	$	22,500	$	5,000
Annual distribution rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Issuance date	September 2007		October 2007		December 2003
Distribution dates (1)	Quarterly		Quarterly		Quarterly

(1) All distributions are cumulative and paid in cash.

(2) FOBB Statutory Trust III was established by First Oak Brook Bancshares, Inc. (“FOBB”) prior to the Company's acquisition of FOBB, and the junior subordinated note issued by FOBB to FOBB Statutory Trust III was assumed by the Company upon completion of the acquisition.

XML

Commitments and Contingencies (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Commitments [Abstract]
Maximum maturity period for letters of credit (in years)	5 years
Increase (decrease) in maximum potential amount of future payments under letters of credit	$ 7,800,000
Dollar amount of letters of credit outstanding	74,600,000	66,700,000
Letters of credit issued or renewed	23,800,000
Capital expenditure commitments outstanding	2,202,000
Home equity lines
Commitments and contingencies
Dollar amount of line of credit outstanding	238,463,000	239,771,000
Other commitments
Commitments and contingencies
Dollar amount of line of credit outstanding	991,668,000	911,166,000
Standby
Commitments and contingencies
Dollar amount of line of credit outstanding	73,703,000	66,247,000
Commercial
Commitments and contingencies
Dollar amount of line of credit outstanding	$ 852,000	$ 465,000

XML

New Authoritative Accounting Guidance (Policies)

3 Months Ended

Mar. 31, 2013

New Authoritative Accounting Guidance [Abstract]

New Authoritative Accounting Pronouncements

ASC Topic 805 “Business Combinations.” New authoritative accounting guidance under ASC Topic 805, “Business Combinations” amended prior guidance on the subsequent accounting for an indemnification asset recognized at the acquisition date as a result of a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement. The new authoritative guidance requires that at each subsequent reporting date, an acquirer measure an indemnification asset on the same basis as the indemnified liability or asset, subject to any contractual limitations on its amount, and, for an indemnification asset that is not subsequently measured at fair value, management's assessment of the collectability of the indemnification asset. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities.” New authoritative accounting guidance under ASC Topic 210, “Disclosures about Offsetting Assets and Liabilities” amended prior guidance to require an entity to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The instruments and transactions would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. This new authoritative guidance was further amended to clarify the scope of offsetting disclosures. The Company adopted the new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 220 “Comprehensive Income.” New authoritative accounting guidance under ASC Topic 220, “Comprehensive Income” amended prior guidance to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount reclassified is required under U.S. GAAP. The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

XML

Loans (Details 8) (USD $)	Mar. 31, 2013		Dec. 31, 2012
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	$ 400,789,000		$ 449,850,000
Estimated receivable amount from the FDIC under the loss-share agreement	27,559,000	[1]
Non covered loans	21,465,000
Outstanding balances on purchased loans from the FDIC	454,700,000		515,700,000
Carrying amount on loans purchased from the FDIC	422,300,000		471,600,000
Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	210,089,000
Estimated receivable amount from the FDIC under the loss-share agreement	9,657,000	[1]
Non covered loans	3,996,000
Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	190,700,000
Estimated receivable amount from the FDIC under the loss-share agreement	17,902,000	[1]
Non covered loans	17,469,000
Commercial related
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	24,992,000	[2]
Non covered loans	17,597,000	[3]
Commercial related | Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Reimbursable Amount Covered Other Real Estate Owned	1,600,000
Covered loans	19,559,000	[2]
Non covered loans	3,908,000	[3]
Commercial related | Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	5,433,000	[2]
Non covered loans	13,689,000	[3]
Commercial loans
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	9,451,000
Commercial loans | Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	3,957,000
Commercial loans | Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	5,494,000
Commercial real estate
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	223,952,000
Commercial real estate | Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	87,016,000
Commercial real estate | Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	136,936,000
Construction real estate
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	106,927,000
Construction real estate | Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	96,093,000
Construction real estate | Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	10,834,000
Other
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	35,467,000
Non covered loans	3,868,000
Other | Purchased Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	3,464,000
Non covered loans	88,000
Other | Purchased Non-Credit Impaired Loans Receivable
Purchased credit-impaired loans and non-credit-impaired loans
Covered loans	32,003,000
Non covered loans	$ 3,780,000

[1] Estimated reimbursable amounts from the FDIC under the loss-share agreement exclude $1.6 million in reimbursable amounts related to covered other real estate owned.

[2] Covered commercial related loans include commercial, commercial real estate and construction real estate loans acquired in connection with the Heritage and Benchmark FDIC-assisted transactions.

[3] Non covered commercial related loans include commercial, commercial real estate and construction real estate for InBank.

XML

Investment Securities (Details 3) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Realized net gains on the sale of investment securities available for sale
Realized losses	$ (1,000)	$ (3,000)
Net gains	(1,000)	(3,000)
Amortized Cost, Available for sale
Due in one year or less	33,798,000
Due after one year through five years	420,646,000
Due after five years through ten years	154,410,000
Due after ten years	307,764,000
Amortized Cost	1,754,822,000		1,808,521,000
Fair Value, Available for sale
Due in one year or less	34,326,000
Due after one year through five years	442,426,000
Due after five years through ten years	161,434,000
Due after ten years	320,199,000
Fair Value	1,812,169,000		1,868,171,000
Amortized Cost, Held to maturity
Due in one year or less	983,000
Due in after one year through five years	4,135,000
Due after five years through ten years	23,000,000
Due after ten years	234,192,000
Investment securities held to maturity	517,785,000		493,421,000
Fair value, Held to maturity
Due in one year or less	1,002,000
Due in after one year through five years	4,189,000
Due after five years through ten years	23,677,000
Due after ten years	250,989,000
Investment Securities held to maturity	554,601,000		535,681,000
Total Available for Sale and Held to Maturity Investment Securities
Amortized Cost	2,272,607,000		2,301,942,000
Fair Value	2,366,770,000		2,403,852,000
Carrying amounts of investment securities available for sale pledged as collateral	1,100,000,000		989,600,000
Equity securities
Amortized Cost, Available for sale
Amortized Cost	10,820,000		11,398,000
Fair Value, Available for sale
Fair Value	11,179,000		11,835,000
Residential and commercial mortgage-backed securities
Amortized Cost, Available for sale
Amortized Cost	827,384,000
Fair Value, Available for sale
Fair Value	842,605,000
Residential mortgage-backed securities
Amortized Cost, Available for sale
Amortized Cost	776,336,000		930,413,000
Fair Value, Available for sale
Fair Value	788,768,000		939,202,000
Amortized Cost, Held to maturity
Investment securities held to maturity	255,475,000		255,858,000
Fair value, Held to maturity
Investment Securities held to maturity	$ 274,744,000		$ 277,079,000

XML

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of derivative financial instruments

The Company’s derivative financial instruments are summarized below as of March 31, 2013 and December 31, 2012 (in thousands):

	Asset Derivatives								Liability Derivatives
	March 31, 2013				December 31, 2012				March 31, 2013					December 31, 2012
	Notional		Estimated		Notional		Estimated		Notional		Estimated			Notional		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value			Amount		Fair Value
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts (1)	$	—	$	—	$	—	$	—	$	3,637	$	(62	)	$	3,707	$	(94	)
Stand-alone derivative instruments (2)
Interest rate swap contracts	504,494		23,853		460,956		27,740		505,328		(23,934		)	462,012		(27,832		)
Interest rate options contracts	72,729		164		70,346		157		72,729		(164		)	70,346		(157		)
Foreign exchange contracts	19,888		1,673		20,033		1,062		19,495		(1,567		)	19,337		(961		)
Mortgage banking derivatives	9,898		147		11,400		137		5,000		(34		)	4,000		(11		)
Total non-hedging derivative instruments	607,009		25,837		562,735		29,096		602,552		(25,699		)	555,695		(28,961		)
Total	$	607,009	$	25,837	$	562,735	$	29,096	$	606,189	$	(25,761	)	$	559,402	$	(29,055	)

(1) Hedged fixed-rate commercial real estate loans

(2) These portfolio swaps are not designated as hedging instruments under ASC Topic 815.

Schedule of the amount of gains and losses on derivative contracts designated as hedges and not designated as hedges

Amounts included in the other income in the consolidated statements of operations related to derivative financial instruments were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts	$	(1	)	$	(61	)
Stand-alone derivative instruments
Interest rate swap contracts	11			66
Interest rate options contracts	—			—
Foreign exchange contracts	5			2
Mortgage banking derivatives	(13		)	27
Total non-hedging derivative instruments	3			95
Total	$	2		$	34

XML

Deposits (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Deposits, by Type [Abstract]
Demand deposit accounts, noninterest bearing	$ 2,067,310,000	$ 2,164,547,000
NOW and money market accounts	2,778,916,000	2,747,273,000
Savings accounts	833,251,000	811,333,000
Certificates of deposit, $100,000 or more	1,006,947,000	1,020,033,000
Other certificates of deposit	765,482,000	799,511,000
Total	7,451,906,000	7,542,697,000
Brokered deposits	$ 294,400,000	$ 294,200,000

XML

Fair Value Measurements (Details 3) (Nonrecurring basis, USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Total Fair Value
Financial Assets:
Impaired loans	$ 84,194	$ 62,258
Foreclosed assets	52,230	60,228
Non-financial long-lived assets		2,314
Significant Unobservable Inputs (Level 3)
Financial Assets:
Impaired loans	84,194	62,258
Foreclosed assets	52,230	60,228
Non-financial long-lived assets		$ 2,314

XML

Loans Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	$ 1,357
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	1,062
Extended Maturity and Delay in Payments	0
Extended Maturity	227
Delay in Payments or Reduction of Interest Rate	1,787
Total	4,433
Commercial loans
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	42
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	0
Extended Maturity and Delay in Payments	0
Extended Maturity	0
Delay in Payments or Reduction of Interest Rate	0
Total	42
Multifamily
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	187
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	0
Extended Maturity and Delay in Payments	0
Extended Maturity	0
Delay in Payments or Reduction of Interest Rate	0
Total	187
Retail
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	256
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	401
Extended Maturity and Delay in Payments	0
Extended Maturity	0
Delay in Payments or Reduction of Interest Rate	0
Total	657
Other
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	84
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	0
Extended Maturity and Delay in Payments	0
Extended Maturity	0
Delay in Payments or Reduction of Interest Rate	0
Total	84
Residential real estate
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	193
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	0
Extended Maturity and Delay in Payments	0
Extended Maturity	0
Delay in Payments or Reduction of Interest Rate	618
Total	811
Home equity lines
Activity in the allowance for loan losses, balance in allowance for loan losses and recorded investment in loans by portfolio segment and based on impairment method
Extended Maturity and Amortization and Reduction of Interest Rate	595
Extended Maturity and Amortization	0
Extended Maturity and Reduction of Interest Rate	661
Extended Maturity and Delay in Payments	0
Extended Maturity	227
Delay in Payments or Reduction of Interest Rate	1,169
Total	$ 2,652

XML

Basis of Presentation (Notes)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Basis of Presentation

 These unaudited consolidated financial statements include the accounts of MB Financial, Inc., a Maryland corporation (the “Company”), and its subsidiaries, including its wholly owned national bank subsidiary, MB Financial Bank, N.A. (“MB Financial Bank”), based in Chicago, Illinois. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been made. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year.

These unaudited interim financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and industry practice. Certain information in footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP and industry practice has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2012 audited financial statements filed on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ from those estimates.

Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications did not result in any changes to previously reported net income or stockholders’ equity.

XML

Fair Value Measurements (Details 4) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Fair Value Disclosures [Abstract]
Maximum maturity period of short-term borrowings where carrying value approximates fair value (in days)	90 days
Minimum maturity period of short-term borrowings where fair value is based on discounted value of conctractual cash flows (in days)	90 days
Financial Assets:
Cash and due from banks	$ 131,146,000	$ 176,010,000
Interest bearing deposits with banks	108,885,000	111,533,000
Securities available for sale, at fair value	1,812,169,000	1,868,171,000
Investment securities held to maturity	517,785,000	493,421,000
Investment securities held to maturity	554,601,000	535,681,000
Non-marketable securities - FHLB and FRB stock	52,434,000	55,385,000
Loans held for sale	3,030,000	7,492,000
Loans, net	5,585,866,000	5,642,726,000
Financial Liabilities:
Non-interest bearing deposits	2,067,310,000	2,164,547,000
Interest bearing deposits	5,384,596,000	5,378,150,000
Short-term borrowings	224,379,000	220,602,000
Long-term borrowings	64,019,000	116,050,000
Junior subordinated notes issued to capital trusts	152,065,000	152,065,000
Carrying Amount
Financial Assets:
Cash and due from banks	131,146,000	176,010,000
Interest bearing deposits with banks	108,885,000	111,533,000
Securities available for sale, at fair value	1,812,169,000
Securities available for sale		1,868,171,000
Investment securities held to maturity	517,785,000
Investment securities held to maturity		493,421,000
Non-marketable securities - FHLB and FRB stock	52,434,000	55,385,000
Loans held for sale	3,030,000	7,492,000
Loans, net	5,585,866,000
Loans, net		5,642,726,000
Accrued interest receivable	35,123,000	36,040,000
Derivative financial instruments	25,837,000	29,096,000
Financial Liabilities:
Non-interest bearing deposits	2,067,310,000	2,164,547,000
Interest bearing deposits	5,384,596,000	5,378,150,000
Short-term borrowings	224,379,000	220,602,000
Long-term borrowings	64,019,000
Long-term borrowings		116,050,000
Junior subordinated notes issued to capital trusts	152,065,000	152,065,000
Accrued interest payable	2,598,000	2,828,000
Derivative financial instruments	25,761,000	29,055,000
Total Fair Value
Financial Assets:
Cash and due from banks	131,146,000	176,010,000
Interest bearing deposits with banks	108,885,000	111,533,000
Securities available for sale	1,812,169,000	1,868,171,000
Investment securities held to maturity	554,601,000	535,681,000
Non-marketable securities - FHLB and FRB stock	52,434,000	55,385,000
Loans held for sale	3,030,000	7,492,000
Loans, net	5,578,973,000	5,659,598,000
Accrued interest receivable	35,123,000	36,040,000
Derivative financial instruments	25,837,000	29,096,000
Financial Liabilities:
Non-interest bearing deposits	2,067,310,000	2,164,547,000
Interest bearing deposits	5,402,697,000	5,399,709,000
Short-term borrowings	224,384,000	220,683,000
Long-term borrowings	70,354,000	117,809,000
Junior subordinated notes issued to capital trusts	110,616,000	104,009,000
Accrued interest payable	2,598,000	2,828,000
Derivative financial instruments	25,761,000	29,055,000
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets:
Cash and due from banks	131,146,000	176,010,000
Interest bearing deposits with banks	108,885,000	111,533,000
Securities available for sale	11,179,000	11,835,000
Investment securities held to maturity	0	0
Non-marketable securities - FHLB and FRB stock	0	0
Loans held for sale	0	0
Loans, net	0	0
Accrued interest receivable	35,123,000	36,040,000
Derivative financial instruments	0	0
Financial Liabilities:
Non-interest bearing deposits	2,067,310,000	2,164,547,000
Interest bearing deposits	0	0
Short-term borrowings	0	0
Long-term borrowings	0	0
Junior subordinated notes issued to capital trusts	0	0
Accrued interest payable	2,598,000	2,828,000
Derivative financial instruments	0	0
Recurring basis | Significant Other Observable Inputs (Level 2)
Financial Assets:
Cash and due from banks	0	0
Interest bearing deposits with banks	0	0
Securities available for sale	1,795,062,000	1,850,265,000
Investment securities held to maturity	554,601,000	535,681,000
Non-marketable securities - FHLB and FRB stock	0	0
Loans held for sale	3,030,000	7,492,000
Loans, net	0	0
Accrued interest receivable	0	0
Derivative financial instruments	25,837,000	29,096,000
Financial Liabilities:
Non-interest bearing deposits	0	0
Interest bearing deposits	0	0
Short-term borrowings	0	0
Long-term borrowings	0	0
Junior subordinated notes issued to capital trusts	0	0
Accrued interest payable	0	0
Derivative financial instruments	25,761,000	29,055,000
Recurring basis | Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	0	0
Interest bearing deposits with banks	0	0
Securities available for sale	5,928,000	6,071,000
Investment securities held to maturity	0	0
Non-marketable securities - FHLB and FRB stock	52,434,000	55,385,000
Loans held for sale	0	0
Loans, net	5,578,973,000	5,659,598,000
Accrued interest receivable	0	0
Derivative financial instruments	0	0
Financial Liabilities:
Non-interest bearing deposits	0	0
Interest bearing deposits	5,402,697,000	5,399,709,000
Short-term borrowings	224,384,000	220,683,000
Long-term borrowings	70,354,000	117,809,000
Junior subordinated notes issued to capital trusts	110,616,000	104,009,000
Accrued interest payable	0	0
Derivative financial instruments	$ 0	$ 0

XML

Loans (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 investmentrating		Dec. 31, 2012		Mar. 31, 2012
Loans
Total loans, excluding covered loans	$ 5,306,879,000		$ 5,317,080,000
Covered loans	400,789,000		449,850,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	5,707,668,000	[1]	5,766,930,000	[1]	5,789,765,000
Net unearned income, including net deferred loan fees	1,200,000		1,100,000
Number of highest rating categories by rating services company	1
Number of highest rating categories to be achieved for classification as investment grade companies	4
Commercial loans
Loans
Total loans, excluding covered loans	1,207,638,000		1,220,472,000
Covered loans	9,451,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,242,081,000				1,122,041,000
Commercial loans collateralized by assignment of lease payments
Loans
Total loans, excluding covered loans	1,347,666,000		1,303,020,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,347,666,000				1,209,942,000
Commercial real estate
Loans
Total loans, excluding covered loans	1,743,329,000		1,761,832,000
Covered loans	223,952,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,967,281,000				2,189,792,000
Residential real estate
Loans
Total loans, excluding covered loans	312,804,000		314,359,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	315,350,000				313,226,000
Construction real estate
Loans
Total loans, excluding covered loans	101,581,000		110,261,000
Covered loans	106,927,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	208,508,000				303,036,000
Indirect vehicle
Loans
Total loans, excluding covered loans	220,739,000		208,633,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	220,739,000				186,736,000
Home equity lines
Loans
Total loans, excluding covered loans	291,190,000		305,186,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	291,481,000				328,093,000
Other consumer loans
Loans
Total loans, excluding covered loans	81,932,000		93,317,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	$ 114,562,000				$ 136,899,000

[1] Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

XML

Loans (Tables)

3 Months Ended

Mar. 31, 2013

Receivables [Abstract]

Schedule of composition of loans

Loans consist of the following at (in thousands):

	March 31, 2013		December 31, 2012
Commercial loans	$	1,207,638	$	1,220,472
Commercial loans collateralized by assignment of lease payments	1,347,666		1,303,020
Commercial real estate	1,743,329		1,761,832
Residential real estate	312,804		314,359
Construction real estate	101,581		110,261
Indirect vehicle	220,739		208,633
Home equity	291,190		305,186
Other consumer loans	81,932		93,317
Gross loans, excluding covered loans	5,306,879		5,317,080
Covered loans	400,789		449,850
Total loans(1)	$	5,707,668	$	5,766,930

 (1) Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

Contractual aging of the recorded investment in past due loans by class of loans

The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	Current		30-59 Days Past Due		60-89 Days Past Due		Loans past due 90 days or more		Total Past Due		Total
March 31, 2013
Commercial	$	1,202,455	$	1,487	$	513	$	3,183	$	5,183	$	1,207,638
Commercial collateralized by assignment of lease payments	1,337,485		6,199		3,393		589		10,181		1,347,666
Commercial real estate
Healthcare	190,062		—		—		3,238		3,238		193,300
Industrial	394,574		3,064		1,765		6,894		11,723		406,297
Multifamily	330,425		821		283		2,391		3,495		333,920
Retail	387,297		1,080		—		6,921		8,001		395,298
Office	170,115		373		962		4,089		5,424		175,539
Other	232,910		409		3,762		1,894		6,065		238,975
Residential real estate	301,609		2,830		1,730		6,635		11,195		312,804
Construction real estate	97,943		700		95		2,843		3,638		101,581
Indirect vehicle	218,794		1,316		305		324		1,945		220,739
Home equity	279,908		2,087		1,306		7,889		11,282		291,190
Other consumer	81,903		20		3		6		29		81,932
Gross loans, excluding covered loans	5,225,480		20,386		14,117		46,896		81,399		5,306,879
Covered loans	264,236		8,038		6,221		122,294		136,553		400,789
Total loans (1)	$	5,489,716	$	28,424	$	20,338	$	169,190	$	217,952	$	5,707,668
Nonperforming loan aging	$	63,416	$	3,295	$	7,147	$	40,100	$	50,542	$	113,958
Non-covered loans related to FDIC transactions (2)	$	14,139	$	82	$	449	$	6,795	$	7,326	$	21,465
December 31, 2012
Commercial	$	1,215,957	$	639	$	754	$	3,122	$	4,515	$	1,220,472
Commercial collateralized by assignment of lease payments	1,288,341		11,252		2,847		580		14,679		1,303,020
Commercial real estate
Healthcare	192,039		—		—		3,238		3,238		195,277
Industrial	402,813		548		424		7,700		8,672		411,485
Multifamily	353,966		1,282		—		3,103		4,385		358,351
Retail	375,900		6,933		518		9,331		16,782		392,682
Office	186,665		742		280		1,125		2,147		188,812
Other	210,456		851		1,837		2,081		4,769		215,225
Residential real estate	306,927		382		1,248		5,802		7,432		314,359
Construction real estate	106,158		1,139		97		2,867		4,103		110,261
Indirect vehicle	206,126		1,588		498		421		2,507		208,633
Home equity	291,737		3,557		1,888		8,004		13,449		305,186
Other consumer	93,266		47		—		4		51		93,317
Gross loans, excluding covered loans	5,230,351		28,960		10,391		47,378		86,729		5,317,080
Covered loans	301,260		5,831		7,478		135,281		148,590		449,850
Total loans (1)	$	5,531,611	$	34,791	$	17,869	$	182,659	$	235,319	$	5,766,930
Nonperforming loan aging	$	69,836	$	3,171	$	3,718	$	40,261	$	47,150	$	116,986
Non-covered loans related to FDIC transactions (2)	$	12,752	$	312	$	1,542	$	7,115	$	8,969	$	21,721

