Taylor Capital Group Reports Net Income of $14.2 Million for the Third Quarter of 2013

CHICAGO, Oct. 17, 2013 /PRNewswire/ -- Taylor Capital Group, Inc. (the "Company") (NASDAQ: TAYC), the parent company of Cole Taylor Bank (the "Bank"), today reported results for the third quarter of 2013.

Net income for the third quarter was $14.2 million, compared to $15.6 million for the second quarter of 2013. Net income applicable to common stockholders for the quarter was $10.6 million, or $0.34 per diluted share, compared to $11.8 million, or $0.39 per diluted share, for the second quarter of 2013.  The results for the third quarter included $2.0 million of expenses, pre-tax, relating to various corporate initiatives, including the previously announced pending merger with MB Financial, Inc.  The following table compares selected financial information for the periods indicated: 

"Our results for the third quarter of 2013 continue to validate our strategy of diversification and core line of business focus," said Mark A. Hoppe, President and Chief Executive Officer of the Company.  "Our banking segment achieved strong results across many areas highlighted by robust 10% quarter-over-quarter growth in commercial loans and a broad expansion in net interest margin.   Credit costs continued to be low this quarter, despite an increase in nonperforming loans that was the result of two relationships where we expect outcomes consistent with what we have experienced recently from our disciplined credit resolution process.  The commercial loan growth, with substantial contributions from all of our lending groups, reflects both new customer relationships and increased activity by existing customers and is our sixth quarter in a row of commercial loan growth.  Moreover, the loan growth, combined with improving yields on the investment portfolio and reduced funding costs, drove a solid 25 basis point improvement in our net interest margin." 

"While our results for the quarter were impacted by the slowdown in mortgage refinancing, our mortgage segment continued on its path of becoming a full service mortgage banking operation as it began servicing loans this quarter on its in-house platform based out of Wilmington, Ohio," Hoppe commented.  "It is worth noting that despite the recent dramatic interest rate swings, our mortgage team has more than doubled its mortgage origination activity for home purchases since the first quarter of 2013 to over $1 billion this quarter highlighting a shift in mix from refinancing.  Amid the uncertainty of the near term outlook for mortgage refinancing, we have developed a diverse and adaptive mortgage business with 30 retail locations, originations in 44 states and a mortgage servicing book over $16 billion."

Hoppe continued, "In July we announced the signing of a definitive merger agreement with MB Financial, Inc. to create the Chicago area's premier commercial bank.  We are excited about the opportunities this merger presents to all of our stakeholders.  In the interim, we remain focused on serving our clients and executing our strategic priorities.  Our third quarter results continue to reflect the value of our diversified model and the contributions of our dedicated bankers." 

THIRD QUARTER 2013 HIGHLIGHTS - COMPARISON TO SECOND QUARTER 2013

• Net interest income was $46.0 million for the third quarter of 2013, up $4.9 million, or 12.0%, from the second quarter of 2013
• Mortgage banking revenue was $25.1 million for the third quarter of 2013, down $13.4 million, or 34.7%, from the second quarter of 2013
• Mortgages for home purchases increased to 63% of total originations for the third quarter of 2013
• Net interest margin on a tax equivalent basis increased by 25 basis points to 3.41% for the third quarter of 2013 from 3.16% for the second quarter of 2013
• Total commercial loans grew $290.2 million, or 9.7%, from June 30, 2013
• In July, the Company repurchased $26.2 million of its outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series B, in a privately negotiated transaction
• As of September 30, 2013, the Company's Tier I Risk Based Capital ratio was 12.89%, its Total Risk Based Capital ratio was 14.15% and its Tier I Capital to Average Assets leverage ratio was 10.30%
• Return on Average Common Equity was 11.69% for the third quarter of 2013 as compared to 12.66% for the second quarter of 2013

Credit quality indicators as compared to the second quarter of 2013

• Nonperforming loans were $86.0 million and 2.37% of total loans at September 30, 2013, compared to $69.5 million and 2.11% of total loans at June 30, 2013
• At September 30, 2013, commercial criticized and classified loans(1) totaled $151.7 million, up from $134.2 million at June 30, 2013
• The allowance for loan losses as a percent of nonperforming loans was 98.80% at September 30, 2013, compared to 120.19% at June 30, 2013
• Credit costs(2) were a negative $536,000 for the third quarter of 2013, compared to a negative $498,000 for the second quarter of 2013

