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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q/A

/x/	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

Commission file number 0-24566

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MB FINANCIAL, INC.
(Exact name of registrant as specified in its charter)

1200 North Ashland Avenue, Chicago, Illinois 60622
(Address of principal executive offices)

Registrant's telephone number, including area code: (773) 645-7866

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    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes /x/  No / /

    There were issued and outstanding 7,064,515 shares of the Registrant's common stock as of May 14, 2001.

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MB FINANCIAL, INC. AND SUBSIDIARIES

FORM 10-Q

MARCH 31, 2001

INDEX

PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Balance Sheets at March 31, 2001, December 31, 2000 and March 31, 2000		3
		Consolidated Statements of Income for the Three Months Ended March 31, 2001 and 2000		4
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000		5
		Notes to Unaudited Consolidated Financial Statements		6-7
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		8-19
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		20
PART II.		OTHER INFORMATION
		Signatures		21

2

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PART I.—FINANCIAL INFORMATION

Item 1.—Financial Statements

MB FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

At March 31, 2001, December 31, 2000 and March 31, 2000
(Unaudited)
(Statement Amounts in Thousands)

					March 31, 2001			December 31, 2000			March 31, 2000
ASSETS
Cash and due from banks					$	27,386		$	31,989		$	21,994
Other interest bearing deposits						2,456			2,300			1,907
Investment securities available for sale						213,960			233,063			266,750
Stock in Federal Home Loan Bank						4,540			7,290			7,290
Loans (net of allowance for loan losses of $16,129 at March 31, 2001, $13,837 at December 31, 2000 and $12,248 at March 31, 2000)						1,107,957			1,043,326			916,319
Lease investments, net						51,077			45,344			38,408
Premises and equipment, net						15,229			15,465			15,251
Cash surrender value of life insurance						32,226			31,703			30,162
Interest only receivables						8,496			10,538			13,785
Intangibles, net						14,033			14,466			15,935
Other assets						20,630			22,764			29,621
			Total assets		$	1,497,990		$	1,458,248		$	1,357,422
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
	Deposits:
		Noninterest bearing			$	141,762		$	157,237		$	141,488
		Interest bearing				923,480			912,027			815,434
			Total deposits			1,065,242			1,069,264			956,922
Short-term borrowings						289,554			249,614			267,671
Long-term borrowings						31,742			31,596			32,403
Other liabilities						15,022			16,033			18,977
			Total liabilities			1,401,560			1,366,507			1,275,973
Stockholders' Equity
	Common stock ($0.01 par value; authorized 20,000,000 shares; issued 7,064,515 shares)					71			71			71
	Additional paid-in capital					50,656			50,656			50,656
	Retained earnings					46,766			43,791			34,873
	Accumulated other comprehensive loss					(1,063	)		(2,777	)		(4,151	)
			Total stockholders' equity			96,430			91,741			81,449
			Total liabilities and stockholders' equity		$	1,497,990		$	1,458,248		$	1,357,422

See Notes to Unaudited Consolidated Financial Statements.

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MB FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Statement Amounts in Thousands, except Common Share Data)
(Unaudited)

				Three Months Ended March 31,
				2001			2000
Interest Income:
	Loans			$	23,093		$	19,010
	Investment securities:
		Taxable			4,133			4,494
		Nontaxable			71			79
	Other interest bearing accounts				29			23
		Total interest income			27,326			23,606
Interest expense:
	Deposits				11,582			8,464
	Short-term borrowings				4,081			3,625
	Long-term borrowings				639			636
		Total interest expense			16,302			12,725
Net interest income					11,024			10,881
Provision for loan losses					750			750
		Net interest income after provision for loan losses			10,274			10,131
Other income:
	Loan service fees				666			774
	Deposit service fees				891			832
	Lease financing, net				513			303
	Increase in cash surrender value of life insurance				523			162
	Other operating income				437			701
					3,030			2,772
Other expense:
	Salaries and employee benefits				4,739			4,790
	Occupancy and equipment expense				1,620			1,655
	Intangibles amortization expense				433			484
	Advertising and marketing expense				447			405
	Other operating expense				1,704			1,627
					8,943			8,961
		Income before income taxes			4,361			3,942
Income taxes					1,386			1,255
		Net income			2,975			2,687
		Other comprehensive income (loss)			1,714			(616	)
		Comprehensive income		$	4,689		$	2,071
Common share data:
	Basic earnings per common share			$	0.42		$	0.38
	Diluted earnings per common share			$	0.42		$	0.38
	Weighted average common shares outstanding				7,064,515			7,064,515