(1)          Includes loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

(2)          Loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing by class of loans

The following table presents the recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013				December 31, 2012
			Loans past due				Loans past due
	Nonaccrual		90 days or more and still accruing		Nonaccrual		90 days or more and still accruing
Commercial	$	21,134	$	400	$	23,886	$	229
Commercial collateralized by assignment of lease payments	439		274		1,180		222
Commercial real estate:
Healthcare	3,238		—		3,238		—
Industrial	14,988		3,603		19,179		147
Multifamily	6,131		—		7,225		—
Office	13,577		561		3,263		—
Retail	6,738		—		17,019		—
Other	8,768		—		9,437		—
Residential real estate	12,428		—		10,943		—
Construction real estate	1,025		—		1,028		—
Indirect vehicles	1,499		17		1,494		—
Home equity	18,791		338		17,486		1,000
Other consumer	9		—		9		1
Total	$	108,765	$	5,193	$	115,387	$	1,599

Risk category of loans by class of loans

The following tables present the risk category of loans by class of loans based on the most recent analysis performed and the contractual aging as of March 31, 2013 and December 31, 2012 (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2013
Commercial	$	1,106,341	$	53,980	$	47,317	$	—	$	1,207,638
Commercial collateralized by assignment of lease payments	1,339,062		97		8,507		—		1,347,666
Commercial real estate
Healthcare	168,433		21,629		—		3,238		193,300
Industrial	351,514		19,948		34,835		—		406,297
Multifamily	316,962		3,935		13,023		—		333,920
Retail	357,114		14,485		23,699		—		395,298
Office	143,780		5,253		26,506		—		175,539
Other	198,048		19,279		21,648		—		238,975
Construction real estate	88,315		549		12,717		—		101,581
Total	$	4,069,569	$	139,155	$	188,252	$	3,238	$	4,400,214
December 31, 2012
Commercial	$	1,136,294	$	33,068	$	50,895	$	215	$	1,220,472
Commercial collateralized by assignment of lease payments	1,292,241		3,322		7,457		—		1,303,020
Commercial real estate
Healthcare	170,265		21,774		—		3,238		195,277
Industrial	355,218		15,243		41,024		—		411,485
Multifamily	318,991		25,297		14,063		—		358,351
Retail	340,919		25,096		26,667		—		392,682
Office	159,056		7,120		22,636		—		188,812
Other	193,824		2,553		18,848		—		215,225
Construction real estate	97,724		552		11,985		—		110,261
Total	$	4,064,532	$	134,025	$	193,575	$	3,453	$	4,395,585

Recorded investment in loan classes based on payment activity

The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2013 and December 31, 2012 (in thousands):

	Performing		Non-performing		Total
March 31, 2013
Residential real estate	$	300,376	$	12,428	$	312,804
Indirect vehicles	219,223		1,516		220,739
Home equity	272,061		19,129		291,190
Other consumer	81,923		9		81,932
Total	$	873,583	$	33,082	$	906,665
December 31, 2012
Residential real estate	$	303,416	$	10,943	$	314,359
Indirect vehicles	207,139		1,494		208,633
Home equity	286,700		18,486		305,186
Other consumer	93,307		10		93,317
Total	$	890,562	$	30,933	$	921,495

Loans individually evaluated for impairment by class of loans

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,016	$	8,440	$	1,576	$	—	$	9,853	$	—
Commercial collateralized by assignment of lease payments	—		—		—		—		—		—
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		10,943		—
Industrial	11,744		10,873		871		—		11,893		—
Multifamily	779		779		—		—		787		—
Retail	3,986		3,526		460		—		3,482		—
Office	1,366		1,170		196		—		1,499		—
Other	2,285		2,283		2		—		2,707		—
Residential real estate	1,730		1,344		386		—		1,730		—
Construction real estate	—		—		—		—		—		—
Indirect vehicles	—		—		—		—		—		—
Home equity	1,575		1,575		—		—		1,471		—
Other consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial	12,745		12,694		51		2,643		13,916		—
Commercial collateralized by assignment of lease payments	536		536		—		86		760		8
Commercial real estate:
Healthcare	—		—		—		—		—		—
Industrial	4,117		4,117		—		1,026		4,077		—
Multifamily	6,950		6,170		780		2,107		6,738		54
Retail	21,267		15,227		6,040		2,396		14,774		—
Office	5,643		5,568		75		2,004		3,026		—
Other	6,568		6,484		84		1,379		6,424		4
Residential real estate	14,151		13,447		704		2,858		13,696		—
Construction real estate	4,547		2,160		2,387		496		2,305		—
Indirect vehicles	—		—		—		—		—		—
Home equity	24,043		23,483		560		682		24,715		—
Other consumer	—		—		—		—		—		—
Total	$	144,991	$	123,114	$	21,877	$	15,677	$	134,796	$	66

	December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,993	$	9,505	$	1,488	$	—	$	14,089	$	105
Commercial collateralized by assignment of lease payments	390		390		—		—		278		9
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		2,751		—
Industrial	16,891		14,940		1,951		—		16,374		29
Multifamily	800		800		—		—		1,340		14
Retail	5,372		4,917		455		—		9,241		—
Office	1,568		1,568		—		—		1,151		—
Other	4,860		4,860		—		—		6,005		—
Residential real estate	3,097		2,711		386		—		6,476		—
Construction real estate	—		—		—		—		577		—
Indirect vehicles	—		—		—		—		—		—
Home equity	2,558		2,558		—		—		8,976		—
Other consumer	—		—		—		—		182		—
With an allowance recorded:
Commercial	14,484		14,381		103		3,620		8,455		—
Commercial collateralized by assignment of lease payments	885		885		—		188		1,130		73
Commercial real estate:
Healthcare	—		—		—		—		3,901		—
Industrial	5,525		4,238		1,287		1,255		2,443		—
Multifamily	8,233		7,249		984		2,284		5,847		130
Retail	23,144		17,257		5,887		3,604		10,058		—
Office	1,706		1,695		11		522		1,904		—
Other	4,661		4,577		84		1,263		6,082		16
Residential real estate	10,565		10,565		—		2,858		3,417		—
Construction real estate	4,552		2,167		2,385		497		3,775		—
Indirect vehicles	—		—		—		—		—		—
Home equity	13,765		13,763		2		850		4,800		—
Other consumer	—		—		—		—		—		—
Total	$	144,992	$	122,264	$	22,728	$	16,941	$	119,252	$	376

Schedule of loans that have been restructured classified as performing and non-performing

The following table presents loans that have been restructured during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Residential real estate	3	$	479	$	479	$	—
Home equity	5	548		548		—
Total	8	$	1,027	$	1,027	$	—
Non-Performing:
Commercial	1	$	42	$	42	$	13
Commercial real estate:
Multifamily	1	187		187		50
Retail	2	657		657		179
Other	1	84		84		23
Residential real estate	4	331		331		—
Home equity	16	2,105		2,105		—
Total	25	$	3,406	$	3,406	$	265

The following table presents loans that have been restructured during the three months ended March 31, 2012 (dollars in thousands):

	March 31, 2012
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Commercial real estate:
Multifamily	1	$	155	$	155	$	—
Retail	1	236		236		—
Home equity	22	4,397		4,397		—
Total	24	$	4,788	$	4,788	$	—
Non-Performing:
Commercial	2	$	185	$	185	$	61
Commercial real estate:
Multifamily	1	149		149		40
Retail	2	599		599		—
Home equity	5	950		921		29
Total	10	$	1,883	$	1,854	$	130

Troubled debt restructuring activity rollforward

The following tables present the troubled debt restructurings activity during the three months ended March 31, 2013 (dollars in thousands):

	Performing			Non-performing
Beginning balance	$	21,256		$	28,418
Additions	1,027			3,406
Charge-offs	—			(2,039		)
Principal payments, net	(276		)	(3,749		)
Removals	—			—
Transfer to other real estate owned	—			(157		)
Transfer from/to performing	—			377
Transfer from/to nonperforming	(377		)	—
Ending balance	$	21,630		$	26,256

Type of financing receivable modifications and restructuring

The following table presents the type of modification for loans that have been restructured and the post-modification recorded investment during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Extended
	Maturity,				Extended		Extended				Delay in
	Amortization		Extended		Maturity and		Maturity and				Payments or
	and Reduction		Maturity and		Reduction of		Delay in		Extended		Reduction of
	of Interest Rate		Amortization		Interest Rate		Payments		Maturity		Interest Rate		Total
Commercial	$	42	$	—	$	—	$	—	$	—	$	—	$	42
Commercial real estate:
Multifamily	187		—		—		—		—		—		187
Retail	256		—		401		—		—		—		657
Other	84		—		—		—		—		—		84
Residential real estate	193		—		—		—		—		618		811
Home equity	595		—		661		—		227		1,169		2,652
Total	$	1,357	$	—	$	1,062	$	—	$	227	$	1,787	$	4,433

Allowance activity for loan losses by portfolio segment based on impairment method

The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2013 and 2012 (in thousands):

	Commercial			Commercial collateralized  by assignment of lease payments			Commercial real estate		Residential real estate			Construction real estate			Indirect vehicles		Home equity			Other Consumer		Unfunded Commitments			Total
March 31, 2013
Allowance for credit losses:
Beginning balance	$	24,943		$	7,755		$	61,056	$	6,941		$	11,222		$	1,324	$	9,401		$	1,562	$	4,075		$	128,279
Charge-offs	911			—			1,917		962			82			729		787			565		—			5,953
Recoveries	452			144			740		214			276			415		114			52		—			2,407
Provision	(330		)	200			3,268		455			(2,246		)	389		(826		)	234		(1,144		)	—
Ending balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,643		$	86		$	8,912	$	2,858		$	496		$	—	$	682		$	—	$	2,461		$	18,138
Collectively evaluated for impairment	19,475			8,013			52,248		3,681			8,674			1,399		7,220			1,283		470			102,463
Acquired and accounted for under ASC 310-30 (1)	2,036			—			1,987		109			—			—		—			—		—			4,132
Total ending allowance balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Loans:
Individually evaluated for impairment	$	21,134		$	536		$	59,435	$	14,791		$	2,160		$	—	$	25,058		$	—	$	—		$	123,114
Collectively evaluated for impairment	1,168,907			1,347,130			1,683,894		294,145			99,421			220,739		266,132			81,932		—			5,162,300
Acquired and accounted for under ASC 310-30 (1)	52,040			—			223,952		6,414			106,927			—		291			32,630		—			422,254
Total ending loans balance	$	1,242,081		$	1,347,666		$	1,967,281	$	315,350		$	208,508		$	220,739	$	291,481		$	114,562	$	—		$	5,707,668
March 31, 2012
Allowance for credit losses:
Beginning balance	$	21,106		$	7,561		$	68,695	$	3,935		$	15,639		$	1,834	$	7,333		$	695	$	9,177		$	135,975
Transfer to (from) allowance for unfunded credit commitments	—			—			—		—			1,132			—		—			—		(1,132		)	—
Charge-offs	539			—			3,003		294			3,436			715		1,072			258		—			9,317
Recoveries	2,038			256			162		34			565			311		20			111		—			3,497
Provision	(3,446		)	(327		)	8,748		(660		)	(2,745		)	396		745			610		(221		)	3,100
Ending balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,382		$	342		$	10,783	$	—		$	915		$	—	$	312		$	—	$	3,127		$	16,861
Collectively evaluated for impairment	17,777			7,148			61,920		2,848			10,240			1,826		6,714			1,158		4,697			114,328
Acquired and accounted for under ASC 310-30 (1)	—			—			1,899		167			—			—		—			—		—			2,066
Total ending allowance balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Loans:
Individually evaluated for impairment	$	32,468		$	1,849		$	71,977	$	6,883		$	1,553		$	—	$	17,399		$	241	$	—		$	132,370
Collectively evaluated for impairment	985,666			1,208,093			1,805,403		298,535			126,487			186,736		310,051			89,464		—			5,010,435
Acquired and accounted for under ASC 310-30 (1)	103,907			—			312,412		7,808			174,996			—		643			47,194		—			646,960
Total ending loans balance	$	1,122,041		$	1,209,942		$	2,189,792	$	313,226		$	303,036		$	186,736	$	328,093		$	136,899	$	—		$	5,789,765

(1)  Loans acquired in FDIC-assisted transactions and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

Changes in the accretable yield for purchased credit-impaired loans

Changes in the accretable yield for loans acquired in FDIC-assisted transactions and accounted for under ASC 310-30 were as follows for the three months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended March 31,
	2013			2012
Balance at beginning of period	$	5,685		$	18,703
Accretion	(1,457		)	(5,373		)
Other	92			—
Balance at end of period	$	4,320		$	13,330

Purchased loans disclosures

The carrying amount of covered loans and other purchased non-covered loans at March 31, 2013 consisted of purchased credit-impaired loans and non-credit-impaired loans as shown in the following table (in thousands):

March 31, 2013	Purchased Credit-Impaired Loans		Purchased Non- Credit-Impaired Loans		Total
Covered loans:
Commercial related (1)	$	19,559	$	5,433	$	24,992
Commercial	3,957		5,494		9,451
Commercial real estate	87,016		136,936		223,952
Construction real estate	96,093		10,834		106,927
Other	3,464		32,003		35,467
Total covered loans	$	210,089	$	190,700	$	400,789
Estimated receivable amount from the FDIC under the loss-share agreement (2)	$	9,657	$	17,902	$	27,559
Non covered loans:
Commercial related (3)	$	3,908	$	13,689	$	17,597
Other	88		3,780		3,868
Total non-covered loans	$	3,996	$	17,469	$	21,465

(1) Covered commercial related loans include commercial, commercial real estate and construction real estate loans acquired in connection with the Heritage and Benchmark FDIC-assisted transactions.

(2) Estimated reimbursable amounts from the FDIC under the loss-share agreement exclude $1.6 million in reimbursable amounts related to covered other real estate owned.

(3) Non covered commercial related loans include commercial, commercial real estate and construction real estate for InBank.

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2013

Investments Securities [Abstract]

Summary investment holdings

Carrying amounts and fair values of investment securities were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2013
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,478	$	2,471	$	—		$	40,949
States and political subdivisions	680,978		40,150		(1,367		)	719,761
Residential mortgage-backed securities	776,336		14,152		(1,720		)	788,768
Commercial mortgage-backed securities	51,048		2,789		—			53,837
Corporate bonds	197,162		1,197		(684		)	197,675
Equity securities	10,820		366		(7		)	11,179
	1,754,822		61,125		(3,778		)	1,812,169
Held to Maturity
States and political subdivisions	262,310		17,606		(59		)	279,857
Residential mortgage-backed securities	255,475		19,269		—			274,744
	517,785		36,875		(59		)	554,601
Total	$	2,272,607	$	98,000	$	(3,837	)	$	2,366,770
December 31, 2012
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,605	$	2,710	$	—		$	41,315
States and political subdivisions	679,991		45,571		(543		)	725,019
Residential mortgage-backed securities	930,413		14,038		(5,249		)	939,202
Commercial mortgage-backed securities	51,100		3,026		—			54,126
Corporate bonds	97,014		213		(553		)	96,674
Equity securities	11,398		447		(10		)	11,835
	$	1,808,521	$	66,005	$	(6,355	)	$	1,868,171
Held to Maturity
States and political subdivisions	237,563		21,039		—			258,602
Residential mortgage-backed securities	255,858		21,221		—			277,079
	493,421		42,260		—			535,681
Total	$	2,301,942	$	108,265	$	(6,355	)	$	2,403,852

Unrealized losses on investment securities and the fair value of the related securities

Unrealized losses on investment securities and the fair value of the related securities at March 31, 2013 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	98,367	$	(1,367	)	$	—	$	—		$	98,367	$	(1,367	)
Residential mortgage-backed securities	169,576		(1,601		)	12,599		(119		)	182,175		(1,720		)
Corporate bonds	45,158		(684		)	—		—			45,158		(684		)
Equity securities	33		(7		)	—		—			33		(7		)
	313,134		(3,659		)	12,599		(119		)	325,733		(3,778		)
Held to maturity
States and political subdivisions	15,476		(59		)	—		—			15,476		(59		)
	15,476		(59		)	—		—			15,476		(59		)
Totals	$	328,610	$	(3,718	)	$	12,599	$	(119	)	$	341,209	$	(3,837	)

Unrealized losses on investment securities and the fair value of the related securities at December 31, 2012 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	57,540	$	(543	)	$	—	$	—		$	57,540	$	(543	)
Residential mortgage-backed securities	270,539		(5,083		)	16,434		(166		)	286,973		(5,249		)
Corporate bonds	58,241		(553		)	—		—			58,241		(553		)
Equity securities	30		(10		)	—		—			30		(10		)
Totals	$	386,350	$	(6,189	)	$	16,434	$	(166	)	$	402,784	$	(6,355	)

Summary of realized gains on the sale of investment securities available for sale

Net losses recognized on investment securities available for sale were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Realized losses	$	(1	)	$	(3	)
Net losses	$	(1	)	$	(3	)

Schedule of remaining contractual maturities of securities included in the securities portfolio

The amortized cost and fair value of investment securities as of March 31, 2013 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.

	Amortized		Fair
(In thousands)	Cost		Value
Available for sale:
Due in one year or less	$	33,798	$	34,326
Due after one year through five years	420,646		442,426
Due after five years through ten years	154,410		161,434
Due after ten years	307,764		320,199
Equity securities	10,820		11,179
Residential and commercial mortgage-backed securities	827,384		842,605
	1,754,822		1,812,169
Held to maturity:
Due in one year or less	983		1,002
Due after one year through five years	4,135		4,189
Due after five years through ten years	23,000		23,677
Due after ten years	234,192		250,989
Residential mortgage-backed securities	255,475		274,744
	517,785		554,601
Total	$	2,272,607	$	2,366,770

XML

Junior Subordinated Notes Issued to Capital Trusts (Details 2) (Trust preferred securities issued by each trust, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Coal City Capital Trust I
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.80%
Description of annual interest rate basis	3-mo LIBOR
Face Value	$ 25,000
MB Financial Capital Trust II
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.40%
Description of annual interest rate basis	3-mo LIBOR
Face Value	35,000
MB Financial Capital Trust III
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.50%
Description of annual interest rate basis	3-mo LIBOR
Face Value	10,000
MB Financial Capital Trust IV
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.52%
Description of annual interest rate basis	3-mo LIBOR
Face Value	20,000
MB Financial Capital Trust V
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.30%
Description of annual interest rate basis	3-mo LIBOR
Face Value	30,000
MB Financial Capital Trust VI
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	1.30%
Description of annual interest rate basis	3-mo LIBOR
Face Value	22,500
FOBB Statutory Trust III
Trust preferred securities issued by each trust
Debt Instrument, Basis Spread on Variable Rate	2.80%
Description of annual interest rate basis	3-mo LIBOR
Face Value	$ 5,000