THIRD QUARTER 2013 - COMPARISON TO THIRD QUARTER 2012

• Net interest income increased to $46.0 million for the third quarter of 2013, up $8.8 million, or 23.7%, from the third quarter of 2012
• Net interest margin on a tax equivalent basis increased by 19 basis points to 3.41% for the third quarter of 2013 from 3.22% for the third quarter of 2012
• Pre-tax, pre-provision operating earnings(3) decreased to $23.1 million for the third quarter of 2013, down $9.8 million, or 29.8%, as compared to the third quarter of 2012
• Total commercial loans increased to $3.29 billion at September 30, 2013, up $619.3 million, or 23.2%, from September 30, 2012
• Core deposits grew to $2.75 billion at September 30, 2013, up $307.4 million, or 12.6%, from September 30, 2012
• Return on Average Common Equity was 11.69% for the third quarter of 2013 as compared to 17.62% for the third quarter of 2012

THIRD QUARTER 2013 PERFORMANCE OVERVIEW

Results of Operations - Comparisons to Second Quarter 2013

Net income for the third quarter of 2013 was $14.2 million, compared to $15.6 million for the second quarter of 2013, a decrease of 9.0%.  Net income applicable to common stockholders for the third quarter of 2013 was $10.6 million, compared to $11.8 million for the second quarter of 2013. 

Income before income taxes was $23.7 million for the third quarter of 2013, compared to $26.2 million for the second quarter of 2013, a decrease of 9.5%.  The decrease was primarily due to a $13.4 million decline in mortgage banking revenue partially offset by a $5.4 million decline in early extinguishment of debt expense and a $4.9 million increase in net interest income.  The decrease in mortgage banking revenue was due to an industry-wide slowdown in mortgage refinancing from the robust pace achieved over the prior few quarters and gain on sale margin compression.              

Pre-tax, pre-provision operating earnings totaled $23.1 million for the third quarter of 2013, compared to $31.1 million for the second quarter of 2013, a decrease of 25.7%.  The decrease was primarily due to a $13.4 million decline in mortgage banking revenue, partially offset by a $4.9 million increase in net interest income.     

Revenue(4)

Revenue totaled $78.4 million for the third quarter of 2013, compared to $87.2 million for the second quarter of 2013, a decrease of 10.1%.    

Net interest income was $46.0 million for the third quarter of 2013, as compared to $41.1 million for the second quarter of 2013.  The increase was primarily due to growth in commercial loan balances, higher municipal bond yields within the tax-exempt investment portfolio and lower cost of interest bearing liabilities, primarily as a result of the prepayment of $37.5 million of the Company's 8% subordinated notes in June 2013 and even with growth in overall interest-bearing deposits, the deposit interest expense decreased due to a 15 basis point reduction in the cost of deposits.  The overall tax equivalent net interest margin increased 25 basis points, from 3.16% for the second quarter of 2013 to 3.41% for the third quarter of 2013 due to commercial loan growth, higher yields on both the investment portfolio and loans held for sale, lower funding costs and one-time interest recoveries of approximately 6 basis points.      

Noninterest income, excluding investment security gains and losses, was $32.4 million for the third quarter of 2013, compared to $46.1 million for the second quarter of 2013, a decrease of 29.7%.  The decrease was primarily due to a $13.4 million decrease in mortgage banking revenue due to a slowdown in mortgage refinancing and lower gain on sale margins.  Total mortgage originations were $1.60 billion in the third quarter of 2013 down 14.8% from the second quarter.  Approximately 63% of the Company's mortgage originations in the third quarter of 2013 were for home purchases as compared to 38% in the second quarter, highlighting the decline in refinance activity and the growth in purchase activity.    

