MB Financial, Inc. Reports Third Quarter Net Income for 2007.CHICAGO -- MB Financial, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :MBFI MBFI Multiplex Bus Fault Isolator ), the holding company for MB Financial Bank, N.A. and Union Bank, N.A., announced today third quarter results for 2007. The words "MB Financial," "the Company," "we," "our" and "us" refer to MB Financial, Inc. and its wholly owned subsidiaries Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , unless we indicate otherwise. We had net income of $18.3 million for the third quarter of 2007 compared to $14.7 million for the third quarter of 2006, an increase of 24.2%, and $21.0 million for the second quarter of 2007, a decrease of 13.0%. Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the third quarter of 2007 were $0.51 per share as compared to $0.46 per share for the third quarter of 2006, and $0.57 per share for the second quarter of 2007. Non-core transactions decreased our earnings for the third quarter of 2006 by $378 thousand, net of tax. Excluding these non-core items, our third quarter earnings for 2006 were $0.47 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. Non-core transactions increased our earnings for the second quarter of 2007 by $2.8 million, net of tax. Excluding these non-core items, our second quarter earnings for 2007 were $0.50 per diluted share. There were no significant non-core items in the third quarter of 2007. On June 29, 2007, we entered into an agreement to sell our Oklahoma City-based subsidiary bank, Union Bank, N.A., to Olney Bancshares of Texas, Inc. for approximately $76.9 million which is based on Union Bank's book value at closing plus a premium of $46.9 million. The transaction, subject to customary closing conditions and regulatory approval, is expected to be completed in the fourth quarter of 2007. Prior to closing, Union Bank will sell to our lead subsidiary bank, Chicago-based MB Financial Bank, N.A., approximately $100 million in performing loans previously purchased from and originated by MB Financial Bank. The sale of Union Bank, N.A., will allow us to concentrate our resources in the Chicago metropolitan market. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 144, "Accounting for the Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. or Disposal of Long-Lived Assets," the financial position of Union Bank is reflected on the Company's balance sheets as "assets held for sale" and "liabilities held for sale", and the results of operations of Union Bank are reflected in the Company's statements of income as "discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ." We estimate the post-closing impact of the Union Bank sale on our overall earnings per share will be minimal, as we anticipate that the lost income from Union Bank will be largely offset by additional income attributable to the loans that we will repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. from Union Bank prior to closing, investment earnings on the sale proceeds, and the impact of planned stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. , funded by the sale proceeds, which are subject to market conditions and other factors. Highlights for the quarter were as follows: * Our net interest margin in the third quarter, expressed on a fully tax equivalent basis, increased 3 basis points to 3.34%, compared to 3.31% in the second quarter of 2007, and was within the range of 3.26% to 3.34% previously communicated. * We continued to enjoy robust commercial loan growth in the third quarter. Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. commercial related loan growth was approximately 16%, compared to 15% in the second quarter of 2007, driven by substantial growth in our commercial and commercial real estate categories. * Core funding increased by $41.3 million compared to the second quarter of 2007. Additionally, our core funding has increased from 74% to 77% of total funding from September 30, 2006 to September 30, 2007. See "Funding Mix" section below for further analysis. * On September 20, 2007 we issued $30.0 million of trust preferred securities at a floating rate of 3 month LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 1.30% with an initial rate of 6.99%, and on October 1, 2007 we issued an additional $22.5 million of trust preferred securities at a floating rate of 3 month LIBOR plus 1.30% with an initial rate of 6.53%. On October 2, 2007, we redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. $61.7 million of trust preferred securities with a fixed coupon rate Coupon rate In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. of 8.60%. As a result of redeeming re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. these securities, we will incur approximately $2 million of additional other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. attributable to unamortized issuance costs in the fourth quarter of 2007, or approximately $0.04 per diluted share based on the number of fully diluted shares outstanding as of September 30, 2007. RESULTS OF OPERATIONS Third Quarter Results Net Interest Income Net interest income on a tax equivalent basis increased $1.9 million from the second quarter of 2007 to the third quarter of 2007. The increase in net interest income was primarily due to an increase in average interest earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin , a three basis point increase in the net interest margin, and one additional day during the third quarter. See the supplemental net interest margin table for further detail. Assuming no significant changes in the interest rate environment or balance sheet leverage, we estimate our net interest margin on a fully tax equivalent basis, will range from 3.26% to 3.34% in the fourth quarter of 2007. Other Income [TABLE OMITTED] (1) Letters denote de·note tr.v. de·not·ed, de·not·ing, de·notes 1. To mark; indicate: a frown that denoted increasing impatience. 