See Notes to Unaudited Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(Statement Amounts in Thousands)

				Three Months Ended March 31,
				2001			2000
Cash Flows From Operating Activities
	Net income			$	2,975		$	2,687
	Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation				3,889			3,334
	Gain on disposal of premises and equipment and leased equipment				(63	)		—
	Amortization of intangibles				433			484
	Provision for loan losses				750			750
	Provision (credit) for deferred income taxes				357			(426	)
	Bond accretion, net				(55	)		(38	)
	Increase in cash surrender value of life insurance				(523	)		(162	)
	(Increase) decrease in other assets				1,063			(2,409	)
	Increase (decrease) in other liabilities				(1,011	)		2,697
		Net cash provided by operating activities			7,815			6,917
Cash Flows From Investing Activities
	Proceeds from maturities and calls of securities available for sale				21,199			5,675
	Purchase of securities available for sale				—			(2,054	)
	Proceeds from redemption of stock in Federal Home Loan Bank				2,750			—
	Purchase of stock in Federal Home Loan Bank				—			(1,000	)
	Net increase in other interest bearing deposits				(156	)		(420	)
	Increase in loans, net of principal collections				(65,528	)		(26,458	)
	Purchases of premises and equipment and leased equipment				(9,274	)		(3,754	)
	Principal collected (paid) on lease investments				(112	)		99
	Purchase of minority interests				—			(154	)
	Purchase of life insurance				—			(30,000	)
	Proceeds received from interest only receivables				2,639			69
		Net cash used in investing activities			(48,482	)		(57,997	)
Cash Flows From Financing Activities
	Net decrease in noninterest bearing deposits				(15,475	)		(3,571	)
	Net increase in interest bearing deposits				11,453			24,418
	Net increase in short-term borrowings				39,940			23,102
	Proceeds from long-term borrowings				146			—
	Principal paid on long-term borrowings				—			(295	)
		Net cash provided by financing activities			36,064			43,654
		Net decrease in cash and due from banks		$	(4,603	)	$	(7,426	)
Cash and due from banks:
	Beginning				31,989			29,420
	Ending			$	27,386		$	21,994
Supplemental Disclosures of Cash Flow Information
	Cash payments for:
		Interest paid to depositors		$	22,994		$	8,188
		Other interest paid			5,026			2,198
		Income taxes paid, net of refunds			1,000			—
Real estate acquired in settlement of loans				$	147		$	319

See Notes to Unaudited Consolidated Financial Statements.

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MB FINANCIAL, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

    The unaudited consolidated financial statements include the accounts of MB Financial, Inc. and its subsidiaries (the "Company"). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods have been made. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the entire fiscal year.

    The unaudited interim financial statements have been prepared in conformity with generally accepted accounting principles and industry practice. Certain information in footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles and industry practice has been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's December 31, 2000 audited financial statements.

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of income and expenses during the reported periods. Actual results could differ from those estimates.

2. MERGERS

    On April 20, 2001, the Company and MidCity Financial Corporation ("MidCity Financial") announced that they had agreed to combine in a merger, pursuant to an Agreement and Plan of Merger dated as of April 19, 2001, (the "Merger Agreement"). Pursuant to the Merger Agreement, the Company and MidCity Financial will be merged into a newly formed company, which will assume the name "MB Financial, Inc." Holders of MB Financial common stock before the transaction will receive one share of common stock of the new company for each share held prior to the transaction. Each share of MidCity Financial common stock will be exchanged for 230.32955 shares of common stock of the new company. The transaction is expected to be accounted for as a pooling-of-interests. Consummation of the transaction is subject to a number of conditions, including adoption of the Merger Agreement by the stockholders of the Company and MidCity Financial, receipt of the requisite approvals from bank regulatory authorities, receipt of opinions as to the tax treatment of the transaction and certain other conditions.