Noninterest Expense

Noninterest expense, excluding nonperforming asset expense and early extinguishment of debt expense, was $55.4 million for the third quarter of 2013, compared to $56.1 million for the second quarter of 2013.  The decrease of $711,000, or 1.3%, was primarily the result of a $4.6 million decrease in performance-based incentives attributable to the decline in mortgage banking revenue, partially offset by a $2.4 million increase in employee salaries and benefits.  Salary expense increased as employees were added at Cole Taylor Mortgage to establish its in-house servicing platform in Wilmington.  Certain expenses at Cole Taylor Mortgage are variable in nature and will likely change with loan production volume in the future.  In addition, Cole Taylor Mortgage continuously evaluates its staffing levels relative to expected loan production.  Besides employee salaries and benefits expense, legal fees also increased mainly due to the proposed merger with MB Financial and other strategic corporate initiatives.

Results of Operations - Comparisons to Third Quarter 2012

Net income for the third quarter of 2013 was $14.2 million, compared to $16.7 million for the third quarter of 2012, a decrease of 15.0%.  Net income applicable to common stockholders for the third quarter of 2013 was $10.6 million, compared to $15.0 million for the third quarter of 2012.

Income before income taxes was $23.7 million for the third quarter of 2013, compared to $27.6 million for the third quarter of 2012, a decrease of 14.1%.  The $3.9 million decrease was primarily due to a $15.5 million decline in mortgage banking revenue partially offset by a $8.8 million increase in net interest income.  The decline in mortgage banking revenue was primarily due to lower gain on sale margins for mortgage originations from the elevated levels seen in the second half of 2012.  The decline in mortgage origination income was partially offset by an increase in servicing revenue.  The Company has grown mortgage servicing as part of its strategy to build a complete mortgage operation with diverse revenue sources.  

Pre-tax, pre-provision operating earnings totaled $23.1 million for the third quarter of 2013, as compared to $32.8 million in the third quarter of 2012, a decrease of 29.6%, primarily due to the previously mentioned decline in mortgage banking revenue.    

Revenue

Revenue totaled $78.4 million for the third quarter of 2013, compared to $84.4 million in the third quarter of 2012, a decrease of 7.1%.    

Net interest income was $46.0 million for the third quarter of 2013, compared to $37.2 million for the third quarter of 2012, an increase of 23.7%.  The increase was primarily due to growth in commercial loan balances, higher yields and growth in the investment portfolio, the repayment of the Bank's $60.0 million of 10% subordinated notes in the third quarter of 2012 and of the Company's $37.5 million of 8% subordinated notes in the second quarter of 2013 and lower deposit funding costs.    

Noninterest income, excluding investment security gains and losses, was $32.4 million for the third quarter of 2013, compared to $47.3 million for the third quarter of 2012, a decrease of 31.5%.  The decrease was primarily due to a $15.5 million decrease in mortgage banking revenue due to lower gain on sale margins for mortgage originations from the elevated margins seen in the second half of 2012, partially offset by an increase in mortgage servicing revenue.  The increase in servicing revenue was the result of growth in the Company's mortgage servicing rights ("MSR") portfolio resulting from both purchased as well as self-originated MSR.

Noninterest Expense

Noninterest expense, excluding nonperforming asset expense and early extinguishment of debt expense, was $55.4 million for the third quarter of 2013, compared to $51.6 million in the third quarter of 2012, an increase of 7.4%.  The net increase of $3.8 million was due to the combination of a $6.2 million increase in employee salary and benefit costs primarily due to headcount growth at Cole Taylor Mortgage, a $2.5 million increase in outside services primarily due to growth in mortgage servicing, a $1.3 million increase in other noninterest expense primarily due to mortgage volume-related costs, a $1.0 million increase in legal fees primarily related to the proposed merger with MB Financial, and a $457,000 increase in occupancy, furniture and equipment costs due to office expansion.  Partially offsetting these increases was a $8.1 million decrease in performance-related incentive expense due to declines in mortgage banking revenue.         

Credit Quality

Loan Portfolio Performance and Credit Quality

Total commercial criticized and classified loans were $151.7 million at September 30, 2013, up from $134.2 million at June 30, 2013 and $114.7 million at September 30, 2012.  The increase in criticized and classified loans was largely attributable to two relationships migrating to nonaccrual status during the third quarter of 2013 partially offset by paydowns of several previously criticized and classified loans.      

Nonperforming loans were $86.0 million at September 30, 2013, up from $69.5 million at June 30, 2013, and $62.1 million at September 30, 2012.  The increase in nonperforming loans was due to the previously mentioned relationships moving to nonaccrual status in the third quarter of 2013.          