2. the corresponding line items where these non-core other income items reside in the consolidated statements of income as follows: A - Brokerage fees, B - Trust and asset management fees, C - Other Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , and D - Net gain (loss) on sale of other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. . Deposit service fees increased from the second quarter of 2007 to the third quarter of 2007, primarily due to enhancements made to our courtesy overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers program and a fee increase that was implemented during the second quarter of 2007 and continued for the entire third quarter. The decrease in our core business brokerage fee income was primarily due to the sale of our third party brokerage business during the second quarter of 2007. The decrease in our core business brokerage fee income was offset by significant corresponding reductions in brokerage expense as a result of selling our third party brokerage business. Accounts sold were converted to the purchaser's brokerage operating platform during the middle of the third quarter. We expect a significant decrease in our brokerage fee revenue in the fourth quarter of 2007 compared to the third quarter of 2007, offset by significant corresponding reductions in brokerage expense as a result of a full quarter's impact of the customers converting to the new platform. Other Expense [TABLE OMITTED] (1) Letters denote the corresponding line items where the non-core other expense items reside in the consolidated statements of income as follows: E - Salaries and employee benefits, and F - Other Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Core salaries and employee benefits increased from the second quarter of 2007 to the third quarter of 2007, primarily due to annual hourly employee pay increases during the third quarter, an increase in employee stock-based compensation expense, and one additional day during the third quarter compared to the second quarter. The increase in employee stock-based compensation expense of approximately $275 thousand was primarily due to the immediate vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: of certain stock-based awards granted during the third quarter of 2007. As noted earlier, the decrease in our core business brokerage fee expense was primarily due to the sale of our third party brokerage business during the second quarter of 2007. Income Taxes Income tax expense from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the three months ended September 30, 2007 decreased $1.7 million to $6.7 million compared to $8.4 million for the three months ended June 30, 2007. The effective tax rate was 27.9% and 30.0% for the quarters ended September 30, 2007 and June 30, 2007, respectively. The decline in the effective tax rate was primarily due to a higher percentage of pre-tax income generated from tax exempt sources for the three months ended September 30, 2007, compared to the three months ended June 30, 2007. LOAN PORTFOLIO The following table sets forth the composition of the loan portfolio as of the dates indicated (dollars in thousands): [TABLE OMITTED] (1) Gross loan balances at September 30, 2007, June 30, 2007, March 31, 2007, December 31, 2006, and September 30, 2006, are net of unearned income Unearned Income Any income that comes from investments and other sources unrelated to employment services. Notes: Examples of unearned income include interest from a savings account, bond interest, tips, alimony, and dividends from stock. , including net deferred loan fees of $2.9 million, $2.9 million, $2.8 million, $3.0 million, and $3.6 million, respectively. (2) During the third quarter of 2007, multifamily residential real estate loans were reclassified from residential real estate loans to commercial real estate loans. Prior periods have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current period's presentation. Commercial related credits increased by 16% on an annualized basis from June 30, 2007 to September 30, 2007. Commercial related credits increased by 13% from September 30, 2006 to September 30, 2007. Total loans increased by 15% on an annualized basis from June 30, 2007 to September 30, 2007. Total loans increased by 11% from September 30, 2006 to September 30, 2007. In each case, this growth was primarily due to growth in both existing customer and new customer loan demand resulting from the Company's focus on marketing and new business development. ASSET QUALITY The following table presents a summary of non-performing assets as of the dates indicated (dollar amounts in thousands): [TABLE OMITTED] (1) There were no restructured loans in any period presented. Below is a reconciliation of the activity in our allowance for loan losses for the periods indicated (dollar amounts in thousands): [TABLE OMITTED] The increase in our provision from the second quarter of 2007 to the third quarter of 2007 was primarily due to our loan growth during the third quarter and an increase in potential problem loans. 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. We define potential problem loans as loans rated substandard substandard, adj below an acceptable level of performance. or doubtful which are included on the watch list presented to our bank subsidiaries' boards of directors that do not meet the definition of a non-performing loan A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. (See "Asset Quality" section above for non-performing loans), but where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with present loan repayment terms. Our decision to include performing loans in potential problem loans does not necessarily mean that we expect losses to occur, but that we recognize potential problem loans carry a higher probability of default Probability of default (PD) is a parameter used in the calculation of economic capital or regulatory capital under Basel II for a banking institution. This is an attribute of bank's client. . The aggregate principal amounts of potential problem loans were $45.6 million, or 0.85% of total loans as of September 30, 2007, and approximately $21.3 million, or 0.41% of total loans as of June 30, 2007. The following is a summary of charge-offs and non-performing loans for the prior nineteen quarters (in thousands): [TABLE OMITTED] INVESTMENT SECURITIES AVAILABLE FOR SALE The following table sets forth the fair value of our investment securities available for sale, by type of security as indicated (in thousands): [TABLE OMITTED] (1) Includes trading securities of $899 thousand at September 30, 2006 Our investment security portfolio continued to decrease, as a majority of Government sponsored agencies and enterprise securities that have been sold or matured have not been replaced due to the lack of attractive investment opportunities. We had no securities classified as held-to-maturity or trading as of September 30, 2007. FUNDING MIX The following table shows the composition of our core and wholesale funding resources as of the dates indicated (dollars in thousands): [TABLE OMITTED] We experienced a net increase in our lower cost core funding sources (non-interest bearing