MB Financial Inc. (NASDAQ:MBFI) Q2 2016 Earnings Conference Call - Final Transcript

Jul 21, 2016 • 11:00 am ET


MB Financial Inc. (NASDAQ:MBFI) Q2 2016 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the MB Financial Inc. Second Quarter 2016 Earnings Conference Call. (Operator Instructions) I would like to introduce Mitchell Feiger, President and Chief Executive Officer; and Randall Conte, Chief Financial Officer of MB Financial Inc. Also present from MB Financial Bank are Mark Hoppe, President and CEO; John Francoeur, Chief Accounting Officer; and Michael Morton, Chief Credit Officer.

Before we begin, I need to remind you that during the course of this call, the company may make forward-looking statements about future events and future financial performance. You should not place undue reliance on any forward-looking statements, which speak only as of the date made. These statements are subject to numerous factors that could cause actual results to differ materially from those anticipated or projected. For a list of some of these factors, please see MB Financial's forward-looking statements disclosure in their 2016 second quarter earnings release. Please note this event is being recorded.

I would now like to turn the conference over to Mitchell Feiger. Please go ahead.

Mitchell Feiger

Okay. Thank you, and good morning. Good morning, everyone. Thank you for taking time to join our call today. I have a few opening remarks I like to make, then Randy will follow with more helpful financial information, and Mark will conclude our prepared remarks with commentary on things we're seeing in the market and business trends. And as always, we'll take your questions at the end. There are many things to like about our second quarter performance, including net operating earnings at a record high.

But let's start with GAAP earnings where net income available to common stockholders was $41.4 million in the quarter or $0.56 per diluted common share. $0.56 is around 12% greater than last quarter and around 8% better than the same quarter a year ago. Operating earnings increased to almost $45 million and were $0.04 per share greater than in the first quarter and $0.05 better than the same quarter a year ago. To remind you, we define operating earnings as reported net income, adjusted for non-core items such as merger expenses, securities, gains or losses and branch closing expense.

But more gratifyingly than those results are, to me, at least, our return on average assets improved to 1.11%, and operating return on average assets was 1.15% in the quarter. Also, good cash return on average tangible common equity was 13.5%, and operating cash return on average tangible common equity was 14%, all excellent numbers. We're getting closer to that 15% ROTC hurdle that we've been kind of aiming at.

Strengths in the quarter were solid balanced loan growth, good non-interest-bearing deposit growth, stable net interest margin, nice growth in our trust and asset management fees, and of course, very good credit performance. I particularly like that we're able to produce a 1.15% operating ROA while continuing to aggressively invest in our business. For 2016, we've been investing in leasing, cards and payments, asset-based lending and technology, among other areas. We're committed to being