    On February 8, 2001, the Company and its subsidiaries, Manufacturers National Corporation and Manufacturers Bank, and FSL Holdings ("FSL") and its subsidiary, First Savings & Loan Association of South Holland ("Association"), entered into an Agreement and Plan of Merger pursuant to which Manufacturers National Corporation will merge into FSL, which will survive the merger as a wholly-owned subsidiary of the Company and each shareholder of FSL will be paid $165 a share for each share of common stock held by such shareholder (for an aggregate consideration of $41.3 million). The acquisition will be funded through a combination of cash acquired through the acquisition and borrowings. Consummation of the merger is subject to certain conditions, including certain regulatory approvals of the merger agreement by the shareholders of FSL. Subject to the foregoing conditions, the merger is expected to occur in the second quarter of 2001.

    On February 26, 1999, Coal City, the holding company for Manufacturers Bank, was merged with and into Avondale, the holding company for Avondale Federal Savings Bank ("Avondale merger"). The resulting entity was renamed MB Financial, Inc. Simultaneously, Avondale Federal Savings Bank was merged into Manufacturers Bank.

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3. EARNINGS PER SHARE DATA

    The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

4. RECENT ACCOUNTING PRONOUNCEMENTS

    Statement of Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS 137 and 138 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. SFAS 133 is effective January 1, 2001. The Company adopted SFAS 133 and the implementation of this standard did not have a material impact on the Company's financial statements.

    SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of SFAS 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but it carries over most of SFAS 125's provisions without reconsideration. SFAS 140 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The provisions of SFAS 140 are effective for transfers after March 31, 2001. It is effective for disclosures about securitizations and collateral and for recognition and reclassification of collateral for fiscal years ending after December 15, 2000. The Company adopted SFAS 140 and the implementation of this standard did not have a material impact on the Company's financial statements.

5. LONG-TERM BORROWINGS

    At March 31, 2001 and 2000, long-term borrowings included $25.0 million in floating rate Preferred Capital Securities ("Capital Securities") through Coal City Capital Trust I ("Trust"), a statutory business trust and wholly owned subsidiary of the Company. The Capital Securities pay cumulative cash distributions quarterly at a rate per annum, reset quarterly, equal to the 3-month LIBOR plus 180 basis points. The effective rate at March 31, 2001 was 6.90%. Proceeds from the sale of the Capital Securities were invested by the Trust in floating rate (3-month LIBOR plus 180 basis points, the three month LIBOR rate effective at March 31, 2001 was 5.10%) Junior Subordinated Deferrable Interest Debentures ("Debentures") issued by the Company which represents all of the assets of the Trust. The Capital Securities are subject to mandatory redemption, in whole or in part, upon repayment of the Junior Subordinated Debentures at the stated maturity in the year 2028 or their earlier redemption, in each case at a redemption price equal to the aggregate liquidation preference of the Capital Securities plus any accumulated and unpaid distributions thereon to the date of redemption. Prior redemption is permitted under certain circumstances.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

    The following is a discussion and analysis of the Company's financial position and results of operation and should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.

General

    The profitability of the Company's operations depends primarily on its net interest income, which is the difference between total interest earned on interest earning assets and total interest paid on interest bearing liabilities. The Company's net income is affected by its provision for loan losses as well as other income and other expenses. The provision for loan losses reflects the amount thought to be adequate to cover estimated credit losses in the loan portfolio. Non-interest income or other income consists of loan service fees, deposit service fees, net lease financing income, net gains (losses) on the sale of securities available for sale, increase in cash surrender value of life insurance and other operating income. Other expenses include salaries and employee benefits along with occupancy and equipment expense, intangibles amortization expense and other operating expenses.

    The amount of net interest income is affected by changes in the volume and mix of earning assets, the level of interest rates earned on those assets, the volume and mix of interest bearing liabilities, and the level of interest rates paid on those interest bearing liabilities. The provision for loan losses is dependent on changes in the loan portfolio and management's assessment of the collectibility of the loan portfolio, as well as economic and market conditions. Other income and other expenses are impacted by growth of operations and growth in the number of accounts through both acquisitions and core banking business growth. Growth in operations affects other expenses as a result of additional employees, branch facilities and promotional marketing expense. Growth in the number of accounts affects other income including service fees as well as other expenses such as computer services, supplies, postage, telecommunications and other miscellaneous expenses.