Other real estate owned ("OREO") and repossessed assets were $14.4 million at September 30, 2013, down from $19.8 million at June 30, 2013 and $28.9 million at September 30, 2012.  The decrease in OREO assets was primarily due to sales as we continue to actively manage the resolution process.  

Total nonperforming assets were $100.4 million at September 30, 2013, up from $89.3 million at June 30, 2013 and $91.0 million at September 30, 2012.  Nonperforming assets to total assets were 1.67% at September 30, 2013, compared to 1.51% at June 30, 2013 and 1.77% at September 30, 2012.   

Allowance and Provision for Loan Losses

The allowance for loan losses was $85.0 million at September 30, 2013 compared to $83.6 million at June 30, 2013 and $79.7 million at September 30, 2012 with the increase primarily due to growth in the loan portfolio.  The allowance for loan losses as a percent of nonperforming loans was 98.80% at September 30, 2013, as compared to 120.19% at June 30, 2013 and 128.30% at September 30, 2012.  

The provision for loan losses was $300,000 for the third quarter of 2013, compared to $700,000 for the second quarter of 2013 and $900,000 in the third quarter of 2012.  The $300,000 loan loss provision in the third quarter of 2013 reflects an increase in the general reserve primarily due to loan growth, partially offset by net recoveries and a decrease in required specific reserves.         

Balance Sheet

Assets

Total assets at September 30, 2013 were $6.01 billion, compared to $5.90 billion at June 30, 2013.

Investment securities were $1.42 billion at September 30, 2013, down slightly from $1.43 billion at June 30, 2013.       

Loans held for sale were $498.3 million at September 30, 2013, a decrease of 28.2% from June 30, 2013.  The decrease was primarily the result of a slowdown in mortgage refinance activity.     

Net loans at September 30, 2013 were $3.54 billion, up $324.7 million from $3.22 billion at June 30, 2013.  Commercial and Industrial loans were $1.90 billion at September 30, 2013, an increase of 11.4% from $1.71 billion at June 30, 2013.  This increase was broadly distributed across the Company's Chicago-based middle market lending, asset based lending and equipment financing groups.  Commercial real estate secured loans were $1.11 billion at September 30, 2013, an increase of 7.5% from June 30, 2013.  Consumer loans, which consist primarily of residential mortgages, were $348.4 million at September 30, 2013, up $37.2 million from June 30, 2013, as a portion of mortgage originations in the third quarter was retained in portfolio for investment purposes.   

MSR increased $38.5 million in the third quarter to $184.2 million as of September 30, 2013.  The unpaid principal balance of loans serviced was $16.43 billion as of September 30, 2013, up 29.0% from June 30, 2013.  The Company invests in MSR and retains servicing on most mortgage loans originated as part of its strategy to diversify the revenue streams of Cole Taylor Mortgage.      

Liabilities and Stockholders' Equity

Total liabilities at September 30, 2013 were $5.47 billion, as compared to $5.34 billion at June 30, 2013.

Total deposits were $3.70 billion at September 30, 2013, compared to $3.69 billion at June 30, 2013.  Total deposits increased in the third quarter, despite the end of a deposit relationship with an organization that provides financial services to the higher education industry, through growth in both interest-bearing demand and time deposits as part of the Company's on-going deposit gathering efforts.   

Average total deposits for the third quarter of 2013 increased to $3.83 billion from $3.69 billion in the second quarter of 2013, primarily due to growth in both interest-bearing demand and time deposits, partially offset by a decrease in noninterest-bearing deposits.

Short-term borrowings increased $136.8 million in the third quarter to $1.57 billion as of September 30, 2013, due to increased funding needs to support commercial loan growth.

Total stockholders' equity decreased $15.6 million from $560.3 million at June 30, 2013, to $544.7 million at September 30, 2013, primarily due to the repurchase of $26.2 million of the Series B preferred in the third quarter.  The decline was partially offset by retaining the net income available to common stockholders earned in the third quarter.

Capital

At September 30, 2013, the Company's Tier I Risk Based Capital ratio was 12.89%, its Total Risk Based Capital ratio was 14.15% and its Tier I Capital to Average Assets leverage ratio was 10.30%.

