MB Financial 1Q earnings plummet on rising loss provision
CHICAGO—MB Financial Inc., the parent of MB Financial Bank, said Friday its first-quarter earnings fell 68 percent due to a sharp increase in bad debt tied to fraud.
Net income for the quarter end March 31 dropped to $5.8 million, or 17 cents per share, from $18.1 million, or 49 cents per share, during the same quarter the previous year.
Analysts polled by Thomson Financial, on average, forecast much higher earnings of 44 cents per share for the quarter.
MB Financial set aside $22.5 million during the first quarter to cover loan fraud. The bank set aside just $3.8 million during the same quarter last year. Of the $22.5 million reserved, $17 million was tied to loan fraud cases and a review that determined one of its loan divisions was not following established monitoring procedures.
Two commercial customer loan frauds occurred resulting in $5.9 million in charge-offs -- loans written off as not being repaid. Another $5.9 million was classified as non-performing. After a review, MB Financial determined one of its divisions was not following monitoring procedures and classified an additional $42.5 million in loans as potential problems, though they are all currently being paid on time.
The increased provision reduced the company's earnings by 29 cents per share.
Net interest income, the difference between how much it costs a bank to borrow money and how much it receives from lending money to customers, rose to $53.5 million from $51.9 million during the year-ago period.
Non-interest income, money derived from fees and other charges, rose to $24.5 million during the quarter, from $22.9 million during the year-ago period.
rising
falling 