XML

Loans (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012		Mar. 31, 2012
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	$ 5,306,879,000		$ 5,317,080,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	5,707,668,000	[1]	5,766,930,000	[1]	5,789,765,000
Period past due of recorded investment in loans (in days)	90 days
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Non-performing substandard and doubtful loans	76,000,000		85,500,000
Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	4,069,569,000		4,064,532,000
Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	139,155,000		134,025,000
Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	188,252,000		193,575,000
Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	3,238,000		3,453,000
Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	4,400,214,000		4,395,585,000
Non-performing
Contractual aging of the recorded investment in loans
Current	63,416,000		69,836,000
30-59 days, past due	3,295,000		3,171,000
60-89 days, past due	7,147,000		3,718,000
Loans past due, 90 days or more	40,100,000		40,261,000
Total, past due	50,542,000		47,150,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	113,958,000		116,986,000
Commercial loans
Contractual aging of the recorded investment in loans
Current	1,202,455,000		1,215,957,000
30-59 days, past due	1,487,000		639,000
60-89 days, past due	513,000		754,000
Loans past due, 90 days or more	3,183,000		3,122,000
Total, past due	5,183,000		4,515,000
Total loans, excluding covered loans	1,207,638,000		1,220,472,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,242,081,000				1,122,041,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	21,134,000		23,886,000
Loans past due 90 days or more and still accruing	400,000		229,000
Commercial loans | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,106,341,000		1,136,294,000
Commercial loans | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	53,980,000		33,068,000
Commercial loans | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	47,317,000		50,895,000
Commercial loans | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		215,000
Commercial loans | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,207,638,000		1,220,472,000
Commercial loans collateralized by assignment of lease payments
Contractual aging of the recorded investment in loans
Current	1,337,485,000		1,288,341,000
30-59 days, past due	6,199,000		11,252,000
60-89 days, past due	3,393,000		2,847,000
Loans past due, 90 days or more	589,000		580,000
Total, past due	10,181,000		14,679,000
Total loans, excluding covered loans	1,347,666,000		1,303,020,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,347,666,000				1,209,942,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	439,000		1,180,000
Loans past due 90 days or more and still accruing	274,000		222,000
Commercial loans collateralized by assignment of lease payments | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,339,062,000		1,292,241,000
Commercial loans collateralized by assignment of lease payments | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	97,000		3,322,000
Commercial loans collateralized by assignment of lease payments | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	8,507,000		7,457,000
Commercial loans collateralized by assignment of lease payments | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Commercial loans collateralized by assignment of lease payments | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,347,666,000		1,303,020,000
Commercial real estate
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,743,329,000		1,761,832,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	1,967,281,000				2,189,792,000
Healthcare
Contractual aging of the recorded investment in loans
Current	190,062,000		192,039,000
30-59 days, past due	0		0
60-89 days, past due	0		0
Loans past due, 90 days or more	3,238,000		3,238,000
Total, past due	3,238,000		3,238,000
Total loans, excluding covered loans	193,300,000		195,277,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	3,238,000		3,238,000
Loans past due 90 days or more and still accruing	0		0
Healthcare | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	168,433,000		170,265,000
Healthcare | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	21,629,000		21,774,000
Healthcare | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Healthcare | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	3,238,000		3,238,000
Healthcare | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	193,300,000		195,277,000
Industrial
Contractual aging of the recorded investment in loans
Current	394,574,000		402,813,000
30-59 days, past due	3,064,000		548,000
60-89 days, past due	1,765,000		424,000
Loans past due, 90 days or more	6,894,000		7,700,000
Total, past due	11,723,000		8,672,000
Total loans, excluding covered loans	406,297,000		411,485,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	14,988,000		19,179,000
Loans past due 90 days or more and still accruing	3,603,000		147,000
Industrial | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	351,514,000		355,218,000
Industrial | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	19,948,000		15,243,000
Industrial | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	34,835,000		41,024,000
Industrial | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Industrial | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	406,297,000		411,485,000
Multifamily
Contractual aging of the recorded investment in loans
Current	330,425,000		353,966,000
30-59 days, past due	821,000		1,282,000
60-89 days, past due	283,000		0
Loans past due, 90 days or more	2,391,000		3,103,000
Total, past due	3,495,000		4,385,000
Total loans, excluding covered loans	333,920,000		358,351,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	6,131,000		7,225,000
Loans past due 90 days or more and still accruing	0		0
Multifamily | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	316,962,000		318,991,000
Multifamily | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	3,935,000		25,297,000
Multifamily | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	13,023,000		14,063,000
Multifamily | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Multifamily | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	333,920,000		358,351,000
Retail
Contractual aging of the recorded investment in loans
Current	387,297,000		375,900,000
30-59 days, past due	1,080,000		6,933,000
60-89 days, past due	0		518,000
Loans past due, 90 days or more	6,921,000		9,331,000
Total, past due	8,001,000		16,782,000
Total loans, excluding covered loans	395,298,000		392,682,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	6,738,000		17,019,000
Loans past due 90 days or more and still accruing	0		0
Retail | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	357,114,000		340,919,000
Retail | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	14,485,000		25,096,000
Retail | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	23,699,000		26,667,000
Retail | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Retail | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	395,298,000		392,682,000
Office
Contractual aging of the recorded investment in loans
Current	170,115,000		186,665,000
30-59 days, past due	373,000		742,000
60-89 days, past due	962,000		280,000
Loans past due, 90 days or more	4,089,000		1,125,000
Total, past due	5,424,000		2,147,000
Total loans, excluding covered loans	175,539,000		188,812,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	13,577,000		3,263,000
Loans past due 90 days or more and still accruing	561,000		0
Office | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	143,780,000		159,056,000
Office | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	5,253,000		7,120,000
Office | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	26,506,000		22,636,000
Office | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Office | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	175,539,000		188,812,000
Other
Contractual aging of the recorded investment in loans
Current	232,910,000		210,456,000
30-59 days, past due	409,000		851,000
60-89 days, past due	3,762,000		1,837,000
Loans past due, 90 days or more	1,894,000		2,081,000
Total, past due	6,065,000		4,769,000
Total loans, excluding covered loans	238,975,000		215,225,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	8,768,000		9,437,000
Loans past due 90 days or more and still accruing	0		0
Other | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	198,048,000		193,824,000
Other | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	19,279,000		2,553,000
Other | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	21,648,000		18,848,000
Other | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Other | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	238,975,000		215,225,000
Residential real estate
Contractual aging of the recorded investment in loans
Current	301,609,000		306,927,000
30-59 days, past due	2,830,000		382,000
60-89 days, past due	1,730,000		1,248,000
Loans past due, 90 days or more	6,635,000		5,802,000
Total, past due	11,195,000		7,432,000
Total loans, excluding covered loans	312,804,000		314,359,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	315,350,000				313,226,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	12,428,000		10,943,000
Loans past due 90 days or more and still accruing	0		0
Residential real estate | Performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	300,376,000		303,416,000
Residential real estate | Non-performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	12,428,000		10,943,000
Construction real estate
Contractual aging of the recorded investment in loans
Current	97,943,000		106,158,000
30-59 days, past due	700,000		1,139,000
60-89 days, past due	95,000		97,000
Loans past due, 90 days or more	2,843,000		2,867,000
Total, past due	3,638,000		4,103,000
Total loans, excluding covered loans	101,581,000		110,261,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	208,508,000				303,036,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	1,025,000		1,028,000
Loans past due 90 days or more and still accruing	0		0
Construction real estate | Pass
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	88,315,000		97,724,000
Construction real estate | Special Mention
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	549,000		552,000
Construction real estate | Substandard
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	12,717,000		11,985,000
Construction real estate | Doubtful
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	0		0
Construction real estate | Total risk rated category
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	101,581,000		110,261,000
Indirect vehicle
Contractual aging of the recorded investment in loans
Current	218,794,000		206,126,000
30-59 days, past due	1,316,000		1,588,000
60-89 days, past due	305,000		498,000
Loans past due, 90 days or more	324,000		421,000
Total, past due	1,945,000		2,507,000
Total loans, excluding covered loans	220,739,000		208,633,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	220,739,000				186,736,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	1,499,000		1,494,000
Loans past due 90 days or more and still accruing	17,000		0
Indirect vehicle | Performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	219,223,000		207,139,000
Indirect vehicle | Non-performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	1,516,000		1,494,000
Home equity lines
Contractual aging of the recorded investment in loans
Current	279,908,000		291,737,000
30-59 days, past due	2,087,000		3,557,000
60-89 days, past due	1,306,000		1,888,000
Loans past due, 90 days or more	7,889,000		8,004,000
Total, past due	11,282,000		13,449,000
Total loans, excluding covered loans	291,190,000		305,186,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	291,481,000				328,093,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	18,791,000		17,486,000
Loans past due 90 days or more and still accruing	338,000		1,000,000
Home equity lines | Performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	272,061,000		286,700,000
Home equity lines | Non-performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	19,129,000		18,486,000
Other consumer
Contractual aging of the recorded investment in loans
Current	81,903,000		93,266,000
30-59 days, past due	20,000		47,000
60-89 days, past due	3,000		0
Loans past due, 90 days or more	6,000		4,000
Total, past due	29,000		51,000
Total loans, excluding covered loans	81,932,000		93,317,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	114,562,000				136,899,000
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	9,000		9,000
Loans past due 90 days or more and still accruing	0		1,000
Other consumer | Performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	81,923,000		93,307,000
Other consumer | Non-performing
Contractual aging of the recorded investment in loans
Total loans, excluding covered loans	9,000		10,000
Gross loans, excluding covered loans
Contractual aging of the recorded investment in loans
Current	5,225,480,000		5,230,351,000
30-59 days, past due	20,386,000		28,960,000
60-89 days, past due	14,117,000		10,391,000
Loans past due, 90 days or more	46,896,000		47,378,000
Total, past due	81,399,000		86,729,000
Total loans, excluding covered loans	5,306,879,000		5,317,080,000
Covered loans
Contractual aging of the recorded investment in loans
Current	264,236,000		301,260,000
30-59 days, past due	8,038,000		5,831,000
60-89 days, past due	6,221,000		7,478,000
Loans past due, 90 days or more	122,294,000		135,281,000
Total, past due	136,553,000		148,590,000
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	400,789,000		449,850,000
Loans
Contractual aging of the recorded investment in loans
Current	5,489,716,000	[2]	5,531,611,000	[2]
30-59 days, past due	28,424,000	[2]	34,791,000	[2]
60-89 days, past due	20,338,000	[2]	17,869,000	[2]
Loans past due, 90 days or more	169,190,000	[2]	182,659,000	[2]
Total, past due	217,952,000	[2]	235,319,000	[2]
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	5,707,668,000	[2]	5,766,930,000	[2]
Recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing
Nonaccrual	108,765,000		115,387,000
Loans past due 90 days or more and still accruing	5,193,000		1,599,000
Non-covered loans related to FDIC transactions
Contractual aging of the recorded investment in loans
Current	14,139,000	[3]	12,752,000	[3]
30-59 days, past due	82,000	[3]	312,000	[3]
60-89 days, past due	449,000	[3]	1,542,000	[3]
Loans past due, 90 days or more	6,795,000	[3]	7,115,000	[3]
Total, past due	7,326,000	[3]	8,969,000	[3]
Loans and Leases Receivable, Net of Deferred Income Including Covered Loans	$ 21,465,000	[3]	$ 21,721,000	[3]

[1] Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

[2] Includes loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

[3] Loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

XML

Goodwill and Intangibles (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of core deposit and client relationship intangibles

The following table presents the changes in the carrying amount of core deposit and client relationship intangibles, gross carrying amount, accumulated amortization, and net book value as of March 31, 2013 (in thousands):

	March 31,
	2013
Balance at beginning of period	$	29,512
Amortization expense	(1,544		)
Balance at end of period	$	27,968
Gross carrying amount	$	61,429
Accumulated amortization	(33,461		)
Net book value	$	27,968

Estimated future amortization expense of other intangible assets

The following presents the estimated future amortization expense of other intangible assets (in thousands):

Year ending December 31,	Amount
2013	$	4,540
2014	4,748
2015	4,030
2016	3,418
2017	3,071
Thereafter	8,161
	$	27,968

XML

Deposits (Tables)

3 Months Ended

Mar. 31, 2013

Deposits [Abstract]

Schedule of composition of deposits

The composition of deposits was as follows (in thousands):

	March 31,		December 31,
	2013		2012
Demand deposit accounts, noninterest bearing	$	2,067,310	$	2,164,547
NOW and money market accounts	2,778,916		2,747,273
Savings accounts	833,251		811,333
Certificates of deposit, $100,000 or more	1,006,947		1,020,033
Other certificates of deposit	765,482		799,511
Total	$	7,451,906	$	7,542,697

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Proceeds From Sale Of Federal Reserve Stock and Federal Home Loan Bank Stock	$ 2,951	$ 15,291
Cash Flows From Operating Activities
Net income (loss)	24,906	21,086
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation of premises and equipment	4,191	3,736
Depreciation of leased equipment	8,474	10,134
Compensation expense for restricted stock awards	994	882
Compensation expense for stock option grants	266	383
Gain on sales of premises and equipment and leased equipment	(412)	(186)
Amortization of other intangibles	1,544	1,257
Provision for credit losses	0	3,100
Deferred income tax (benefit) expense	(5,109)	7,118
Amortization of premiums and discounts on investment securities, net	12,517	10,315
Accretion of premiums and discounts on loans, net	(1,507)	(5,434)
Accretion of FDIC indemnification asset	(143)	(475)
Net loss on sale of investment securities available for sale	1	3
Proceeds from sale of loans held for sale	31,097	19,076
Origination of loans held for sale	(25,972)	(17,328)
Net gain on sale of loans held for sale	(639)	(374)
Net gain on sales of other real estate owned	(30)	(416)
Fair value adjustments on other real estate owned	349	4,764
Net loss on sales of other real estate owned related to FDIC-assisted transactions	11	2,241
Increase in cash surrender value of life insurance	(844)	(917)
Decrease (increase) in other assets, net	12,720	(12,782)
Decrease in other liabilities, net	(64,112)	(23,551)
Net cash (used in) provided by operating activities	(1,698)	22,632
Cash Flows From Investing Activities
Proceeds from sales of investment securities available for sale	635	6
Proceeds from maturities and calls of investment securities available for sale	160,430	134,979
Purchase of investment securities available for sale	(118,412)	(35,537)
Proceeds from maturities and calls of investment securities held to maturity	363
Purchase of investment securities held to maturity	(21,340)	(908)
Net decrease in loans	62,955	159,641
Purchases of premises and equipment	(2,483)	(5,637)
Purchases of leased equipment	(3,628)	(6,357)
Proceeds from sales of leased equipment	1,803	630
Capital improvements on other real estate owned	0	(359)
Proceeds from sale of other real estate owned	5,907	13,137
Proceeds from sale of other real estate owned related to FDIC-assisted transactions	2,613	5,249
Principal paid on lease investments	(497)	(969)
Net proceeds from FDIC related covered assets	7,487	27,528
Net cash provided by investing activities	98,784	306,694
Cash Flows From Financing Activities
Net decrease in deposits	(90,791)	(12,905)
Net increase in short-term borrowings	3,777	49,738
Proceeds from long-term borrowings	1,747	1,160
Principal paid on long-term borrowings	(53,778)	(10,968)
Repurchase of preferred stock	0	(196,000)
Treasury stock transactions, net	(125)	(274)
Stock options exercised	30	103
Excess tax benefits from share-based payment arrangements	(12)
Dividends paid on preferred stock		(3,239)
Dividends paid on common stock	(5,446)	(542)
Net cash used in financing activities	(144,598)	(172,927)
Net (decrease) increase in cash and cash equivalents	(47,512)	156,399
Cash and cash equivalents:
Beginning of year	287,543	244,565
End of year	240,031	400,964
Cash payments for:
Interest paid to depositors and other borrowed funds	7,673	12,701
Net income tax payments, net	17,620	70
Supplemental Schedule of Noncash Investing Activities:
Loans transferred to other real estate owned	711	2,110
Loans transferred to other real estate owned related to FDIC-assisted transactions	872	8,054
Loans transferred to repossessed vehicles	168	256
Operating leases rewritten as direct finance leases included as loans	$ 6,339	$ 7,506

XML

Short-Term Borrowings (Tables)

3 Months Ended

Mar. 31, 2013

Short-term Debt [Abstract]

Summary of short-term borrowings

Short-term borrowings were as follows as of March 31, 2013 and December 31, 2012 (dollars in thousands):

	March 31, 2013				December 31, 2012
	Weighted Average				Weighted Average
	Cost		Amount		Cost		Amount
Customer repurchase agreements	0.21	%	$	219,089	0.23	%	$	208,242
Federal Home Loan Bank advances	3.64	%	5,290		3.58	%	12,360
	0.29	%	$	224,379	0.42	%	$	220,602

XML

Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Available for Sale
Amortized Cost	$ 1,754,822	$ 1,808,521
Gross Unrealized Gains	61,125	66,005
Gross Unrealized Losses	(3,778)	(6,355)
Fair Value	1,812,169	1,868,171
Held to Maturity
Investment securities held to maturity	517,785	493,421
Gross Unrealized Gains	36,875	42,260
Gross Unrealized Losses	(59)	0
Investment Securities held to maturity	554,601	535,681
Total Available for Sale and Held to Maturity Investment Securities
Amortized Cost	2,272,607	2,301,942
Gross Unrealized Gains	98,000	108,265
Gross Unrealized Losses	3,837	6,355
Fair Value	2,366,770	2,403,852
U.S. Government sponsored agencies and enterprises
Available for Sale
Amortized Cost	38,478	38,605
Gross Unrealized Gains	2,471	2,710
Gross Unrealized Losses	0	0
Fair Value	40,949	41,315
States and political subdivisions
Available for Sale
Amortized Cost	680,978	679,991
Gross Unrealized Gains	40,150	45,571
Gross Unrealized Losses	(1,367)	(543)
Fair Value	719,761	725,019
Held to Maturity
Investment securities held to maturity	262,310	237,563
Gross Unrealized Gains	17,606	21,039
Gross Unrealized Losses	(59)	0
Investment Securities held to maturity	279,857	258,602
Total Available for Sale and Held to Maturity Investment Securities
Percentage of securities insured	39.00%
Percentage of securities consisting general obligation issues	89.00%
States and political subdivisions | State of Illinois
Total Available for Sale and Held to Maturity Investment Securities
Percentage of investments issued by states and political subdivisions that were within the state of Illinois	25.00%
Residential mortgage-backed securities
Available for Sale
Amortized Cost	776,336	930,413
Gross Unrealized Gains	14,152	14,038
Gross Unrealized Losses	(1,720)	(5,249)
Fair Value	788,768	939,202
Held to Maturity
Investment securities held to maturity	255,475	255,858
Gross Unrealized Gains	19,269	21,221
Gross Unrealized Losses	0	0
Investment Securities held to maturity	274,744	277,079
Commercial mortgage-backed securities
Available for Sale
Amortized Cost	51,048	51,100
Gross Unrealized Gains	2,789	3,026
Gross Unrealized Losses	0	0
Fair Value	53,837	54,126
Corporate bonds
Available for Sale
Amortized Cost	197,162	97,014
Gross Unrealized Gains	1,197	213
Gross Unrealized Losses	(684)	(553)
Fair Value	197,675	96,674
Equity securities
Available for Sale
Amortized Cost	10,820	11,398
Gross Unrealized Gains	366	447
Gross Unrealized Losses	(7)	(10)
Fair Value	$ 11,179	$ 11,835

XML

Short-Term Borrowings (Details) (USD $)									3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Minimum	Mar. 31, 2013 Maximum	Mar. 31, 2013 Customer repurchase agreements	Dec. 31, 2012 Customer repurchase agreements	Mar. 31, 2013 Federal Home Loan Bank advances	Dec. 31, 2012 Federal Home Loan Bank advances	Mar. 31, 2013 Line of Credit [Member]	Mar. 31, 2013 Libor [Member] Line of Credit [Member]
Short-term borrowings
Weighted Average Cost	0.29%	0.42%			0.21%	0.23%	3.64%	3.58%
Amount	$ 224,379,000	$ 220,602,000			$ 219,089,000	$ 208,242,000	$ 5,290,000	$ 12,360,000
Fixed interest rate Federal Home Loan Bank advances	5,300,000	12,400,000
Effective interest rate for fixed rate advance (as a percent)			3.26%	3.98%
Unsecured Line of Credit									$ 35,000,000
Description of interest rate basis									one month LIBOR
Debt Instrument, Basis Spread on Variable Rate										2.00%

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
ASSETS
Cash and due from banks	$ 131,146		$ 176,010
Interest earning deposits with banks	108,885		111,533
Total cash and cash equivalents	240,031		287,543
Investment securities:
Securities available for sale, at fair value	1,812,169		1,868,171
Securities held to maturity, at amortized cost ($554,601 and $535,681 fair value at March 31, 2013 and December 31, 2012, respectively)	517,785		493,421
Non-marketable securities - FHLB and FRB stock	52,434		55,385
Total investment securities	2,382,388		2,416,977
Loans held for sale	3,030		7,492
Loans:
Total loans, excluding covered loans	5,306,879		5,317,080
Covered loans	400,789		449,850
Total loans	5,707,668	[1]	5,766,930	[1]
Less: Allowance for loan loss	121,802		124,204
Net loans	5,585,866		5,642,726
Lease investment, net	117,744		129,823
Premises and equipment, net	219,662		221,533
Cash surrender value of life insurance	129,723		128,879
Goodwill, net	423,369		423,369
Other intangibles, net	27,968		29,512
Other real estate owned, net	31,462		36,977
Other real estate owned related to FDIC-assisted transactions	20,011		22,478
FDIC indemnification asset	29,197		39,345
Other assets	175,379		185,151
Total assets	9,385,830		9,571,805
Deposits:
Noninterest bearing	2,067,310		2,164,547
Interest bearing	5,384,596		5,378,150
Total	7,451,906		7,542,697
Short-term borrowings	224,379		220,602
Long-term borrowings	64,019		116,050
Junior subordinated notes issued to capital trusts	152,065		152,065
Accrued expenses and other liabilities	198,658		264,621
Total liabilities	8,091,027		8,296,035
STOCKHOLDERS’ EQUITY
Common stock, ($0.01 par value; authorized 70,000,000 shares at March 31, 2013 and December 31, 2012; issued 54,984,191 shares at March 31, 2013 and 54,955,284 shares at December 31, 2012)	550		550
Additional paid-in capital	734,057		732,771
Retained earnings	527,332		507,933
Accumulated other comprehensive income	34,928		36,326
Less: 183,700 and 170,567 shares of treasury stock, at cost, at March 31, 2013 and December 31, 2012, respectively	(3,529)		(3,293)
Controlling interest stockholders’ equity	1,293,338		1,274,287
Noncontrolling interest	1,465		1,483
Total stockholders’ equity	1,294,803		1,275,770
Total liabilities and stockholders’ equity	$ 9,385,830		$ 9,571,805