Each of these Company ratios exceeded the regulatory requirements for well-capitalized banks of 6.00% for the Tier I Risk Based Capital ratio, 10.00% for the Total Risk Based Capital ratio and 5.00% for the Tier I Capital to Average Assets leverage ratio.

Accompanying Financial Statements and Tables
This press release is accompanied by the following unaudited financial information:

• Condensed Consolidated Balance Sheets
• Consolidated Statements of Income
• Summary of Key Quarterly Financial Data
• Summary of Key Year-to-Date Financial Data
• Summary of Key Period-End Financial Data
• Composition of Loan Portfolio
• Credit Quality
• Loan Portfolio Aging
• Funding Liabilities
• Summary of Quarterly Segment Financial Data
• Reconciliation of U.S. GAAP Financial Measures

About Taylor Capital Group, Inc. (NASDAQ: TAYC)

Taylor Capital Group, Inc. is the holding company of Cole Taylor Bank, a commercial bank headquartered in Chicago with assets of $6.0 billion as of September 30, 2013. For more than 80 years, Cole Taylor Bank has been successfully meeting the banking needs of closely-held companies and the people who own and manage them by focusing on a relationship-based approach to business. Through its national businesses, Cole Taylor provides a full range of financial services, including asset based lending, commercial equipment financing, and residential mortgage lending.

Endnotes:
(1) Commercial criticized and classified loans are defined as special mention, substandard, and nonaccrual loans in commercial and industrial, commercial real estate, residential construction and land, and commercial construction and land, excluding consumer loans.
(2) Credit costs are defined as provision for loan losses plus nonperforming asset expense.
(3) Schedules reconciling earnings in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") to the non-GAAP measurement of revenue and pre-tax, pre-provision operating earnings are provided in the attached tables.
(4) Revenue is defined as net interest income plus noninterest income less investment securities gains and losses and impairment of investment securities.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release includes forward-looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "might," "contemplate," "plan," "predict," "potential," "should," "will," "expect," "anticipate," "believe," "intend," "could," "estimate" and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities in 2013 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements.

These risks, uncertainties and other factors include, without limitation:

• The Agreement and Plan of Merger (the "Merger Agreement") with MB Financial, Inc. ("MB") may be terminated in accordance with its terms, and the merger contemplated thereby (the "Merger") may not be completed.
• Termination of the Merger Agreement could negatively impact us.
• We will be subject to business uncertainties and contractual restrictions while the Merger is pending.
• Two stockholder actions have been filed against us, our Board of Directors and MB challenging the Merger, and additional suits may be filed in the future. An adverse ruling in any of these lawsuits may prevent the Merger from being completed or from being completed within the expected timeframe.
• The Merger Agreement limits our ability to pursue an alternative acquisition proposal and requires us to pay a termination fee of $20.0 million under limited circumstances relating to alternative acquisition proposals.
• We may be materially and adversely affected by the highly regulated environment in which we operate.
• Increasing dependence on our mortgage business may increase volatility in our consolidated revenues and earnings, and our residential mortgage lending profitability could be significantly reduced if we are not able to originate and sell mortgage loans at profitable margins.
• Changes in interest rates may change the value of our mortgage servicing rights ("MSRs") portfolio, which may increase the volatility of our earnings.
• Certain hedging strategies that we use to manage investment in MSR, mortgage loans held for sale and interest rate lock commitments may be ineffective to offset any adverse changes in the fair value of these assets due to changes in interest rates and market liquidity.
• Our mortgage loan repurchase reserve for losses could be insufficient.
• A significant increase in certain loan balances associated with our mortgage business may result in liquidity risk related to the funding of these loans.
• We are subject to interest rate risk, including interest rate fluctuations that could have a material adverse effect on us.
• Competition from financial institutions and other financial services providers may adversely affect our growth and profitability and have a material adverse effect on us.
• Our business is subject to the conditions of the economies in which we operate and continued weakness in those economies and the real estate markets may materially and adversely affect us.
• Our business is subject to domestic and, to a lesser extent, international economic conditions and other factors, many of which are beyond our control and could materially and adversely affect us.
• The preparation of our consolidated financial statements requires us to make estimates and judgments, including the use of models, which are subject to an inherent degree of uncertainty and which may differ from actual results.
• We must manage credit risk and, if we are unable to do so, our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio, which could have a material adverse effect on us.
• We may not be able to access sufficient and cost-effective sources of liquidity.
• We are subject to liquidity risk, including unanticipated deposit volatility.
• The repeal of federal prohibitions on payment of interest on business demand deposits could increase our interest expense and have a material adverse effect on us.
• Changes in certain ratings related to us or our credit could increase our financing costs or make it more difficult for us to obtain funding or capital on commercially acceptable terms.
• As a bank holding company, our sources of funds are limited.
• We are subject to certain operational risks, including, but not limited to, data processing system failures and errors and customer or employee fraud. Our controls and procedures may fail or be circumvented.
• We are dependent on outside third parties for processing and handling of our records and data.
• System failure or breaches of our network security, including with respect to our internet banking activities, could subject us to increased operating costs as well as litigation and other liabilities.
• We have counterparty risk and therefore we may be materially and adversely affected by the soundness of other financial institutions.
• We are subject to lending concentration risks.
• We are subject to mortgage asset concentration risks.
• Our business strategy is dependent on our continued ability to attract, develop and retain highly qualified and experienced personnel in senior management and customer relationship positions.
• Our reputation could be damaged by negative publicity.
• New lines of business, new products and services or new customer relationships may subject us to certain additional risks.
• We may experience difficulties in managing our future growth.
• We and our subsidiaries are subject to changes in federal and state tax laws and changes in interpretation of existing laws.
• Regulatory requirements, including rules recently adopted by the U.S. federal bank regulatory agencies to implement Basel III, growth plans or operating results may require us to raise additional capital, which may not be available on favorable terms or at all.
• We have not paid a dividend on our common stock since the third quarter of 2008. In addition, regulatory restrictions and liquidity constraints at the holding company level could impair our ability to make distributions on our outstanding securities.