deposits, money market and NOW accounts, and savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: ), and a net decrease in our higher cost core funding sources (certificates of deposit and customer repurchase agreements Repurchase agreement An agreement with a commitment by the seller (dealer) to buy a security back from the purchaser (customer) at a specified price at a designated future date. ) from the second quarter of 2007 to the third quarter of 2007. Our percentage of core funding to total funding has increased from September 30, 2006 to September 30, 2007. Additionally, the average balance of our non-interest bearing deposits increased from $848.5 million in the second quarter of 2007, to $864.2 million in the third quarter of 2007. CAPITAL MANAGEMENT On July 2, 2007, we announced our intent to expand our existing stock repurchase program from 1,000,000 to 2,000,000 shares. As of September 30, 2007, we had repurchased 1,305,467 of our outstanding shares under this program. The 694,533 shares remaining under our expanded authorization may be repurchased from time to time over a twelve-month period, depending upon market conditions and other factors, in open market or privately negotiated transactions. At September 30, 2007, our total risk-based capital ratio Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. was 11.83%; Tier 1 capital Tier 1 Capital A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves. Notes: Equity capital includes instruments that can't be redeemed at the option of the holder. to risk-weighted assets Risk-Weighted Assets In terms of the minimum amount of capital that is required within banks and other institutions, based on a percentage of the assets, weighted by risk. Notes: The idea of risk-weighted assets is a move away from having a static requirement for capital. ratio was 10.31% and Tier 1 capital to average asset ratio was 8.61%, compared to 11.62%, 10.09% and 8.25%, respectively, at June 30, 2007. The increase in our risk-based capital ratios from the second quarter of 2007 to the third quarter of 2007 was primarily due to the issuance $30.0 million of additional trust preferred securities during the third quarter of 2007. This was a temporary increase, as during the fourth quarter of 2007, in addition to issuing another $22.5 million of trust preferred securities, we redeemed $61.7 million of trust preferred securities originally issued in the third quarter of 2002. MB Financial Bank, N.A. and Union Bank, N.A. were each categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as "Well-Capitalized" under Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. regulations at September 30, 2007. ASSET LIABILITY MANAGEMENT Based on simulation modeling which assumes immediate changes in interest rates at September 30, 2007 and December 31, 2006, we believe that our net interest income would change over a one-year period due to changes in interest rates as follows (dollars in thousands): [TABLE OMITTED] In addition to the simulation assuming an immediate change in interest rates above, we model many other scenarios including those with gradual changes in interest rates over a one-year period to evaluate our interest rate sensitivity. Based on simulation modeling which assumes gradual changes in interest rates, we believe that our net interest income would change over a one-year period due to changes in interest rates as follows (dollars in thousands): [TABLE OMITTED] In both the immediate and gradual interest rate sensitivity tables above, changes in net interest income between September 30, 2007 and December 31, 2006 reflect changes in the composition of our interest earning assets and interest bearing liabilities, related interest rates, repricing Repricing To change the price of an asset. In derivatives, it sometimes refers to the exchange of options of with different strike prices. repricing frequencies, and the fixed or variable characteristics of our interest earning assets and interest bearing liabilities. We also review our interest rate sensitivity under certain scenarios in which the general shape of the yield curve changes over time. One such scenario is a gradual reversion reversion: see atavism. to a "Normal Yield Curve Normal Yield Curve A chart showing long-term debt instruments having higher yields than short-term debt instruments. Sometimes referred to as positive yield curve. Notes: ," which we define as a yield curve having the mean historical interest rate value for each time period on the yield curve. Gradual reversion to the Normal Yield Curve assumes a gradual decrease in interest rates for 3 months and 1 year to 4.02% and 4.25% from 5.23% and 4.90%, respectively, and a gradual rise in long-term interest rates for 15 year and 30 year periods to 5.75% and 5.88% from 5.37% and 5.45%, respectively. Under this scenario, our net interest income is projected to increase by $7.5 million or 3.48% over a one year period. The assumptions used in our interest rate sensitivity simulations 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 our interest rates on net interest income. Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions, management strategies, and customer behavior. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. When used in this press release and in filings with the Securities and Exchange Commission, in other press releases or other public shareholder communications, or in oral statements made with the approval of an authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to our future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) the possibility that the sale of Union Bank will not be completed within the expected time frame, whether due to delays in receipt of regulatory approval for the transaction or the purchaser's inability to obtain all of the financing it needs to enable it to pay the purchase price; (2) the possibility that the loss of future income from Union Bank will have a greater impact on our overall earnings per share than we currently anticipate, whether due to our realizing less income than we expect to realize from the loans we will repurchase from Union Bank prior to closing and on our investments of the Union Bank sale proceeds, or due to unfavorable market conditions or other factors impeding im·pede tr.v. im·ped·ed, im·ped·ing, im·pedes To retard or obstruct the progress of. See Synonyms at hinder1. [Latin imped our planned stock repurchase activity; (3) expected cost savings and synergies from our merger and acquisition activities might not be realized within the expected time