[1] Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

XML

Loans (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	$ 5,306,879	$ 5,317,080
Unpaid Principal Balance	144,991	144,992
Recorded Investment	123,114	122,264
Partial Charge-Offs	21,877	22,728
Allowance for Loan Losses Allocated	15,677	16,941
Impaired Financing Receivable, Average Recorded Investment	134,796	119,252
Interest Income Recognized	66	376
Restructured loans	4,433
Performing
Loans individually evaluated for impairment by class of loans
Restructured loans	21,600	21,300
Non-performing
Loans individually evaluated for impairment by class of loans
Restructured loans	26,300	28,400
Commercial loans
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	1,207,638	1,220,472
Restructured loans	42
Commercial loans collateralized by assignment of lease payments
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	1,347,666	1,303,020
Commercial real estate
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	1,743,329	1,761,832
Healthcare
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	193,300	195,277
Industrial
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	406,297	411,485
Multifamily
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	333,920	358,351
Restructured loans	187
Retail
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	395,298	392,682
Restructured loans	657
Office
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	175,539	188,812
Other
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	238,975	215,225
Restructured loans	84
Residential real estate
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	312,804	314,359
Restructured loans	811
Residential real estate | Performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	300,376	303,416
Residential real estate | Non-performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	12,428	10,943
Construction real estate
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	101,581	110,261
Indirect vehicle
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	220,739	208,633
Indirect vehicle | Performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	219,223	207,139
Indirect vehicle | Non-performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	1,516	1,494
Home equity lines
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	291,190	305,186
Restructured loans	2,652
Home equity lines | Performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	272,061	286,700
Home equity lines | Non-performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	19,129	18,486
Other consumer
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	81,932	93,317
Other consumer | Performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	81,923	93,307
Other consumer | Non-performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	9	10
Other loans
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	906,665	921,495
Other loans | Performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	873,583	890,562
Other loans | Non-performing
Loans individually evaluated for impairment by class of loans
Total loans, excluding covered loans	33,082	30,933
Impaired financing receivable with no allowance | Commercial loans
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	10,016	10,993
Recorded Investment	8,440	9,505
Partial Charge-Offs	1,576	1,488
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	9,853	14,089
Interest Income Recognized	0	105
Impaired financing receivable with no allowance | Commercial loans collateralized by assignment of lease payments
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	390
Recorded Investment	0	390
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	278
Interest Income Recognized	0	9
Impaired financing receivable with no allowance | Healthcare
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	10,943	10,943
Recorded Investment	3,238	3,238
Partial Charge-Offs	7,705	7,705
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	10,943	2,751
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Industrial
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	11,744	16,891
Recorded Investment	10,873	14,940
Partial Charge-Offs	871	1,951
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	11,893	16,374
Interest Income Recognized	0	29
Impaired financing receivable with no allowance | Multifamily
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	779	800
Recorded Investment	779	800
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	787	1,340
Interest Income Recognized	0	14
Impaired financing receivable with no allowance | Retail
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	3,986	5,372
Recorded Investment	3,526	4,917
Partial Charge-Offs	460	455
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	3,482	9,241
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Office
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	1,366	1,568
Recorded Investment	1,170	1,568
Partial Charge-Offs	196	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	1,499	1,151
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Other
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	2,285	4,860
Recorded Investment	2,283	4,860
Partial Charge-Offs	2	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	2,707	6,005
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Residential real estate
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	1,730	3,097
Recorded Investment	1,344	2,711
Partial Charge-Offs	386	386
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	1,730	6,476
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Construction real estate
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	577
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Indirect vehicle
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	0
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Home equity lines
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	1,575	2,558
Recorded Investment	1,575	2,558
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	1,471	8,976
Interest Income Recognized	0	0
Impaired financing receivable with no allowance | Other consumer
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	182
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Commercial loans
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	12,745	14,484
Recorded Investment	12,694	14,381
Partial Charge-Offs	51	103
Allowance for Loan Losses Allocated	2,643	3,620
Impaired Financing Receivable, Average Recorded Investment	13,916	8,455
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Commercial loans collateralized by assignment of lease payments
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	536	885
Recorded Investment	536	885
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	86	188
Impaired Financing Receivable, Average Recorded Investment	760	1,130
Interest Income Recognized	8	73
Impaired financing receivable with allowance | Healthcare
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	3,901
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Industrial
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	4,117	5,525
Recorded Investment	4,117	4,238
Partial Charge-Offs	0	1,287
Allowance for Loan Losses Allocated	1,026	1,255
Impaired Financing Receivable, Average Recorded Investment	4,077	2,443
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Multifamily
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	6,950	8,233
Recorded Investment	6,170	7,249
Partial Charge-Offs	780	984
Allowance for Loan Losses Allocated	2,107	2,284
Impaired Financing Receivable, Average Recorded Investment	6,738	5,847
Interest Income Recognized	54	130
Impaired financing receivable with allowance | Retail
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	21,267	23,144
Recorded Investment	15,227	17,257
Partial Charge-Offs	6,040	5,887
Allowance for Loan Losses Allocated	2,396	3,604
Impaired Financing Receivable, Average Recorded Investment	14,774	10,058
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Office
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	5,643	1,706
Recorded Investment	5,568	1,695
Partial Charge-Offs	75	11
Allowance for Loan Losses Allocated	2,004	522
Impaired Financing Receivable, Average Recorded Investment	3,026	1,904
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Other
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	6,568	4,661
Recorded Investment	6,484	4,577
Partial Charge-Offs	84	84
Allowance for Loan Losses Allocated	1,379	1,263
Impaired Financing Receivable, Average Recorded Investment	6,424	6,082
Interest Income Recognized	4	16
Impaired financing receivable with allowance | Residential real estate
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	14,151	10,565
Recorded Investment	13,447	10,565
Partial Charge-Offs	704	0
Allowance for Loan Losses Allocated	2,858	2,858
Impaired Financing Receivable, Average Recorded Investment	13,696	3,417
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Construction real estate
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	4,547	4,552
Recorded Investment	2,160	2,167
Partial Charge-Offs	2,387	2,385
Allowance for Loan Losses Allocated	496	497
Impaired Financing Receivable, Average Recorded Investment	2,305	3,775
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Indirect vehicle
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	0
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Home equity lines
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	24,043	13,765
Recorded Investment	23,483	13,763
Partial Charge-Offs	560	2
Allowance for Loan Losses Allocated	682	850
Impaired Financing Receivable, Average Recorded Investment	24,715	4,800
Interest Income Recognized	0	0
Impaired financing receivable with allowance | Other consumer
Loans individually evaluated for impairment by class of loans
Unpaid Principal Balance	0	0
Recorded Investment	0	0
Partial Charge-Offs	0	0
Allowance for Loan Losses Allocated	0	0
Impaired Financing Receivable, Average Recorded Investment	0	0
Interest Income Recognized	$ 0	$ 0

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss), Net of Tax	Treasury Stock	Noncontrolling Interest
Balance at Dec. 31, 2011	$ 1,393,027	$ 194,719	$ 548	$ 731,248	$ 427,956	$ 39,150	$ (3,044)	$ 2,450
Increase (Decrease) in Stockholders' Equity
Net income	21,152				21,086			66
Other comprehensive loss, net of tax	(1,215)					(1,215)
Cash dividends declared on common stock	(548)				(548)
Dividends and discount accretion on preferred shares	(1,988)	1,281			(3,269)
Repurchase of preferred shares and warrant	(196,000)	(196,000)	0	0	0	0	0	0
Restricted common stock activity, net of tax	12		1	(169)	8		172
Stock option activity, net of tax	103			103
Repurchase of common shares in connection with employee benefit plans and held in trust for deferred compensation plan	(288)			166			(454)
Stock-based compensation expense	1,265			1,265
Distributions to noncontrolling interest	(90)							(90)
Balance at Mar. 31, 2012	1,215,430		549	732,613	445,233	37,935	(3,326)	2,426
Balance at Dec. 31, 2012	1,275,770		550	732,771	507,933	36,326	(3,293)	1,483
Increase (Decrease) in Stockholders' Equity
Net income	24,944				24,906			38
Other comprehensive loss, net of tax	(1,398)					(1,398)
Cash dividends declared on common stock	(5,507)				(5,507)
Restricted common stock activity, net of tax	14			14
Stock option activity, net of tax	(99)			(99)
Repurchase of common shares in connection with employee benefit plans and held in trust for deferred compensation plan	(125)			111			(236)
Stock-based compensation expense	1,260			1,260
Distributions to noncontrolling interest	(56)							(56)
Balance at Mar. 31, 2013	$ 1,294,803		$ 550	$ 734,057	$ 527,332	$ 34,928	$ (3,529)	$ 1,465

XML

Fair Value Measurements (Details) (USD $)	Mar. 31, 2013		Dec. 31, 2012
Financial assets and financial liabilities measured at fair value on a recurring basis
Loans held for sale	$ 3,030,000		$ 7,492,000
Recurring basis | Total Fair Value
Financial assets and financial liabilities measured at fair value on a recurring basis
Loans held for sale	3,030,000		7,492,000
Assets held in trust for deferred compensation	8,730,000		7,746,000
Derivative financial instruments, assets	25,837,000		29,096,000
Other liabilities	8,730,000	[1]	7,746,000	[1]
Derivative financial instrument, liabilities	25,761,000		29,055,000
Recurring basis | Total Fair Value | U.S. Government sponsored agencies and enterprises
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	40,949,000		41,315,000
Recurring basis | Total Fair Value | States and political subdivisions
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	719,761,000		725,019,000
Recurring basis | Total Fair Value | Residential mortgage-backed securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	788,768,000		939,202,000
Recurring basis | Total Fair Value | Commercial mortgage-backed securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	53,837,000		54,126,000
Recurring basis | Total Fair Value | Corporate bonds
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	197,675,000		96,674,000
Recurring basis | Total Fair Value | Equity securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	11,179,000		11,835,000
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	11,179,000		11,835,000
Loans held for sale	0		0
Assets held in trust for deferred compensation	8,730,000		7,746,000
Derivative financial instruments, assets	0		0
Other liabilities	8,730,000	[1]	7,746,000	[1]
Derivative financial instrument, liabilities	0		0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | States and political subdivisions
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale			0
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	11,179,000		11,835,000
Recurring basis | Significant Other Observable Inputs (Level 2)
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	1,795,062,000		1,850,265,000
Loans held for sale	3,030,000		7,492,000
Derivative financial instruments, assets	25,837,000		29,096,000
Derivative financial instrument, liabilities	25,761,000		29,055,000
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. Government sponsored agencies and enterprises
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	40,949,000		41,315,000
Recurring basis | Significant Other Observable Inputs (Level 2) | States and political subdivisions
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	719,761,000		725,019,000
Recurring basis | Significant Other Observable Inputs (Level 2) | Residential mortgage-backed securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	787,960,000		938,354,000
Recurring basis | Significant Other Observable Inputs (Level 2) | Commercial mortgage-backed securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	53,837,000		54,126,000
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate bonds
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	192,555,000		91,451,000
Recurring basis | Significant Unobservable Inputs (Level 3)
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	5,928,000		6,071,000
Loans held for sale	0		0
Derivative financial instruments, assets	0		0
Derivative financial instrument, liabilities	0		0
Recurring basis | Significant Unobservable Inputs (Level 3) | Residential mortgage-backed securities
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	808,000		848,000
Recurring basis | Significant Unobservable Inputs (Level 3) | Corporate bonds
Financial assets and financial liabilities measured at fair value on a recurring basis
Securities available for sale	$ 5,120,000		$ 5,223,000

[1] Liabilities associated with assets held in trust for deferred compensation

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Financial assets and financial liabilities measured at fair value on a recurring basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets
Securities available for sale:
U.S Government sponsored agencies and enterprises	$	40,949	$	—	$	40,949	$	—
States and political subdivisions	719,761		—		719,761		—
Residential mortgage-backed securities	788,768		—		787,960		808
Commercial mortgage-backed securities	53,837		—		53,837		—
Corporate bonds	197,675		—		192,555		5,120
Equity securities	11,179		11,179		—		—
Loans held for sale	3,030		—		3,030		—
Assets held in trust for deferred compensation	8,730		8,730		—		—
Derivative financial instruments	25,837		—		25,837		—
Financial liabilities
Other liabilities (1)	8,730		8,730		—		—
Derivative financial instruments	25,761		—		25,761		—
December 31, 2012
Financial assets
Securities available for sale:
U.S. Government sponsored agencies and enterprises	$	41,315	$	—	$	41,315	$	—
States and political subdivisions	725,019		—		725,019		—
Residential mortgage-backed securities	939,202		—		938,354		848
Commercial mortgage-backed securities	54,126		—		54,126		—
Corporate bonds	96,674		—		91,451		5,223
Equity securities	11,835		11,835		—		—
Loans held for sale	7,492		—		7,492		—
Assets held in trust for deferred compensation	7,746		7,746		—		—
Derivative financial instruments	29,096		—		29,096		—
Financial liabilities
Other liabilities (1)	7,746		7,746		—		—
Derivative financial instruments	29,055		—		29,055		—

(1) Liabilities associated with assets held in trust for deferred compensation

Financial assest measured at fair value on a recurring and non-recurring basis, unobservable inputs used

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a recurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Residential mortgage-backed securities	$	808	Discounted cash flows	Constant pre-payment rates
				(CPR) assumption	1% - 3% CPR
Corporate bonds	5,120		Discounted cash flows	Credit assumption	20% Loss

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Impaired loans	$	84,194	Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%
Foreclosed assets	52,230		Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%

Financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)

The following table presents additional information about financial assets measured at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3):

	Three Months Ended March 31
(in thousands)	2013			2012
Balance, beginning of period	$	6,071		$	6,992
Transfer into Level 3	—			—
Other comprehensive income	(103		)	37
Principal payments	(40		)	(294		)
Balance, ending of period	$	5,928		$	6,735

Assets measured at fair value on a nonrecurring basis

Assets measured at fair value on a nonrecurring basis as of March 31, 2013 and December 31, 2012 are included in the table below (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets:
Impaired loans	$	84,194	$	—	$	—	$	84,194
Non-financial assets:
Foreclosed assets	52,230		—		—		52,230
December 31, 2012
Financial assets:
Impaired loans	$	62,258	$	—	$	—	$	62,258
Non-financial assets:
Foreclosed assets	60,228		—		—		60,228
Long-lived assets	2,314		—		—		2,314

Estimated fair values of financial instruments

The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2013
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	131,146	$	131,146	$	131,146	$	—	$	—
Interest bearing deposits with banks	108,885		108,885		108,885		—		—
Investment securities available for sale	1,812,169		1,812,169		11,179		1,795,062		5,928
Investment securities held to maturity	517,785		554,601		—		554,601		—
Non-marketable securities - FHLB and FRB stock	52,434		52,434		—		—		52,434
Loans held for sale	3,030		3,030		—		3,030		—
Loans, net	5,585,866		5,578,973		—		—		5,578,973
Accrued interest receivable	35,123		35,123		35,123		—		—
Derivative financial instruments	25,837		25,837		—		25,837		—
Financial Liabilities:
Non-interest bearing deposits	$	2,067,310	$	2,067,310	$	2,067,310	$	—	$	—
Interest bearing deposits	5,384,596		5,402,697		—		—		5,402,697
Short-term borrowings	224,379		224,384		—		—		224,384
Long-term borrowings	64,019		70,354		—		—		70,354
Junior subordinated notes issued to capital trusts	152,065		110,616		—		—		110,616
Accrued interest payable	2,598		2,598		2,598		—		—
Derivative financial instruments	25,761		25,761		—		25,761		—

	December 31, 2012
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	176,010	$	176,010	$	176,010	$	—	$	—
Interest bearing deposits with banks	111,533		111,533		111,533		—		—
Investment securities available for sale	1,868,171		1,868,171		11,835		1,850,265		6,071
Investment securities held to maturity	493,421		535,681		—		535,681		—
Non-marketable securities - FHLB and FRB stock	55,385		55,385		—		—		55,385
Loans held for sale	7,492		7,492		—		7,492		—
Loans, net	5,642,726		5,659,598		—		—		5,659,598
Accrued interest receivable	36,040		36,040		36,040		—		—
Derivative financial instruments	29,096		29,096		—		29,096		—
Financial Liabilities:
Non-interest bearing deposits	$	2,164,547	$	2,164,547	$	2,164,547	$	—	$	—
Interest bearing deposits	5,378,150		5,399,709		—		—		5,399,709
Short-term borrowings	220,602		220,683		—		—		220,683
Long-term borrowings	116,050		117,809		—		—		117,809
Junior subordinated notes issued to capital trusts	152,065		104,009		—		—		104,009
Accrued interest payable	2,828		2,828		2,828		—		—
Derivative financial instruments	29,055		29,055		—		29,055		—

XML

Common and Preferred Stock (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended
	May 02, 2012	Mar. 14, 2012	Sep. 30, 2009	Mar. 31, 2013 Series A Preferred Stock	Dec. 31, 2008 Series A Preferred Stock	Sep. 30, 2009 Common Stock	Mar. 31, 2013 Common Stock	Sep. 17, 2009 Common Stock
Common and preferred stock
Preferred Stock, Shares Issued					196,000
Share Price					$ 1,000
Series A Preferred Stock, cumulative dividends rate for the first five years (as a percent)				5.00%
Series A Preferred Stock, cumulative dividends rate after five years (as a percent)				9.00%
Warrants, term (in years)							10 years
Warrants to purchase the Company's common stock, initially authorized (in shares)								1,012,048
Warrants to purchase the Company's common stock, as adjusted (in shares)								506,024
Warrants, exercise price (in dollars per share)							29.05
Common stock issued (in shares)						12,578,125
Gross proceeds from public offering of common stock						$ 201.3
Proceeds from public offering of common stock, net of underwriting discounts, commissions and offering expenses						190.9
Aggregate gross proceeds from "Qualified Equity Offerings"			196.0		196.0
Percentage of reduction in number of common shares to be purchased under the warrant								50.00%
Payments for repurchase of preferred stock and preference stock		196.0
Payments for repurchase of warrants	$ 1.5

XML

Stock Incentive Plans

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Incentive Plans

Stock Incentive Plans

ASC Topic 718 requires that the grant date fair value of equity awards to employees be recognized as compensation expense over the period during which an employee is required to provide service in exchange for such award.

The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the periods shown (in thousands):

	Three Months Ended March 31,
	2013		2012
Total cost of share-based payment plans during the period	$	1,260	$	1,265
Amount of related income tax benefit recognized in income	$	501	$	506

The Company adopted the Omnibus Incentive Plan (the “Omnibus Plan”) in 1997.  In June 2011, the Company’s stockholders approved an amendment and restatement of the Omnibus Plan to add 2,300,000 authorized shares for a total of 8,300,000 shares of common stock for issuance to directors, officers, and employees of the Company or any of its subsidiaries.  Equity grants under the Omnibus Plan can be in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other stock-based awards.  Shares awarded in the form of restricted stock, restricted stock units, performance shares, performance units, or other stock-based awards generally will reduce the shares available under the Omnibus Plan on a 2-for-1basis.  As of March 31, 2013, there were 2,214,130 shares available for future grants.

Annual equity-based incentive awards are typically granted to selected officers and employees mid-year.  Options are granted with an exercise price equal to no less than the market price of the Company’s shares at the date of grant; those option awards generally vest over four years of service and have 10-year contractual terms.  Restricted shares and units typically vest over a two or four year period.  Equity awards may also be granted at other times throughout the year in connection with the recruitment and retention of officers and employees.  Directors currently may elect, in lieu of cash, to receive up to 70% of their fees in stock options with a five year term which are fully vested on the grant date (provided that the director may not sell the underlying shares for at least six months after the grant date), and up to 100% of their fees in restricted shares, which vests one year after the grant date.

The following table summarizes stock options outstanding for the three months ended March 31, 2013:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding as of December 31, 2012	2,739,753		$	27.34
Granted	9,719		24.17
Exercised	(1,550	)	19.67
Expired or cancelled	(63,655	)	29.48
Forfeited	(5,497	)	18.98
Options outstanding as of March 31, 2013	2,678,770		$	27.30	4.52	$	4,562
Options exercisable as of March 31, 2013	2,020,953		$	30.13	3.36	$	890

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model based on certain assumptions.  Expected volatility is based on historical volatility and the expectations of future volatility of Company shares.  The risk free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.  The expected life of options is estimated based on historical employee behavior and represents the period of time that options granted are expected to remain outstanding.

 The following assumptions were used for options granted during the three months ended March 31, 2013:

	March 31,
	2013
Risk-free interest rate	0.71		%
Expected volatility of Company’s stock	27.91		%
Expected dividend yield	1.66		%
Expected life of options	4 years
Weighted average fair value per option of options granted during the year	$	4.65

The total intrinsic value of options exercised during the three months ended March 31, 2013 and 2012 was $2 thousand and $11 thousand, respectively.

The following is a summary of changes in restricted shares and units for the three months ended March 31, 2013:

	Number of Shares and Units		Weighted Average Grant Date Fair Value
Shares Outstanding at December 31, 2012	634,211		$	18.82
Granted	32,760		23.52
Vested	(12,286	)	19.90
Forfeited	(4,051	)	19.66
Shares Outstanding at March 31, 2013	650,634		$	19.03

During 2012, the Company issued 65,333 market-based restricted stock units which entitle recipients to shares of common stock at the end of a three year vesting period. Recipients will earn shares, totaling between 0% and 175% of the number of units issued, based on the Company's total stockholder return relative to a specified peer group of financial institutions over the three year period. The market-based restricted stock units are included in the preceding table as if the recipients earned shares equal to 100% of the units issued. A Monte Carlo simulation model was used to value the market-based restricted stock units at the time of issuance.