For further information about these and other risks, uncertainties and factors, please review the disclosure included in the section captioned "Risk Factors" in our December 31, 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 8, 2013, as updated by our quarterly reports on Form 10-Q, Current Reports on Form 8-K and other filings we have made with the SEC. You should not place undue reliance on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or risk factors, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.

Additional Information

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  In connection with the proposed merger between MB Financial, Inc. ("MB Financial") and Taylor Capital Group, Inc. ("Taylor Capital"), MB Financial has filed a registration statement on Form S-4 with the Securities and Exchange Commission (the "SEC"). The registration statement includes a preliminary joint proxy statement of MB Financial and Taylor Capital that also constitutes a preliminary prospectus of MB Financial, which, when finalized, will be sent to the stockholders of MB Financial and Taylor Capital. Stockholders are advised to read the preliminary joint proxy statement/prospectus regarding the proposed merger, the definitive joint proxy statement/prospectus (when it becomes available) and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain, or will contain, as the case may be, important information about MB Financial, Taylor Capital and the proposed transaction. Copies of all documents relating to the merger filed by MB Financial and Taylor Capital can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing MB Financial's website at www.mbfinancial.com under the tab "Investor Relations" and then under "SEC Filings" or by accessing Taylor Capital's website at www.taylorcapitalgroup.com under the tab "SEC Filings" and then under "Documents." Alternatively, these documents can be obtained free of charge from MB Financial upon written request to MB Financial, Inc., Secretary, 6111 North River Road, Rosemont, Illinois 60018 or by calling (847) 653-1992, or from Taylor Capital, upon written request to Taylor Capital Group, Inc., Investor Relations, 9550 West Higgins Road, Rosemont, Illinois 60018 or by calling (847) 653-7978.

Participants in this Transaction

MB Financial, Taylor Capital and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed transaction under the rules of the SEC. Information about these participants may be found in the definitive proxy statement of MB Financial relating to its 2013 Annual Meeting of Stockholders filed with the SEC by MB Financial on April 12, 2013 and the definitive proxy statement of Taylor Capital relating to its 2013 Annual Meeting of Stockholders filed with the SEC on April 24, 2013. These definitive proxy statements can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants can be found in the joint proxy statement/prospectus regarding the proposed transaction, copies of which may also be obtained free of charge from the sources indicated above.