frames; (4) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (5) competitive pressures among depository institutions Depository institution A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. ; (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) the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place; (9) our ability to realize the residual values Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. of our direct finance, leveraged, and operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. ; (10) our ability to access cost-effective funding; (11) changes in financial markets; (12) changes in economic conditions in general and in the Chicago metropolitan area “Chicagoland” redirects here. For for the racing venue, see Chicagoland Speedway. The Chicago metropolitan area is the metropolitan area associated with the city of Chicago in the United States. in particular; (13) the costs, effects and outcomes of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; (14) new legislation or regulatory changes, including but not limited to changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (15) changes in accounting principles, policies or guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. ; (16) our future acquisitions of other depository institutions or lines of business; (17) our deposit growth and deposit mix resulting from our new deposit gathering strategy may be less favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. than expected; and (18) the impact of the guidance prepared by the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. regarding concentrations in real estate lending. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made. TABLES TO FOLLOW [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (1) Net cash flow available to stockholders (net income or net income on continuing operations, as appropriate, plus other intangibles amortization expense, net of tax benefit) / Average tangible equity (average equity less average goodwill and average other intangibles, net of tax benefit) (2) Equals total other expense divided by the sum of net interest income on a fully tax equivalent basis and total other income less net gains (losses) on securities available for sale. (3) Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets. (4) Equals total ending stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit. (5) Equals total ending stockholders' equity divided by common shares outstanding. (6) Equals total ending stockholders' equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding. NON-GAAP FINANCIAL INFORMATION This press release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). These measures include net income and fully diluted earnings per share excluding certain items, net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis, tangible equity to assets ratio, tangible book value per share, and annualized cash return on average tangible equity. Our management uses these non-GAAP measures in its analysis of our performance. 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. The other measures exclude the ending balances of acquisition-related goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , net of tax benefit, in determining tangible stockholders' equity. Management believes the presentation of these other financial measures excluding the impact of such items provides useful supplemental information that is helpful in understanding our financial results, as they provide a method to assess management's success in utilizing our tangible capital. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. The following table presents a reconciliation of tangible equity to stockholders' equity (in thousands): [TABLE OMITTED] The following table presents a reconciliation of average tangible equity to average stockholders' equity (in thousands): [TABLE OMITTED] The following table presents a reconciliation of net cash flow available to stockholders to net income from continuing operations (in thousands): [TABLE OMITTED] The following table presents a reconciliation of net cash flow available to stockholders to net income (in thousands): [TABLE OMITTED] 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." A reconciliation of tangible book value per share to book value per share is contained in the "Selected Financial Ratios" table. NET INTEREST MARGIN The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant This article is about the resultant of polynomials. For the result of adding two or more vectors, see Parallelogram rule. For the technique in organ building, see Resultant (organ). In mathematics, the resultant of two monic polynomials yields, as well as the interest expense on average interest bearing liabilities, and the resultant costs, expressed both in dollars and rates (dollars in thousands): [TABLE OMITTED] (1) Non-accrual loans are included in average loans. (2) Interest income includes amortization of deferred loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. fees of $1.7 million, $1.5 million and $1.8 million for the three months ended September 30, 2007, September 30, 2006, and June 30, 2007, respectively. (3) Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate. (4) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. (5) Net interest margin represents net interest income as a percentage of average interest earning assets. (6) During the third quarter of 2007, multifamily residential real estate loans were reclassified from residential real estate loans to real estate commercial loans. Prior periods have been reclassified to conform to the current period's presentation. The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, and the resultant costs, expressed both in dollars and rates (dollars in thousands): [TABLE OMITTED] (1) Non-accrual loans are included in average loans. (2) Interest income includes amortization of deferred loan origination fees of $5.2 million and $4.9 million for the nine months ended September 30, 2007, and September 30, 2006, respectively. (3) Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate. (4) Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. (5) Net interest margin represents net interest income as percentage of average interest earning assets. (6) During the third quarter of 2007, multifamily residential real estate loans were reclassified from residential real estate loans to real estate commercial loans. Prior periods have been reclassified to conform to the current period's presentation. |
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