The Company issued 92,717 shares and 66,193 shares of market-based restricted stock in 2011 and 2010, respectively.  The market component of the vesting terms for each award requires that, for ten consecutive trading days, the closing price of the Company’s stock be at least $27.00 for awards issued in 2011 and $25.80 for awards issued in 2010.  The market components for awards issued in 2011 and 2010 have not been satisfied as of March 31, 2013. A Monte Carlo simulation model was used to value the market-based restricted stock awards at the time of issuance.

Effective January 1, 2010, the Company began issuing shares of common stock under the Omnibus Plan as Salary Stock, classified as other stock-based awards, to certain executive officers. This stock is fully vested as of the grant date and the related expense is included in salaries and employee benefits on the Consolidated Statements of Operations. Holders of Salary Stock have all of the rights of a stockholder, including the right to vote the shares and the right to receive any dividends that may be paid thereon. As a condition of receiving the Salary Stock, the holders entered into agreements with the Company providing that they may not sell or otherwise transfer the shares of Salary Stock for two years, except in the event of disability or death.  During the three months ended March 31, 2013, the Company issued 876 shares of Salary Stock at a weighted average issuance price of $22.39 and subsequently ended the issuance of new shares of Salary Stock.

As of March 31, 2013, there was $9.3 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements (including share option and nonvested share awards) granted under the Omnibus Plan.  At March 31, 2013, the weighted-average period over which the unrecognized compensation expense is expected to be recognized was approximately 2.5 years.

XML

Stock Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of the impact of share-based payment plans in the financial statements

The following table summarizes the impact of the Company’s share-based payment plans in the financial statements for the periods shown (in thousands):

	Three Months Ended March 31,
	2013		2012
Total cost of share-based payment plans during the period	$	1,260	$	1,265
Amount of related income tax benefit recognized in income	$	501	$	506

Additional information related to options outstanding

The following table summarizes stock options outstanding for the three months ended March 31, 2013:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value (in thousands)
Options outstanding as of December 31, 2012	2,739,753		$	27.34
Granted	9,719		24.17
Exercised	(1,550	)	19.67
Expired or cancelled	(63,655	)	29.48
Forfeited	(5,497	)	18.98
Options outstanding as of March 31, 2013	2,678,770		$	27.30	4.52	$	4,562
Options exercisable as of March 31, 2013	2,020,953		$	30.13	3.36	$	890

Assumptions used for options granted

The expected life of options is estimated based on historical employee behavior and represents the period of time that options granted are expected to remain outstanding.

 The following assumptions were used for options granted during the three months ended March 31, 2013:

	March 31,
	2013
Risk-free interest rate	0.71		%
Expected volatility of Company’s stock	27.91		%
Expected dividend yield	1.66		%
Expected life of options	4 years
Weighted average fair value per option of options granted during the year	$	4.65

Summary of changes in restricted shares

The following is a summary of changes in restricted shares and units for the three months ended March 31, 2013:

	Number of Shares and Units		Weighted Average Grant Date Fair Value
Shares Outstanding at December 31, 2012	634,211		$	18.82
Granted	32,760		23.52
Vested	(12,286	)	19.90
Forfeited	(4,051	)	19.66
Shares Outstanding at March 31, 2013	650,634		$	19.03

XML

Common and Preferred Stock

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

Common and Preferred Stock

Common and Preferred Stock

In 2008, the Company issued 196,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A ("the Series A Preferred Stock"), liquidation amount $1,000 per share, for an aggregate purchase price of $196.0 million as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program of the United States Department of the Treasury (the “Treasury”).  The Series A Preferred Stock qualified as Tier 1 capital and provided for cumulative dividends on the liquidation preference amount on a quarterly basis at a rate of 5% per annum for the first five years, and 9% per annum thereafter.  Concurrent with issuing the Series A Preferred Stock, the Company issued to the Treasury a 10 year warrant (the “Warrant”) to purchase 1,012,048 shares (subsequently reduced to 506,024 shares, as described below) of the Company’s Common Stock at an exercise price of $29.05 per share.

On September 17, 2009, the Company completed a public offering of its common stock by issuing 12,578,125 shares of common stock for aggregate gross proceeds of $201.3 million.  The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were approximately $190.9 million.  With the proceeds from this offering and the proceeds received by the Company from issuances pursuant to its Dividend Reinvestment and Stock Purchase Plan, the Company has received aggregate gross proceeds from “Qualified Equity Offerings” in excess of the $196.0 million aggregate liquidation preference amount of the Series A Preferred Stock.  As a result, the number of shares of the Company’s common stock underlying the Warrant was reduced by 50%, from 1,012,048 shares to 506,024 shares.

On March 14, 2012, the Company repurchased all $196.0 million of the Series A Preferred Stock. On May 2, 2012, the Company repurchased the Warrant in full for approximately $1.5 million.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash dividends declared	$ 0.10	$ 0.01

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities held to maturity, at amortized cost, fair value (in dollars)	$ 554,601	$ 535,681
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	70,000,000	70,000,000
Common stock, issued shares	54,984,191	54,955,284
Treasury stock, shares	183,700	170,567

XML

Short-Term Borrowings

3 Months Ended

Mar. 31, 2013

Short-term Debt [Abstract]

Short-Term Borrowings

Short-Term Borrowings

Short-term borrowings were as follows as of March 31, 2013 and December 31, 2012 (dollars in thousands):

	March 31, 2013				December 31, 2012
	Weighted Average				Weighted Average
	Cost		Amount		Cost		Amount
Customer repurchase agreements	0.21	%	$	219,089	0.23	%	$	208,242
Federal Home Loan Bank advances	3.64	%	5,290		3.58	%	12,360
	0.29	%	$	224,379	0.42	%	$	220,602

Securities sold under agreements to repurchase are agreements in which the Company acquires funds by selling assets to another party under a simultaneous agreement to repurchase the same assets at a specified price and date.  The Company enters into repurchase agreements and also offers a demand deposit account product to customers that sweeps their balances in excess of an agreed upon target amount into overnight repurchase agreements.  All securities sold under agreements to repurchase are recorded on the face of the balance sheet.

The Company had Federal Home Loan Bank advances with maturity dates less than one year consisting of $5.3 million in fixed rate advances at March 31, 2013 and $12.4 million in fixed rate advances at December 31, 2012.  At March 31, 2013, the interest rates on these advances ranged from 3.26% to 3.98% and maturities ranged from April 2013 to July 2013.

On March 9, 2012, the Company entered into a $35.0 million unsecured line of credit with a correspondent bank. Interest is payable at a rate of one month LIBOR + 2.00%. As of March 31, 2013, no amount was outstanding. The line originally matured on March 8, 2013, was renewed and is scheduled to mature on March 7, 2014.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 29, 2013
Entity Registrant Name	MB FINANCIAL INC /MD
Entity Central Index Key	0001139812
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		54,798,535
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

XML

Long-term Borrowings

3 Months Ended

Mar. 31, 2013

Long-term Debt, Unclassified [Abstract]

Long-term Borrowings

Long-term Borrowings

The Company had Federal Home Loan Bank advances with original contractual maturities greater than one year of $4.4 million at March 31, 2013 and December 31, 2012. As of March 31, 2013, the advances had fixed terms with effective interest rates, net of discounts, ranging from 3.23% to 5.87% and maturities ranging from April 2021 to April 2035.

A collateral pledge agreement exists whereby at all times, the Company must keep on hand, free of all other pledges, liens, and encumbrances, first mortgage loans and home equity loans with unpaid principal balances aggregating no less than 133% for first mortgage loans and 250% for home equity loans of the outstanding advances from the Federal Home Loan Bank.  The Company may also pledge certain investment securities as collateral for advances based on market value.  As of March 31, 2013 and December 31, 2012, the Company had $16.3 million and $28.4 million, respectively, of loans pledged as collateral for long-term Federal Home Loan Bank advances.  Additionally, as of March 31, 2013 and December 31, 2012, the Company had $31.7 million and $32.1 million, respectively, of investment securities pledged as collateral for advances from the Federal Home Loan Bank.

The Company had notes payable to banks totaling $19.2 million and $21.1 million at March 31, 2013 and December 31, 2012, respectively, which as of March 31, 2013, were accruing interest at rates ranging from 2.50% to 12.00%.  Lease investments includes equipment with an amortized cost of $27.8 million and $29.7 million at March 31, 2013 and December 31, 2012, respectively, that is pledged as collateral on these notes.

The Company had a $40.0 million10-year structured repurchase agreement as of March 31, 2013, which bears interest at a fixed rate borrowing of 4.75% and expires in 2016.

During the first quarter of 2013, MB Financial Bank pre-paid a $50.0 million subordinated debt facility.  Interest was payable at a rate of 3-month LIBOR +1.70%.

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Interest income:
Loans	$ 60,793	$ 71,648
Investment securities:
Taxable	6,140	10,884
Nontaxable	8,060	6,739
Other interest earning accounts	135	169
Total interest income	75,128	89,440
Interest expense:
Deposits	5,709	8,760
Short-term borrowings	167	206
Long-term borrowings and junior subordinated notes	1,567	3,381
Total interest expense	7,443	12,347
Net interest income	67,685	77,093
Provision for credit losses	0	3,100
Net interest income after provision for credit losses	67,685	73,993
Non-interest income:
Capital markets and international banking fees	808	512
Commercial deposit and treasury management fees	5,966	5,897
Lease financing, net	16,263	6,958
Trust and asset management fees	4,494	4,404
Card fees	2,695	2,046
Loan service fees	1,011	1,067
Consumer and other deposit service fees	3,246	3,453
Brokerage fees	1,157	1,255
Net loss on investment securities	(1)	(3)
Increase in cash surrender value of life insurance	844	917
Net loss on sale of assets	0	(17)
Accretion of FDIC indemnification asset	143	475
Net loss recognized on other real estate owned	(330)	(6,589)
Net gain on sale of loans	639	374
Other operating income	1,438	2,105
Total non-interest income	38,373	22,854
Non-interest expenses:
Salaries and employee benefits	43,514	40,429
Occupancy and equipment expense	9,404	9,570
Computer services and telecommunication expense	3,887	3,653
Advertising and marketing expense	2,103	2,073
Professional and legal expense	1,295	1,413
Other intangibles amortization expense	1,544	1,257
Other real estate expense, net	139	1,243
Other operating expenses	9,213	7,693
Total non-interest expenses	71,099	67,331
Income before income taxes	34,959	29,516
Income tax expense	10,053	8,430
Net income	24,906	21,086
Dividends and discount accretion on preferred shares	0	3,269
Net income available to common stockholders	$ 24,906	$ 17,817
Common share data:
Basic earnings per common share	$ 0.46	$ 0.33
Diluted earnings per common share	$ 0.46	$ 0.33
Weighted average common shares outstanding for basic earnings per common share	54,411,806	54,155,856
Diluted weighted average common shares outstanding for diluted earnings per common share	54,736,644	54,411,916

XML

Business Combinations

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Business Combinations

Business Combinations

The following business combination was accounted for under the purchase method of accounting.  Accordingly, the results of operations of the acquired company have been included in the Company’s results of operations since the date of acquisition.  Under this method of accounting, assets and liabilities acquired are recorded at their estimated fair values, net of applicable income tax effects.  The excess cost over fair value of net assets acquired is recorded as goodwill.  In the event that the fair value of net assets acquired exceeds the cost, the Company will record a gain on the acquisition.

On December 28, 2012, MB Financial Bank acquired a 100% equity interest in Celtic Leasing Corp. (“Celtic”), a privately held, mid-ticket equipment leasing company. Celtic specializes in solutions for the health care, legal, technology, and manufacturing industries. MB Financial Bank estimated contingent consideration related to the transaction which may be paid out at future dates. This consideration is based on the performance of lease residual values which will be determined in future years over an earn-out period. As the consideration paid for Celtic exceeded the net assets acquired, goodwill was recorded on the acquisition. Goodwill recorded in the transaction is not tax deductible. The purchase accounting entries are preliminary for lease loans, goodwill and other intangibles, as MB Financial Bank continues to analyze the portfolios and the underlying risks and collateral values of the assets. After the purchase accounting is finalized, the impact of any future changes to the amount of contingent consideration will be reflected in the statement of operations.

Estimated fair values of the assets acquired and liabilities assumed in the Celtic transaction, as of the closing date of the transaction were as follows (in thousands):

Assets Acquired and Liabilities Assumed

(Dollar Amounts in Thousands)

	Celtic
	December 28,
	2012
ASSETS
Cash and cash equivalents	$	31,647
Investment securities available for sale	635
Loans and leases	32,933
Premises and equipment	81
Goodwill	36,300
Other intangibles	5,028
Other assets	27,323
Total assets	$	133,947
LIABILITIES
Accrued expenses and other liabilities	$	75,290
Total liabilities	$	75,290
Cash paid on acquisition	$	58,657
Net gain recorded on acquisition	$	—

XML

Earnings Per Common Share

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Earnings Per Common Share

Earnings Per Common Share

Earnings per common share is computed using the two-class method. Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Participating securities include non-vested restricted stock awards and restricted stock units, though no actual shares of common stock related to restricted stock units are issued until the settlement of such units, to the extent holders of these securities receive non-forfeitable dividends or dividend equivalents at the same rate as holders of the Company's common stock. Diluted earnings per common share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method.

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share (amounts in thousands, except common share data).

	Three Months Ended March 31,
	2013		2012
Distributed earnings allocated to common stock	$	5,507	$	548
Undistributed earnings	19,399		20,538
Net income	24,906		21,086
Less: preferred stock dividends and discount accretion	—		3,269
Net income available to common stockholders	24,906		17,817
Less: earnings allocated to participating securities	1		1
Earnings allocated to common stockholders	$	24,905	$	17,816
Weighted average shares outstanding for basic earnings per common share	54,411,806		54,155,856
Dilutive effect of equity awards	324,838		256,060
Weighted average shares outstanding for diluted earnings per common share	54,736,644		54,411,916
Basic earnings per common share	$	0.46	$	0.33
Diluted earnings per common share	0.46		0.33

XML

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Company offers various derivatives, including interest rate swaps and foreign currency forward contracts, to our customers which can mitigate our exposure to market risk through the execution of off-setting positions with inter-bank dealer counterparties. This also permits the Company to offer customized risk management solutions to our customers. These customer accommodations and any offsetting financial contracts are treated as non-designated derivative instruments and carried at fair value through an adjustment to the income statement.

Interest rate swap and foreign currency forward contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. The net amount payable or receivable under interest rate swaps is accrued as an adjustment to interest income.  The net amount payable for March 31, 2013 was approximately $34 thousand, and the net amount payable for December 31, 2012 was approximately $30 thousand.  The Company's credit exposure on interest rate swaps is limited to the Company's net favorable value and interest payments of all swaps to each counterparty. In such cases, collateral is generally required from the counterparties involved if the net value of the swaps exceeds a nominal amount.  At March 31, 2013, the Company’s credit exposure relating to interest rate swaps was approximately $23.9 million, which is secured by the underlying collateral on customer loans. 

The Company also enters into mortgage banking derivatives which are designated as non-designated derivatives. These derivatives include interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. It is the Company's practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rates on its commitments to fund the loans as well as on its portfolio of mortgage loans held-for-sale.

The Company had fair value commercial loan interest rate swaps, to hedge its interest rate risk, with an aggregate notional amount of $3.6 million at March 31, 2013.  For fair value hedges, the changes in fair values of both the hedging derivative and the hedged item were recorded in current earnings as other income.

The Company’s derivative financial instruments are summarized below as of March 31, 2013 and December 31, 2012 (in thousands):

	Asset Derivatives								Liability Derivatives
	March 31, 2013				December 31, 2012				March 31, 2013					December 31, 2012
	Notional		Estimated		Notional		Estimated		Notional		Estimated			Notional		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value			Amount		Fair Value
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts (1)	$	—	$	—	$	—	$	—	$	3,637	$	(62	)	$	3,707	$	(94	)
Stand-alone derivative instruments (2)
Interest rate swap contracts	504,494		23,853		460,956		27,740		505,328		(23,934		)	462,012		(27,832		)
Interest rate options contracts	72,729		164		70,346		157		72,729		(164		)	70,346		(157		)
Foreign exchange contracts	19,888		1,673		20,033		1,062		19,495		(1,567		)	19,337		(961		)
Mortgage banking derivatives	9,898		147		11,400		137		5,000		(34		)	4,000		(11		)
Total non-hedging derivative instruments	607,009		25,837		562,735		29,096		602,552		(25,699		)	555,695		(28,961		)
Total	$	607,009	$	25,837	$	562,735	$	29,096	$	606,189	$	(25,761	)	$	559,402	$	(29,055	)

(1) Hedged fixed-rate commercial real estate loans

(2) These portfolio swaps are not designated as hedging instruments under ASC Topic 815.

Amounts included in the other income in the consolidated statements of operations related to derivative financial instruments were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Derivative instruments designated as hedges of fair value:
Interest rate swap contracts	$	(1	)	$	(61	)
Stand-alone derivative instruments
Interest rate swap contracts	11			66
Interest rate options contracts	—			—
Foreign exchange contracts	5			2
Mortgage banking derivatives	(13		)	27
Total non-hedging derivative instruments	3			95
Total	$	2		$	34

Methods and assumptions used by the Company in estimating the fair value of its interest rate swaps are discussed in Note 13 to consolidated financial statements.

XML

Junior Subordinated Notes Issued to Capital Trusts

3 Months Ended

Mar. 31, 2013

JUNIOR SUBORDINATED NOTES ISSUED TO CAPITAL TRUSTS

Junior Subordinated Notes Issued to Capital Trusts

Junior Subordinated Notes Issued to Capital Trusts

The Company has established statutory trusts for the sole purpose of issuing trust preferred securities and related trust common securities.  The proceeds from such issuances were used by the trusts to purchase junior subordinated notes of the Company, which are the sole assets of each trust.  Concurrently with the issuance of the trust preferred securities, the Company issued guarantees for the benefit of the holders of the trust preferred securities.  The Company’s outstanding trust preferred securities qualify, and are treated by the Company, as Tier 1 regulatory capital.  The Company owns all of the common securities of each trust.  The trust preferred securities issued by each trust rank equally with the common securities in right of payment, except that if an event of default under the indenture governing the notes has occurred and is continuing, the preferred securities will rank senior to the common securities in right of payment.

The table below summarizes the outstanding junior subordinated notes and the related trust preferred securities issued by each trust as of March 31, 2013 (in thousands):

	Coal City Capital Trust I		MB Financial Capital Trust II		MB Financial Capital Trust III		MB Financial Capital Trust IV
Junior Subordinated Notes:
Principal balance	$	25,774	$	36,083	$	10,310	$	20,619
Annual interest rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Stated maturity date	September 1, 2028		September 15, 2035		September 23, 2036		September 15, 2036
Call date	September 1, 2008		December 15, 2010		September 23, 2011		September 15, 2011
Trust Preferred Securities:
Face Value	$	25,000	$	35,000	$	10,000	$	20,000
Annual distribution rate	3-mo LIBOR + 1.80%		3-mo LIBOR + 1.40%		3-mo LIBOR + 1.50%		3-mo LIBOR + 1.52%
Issuance date	July 1998		August 2005		July 2006		August 2006
Distribution dates (1)	Quarterly		Quarterly		Quarterly		Quarterly

	MB Financial Capital Trust V		MB Financial Capital Trust VI		FOBB Statutory Trust III (2)
Junior Subordinated Notes:
Principal balance	$	30,928	$	23,196	$	5,155
Annual interest rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Stated maturity date	December 15, 2037		October 30, 2037		January 23, 2034
Call date	December 15, 2012		October 30, 2012		January 23, 2009
Trust Preferred Securities:
Face Value	$	30,000	$	22,500	$	5,000
Annual distribution rate	3-mo LIBOR + 1.30%		3-mo LIBOR + 1.30%		3-mo LIBOR + 2.80%
Issuance date	September 2007		October 2007		December 2003
Distribution dates (1)	Quarterly		Quarterly		Quarterly

(1) All distributions are cumulative and paid in cash.

(2) FOBB Statutory Trust III was established by First Oak Brook Bancshares, Inc. (“FOBB”) prior to the Company's acquisition of FOBB, and the junior subordinated note issued by FOBB to FOBB Statutory Trust III was assumed by the Company upon completion of the acquisition.

The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated notes at the stated maturity date or upon redemption on a date no earlier than the call dates noted in the table above.  Prior to these respective redemption dates, the junior subordinated notes could have been redeemed by the Company (in which case the trust preferred securities would also be redeemed) after the occurrence of certain events that would have a negative tax effect on the Company or the trusts, would cause the trust preferred securities to no longer qualify as Tier 1 capital, or would result in a trust being treated as an investment company.  Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated notes.  The Company’s obligation under the junior subordinated notes and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each trust’s obligations under the trust preferred securities issued by each trust.  The Company has the right to defer payment of interest on the notes and, therefore, distributions on the trust preferred securities, for up to five years, but not beyond the stated maturity date in the table above.  During any such deferral period the Company may not pay cash dividends on its stock and generally may not repurchase its stock.

XML

Goodwill and Intangibles

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

  Goodwill and Intangibles

The excess of the cost of an acquisition over the fair value of the net assets acquired consists of goodwill, and core deposit and client relationship intangibles. Under ASC Topic 350, goodwill is subject to at least annual assessments for impairment by applying a fair value based test. The Company reviews goodwill to determine potential impairment annually, or more frequently if events and circumstances indicate that goodwill might be impaired, by comparing the carrying value of the reporting unit with the fair value of the reporting unit.

The Company's annual assessment date is as of December 31. No impairment losses were recognized during the three months ended March 31, 2013 or 2012. Goodwill is tested for impairment at the reporting unit level. All of our goodwill is allocated to MB Financial, Inc., which is the Company's only applicable reporting unit for purposes of testing goodwill impairment.  The carrying amount of goodwill was $423.4 million at March 31, 2013 and December 31, 2012.

