MB Financial in Chicago reported a sharp rise in quarterly earnings in its first full quarter following the acquisition of Taylor Capital.
The $14.6 billion-asset company earned $34.1 million in the fourth quarter, a nearly sevenfold increase from the previous quarter. Earnings per share were 50 cents, falling 2 cents short of a Bloomberg analyst poll.
On a year-over-year basis, MB's profits surged 43%, on revenue generated from its August 2014 acquisition of the $5.9 billion-asset Taylor.
A combination of higher income from interest and fees, coupled with lower merger-related costs, drove the quarterly results.
Noninterest income climbed 37% from the previous quarter, to $83.7 million, thanks to an uptick in mortgage banking revenue. The company reported mortgage banking revenue of $29 million, up 72% from the third quarter, however the increase was largely related to the timing of the merger as the third quarter resulted only included mortgage banking revenue for 44 days. A year earlier, MB reported mortgage banking revenues of just $342,000.
MB was traditionally not a mortgage lender, but Taylor had a national mortgage origination business that lifted its earnings for several years. At the onset of the transaction, MB gave Taylor the option to sell the unit separately. A sale never materialized and MB retained the business in the acquisition.
Net interest income jumped 25%, to $119.8 million. Total loans grew 1%, to $9.1 billion. The net interest margin expanded 25 basis points, to 3.81%.
Noninterest expenses held steady at about $141 million, as a sharp drop in merger costs compensated for higher salaries and compensation. Merger-related costs fell to $6.5 million from $27.2 million in the third quarter. At the same time, salary and benefit expenses rose 28%, to $83.2 million.