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MB Financial's (MBFI) CEO Mitchell Feiger on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Results Earnings Conference Call

April 19, 2016 11:00 AM ET

Executives

Mitchell Feiger - President and CEO

Jill York - CFO

Mark Hoppe - President and CEO, MB Financial Bank

Randall Conte - COO, MB Financial Bank

Michael Morton - Chief Credit Officer, MB Financial Bank

Analysts

Preeti Dixit - J.P. Morgan

Chris McGratty - KBW

Kevin Fitzsimmons - Hovde Group

Emlen Harmon - Jefferies

Terry McEvoy - Stephens

Kevin Reevey - D.A. Davidson

Brian Martin - FIG Partners

Operator

Good morning and welcome to the MBFI’s First Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded.

On today’s call, we have Mitchell Feiger, President and Chief Executive Officer; and Jill York, Chief Financial Officer of MB Financial, Inc. Also present from MB Financial Bank are Mark Hoppe, President and CEO; Randall Conte, Chief Operating Officer; Michael Morton, Chief Credit Officer; Brian Wildman, Chief Risk Officer; and John Francoeur, Chief Accounting 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 first quarter earnings release.

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

Mitchell Feiger

Okay. Thank you and good morning. It’s good to be with you all again for our regular quarterly visit. So, as is our custom, I’ll begin with some opening remarks; Jill will follow with more financial detail; Mark will conclude with our -- he’ll conclude our prepared remarks with commentary on market competition, business trends, perhaps some other things.

Our first quarter was a solid one. We are $0.50 per diluted common share in the quarter, that compares to $0.56 in the prior quarter and $0.43 in the same quarter a year earlier. But diluted operating earnings per share which we define as earnings excluding non-core items was $0.54 per share in the quarter versus $0.52 last quarter and $0.50 in the first quarter of 2015. I encourage you to review our earnings release 8-K for a complete definition of our operating earnings.

Here are the positives and neutral things I see in the quarter; I really didn’t see any negatives. So positives up first. Our margin excluding acquisition accounting discount accretion, which I think is the right way to look at it for long term investors, was 3.55%, that’s a 1 basis point decline from the prior quarter, so pretty stable. In fact, our margin has been very stable for many quarters. Over the past six quarters, our net interest margin, again excluding acquisition accounting discount accretion has been in the last six quarters 3.63%, 3.62%, 3.57% 3.49%, 3.56% last quarter now 355%. So pretty good given very low interest rates and margin pressure from reduced credit spreads.

Also positive loan growth was good. Normally, our first quarter loan growth is the lowest of the year, but this year period-end loans excluding purchased credit impaired loans grew $168 million or 7% annualized from the prior quarter-end. And that was after about a $100 million of seasonal pay-downs in the quarter. Average quarterly loans grew even better at almost 11% annualized. Core non-interest income was good, increasing $6.7 million in the quarter, driven by strong leasing revenues and added fees from our acquisition of MSA Holdings at the end of the prior quarter.