The Company has other intangible assets consisting of core deposit and client relationship intangibles that had a remaining weighted average amortization period of approximately four years, as of March 31, 2013.

The following table presents the changes in the carrying amount of core deposit and client relationship intangibles, gross carrying amount, accumulated amortization, and net book value as of March 31, 2013 (in thousands):

	March 31,
	2013
Balance at beginning of period	$	29,512
Amortization expense	(1,544		)
Balance at end of period	$	27,968
Gross carrying amount	$	61,429
Accumulated amortization	(33,461		)
Net book value	$	27,968

The following presents the estimated future amortization expense of other intangible assets (in thousands):

Year ending December 31,	Amount
2013	$	4,540
2014	4,748
2015	4,030
2016	3,418
2017	3,071
Thereafter	8,161
	$	27,968

XML

Fair Value Measurements (Details 2) (USD $)	3 Months Ended						3 Months Ended		3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Recurring basis	Dec. 31, 2012 Significant Unobservable Inputs (Level 3) Recurring basis	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Recurring basis Residential mortgage-backed securities	Dec. 31, 2012 Significant Unobservable Inputs (Level 3) Recurring basis Residential mortgage-backed securities	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Recurring basis Corporate bonds	Dec. 31, 2012 Significant Unobservable Inputs (Level 3) Recurring basis Corporate bonds	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Recurring basis Minimum Residential mortgage-backed securities	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Recurring basis Maximum Residential mortgage-backed securities	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Nonrecurring basis Minimum	Mar. 31, 2013 Significant Unobservable Inputs (Level 3) Nonrecurring basis Maximum
Assets measured at fair value on a nonrecurring basis
Constant prepayment rates (as a percent)									1.00%	3.00%
Credit assumption (as a percent)							20.00%
Appraisal adjustment impaired loans (as a percent)											5.00%	10.00%
Appraisal adjustment foreclosed assets (as a percent)											5.00%	10.00%
Securities available for sale			$ 5,928,000	$ 6,071,000	$ 808,000	$ 848,000	$ 5,120,000	$ 5,223,000
Financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3)
Balance at the beginning of the period	6,071,000	6,992,000
Other comprehensive income	(103,000)	37,000
Principal payments	(40,000)	(294,000)
Balance at the end of the period	$ 5,928,000	$ 6,735,000
Fair value assumption, allowance for impaired real estate loans percentage	85.00%

XML

Investment Securities

3 Months Ended

Mar. 31, 2013

Investments Securities [Abstract]

Investment Securities

Investment Securities

Carrying amounts and fair values of investment securities were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2013
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,478	$	2,471	$	—		$	40,949
States and political subdivisions	680,978		40,150		(1,367		)	719,761
Residential mortgage-backed securities	776,336		14,152		(1,720		)	788,768
Commercial mortgage-backed securities	51,048		2,789		—			53,837
Corporate bonds	197,162		1,197		(684		)	197,675
Equity securities	10,820		366		(7		)	11,179
	1,754,822		61,125		(3,778		)	1,812,169
Held to Maturity
States and political subdivisions	262,310		17,606		(59		)	279,857
Residential mortgage-backed securities	255,475		19,269		—			274,744
	517,785		36,875		(59		)	554,601
Total	$	2,272,607	$	98,000	$	(3,837	)	$	2,366,770
December 31, 2012
Available for Sale
U.S. Government sponsored agencies and enterprises	$	38,605	$	2,710	$	—		$	41,315
States and political subdivisions	679,991		45,571		(543		)	725,019
Residential mortgage-backed securities	930,413		14,038		(5,249		)	939,202
Commercial mortgage-backed securities	51,100		3,026		—			54,126
Corporate bonds	97,014		213		(553		)	96,674
Equity securities	11,398		447		(10		)	11,835
	$	1,808,521	$	66,005	$	(6,355	)	$	1,868,171
Held to Maturity
States and political subdivisions	237,563		21,039		—			258,602
Residential mortgage-backed securities	255,858		21,221		—			277,079
	493,421		42,260		—			535,681
Total	$	2,301,942	$	108,265	$	(6,355	)	$	2,403,852

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. 

The Company has no direct exposure to the State of Illinois, but approximately 25% of the state and political subdivisions portfolio consists of securities issued by municipalities located in Illinois as of March 31, 2013.

As of March 31, 2013, approximately 39% of state and political subdivisions securities were insured and approximately 89% of such securities were general obligation issues.

Unrealized losses on investment securities and the fair value of the related securities at March 31, 2013 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	98,367	$	(1,367	)	$	—	$	—		$	98,367	$	(1,367	)
Residential mortgage-backed securities	169,576		(1,601		)	12,599		(119		)	182,175		(1,720		)
Corporate bonds	45,158		(684		)	—		—			45,158		(684		)
Equity securities	33		(7		)	—		—			33		(7		)
	313,134		(3,659		)	12,599		(119		)	325,733		(3,778		)
Held to maturity
States and political subdivisions	15,476		(59		)	—		—			15,476		(59		)
	15,476		(59		)	—		—			15,476		(59		)
Totals	$	328,610	$	(3,718	)	$	12,599	$	(119	)	$	341,209	$	(3,837	)

Unrealized losses on investment securities and the fair value of the related securities at December 31, 2012 were as follows (in thousands):

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
States and political subdivisions	$	57,540	$	(543	)	$	—	$	—		$	57,540	$	(543	)
Residential mortgage-backed securities	270,539		(5,083		)	16,434		(166		)	286,973		(5,249		)
Corporate bonds	58,241		(553		)	—		—			58,241		(553		)
Equity securities	30		(10		)	—		—			30		(10		)
Totals	$	386,350	$	(6,189	)	$	16,434	$	(166	)	$	402,784	$	(6,355	)

The total number of security positions in the investment portfolio in an unrealized loss position at March 31, 2013 was 142 compared to 117 at December 31, 2012. Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether or not the Company is more likely than not to sell the security before recovery of its cost basis.

As of March 31, 2013, management does not have the intent to sell any of the securities in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2013, management believes the impairments detailed in the table above are temporary.

Net losses recognized on investment securities available for sale were as follows (in thousands):

	Three Months Ended March 31,
	2013			2012
Realized losses	$	(1	)	$	(3	)
Net losses	$	(1	)	$	(3	)

The amortized cost and fair value of investment securities as of March 31, 2013 by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.

	Amortized		Fair
(In thousands)	Cost		Value
Available for sale:
Due in one year or less	$	33,798	$	34,326
Due after one year through five years	420,646		442,426
Due after five years through ten years	154,410		161,434
Due after ten years	307,764		320,199
Equity securities	10,820		11,179
Residential and commercial mortgage-backed securities	827,384		842,605
	1,754,822		1,812,169
Held to maturity:
Due in one year or less	983		1,002
Due after one year through five years	4,135		4,189
Due after five years through ten years	23,000		23,677
Due after ten years	234,192		250,989
Residential mortgage-backed securities	255,475		274,744
	517,785		554,601
Total	$	2,272,607	$	2,366,770

Investment securities available for sale with carrying amounts of $1.1 billion and $989.6 million at March 31, 2013 and December 31, 2012, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law.

XML

Loans

3 Months Ended

Mar. 31, 2013

Receivables [Abstract]

Loans

Loans

Loans consist of the following at (in thousands):

	March 31, 2013		December 31, 2012
Commercial loans	$	1,207,638	$	1,220,472
Commercial loans collateralized by assignment of lease payments	1,347,666		1,303,020
Commercial real estate	1,743,329		1,761,832
Residential real estate	312,804		314,359
Construction real estate	101,581		110,261
Indirect vehicle	220,739		208,633
Home equity	291,190		305,186
Other consumer loans	81,932		93,317
Gross loans, excluding covered loans	5,306,879		5,317,080
Covered loans	400,789		449,850
Total loans(1)	$	5,707,668	$	5,766,930

 (1) Gross loan balances at March 31, 2013 and December 31, 2012 are net of unearned income, including net deferred loan fees of $1.2 million and $1.1 million, respectively.

Loans are made to individuals as well as commercial and tax exempt entities. Specific loan terms vary as to interest rate, repayment, and collateral requirements based on the type of loan requested and the credit worthiness of the prospective borrower. Credit risk tends to be geographically concentrated in that a majority of the loan customers are located in the markets serviced by MB Financial Bank.

The Company's extension of credit is governed by its Credit Risk Policy which was established to control the quality of the Company's loans. These policies and procedures are reviewed and approved by the Board of Directors on a regular basis.

Commercial Loans. Commercial credit is extended primarily to middle market customers. Such credits are typically comprised of working capital loans, loans for physical asset expansion, asset acquisition loans and other business loans. Loans to closely held businesses will generally be guaranteed in full or for a meaningful amount by the businesses' principal owners. Commercial loans are made based primarily on the historical and projected cash flow of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not behave as forecasted and collateral securing loans may fluctuate in value due to economic or individual performance factors. Minimum standards and underwriting guidelines have been established for all commercial loan types.

Lease Loans. The Company makes lease loans to both investment grade and non-investment grade companies. Investment grade lessees are companies rated in one of the four highest categories by Moody's Investor Services or Standard & Poor's Rating Services or, in the event the related lessee has not received any such rating, where the related lessee would be viewed under the underwriting polices of the Company as an investment grade company. Whether or not companies fall into this category, each lease loan is considered on its individual merit based on financial information available at the time of underwriting.

Commercial Real Estate Loans. Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial loans. These loans are viewed primarily as cash flow loans and the repayment of these loans is largely dependent on the successful operation of the property. Loan performance may be adversely affected by factors impacting the general economy or conditions specific to the real estate market such as geographic location and/or property type.

Construction Real Estate Loans. The Company defines construction loans as loans where the loan proceeds are controlled by the Company and used exclusively for the improvement of real estate in which the Company holds a mortgage. Due to the inherent risk in this type of loan, they are subject to other industry specific policy guidelines outlined in the Company's Credit Risk Policy.

Consumer Related Loans. The Company originates direct and indirect consumer loans including primarily residential real estate, home equity lines and loans, credit cards, and indirect motorcycle loans using a matrix-based credit analysis as part of the underwriting process. Each loan type has a separate specified matrix which consists of several factors including debt to income, type of collateral and loan to collateral value, credit history and Company relationship with the borrower. Indirect loan and credit card underwriting involves the use of risk-based pricing in the underwriting process.

The following table presents the contractual aging of the recorded investment in past due loans by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	Current		30-59 Days Past Due		60-89 Days Past Due		Loans past due 90 days or more		Total Past Due		Total
March 31, 2013
Commercial	$	1,202,455	$	1,487	$	513	$	3,183	$	5,183	$	1,207,638
Commercial collateralized by assignment of lease payments	1,337,485		6,199		3,393		589		10,181		1,347,666
Commercial real estate
Healthcare	190,062		—		—		3,238		3,238		193,300
Industrial	394,574		3,064		1,765		6,894		11,723		406,297
Multifamily	330,425		821		283		2,391		3,495		333,920
Retail	387,297		1,080		—		6,921		8,001		395,298
Office	170,115		373		962		4,089		5,424		175,539
Other	232,910		409		3,762		1,894		6,065		238,975
Residential real estate	301,609		2,830		1,730		6,635		11,195		312,804
Construction real estate	97,943		700		95		2,843		3,638		101,581
Indirect vehicle	218,794		1,316		305		324		1,945		220,739
Home equity	279,908		2,087		1,306		7,889		11,282		291,190
Other consumer	81,903		20		3		6		29		81,932
Gross loans, excluding covered loans	5,225,480		20,386		14,117		46,896		81,399		5,306,879
Covered loans	264,236		8,038		6,221		122,294		136,553		400,789
Total loans (1)	$	5,489,716	$	28,424	$	20,338	$	169,190	$	217,952	$	5,707,668
Nonperforming loan aging	$	63,416	$	3,295	$	7,147	$	40,100	$	50,542	$	113,958
Non-covered loans related to FDIC transactions (2)	$	14,139	$	82	$	449	$	6,795	$	7,326	$	21,465
December 31, 2012
Commercial	$	1,215,957	$	639	$	754	$	3,122	$	4,515	$	1,220,472
Commercial collateralized by assignment of lease payments	1,288,341		11,252		2,847		580		14,679		1,303,020
Commercial real estate
Healthcare	192,039		—		—		3,238		3,238		195,277
Industrial	402,813		548		424		7,700		8,672		411,485
Multifamily	353,966		1,282		—		3,103		4,385		358,351
Retail	375,900		6,933		518		9,331		16,782		392,682
Office	186,665		742		280		1,125		2,147		188,812
Other	210,456		851		1,837		2,081		4,769		215,225
Residential real estate	306,927		382		1,248		5,802		7,432		314,359
Construction real estate	106,158		1,139		97		2,867		4,103		110,261
Indirect vehicle	206,126		1,588		498		421		2,507		208,633
Home equity	291,737		3,557		1,888		8,004		13,449		305,186
Other consumer	93,266		47		—		4		51		93,317
Gross loans, excluding covered loans	5,230,351		28,960		10,391		47,378		86,729		5,317,080
Covered loans	301,260		5,831		7,478		135,281		148,590		449,850
Total loans (1)	$	5,531,611	$	34,791	$	17,869	$	182,659	$	235,319	$	5,766,930
Nonperforming loan aging	$	69,836	$	3,171	$	3,718	$	40,261	$	47,150	$	116,986
Non-covered loans related to FDIC transactions (2)	$	12,752	$	312	$	1,542	$	7,115	$	8,969	$	21,721

(1)          Includes loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

(2)          Loans related to the InBank FDIC-assisted transaction completed by MB Financial Bank in 2009.

The following table presents the recorded investment in nonaccrual loans and loans past due ninety days or more and still accruing by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013				December 31, 2012
			Loans past due				Loans past due
	Nonaccrual		90 days or more and still accruing		Nonaccrual		90 days or more and still accruing
Commercial	$	21,134	$	400	$	23,886	$	229
Commercial collateralized by assignment of lease payments	439		274		1,180		222
Commercial real estate:
Healthcare	3,238		—		3,238		—
Industrial	14,988		3,603		19,179		147
Multifamily	6,131		—		7,225		—
Office	13,577		561		3,263		—
Retail	6,738		—		17,019		—
Other	8,768		—		9,437		—
Residential real estate	12,428		—		10,943		—
Construction real estate	1,025		—		1,028		—
Indirect vehicles	1,499		17		1,494		—
Home equity	18,791		338		17,486		1,000
Other consumer	9		—		9		1
Total	$	108,765	$	5,193	$	115,387	$	1,599

The Company utilizes an internal asset classification system as a means of reporting problem and potential problem loans. Under the Company's risk rating system, the Company classifies potential problem and problem loans as “Special Mention,” “Substandard,” and “Doubtful.” Substandard loans include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management's close attention are deemed to be Special Mention. Risk ratings are updated at least annually and any time the situation warrants.

Loans listed as not rated are included in groups of homogeneous loans with similar risk and loss characteristics. The following tables present the risk category of loans by class of loans based on the most recent analysis performed and the contractual aging as of March 31, 2013 and December 31, 2012 (in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2013
Commercial	$	1,106,341	$	53,980	$	47,317	$	—	$	1,207,638
Commercial collateralized by assignment of lease payments	1,339,062		97		8,507		—		1,347,666
Commercial real estate
Healthcare	168,433		21,629		—		3,238		193,300
Industrial	351,514		19,948		34,835		—		406,297
Multifamily	316,962		3,935		13,023		—		333,920
Retail	357,114		14,485		23,699		—		395,298
Office	143,780		5,253		26,506		—		175,539
Other	198,048		19,279		21,648		—		238,975
Construction real estate	88,315		549		12,717		—		101,581
Total	$	4,069,569	$	139,155	$	188,252	$	3,238	$	4,400,214
December 31, 2012
Commercial	$	1,136,294	$	33,068	$	50,895	$	215	$	1,220,472
Commercial collateralized by assignment of lease payments	1,292,241		3,322		7,457		—		1,303,020
Commercial real estate
Healthcare	170,265		21,774		—		3,238		195,277
Industrial	355,218		15,243		41,024		—		411,485
Multifamily	318,991		25,297		14,063		—		358,351
Retail	340,919		25,096		26,667		—		392,682
Office	159,056		7,120		22,636		—		188,812
Other	193,824		2,553		18,848		—		215,225
Construction real estate	97,724		552		11,985		—		110,261
Total	$	4,064,532	$	134,025	$	193,575	$	3,453	$	4,395,585

Approximately $76.0 million and $85.5 million of the substandard and doubtful loans were non-performing as of March 31, 2013 and December 31, 2012, respectively.

For residential real estate, home equity indirect vehicle and other consumer loan classes, the Company also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in those loan classes based on payment activity as of March 31, 2013 and December 31, 2012 (in thousands):

	Performing		Non-performing		Total
March 31, 2013
Residential real estate	$	300,376	$	12,428	$	312,804
Indirect vehicles	219,223		1,516		220,739
Home equity	272,061		19,129		291,190
Other consumer	81,923		9		81,932
Total	$	873,583	$	33,082	$	906,665
December 31, 2012
Residential real estate	$	303,416	$	10,943	$	314,359
Indirect vehicles	207,139		1,494		208,633
Home equity	286,700		18,486		305,186
Other consumer	93,307		10		93,317
Total	$	890,562	$	30,933	$	921,495

The following tables present loans individually evaluated for impairment by class of loans as of March 31, 2013 and December 31, 2012 (in thousands):

	March 31, 2013
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,016	$	8,440	$	1,576	$	—	$	9,853	$	—
Commercial collateralized by assignment of lease payments	—		—		—		—		—		—
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		10,943		—
Industrial	11,744		10,873		871		—		11,893		—
Multifamily	779		779		—		—		787		—
Retail	3,986		3,526		460		—		3,482		—
Office	1,366		1,170		196		—		1,499		—
Other	2,285		2,283		2		—		2,707		—
Residential real estate	1,730		1,344		386		—		1,730		—
Construction real estate	—		—		—		—		—		—
Indirect vehicles	—		—		—		—		—		—
Home equity	1,575		1,575		—		—		1,471		—
Other consumer	—		—		—		—		—		—
With an allowance recorded:
Commercial	12,745		12,694		51		2,643		13,916		—
Commercial collateralized by assignment of lease payments	536		536		—		86		760		8
Commercial real estate:
Healthcare	—		—		—		—		—		—
Industrial	4,117		4,117		—		1,026		4,077		—
Multifamily	6,950		6,170		780		2,107		6,738		54
Retail	21,267		15,227		6,040		2,396		14,774		—
Office	5,643		5,568		75		2,004		3,026		—
Other	6,568		6,484		84		1,379		6,424		4
Residential real estate	14,151		13,447		704		2,858		13,696		—
Construction real estate	4,547		2,160		2,387		496		2,305		—
Indirect vehicles	—		—		—		—		—		—
Home equity	24,043		23,483		560		682		24,715		—
Other consumer	—		—		—		—		—		—
Total	$	144,991	$	123,114	$	21,877	$	15,677	$	134,796	$	66

	December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Partial Charge-offs		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	10,993	$	9,505	$	1,488	$	—	$	14,089	$	105
Commercial collateralized by assignment of lease payments	390		390		—		—		278		9
Commercial real estate:
Healthcare	10,943		3,238		7,705		—		2,751		—
Industrial	16,891		14,940		1,951		—		16,374		29
Multifamily	800		800		—		—		1,340		14
Retail	5,372		4,917		455		—		9,241		—
Office	1,568		1,568		—		—		1,151		—
Other	4,860		4,860		—		—		6,005		—
Residential real estate	3,097		2,711		386		—		6,476		—
Construction real estate	—		—		—		—		577		—
Indirect vehicles	—		—		—		—		—		—
Home equity	2,558		2,558		—		—		8,976		—
Other consumer	—		—		—		—		182		—
With an allowance recorded:
Commercial	14,484		14,381		103		3,620		8,455		—
Commercial collateralized by assignment of lease payments	885		885		—		188		1,130		73
Commercial real estate:
Healthcare	—		—		—		—		3,901		—
Industrial	5,525		4,238		1,287		1,255		2,443		—
Multifamily	8,233		7,249		984		2,284		5,847		130
Retail	23,144		17,257		5,887		3,604		10,058		—
Office	1,706		1,695		11		522		1,904		—
Other	4,661		4,577		84		1,263		6,082		16
Residential real estate	10,565		10,565		—		2,858		3,417		—
Construction real estate	4,552		2,167		2,385		497		3,775		—
Indirect vehicles	—		—		—		—		—		—
Home equity	13,765		13,763		2		850		4,800		—
Other consumer	—		—		—		—		—		—
Total	$	144,992	$	122,264	$	22,728	$	16,941	$	119,252	$	376

Impaired loans included accruing restructured loans of $21.6 million and $21.3 million that have been modified and are performing in accordance with those modified terms as of March 31, 2013 and December 31, 2012, respectively.  In addition, impaired loans included $26.3 million and $28.4 million of non-performing, restructured loans as of March 31, 2013 and December 31, 2012, respectively.

Loans may be restructured in an effort to maximize collections from financially distressed borrowers. We use various restructuring techniques, including, but not limited to, deferral of past due interest or principal, implementing an A/B note structure, redeeming past due taxes, reduction of interest rates, extending maturities and modification of amortization schedules. Residential real estate loans are restructured in an effort to minimize losses while allowing borrowers to remain in their primary residences when possible. Programs that we offer to residential real estate borrowers include the Home Affordable Refinance Program (“HARP”) and a restructuring program similar to the Home Affordable Modification Program (“HAMP”) for first mortgage borrowers as well as the Second Lien Modification Program (“2MP”) and similar programs for home equity borrowers in keeping with the restructuring techniques discussed above.

Periodically, the Company will restructure a note into two separate notes (A/B structure), charging off the entire B portion of the note. The A note is structured with appropriate loan-to-value and cash flow coverage ratios that provide for a high likelihood of repayment. The A note is classified as a non-performing note until the borrower has displayed a historical payment performance for a reasonable time prior to and subsequent to the restructuring. A period of sustained repayment for at least six months generally is required to return the note to accrual status provided that management has determined that the performance is reasonably expected to continue. The A note will be classified as a restructured note (either performing or nonperforming) through the calendar year of the restructuring that the historical payment performance has been established. As of March 31, 2013, there was approximately $3.0 million in recorded investment in relation to one A/B structure. As of December 31, 2012 there was approximately $3.1 million in recorded investment in relation to one A/B structure. 

A loan classified as a troubled debt restructuring will no longer be included in the troubled debt restructuring disclosures in the years after the restructuring if the loan performs in accordance with the terms specified by the restructuring agreement and the interest rate specified in the restructuring agreement represents a market rate at the time of modification. The specified interest rate is considered a market rate when the interest rate is equal or greater than the rate the Company is willing to accept at the time of restructuring for a new loan with comparable risk. If there are concerns that the borrower would not be able to meet the modified terms of the loan, the loan would continue to be included in the troubled debt restructuring disclosures.

Impairment analyses on commercial-related loans classified as troubled debt restructurings are performed in conjunction with the normal allowance for loan loss process. Consumer loans classified as troubled debt restructurings are aggregated in two pools that share common risk characteristics, home equity and residential real estate loans, with impairment measured on a quarterly basis based on the present value of expected future cash flows discounted at the loan's effective interest rate.

The following table presents loans that have been restructured during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Residential real estate	3	$	479	$	479	$	—
Home equity	5	548		548		—
Total	8	$	1,027	$	1,027	$	—
Non-Performing:
Commercial	1	$	42	$	42	$	13
Commercial real estate:
Multifamily	1	187		187		50
Retail	2	657		657		179
Other	1	84		84		23
Residential real estate	4	331		331		—
Home equity	16	2,105		2,105		—
Total	25	$	3,406	$	3,406	$	265

The following table presents loans that have been restructured during the three months ended March 31, 2012 (dollars in thousands):

	March 31, 2012
	Number of Loans	Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Charge-offs and Specific Reserves
Performing:
Commercial real estate:
Multifamily	1	$	155	$	155	$	—
Retail	1	236		236		—
Home equity	22	4,397		4,397		—
Total	24	$	4,788	$	4,788	$	—
Non-Performing:
Commercial	2	$	185	$	185	$	61
Commercial real estate:
Multifamily	1	149		149		40
Retail	2	599		599		—
Home equity	5	950		921		29
Total	10	$	1,883	$	1,854	$	130

Of the troubled debt restructurings entered into during the past twelve months, none subsequently defaulted during the three months ended March 31, 2013.  Performing troubled debt restructurings are considered to have defaulted when they become 90 days or more past due post restructuring or are placed on non-accrual status.

The following tables present the troubled debt restructurings activity during the three months ended March 31, 2013 (dollars in thousands):

	Performing			Non-performing
Beginning balance	$	21,256		$	28,418
Additions	1,027			3,406
Charge-offs	—			(2,039		)
Principal payments, net	(276		)	(3,749		)
Removals	—			—
Transfer to other real estate owned	—			(157		)
Transfer from/to performing	—			377
Transfer from/to nonperforming	(377		)	—
Ending balance	$	21,630		$	26,256

Loans removed from trouble debt restructuring status are those that were restructured in a previous calendar year at a market rate of interest and have performed in compliance with the modified terms.

The following table presents the type of modification for loans that have been restructured and the post-modification recorded investment during the three months ended March 31, 2013 (dollars in thousands):

	March 31, 2013
	Extended
	Maturity,				Extended		Extended				Delay in
	Amortization		Extended		Maturity and		Maturity and				Payments or
	and Reduction		Maturity and		Reduction of		Delay in		Extended		Reduction of
	of Interest Rate		Amortization		Interest Rate		Payments		Maturity		Interest Rate		Total
Commercial	$	42	$	—	$	—	$	—	$	—	$	—	$	42
Commercial real estate:
Multifamily	187		—		—		—		—		—		187
Retail	256		—		401		—		—		—		657
Other	84		—		—		—		—		—		84
Residential real estate	193		—		—		—		—		618		811
Home equity	595		—		661		—		227		1,169		2,652
Total	$	1,357	$	—	$	1,062	$	—	$	227	$	1,787	$	4,433

The following table presents the activity in the allowance for credit losses, balance in allowance for credit losses and recorded investment in loans by portfolio segment and based on impairment method as of March 31, 2013 and 2012 (in thousands):

	Commercial			Commercial collateralized  by assignment of lease payments			Commercial real estate		Residential real estate			Construction real estate			Indirect vehicles		Home equity			Other Consumer		Unfunded Commitments			Total
March 31, 2013
Allowance for credit losses:
Beginning balance	$	24,943		$	7,755		$	61,056	$	6,941		$	11,222		$	1,324	$	9,401		$	1,562	$	4,075		$	128,279
Charge-offs	911			—			1,917		962			82			729		787			565		—			5,953
Recoveries	452			144			740		214			276			415		114			52		—			2,407
Provision	(330		)	200			3,268		455			(2,246		)	389		(826		)	234		(1,144		)	—
Ending balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2,643		$	86		$	8,912	$	2,858		$	496		$	—	$	682		$	—	$	2,461		$	18,138
Collectively evaluated for impairment	19,475			8,013			52,248		3,681			8,674			1,399		7,220			1,283		470			102,463
Acquired and accounted for under ASC 310-30 (1)	2,036			—			1,987		109			—			—		—			—		—			4,132
Total ending allowance balance	$	24,154		$	8,099		$	63,147	$	6,648		$	9,170		$	1,399	$	7,902		$	1,283	$	2,931		$	124,733
Loans:
Individually evaluated for impairment	$	21,134		$	536		$	59,435	$	14,791		$	2,160		$	—	$	25,058		$	—	$	—		$	123,114
Collectively evaluated for impairment	1,168,907			1,347,130			1,683,894		294,145			99,421			220,739		266,132			81,932		—			5,162,300
Acquired and accounted for under ASC 310-30 (1)	52,040			—			223,952		6,414			106,927			—		291			32,630		—			422,254
Total ending loans balance	$	1,242,081		$	1,347,666		$	1,967,281	$	315,350		$	208,508		$	220,739	$	291,481		$	114,562	$	—		$	5,707,668
March 31, 2012
Allowance for credit losses:
Beginning balance	$	21,106		$	7,561		$	68,695	$	3,935		$	15,639		$	1,834	$	7,333		$	695	$	9,177		$	135,975
Transfer to (from) allowance for unfunded credit commitments	—			—			—		—			1,132			—		—			—		(1,132		)	—
Charge-offs	539			—			3,003		294			3,436			715		1,072			258		—			9,317
Recoveries	2,038			256			162		34			565			311		20			111		—			3,497
Provision	(3,446		)	(327		)	8,748		(660		)	(2,745		)	396		745			610		(221		)	3,100
Ending balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1,382		$	342		$	10,783	$	—		$	915		$	—	$	312		$	—	$	3,127		$	16,861
Collectively evaluated for impairment	17,777			7,148			61,920		2,848			10,240			1,826		6,714			1,158		4,697			114,328
Acquired and accounted for under ASC 310-30 (1)	—			—			1,899		167			—			—		—			—		—			2,066
Total ending allowance balance	$	19,159		$	7,490		$	74,602	$	3,015		$	11,155		$	1,826	$	7,026		$	1,158	$	7,824		$	133,255
Loans:
Individually evaluated for impairment	$	32,468		$	1,849		$	71,977	$	6,883		$	1,553		$	—	$	17,399		$	241	$	—		$	132,370
Collectively evaluated for impairment	985,666			1,208,093			1,805,403		298,535			126,487			186,736		310,051			89,464		—			5,010,435
Acquired and accounted for under ASC 310-30 (1)	103,907			—			312,412		7,808			174,996			—		643			47,194		—			646,960
Total ending loans balance	$	1,122,041		$	1,209,942		$	2,189,792	$	313,226		$	303,036		$	186,736	$	328,093		$	136,899	$	—		$	5,789,765

(1)  Loans acquired in FDIC-assisted transactions and accounted for under ASC Subtopic 310-30 “Receivables — Loans and Debt Securities Acquired with Deteriorated Credit Quality.”

Purchased loans acquired in a business combination, including loans purchased in our FDIC-assisted transactions, are recorded at estimated fair value on their purchase date without a carryover of the related allowance for loan losses. Purchased credit-impaired loans are loans that have evidence of credit deterioration since origination and it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. Evidence of credit quality deterioration as of the purchase date may include factors such as past due and non-accrual status. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference. Further, any excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan when there is a reasonable expectation about the amount and timing of such cash flows. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in cash flows result in a reduction of the remaining portion of any allowance for loan losses previously established and/or a reclassification of the difference from non-accretable to accretable with a positive impact on interest income prospectively.

During the three months ended March 31, 2013 there was a provision for credit losses of $425 thousand and net charge-offs of $809 thousand, respectively, in relation to 14 pools of purchased loans with a total carrying amount of $237.8 million as of March 31, 2013. There was $4.1 million in allowance for loan losses related to these purchased loans at March 31, 2013 and $4.5 million at December 31, 2012.  The provision for credit losses and accompanying charge-offs are included in the table above.

Changes in the accretable yield for loans acquired in FDIC-assisted transactions and accounted for under ASC 310-30 were as follows for the three months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended March 31,
	2013			2012
Balance at beginning of period	$	5,685		$	18,703
Accretion	(1,457		)	(5,373		)
Other	92			—
Balance at end of period	$	4,320		$	13,330

In our FDIC-assisted transactions, the fair value of purchased credit-impaired loans, on the acquisition date, was determined based on assigned risk ratings, expected cash flows and the fair value of loan collateral. The fair value of loans that were not credit-impaired was determined based on estimates of losses on defaults and other market factors. Due to the loss-share agreements with the FDIC, MB Financial Bank recorded a receivable (FDIC indemnification asset) from the FDIC equal to the present value of the corresponding reimbursement percentages on the estimated losses embedded in the loan portfolio.

When cash flow estimates are adjusted downward for a particular loan pool, the FDIC indemnification asset is increased. An allowance for loan losses is established for the impairment of the loans. A provision for loan losses is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows.

When cash flow estimates are adjusted upward for a particular loan pool, the FDIC indemnification asset is decreased. The difference between the decrease in the FDIC indemnification asset and the increase in cash flows is accreted over the estimated life of the loan pool.

When cash flow estimates are adjusted downward for covered foreclosed real estate, the FDIC indemnification asset is increased. A charge is recognized for the difference between the increase in the FDIC indemnification asset and the decrease in cash flows.

When cash flow estimates are adjusted upward for covered foreclosed real estate, the FDIC indemnification asset is decreased. Any write-down after the transfer to covered foreclosed real estate is reversed.

In both scenarios, the clawback liability (the amount the FDIC requires MB Financial Bank to pay back if certain thresholds are met) will increase or decrease accordingly.

The carrying amount of covered loans and other purchased non-covered loans at March 31, 2013 consisted of purchased credit-impaired loans and non-credit-impaired loans as shown in the following table (in thousands):

March 31, 2013	Purchased Credit-Impaired Loans		Purchased Non- Credit-Impaired Loans		Total
Covered loans:
Commercial related (1)	$	19,559	$	5,433	$	24,992
Commercial	3,957		5,494		9,451
Commercial real estate	87,016		136,936		223,952
Construction real estate	96,093		10,834		106,927
Other	3,464		32,003		35,467
Total covered loans	$	210,089	$	190,700	$	400,789
Estimated receivable amount from the FDIC under the loss-share agreement (2)	$	9,657	$	17,902	$	27,559
Non covered loans:
Commercial related (3)	$	3,908	$	13,689	$	17,597
Other	88		3,780		3,868
Total non-covered loans	$	3,996	$	17,469	$	21,465

(1) Covered commercial related loans include commercial, commercial real estate and construction real estate loans acquired in connection with the Heritage and Benchmark FDIC-assisted transactions.

(2) Estimated reimbursable amounts from the FDIC under the loss-share agreement exclude $1.6 million in reimbursable amounts related to covered other real estate owned.

(3) Non covered commercial related loans include commercial, commercial real estate and construction real estate for InBank.

Outstanding balances on purchased loans from the FDIC were $454.7 million and $515.7 million as of March 31, 2013 and December 31, 2012, respectively.  The related carrying amount on loans purchased from the FDIC was $422.3 million and $471.6 million as of March 31, 2013 and December 31, 2012, respectively.

XML

Deposits

3 Months Ended

Mar. 31, 2013

Deposits [Abstract]

Deposits

Deposits

The composition of deposits was as follows (in thousands):

	March 31,		December 31,
	2013		2012
Demand deposit accounts, noninterest bearing	$	2,067,310	$	2,164,547
NOW and money market accounts	2,778,916		2,747,273
Savings accounts	833,251		811,333
Certificates of deposit, $100,000 or more	1,006,947		1,020,033
Other certificates of deposit	765,482		799,511
Total	$	7,451,906	$	7,542,697

Certificates of deposit of $100,000 or more included $294.4 million and $294.2 million of brokered deposits at March 31, 2013 and December 31, 2012, respectively.  Brokered deposits typically consist of smaller individual time certificates that have the same liquidity characteristics and yields consistent with time certificates of $100,000 or more.

XML

Derivative Financial Instruments (Details) (USD $)	3 Months Ended			12 Months Ended
	Mar. 31, 2013		Mar. 31, 2012	Dec. 31, 2012
Derivative financial instruments
Net amount payable under interest rate swap	$ 34,000			$ 30,000
Interest rate swap credit risk exposure	23,900,000
Asset Derivatives, Notional Amount	607,009,000			562,735,000
Asset Derivatives, Estimated Fair Value	25,837,000			29,096,000
Liability Derivatives, Notional Amount	606,189,000			559,402,000
Liability Derivatives, Estimated Fair Value	(25,761,000)			(29,055,000)
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	2,000		34,000
Stand-alone derivative instruments
Derivative financial instruments
Asset Derivatives, Notional Amount	607,009,000	[1]		562,735,000	[1]
Asset Derivatives, Estimated Fair Value	25,837,000	[1]		29,096,000	[1]
Liability Derivatives, Notional Amount	602,552,000	[1]		555,695,000	[1]
Liability Derivatives, Estimated Fair Value	(25,699,000)	[1]		(28,961,000)	[1]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	3,000		95,000
Commercial loan interest rate swaps
Derivative financial instruments
Liability Derivatives, Notional Amount	3,600,000
Interest rate swap contracts | Derivative instruments designated as hedges of fair value
Derivative financial instruments
Liability Derivatives, Notional Amount	3,637,000	[2]		3,707,000	[2]
Liability Derivatives, Estimated Fair Value	(62,000)	[2]		(94,000)	[2]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	(1,000)		(61,000)
Interest rate swap contracts | Stand-alone derivative instruments
Derivative financial instruments
Asset Derivatives, Notional Amount	504,494,000	[1]		460,956,000	[1]
Asset Derivatives, Estimated Fair Value	23,853,000	[1]		27,740,000	[1]
Liability Derivatives, Notional Amount	505,328,000	[1]		462,012,000	[1]
Liability Derivatives, Estimated Fair Value	(23,934,000)	[1]		(27,832,000)	[1]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	11,000		66,000
Interest rate options contracts | Stand-alone derivative instruments
Derivative financial instruments
Asset Derivatives, Notional Amount	72,729,000	[1]		70,346,000	[1]
Asset Derivatives, Estimated Fair Value	164,000	[1]		157,000	[1]
Liability Derivatives, Notional Amount	72,729,000	[1]		70,346,000	[1]
Liability Derivatives, Estimated Fair Value	(164,000)	[1]		(157,000)	[1]
Foreign exchange contracts | Stand-alone derivative instruments
Derivative financial instruments
Asset Derivatives, Notional Amount	19,888,000	[1]		20,033,000	[1]
Asset Derivatives, Estimated Fair Value	1,673,000	[1]		1,062,000	[1]
Liability Derivatives, Notional Amount	19,495,000	[1]		19,337,000	[1]
Liability Derivatives, Estimated Fair Value	(1,567,000)	[1]		(961,000)	[1]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	5,000		2,000
Mortgage banking derivatives | Stand-alone derivative instruments
Derivative financial instruments
Asset Derivatives, Notional Amount	9,898,000	[1]		11,400,000	[1]
Asset Derivatives, Estimated Fair Value	147,000	[1]		137,000	[1]
Liability Derivatives, Notional Amount	5,000,000	[1]		4,000,000	[1]
Liability Derivatives, Estimated Fair Value	(34,000)	[1]		(11,000)	[1]
Derivative Instruments, Gain (Loss) Recognized in Income, Net [Abstract]
Amounts of gain or (loss) recognized in income on derivatives	$ (13,000)		$ 27,000

[1] These portfolio swaps are not designated as hedging instruments under ASC Topic 815.

[2] Hedged fixed-rate commercial real estate loans

XML

Stock Incentive Plans (Details) (USD $)	3 Months Ended				3 Months Ended					12 Months Ended			3 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Omnibus Incentive Plan (the "Omnibus Plan")	Jun. 30, 2011 Omnibus Incentive Plan (the "Omnibus Plan")	Mar. 31, 2013 Stock options	Mar. 31, 2012 Stock options	Mar. 31, 2013 Stock options Director	Mar. 31, 2013 Restricted stock and restricted stock units	Mar. 31, 2013 Restricted stock Director	Dec. 31, 2012 Performance-based restricted stock units	Dec. 31, 2011 Market-based restricted stock	Dec. 31, 2010 Market-based restricted stock	Mar. 31, 2013 Salary Stock	Mar. 31, 2013 Minimum Restricted stock and restricted stock units	Dec. 31, 2012 Minimum Performance-based restricted stock units	Mar. 31, 2013 Maximum Restricted stock and restricted stock units	Dec. 31, 2012 Maximum Performance-based restricted stock units
Impact of the share-based payment plans in the financial statements
Total cost of share-based payment plans during the period	$ 1,260,000	$ 1,265,000
Amount of related income tax benefit recognized in income	501,000	506,000
Stock-based compensation
Number of additional authorized shares				2,300,000
Number of common shares authorized for issuance				8,300,000
Numerator of shares granted beyond threshold limit	2
Denominator of shares granted beyond threshold limit	1
Number of shares available for future grants			2,214,130
Continuous service period for vesting of option awards (in years)					4 years
Contractual terms of option awards (in years)					10 years
Minimum vesting period (in years)							5 years		1 year					2 years		4 years
Maximum percentage of fees with an option to be received in equity-based incentive awards							70.00%		100.00%
Period of restriction for sale of underlying shares (in months)							6 months
Number of shares issued										65,333	92,717	66,193	876
Share-Based Compensation Arrangement By Share Based Payment Award, Percentage Of Shares Earned To Number Of Units Issued															0.00%		175.00%
Performance based restricted units performance period (in years)										3 years
Share based compensation restricted stock units multiplier (in percent)										100.00%
Number of consecutive trading days over which a specified closing price of the entity's stock is maintained											10 days	10 days
Minimum closing price of the entity's stock (in dollars per share)											$ 27.00	$ 25.80
Period of restriction for sale of shares of Salary Stock (in years)													2 years
Weighted average issuance price of Salary Stock (in dollars per share)													$ 22.39
Unrecognized compensation cost			9,300,000
Expected weighted-average period for recognition of unrecognized compensation expense (in years)			2 years 6 months
Options outstanding activity
Options outstanding at the beginning of the period (in shares)					2,739,753
Granted (in shares)					9,719
Exercised (in shares)					(1,550)
Expired or cancelled (in shares)					(63,655)
Forfeited (in shares)					(5,497)
Options outstanding at the end of the period (in shares)					2,678,770
Options exercisable at end of the period (in shares)					2,020,953
Weighted Average Exercise Price
Options outstanding at the beginning of the period (in dollars per share)					$ 27.34
Granted (in dollars per share)					$ 24.17
Exercised (in dollars per share)					$ 19.67
Expired or cancelled (in dollars per share)					$ 29.48
Forfeited (in dollars per share)					$ 18.98
Options outstanding at the end of the period (in dollars per share)					$ 27.30
Options exercisable at end of the period (in dollars per share)					$ 30.13
Weighted Average Remaining Contractual Term (In Years)
Options outstanding at the end of the period					4 years 6 months 7 days
Options exercisable at end of the period					3 years 4 months 10 days
Aggregate Intrinsic Value
Options outstanding at the end of the period					4,562,000
Options exercisable at end of the period					890,000
Fair value assumptions
Risk free interest rate (as a percent)					0.71%
Expected volatility of Company's stock (as a percent)					27.91%
Expected dividend yield (as a percent)					1.66%
Expected life of options (in years)					4 years
Weighted average fair value per option of options granted during the year (in dollars per share)					$ 4.65
Total intrinsic value of options exercised					$ 2,000	$ 11,000
Changes in restricted shares
Nonvested shares of restricted stock and nonvested restricted stock units at the beginning of the period								634,211
Granted (in shares)								32,760
Vested (in shares)								(12,286)
Forfeited (in shares)								(4,051)
Nonvested shares of restricted stock and nonvested restricted stock units at the end of the period								650,634
Weighted Average Grant Date Fair Value, restricted shares
Shares Outstanding at the beginning of the period (in dollars per share)								$ 18.82
Granted (in dollars per share)								$ 23.52
Vested (in dollars per share)								$ 19.90
Forfeited (in dollars per share)								$ 19.66
Nonvested shares of restricted stock and nonvested restricted stock units at the end of the period (in dollars per share)								$ 19.03

XML

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Schedule of outstanding financial instruments, contractual amounts of off-balance sheet credit risk

At March 31, 2013 and December 31, 2012, the following financial instruments were outstanding, the contractual amounts of which represent off-balance sheet credit risk (in thousands):

	Contractual Amount
	March 31, 2013		December 31, 2012
Commitments to extend credit:
Home equity lines	$	238,463	$	239,771
Other commitments	991,668		911,166
Letters of credit:
Standby	73,703		66,247
Commercial	852		465

XML

Goodwill and Intangibles (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, impairment loss	$ 0	$ 0
Carrying amount of goodwill	423,369,000		423,369,000
Weighted average amortization period (in years)	4
Changes in the carrying amount of core deposit and client relationship intangibles
Balance at beginning of period	29,512,000
Amortization expense	(1,544,000)	(1,257,000)
Balance at end of period	27,968,000
Gross carrying amount	61,429,000
Accumulated amortization	(33,461,000)
Net book value	27,968,000
Estimated future amortization expense
2013	4,540,000
2014	4,748,000
2015	4,030,000
2016	3,418,000
2017	3,071,000
Thereafter	8,161,000
Total estimated future amortization expense	$ 27,968,000

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

ASC Topic 820 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert expected future amounts, such as cash flows or earnings, to a single present value amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality, the Company's creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company's monthly and/or quarterly valuation process.

Financial Instruments Recorded at Fair Value on a Recurring Basis

Securities Available for Sale. The fair values of securities available for sale are determined by quoted prices in active markets, when available, and classified as Level 1. If quoted market prices are not available, the fair value is determined by a matrix pricing, which is a mathematical technique, widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities and classified as Level 2. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 inputs.

Loans Held for Sale. Mortgage loans originated and held for sale in the secondary market are carried at fair value. The fair value of loans held for sale is determined using quoted secondary market prices and classified as level 2.

Assets Held in Trust for Deferred Compensation and Associated Liabilities.Assets held in trust for deferred compensation are recorded at fair value and included in “Other Assets” on the consolidated balance sheets. These assets are invested in mutual funds and classified as Level 1. Deferred compensation liabilities, also classified as Level 1, are carried at the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets.

Derivatives. Currently, we use interest rate swaps to manage our interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative and classified as Level 2. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including LIBOR rate curves. We also obtain dealer quotations for these derivatives for comparative purposes to assess the reasonableness of the model valuations. We also offer other derivatives, including foreign currency forward contracts and interest rate lock commitments, to our customers and offset our exposure from such contracts by purchasing other financial contracts, which are valued using market consensus prices.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets
Securities available for sale:
U.S Government sponsored agencies and enterprises	$	40,949	$	—	$	40,949	$	—
States and political subdivisions	719,761		—		719,761		—
Residential mortgage-backed securities	788,768		—		787,960		808
Commercial mortgage-backed securities	53,837		—		53,837		—
Corporate bonds	197,675		—		192,555		5,120
Equity securities	11,179		11,179		—		—
Loans held for sale	3,030		—		3,030		—
Assets held in trust for deferred compensation	8,730		8,730		—		—
Derivative financial instruments	25,837		—		25,837		—
Financial liabilities
Other liabilities (1)	8,730		8,730		—		—
Derivative financial instruments	25,761		—		25,761		—
December 31, 2012
Financial assets
Securities available for sale:
U.S. Government sponsored agencies and enterprises	$	41,315	$	—	$	41,315	$	—
States and political subdivisions	725,019		—		725,019		—
Residential mortgage-backed securities	939,202		—		938,354		848
Commercial mortgage-backed securities	54,126		—		54,126		—
Corporate bonds	96,674		—		91,451		5,223
Equity securities	11,835		11,835		—		—
Loans held for sale	7,492		—		7,492		—
Assets held in trust for deferred compensation	7,746		7,746		—		—
Derivative financial instruments	29,096		—		29,096		—
Financial liabilities
Other liabilities (1)	7,746		7,746		—		—
Derivative financial instruments	29,055		—		29,055		—

(1) Liabilities associated with assets held in trust for deferred compensation

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a recurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Residential mortgage-backed securities	$	808	Discounted cash flows	Constant pre-payment rates
				(CPR) assumption	1% - 3% CPR
Corporate bonds	5,120		Discounted cash flows	Credit assumption	20% Loss

The Company did not have any transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2013. The Company's policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels.

The following table presents additional information about financial assets measured at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3):

	Three Months Ended March 31
(in thousands)	2013			2012
Balance, beginning of period	$	6,071		$	6,992
Transfer into Level 3	—			—
Other comprehensive income	(103		)	37
Principal payments	(40		)	(294		)
Balance, ending of period	$	5,928		$	6,735

Financial Instruments Recorded at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of the period.

Impaired Loans.Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC Topic 310. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. In accordance with ASC Topic 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria. For a majority of impaired real estate loans where an allowance is established based on the fair value of collateral (approximately 85%), the Company obtains a current external appraisal. Other valuation techniques are used as well, including internal valuations, comparable property analysis and contractual sales information.

Non-Financial Assets and Non-Financial Liabilities Recorded at Fair Value

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a non-recurring basis include foreclosed assets and non-financial long-lived assets.

Other Real Estate and Repossessed Vehicles Owned (Foreclosed Assets). Foreclosed assets, upon initial recognition, are measured and reported at fair value through a charge-off to the allowance for possible loan losses based upon the fair value of the foreclosed asset. The fair value of foreclosed assets, upon initial recognition, are estimated using Level 3 inputs based on customized discounting criteria.

Non-Financial Long-Lived Assets.  Non-financial long-lived assets, when determined to be impaired, are measured and reported at fair value using Level 3 inputs based on customized discounting criteria.

Assets measured at fair value on a nonrecurring basis as of March 31, 2013 and December 31, 2012 are included in the table below (in thousands):

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2013
Financial assets:
Impaired loans	$	84,194	$	—	$	—	$	84,194
Non-financial assets:
Foreclosed assets	52,230		—		—		52,230
December 31, 2012
Financial assets:
Impaired loans	$	62,258	$	—	$	—	$	62,258
Non-financial assets:
Foreclosed assets	60,228		—		—		60,228
Long-lived assets	2,314		—		—		2,314

The following table presents additional information about the unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:

	Fair Value at		Valuation	Unobservable
	March 31, 2013		Technique	Input	Range
Impaired loans	$	84,194	Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%
Foreclosed assets	52,230		Appraisal of collateral	Appraisal adjustments - sales costs	5% - 10%

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The estimated fair value approximates carrying value for cash and cash equivalents, accrued interest and the cash surrender value of life insurance policies. The methodologies for other financial assets and financial liabilities are discussed below:

The following methods and assumptions were used by the Company in estimating the fair values of its other financial instruments:

Cash and due from banks and interest bearing deposits with banks: The carrying amounts reported in the balance sheet approximate fair value.

Securities held to maturity: The fair values of securities held to maturity are determined by quoted prices in active markets, when available. If quoted market prices are not available, the fair value is determined by a matrix pricing.

Non-marketable securities - FHLB and FRB Stock: The carrying amounts reported in the balance sheet approximate fair value.

Loans: The fair values for loans are estimated using discounted cash flow analyses, using the corporate bond curve adjusted for liquidity for commercial loans and the swap curve adjusted for liquidity for retail loans.

Non-interest bearing deposits: The fair values disclosed are equal to their balance sheet carrying amounts, which represent the amount payable on demand.

Interest bearing deposits: The fair values disclosed for deposits with no defined maturities are equal to their carrying amounts, which represent the amounts payable on demand. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies the Company's current incremental borrowing rates for similar terms.

Short-term borrowings: The carrying amounts of federal funds purchased, borrowings under repurchase agreements and other short-term borrowings with maturities of 90 days or less approximate their fair values.  The fair value of short-term borrowings greater than 90 days is based on the discounted value of contractual cash flows.

Long-term borrowings: The fair values of the Company's long-term borrowings (other than deposits) are estimated using discounted cash flow analyses, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.

Junior subordinated notes issued to capital trusts: The fair values of the Company's junior subordinated notes issued to capital trusts are estimated based on the quoted market prices, when available, of the related trust preferred security instruments, or are estimated based on the quoted market prices of comparable trust preferred securities.

Accrued interest: The carrying amount of accrued interest receivable and payable approximate their fair values.

Off-balance-sheet instruments: Fair values for the Company’s off-balance-sheet lending commitments (guarantees, letters of credit and commitments to extend credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements.

The estimated fair values of financial instruments are as follows (in thousands):

	March 31, 2013
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	131,146	$	131,146	$	131,146	$	—	$	—
Interest bearing deposits with banks	108,885		108,885		108,885		—		—
Investment securities available for sale	1,812,169		1,812,169		11,179		1,795,062		5,928
Investment securities held to maturity	517,785		554,601		—		554,601		—
Non-marketable securities - FHLB and FRB stock	52,434		52,434		—		—		52,434
Loans held for sale	3,030		3,030		—		3,030		—
Loans, net	5,585,866		5,578,973		—		—		5,578,973
Accrued interest receivable	35,123		35,123		35,123		—		—
Derivative financial instruments	25,837		25,837		—		25,837		—
Financial Liabilities:
Non-interest bearing deposits	$	2,067,310	$	2,067,310	$	2,067,310	$	—	$	—
Interest bearing deposits	5,384,596		5,402,697		—		—		5,402,697
Short-term borrowings	224,379		224,384		—		—		224,384
Long-term borrowings	64,019		70,354		—		—		70,354
Junior subordinated notes issued to capital trusts	152,065		110,616		—		—		110,616
Accrued interest payable	2,598		2,598		2,598		—		—
Derivative financial instruments	25,761		25,761		—		25,761		—

	December 31, 2012
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets:
Cash and due from banks	$	176,010	$	176,010	$	176,010	$	—	$	—
Interest bearing deposits with banks	111,533		111,533		111,533		—		—
Investment securities available for sale	1,868,171		1,868,171		11,835		1,850,265		6,071
Investment securities held to maturity	493,421		535,681		—		535,681		—
Non-marketable securities - FHLB and FRB stock	55,385		55,385		—		—		55,385
Loans held for sale	7,492		7,492		—		7,492		—
Loans, net	5,642,726		5,659,598		—		—		5,659,598
Accrued interest receivable	36,040		36,040		36,040		—		—
Derivative financial instruments	29,096		29,096		—		29,096		—
Financial Liabilities:
Non-interest bearing deposits	$	2,164,547	$	2,164,547	$	2,164,547	$	—	$	—
Interest bearing deposits	5,378,150		5,399,709		—		—		5,399,709
Short-term borrowings	220,602		220,683		—		—		220,683
Long-term borrowings	116,050		117,809		—		—		117,809
Junior subordinated notes issued to capital trusts	152,065		104,009		—		—		104,009
Accrued interest payable	2,828		2,828		2,828		—		—
Derivative financial instruments	29,055		29,055		—		29,055		—

XML

Earnings Per Common Share (Tables)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Reconciliation of the number of shares used in the calculation of basic and diluted earnings (loss) per common share, net income available to common stockholders, and earnings per share

The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share (amounts in thousands, except common share data).

	Three Months Ended March 31,
	2013		2012
Distributed earnings allocated to common stock	$	5,507	$	548
Undistributed earnings	19,399		20,538
Net income	24,906		21,086
Less: preferred stock dividends and discount accretion	—		3,269
Net income available to common stockholders	24,906		17,817
Less: earnings allocated to participating securities	1		1
Earnings allocated to common stockholders	$	24,905	$	17,816
Weighted average shares outstanding for basic earnings per common share	54,411,806		54,155,856
Dilutive effect of equity awards	324,838		256,060
Weighted average shares outstanding for diluted earnings per common share	54,736,644		54,411,916
Basic earnings per common share	$	0.46	$	0.33
Diluted earnings per common share	0.46		0.33

XML

Loans (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Changes in the accretable yield for purchased credit-impaired loans
Balance at beginning of period	$ 5,685	$ 18,703
Accretion	(1,457)	(5,373)
Other	92	0
Balance at end of period	$ 4,320	$ 13,330

XML

Investment Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013 Security_Position	Dec. 31, 2012	Mar. 31, 2012 Security_Position
Available for Sale
Less Than 12 Months, Fair Value	$ 313,134
Less Than 12 Months, Unrealized Losses	(3,659)
12 Months or More, Fair Value	12,599
12 Months or More, Unrealized Losses	(119)
Total Fair Value	325,733
Total Unrealized Losses	(3,778)
Held to maturity
Less Than 12 Months, Fair Value	15,476
Less Than 12 Months, Unrealized Losses	(59)
Total Fair Value	15,476
Total Unrealized Losses	(59)
Total
Less Than 12 Months, Fair Value	328,610	386,350
Less Than 12 Months, Unrealized Losses	(3,718)	6,189
12 Months or More, Fair Value	12,599	16,434
12 Months or More, Unrealized Losses	(119)	166
Total Fair Value	341,209	402,784
Total Unrealized Losses	3,837	(6,355)
Number of security positions in the investment portfolio in an unrealized loss position	142		117
States and political subdivisions
Available for Sale
Less Than 12 Months, Fair Value	98,367	57,540
Less Than 12 Months, Unrealized Losses	(1,367)	(543)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	98,367	57,540
Total Unrealized Losses	(1,367)	(543)
Held to maturity
Less Than 12 Months, Fair Value	15,476
Less Than 12 Months, Unrealized Losses	(59)
Total Fair Value	15,476
Total Unrealized Losses	(59)
Residential mortgage-backed securities
Available for Sale
Less Than 12 Months, Fair Value	169,576	270,539
Less Than 12 Months, Unrealized Losses	(1,601)	(5,083)
12 Months or More, Fair Value	12,599	16,434
12 Months or More, Unrealized Losses	(119)	(166)
Total Fair Value	182,175	286,973
Total Unrealized Losses	(1,720)	(5,249)
Corporate bonds
Available for Sale
Less Than 12 Months, Fair Value	45,158	58,241
Less Than 12 Months, Unrealized Losses	(684)	(553)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	45,158	58,241
Total Unrealized Losses	(684)	(553)
Equity securities
Available for Sale
Less Than 12 Months, Fair Value	33	30
Less Than 12 Months, Unrealized Losses	(7)	(10)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	33	30
Total Unrealized Losses	$ (7)	$ (10)

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income	$ 24,906	$ 21,086
Unrealized holding losses on investment securities, net of tax	(1,399)	(1,217)
Reclassification adjustments for losses included in net income, net of tax	1	2
Other comprehensive loss, net of tax	(1,398)	(1,215)
Comprehensive income	$ 23,508	$ 19,871

XML

New Authoritative Accounting Guidance (Notes)

3 Months Ended

Mar. 31, 2013

New Authoritative Accounting Guidance [Abstract]

New Authoritative Accounting Guidance

New Authoritative Accounting Guidance

ASC Topic 805 “Business Combinations.” New authoritative accounting guidance under ASC Topic 805, “Business Combinations” amended prior guidance on the subsequent accounting for an indemnification asset recognized at the acquisition date as a result of a government-assisted (Federal Deposit Insurance Corporation) acquisition of a financial institution that includes a loss-sharing agreement. The new authoritative guidance requires that at each subsequent reporting date, an acquirer measure an indemnification asset on the same basis as the indemnified liability or asset, subject to any contractual limitations on its amount, and, for an indemnification asset that is not subsequently measured at fair value, management's assessment of the collectability of the indemnification asset. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 210 “Disclosures about Offsetting Assets and Liabilities.” New authoritative accounting guidance under ASC Topic 210, “Disclosures about Offsetting Assets and Liabilities” amended prior guidance to require an entity to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The instruments and transactions would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements. This new authoritative guidance was further amended to clarify the scope of offsetting disclosures. The Company adopted the new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

ASC Topic 220 “Comprehensive Income.” New authoritative accounting guidance under ASC Topic 220, “Comprehensive Income” amended prior guidance to improve the reporting of reclassifications out of accumulated other comprehensive income by requiring an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income if the amount reclassified is required under U.S. GAAP. The Company adopted this new authoritative guidance on January 1, 2013, and it did not have an impact on the Company's statements of operations and financial condition.

XML

Commitments and Contingencies (Details 2) (States and political subdivisions, State of Illinois)	3 Months Ended
	Mar. 31, 2013
States and political subdivisions | State of Illinois
Concentrations of credit risk
Percentage of investments issued by states and political subdivisions that were within the state of Illinois	25.00%

XML

Business Combinations (Tables)

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Assets Acquired and Liabilities Assumed

Estimated fair values of the assets acquired and liabilities assumed in the Celtic transaction, as of the closing date of the transaction were as follows (in thousands):

Assets Acquired and Liabilities Assumed

(Dollar Amounts in Thousands)

	Celtic
	December 28,
	2012
ASSETS
Cash and cash equivalents	$	31,647
Investment securities available for sale	635
Loans and leases	32,933
Premises and equipment	81
Goodwill	36,300
Other intangibles	5,028
Other assets	27,323
Total assets	$	133,947
LIABILITIES
Accrued expenses and other liabilities	$	75,290
Total liabilities	$	75,290
Cash paid on acquisition	$	58,657
Net gain recorded on acquisition	$	—

XML

Earnings Per Common Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Basic and diluted earnings per common share:
Net income (loss)	$ 24,906	$ 21,086
Less: preferred stock dividends and discount accretion	0	3,269
Net income available to common stockholders	24,906	17,817
Earnings allocated to common stockholders	24,905	17,816
Weighted average shares outstanding for basic earnings per common share	54,411,806	54,155,856
Weighted average shares outstanding for diluted earnings per common share	54,736,644	54,411,916
Basic earnings per common share	$ 0.46	$ 0.33
Diluted earnings per common share	$ 0.46	$ 0.33
Common Stock
Basic and diluted earnings per common share:
Distributed earnings allocated to common stock	5,507	548
Undistributed earnings	19,399	20,538
Net income (loss)	24,906	21,086
Net income available to common stockholders	24,906	17,817
Dilutive effect of equity awards	324,838	256,060
Participating Securities
Basic and diluted earnings per common share:
Less: earnings allocated to participating securities	$ 1	$ 1

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments: The Company is a party to credit-related financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit.  Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments.  The Company follows the same credit policies in making commitments as it does for on-balance-sheet instruments.

At March 31, 2013 and December 31, 2012, the following financial instruments were outstanding, the contractual amounts of which represent off-balance sheet credit risk (in thousands):

	Contractual Amount
	March 31, 2013		December 31, 2012
Commitments to extend credit:
Home equity lines	$	238,463	$	239,771
Other commitments	991,668		911,166
Letters of credit:
Standby	73,703		66,247
Commercial	852		465

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require a payment of a fee.  The commitments for home equity lines of credit may expire without being drawn upon.  Therefore, the total commitment amounts do not necessarily represent future cash requirements.  The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

The Company, in the normal course of its business, regularly offers standby and commercial letters of credit to its bank customers.  Standby and commercial letters of credit are a conditional but irrevocable form of guarantee.  Under letters of credit, the Company typically guarantees payment to a third party beneficiary upon the default of payment or nonperformance by the bank customer and upon receipt of complying documentation from that beneficiary.

Both standby and commercial letters of credit may be issued for any length of time, but normally do not exceed a period of five years.  These letters of credit may also be extended or amended from time to time depending on the bank customer’s needs.  As of March 31, 2013, the maximum remaining term for any standby letters of credit was December 31, 2017.  A fee is charged to the bank customer and is recognized as income over the life of the letter of credit, unless considered non-rebatable under the terms of a letter of credit application.

At March 31, 2013, the aggregate contractual amount of these letters of credit, which represents the maximum potential amount of future payments that the Company would be obligated to pay, increased $7.8 million to $74.6 million from $66.7 million at December 31, 2012.  Of the $74.6 million in commitments outstanding at March 31, 2013, approximately $23.8 million of the letters of credit have been issued or renewed since December 31, 2012.

Letters of credit issued on behalf of bank customers may be done on either a secured, partially secured or an unsecured basis.  If a letter credit is secured or partially secured, the collateral can take various forms including bank accounts, investments, fixed assets, inventory, accounts receivable or real estate, among other things.  The Company takes the same care in making credit decisions and obtaining collateral when it issues letters of credit on behalf of its customers, as it does when making other types of loans.

As of March 31, 2013, the Company had approximately $2.2 million in capital expenditure commitments outstanding which relate to various projects to renovate existing branches.

Concentrations of credit risk:  The majority of the loans, commitments to extend credit and standby letters of credit have been granted to customers in the Company’s market area.  As of March 31, 2013, approximately 25% of our investments in securities issued by states and political subdivisions were within the state of Illinois.  We did not hold any direct exposure to the state of Illinois as of March 31, 2013. The distribution of commitments to extend credit approximates the distribution of loans outstanding.  Standby letters of credit are granted primarily to commercial borrowers.

Contingencies: In the normal course of business, the Company is involved in various legal proceedings.  In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company’s consolidated financial statements.