Results of Operations

    The Company had net income of $3.0 million for the first quarter of 2001 compared to $2.7 million for the first quarter of 2000. Net interest income, the largest component of net income, was $11.0 million for the three months ended March 31, 2001 and $10.9 million for the same period in 2000. Net interest income remained relatively flat as higher lending rates from growth in the Company's commercial and lease banking businesses were offset by higher deposit and borrowing costs. Including income from investing in life insurance for which the Company reports in other income versus interest income, net interest income would have been $11.5 million for the first quarter of 2001 compared to $11.0 million for the first quarter of 2000.

    Other income increased $258 thousand for the three months ended March 31, 2001 compared to the first quarter of 2000. The increase in other income was primarily due to income related to cash surrender value of life insurance which was purchased March 2000, and an increase in the Company's lease financing income. Offsetting these increases in other income were decreases in loan service fees and other operating income.

    Other expense remained relatively flat at $8.9 million for the three months ended March 31, 2001 compared to $9.0 million for the three months ended March 31, 2000.

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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 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):

			Three Months Ended March 31,
			2001								2000
			Average Balance			Interest			Yield/ Rate		Average Balance			Interest			Yield/ Rate
Interest Earning Assets:
Loans (1) (2)			$	1,083,603		$	23,093		8.64	%	$	901,616		$	19,010		8.46	%
Taxable investment securities				238,399			4,133		7.03			269,901			4,494		6.68
Investment securities exempt from federal income taxes (3)				4,503			109		9.82			5,322			122		9.19
Other interest bearing deposits				1,950			29		5.95			1,827			23		5.05
	Total interest earning assets			1,328,455			27,364		8.35			1,178,666			23,649		8.05
	Non-interest earning assets			147,892								130,868
	Total assets		$	1,476,347							$	1,309,534
Interest Bearing Liabilities:
Deposits:
	NOW and money market deposit accounts		$	171,089			1,358		3.22		$	168,309			1,165		2.78
	Savings deposits			129,727			635		1.99			149,366			907		2.44
	Time deposits			613,194			9,589		6.34			475,014			6,392		5.40
Short-term borrowings				276,025			4,081		6.00			245,958			3,625		5.91
Long-term borrowings				31,885			639		8.13			32,204			636		7.92
	Total interest bearing liabilities			1,221,920			16,302		5.41			1,070,851			12,725		4.77
Demand deposits — non-interest bearing				145,234								139,685
Other non-interest bearing liabilities				14,990								17,058
Stockholders' equity				94,203								81,940
	Total liabilities and stockholders' equity		$	1,476,347							$	1,309,534
	Net interest income/interest rate spread (4)					$	11,062		2.94					$	10,924		3.28
	Net interest margin on a fully tax equivalent basis (5)								3.38	%							3.72	%
	Net interest margin (5)								3.37	%							3.70	%

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(1)

Non-accrual loans are included in average loans.

(2)

Interest income includes loan origination fees of $395,000 and $387,000 for the three months ended March 31, 2001 and 2000, respectively.

(3)

Non-taxable investment income is presented on a fully tax equivalent basis assuming a 35% tax rate for the three months ended March 31, 2001 and 2000.

(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.

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    Net interest income on a tax equivalent basis was $11.1 million for the three months ended March 31, 2001 and $10.9 million for the same period in 2000. Interest income increased $3.7 million, or 15.7%, for the first quarter of 2001 to $27.4 million from $23.6 million for the first quarter of 2000. The increase in interest income was due to a $149.8 million, or 12.7%, increase in average interest earning assets consisting primarily of a $182.0 million increase in average loans, as a result of growth in the Company's commercial and lease banking businesses, partially offset by a $32.3 million decrease in average investment securities. Interest expense increased $3.6 million, or 28.1%, for the first quarter of 2001 to $16.3 million from $12.7 million for the first quarter of 2000. The increase in interest expense resulted from a $151.1 million, or 14.1%, increase in average interest bearing liabilities primarily comprised of a $138.2 million increase in average time deposits, the majority of which were brokered deposits, a $30.1 million increase in average short-term borrowings, and a $19.6 million decrease in average savings deposits. The net interest margin on a tax equivalent basis decreased to 3.38% for the three months ended March 31, 2001 from 3.72% for the three months ended March 31, 2000. While the Company's growth in commercial and lease banking businesses earned higher interest rates, higher deposit and borrowing interest costs to fund this growth attributed to the decrease in the net interest margin. Excluding the effect of investing in life insurance for which the Company reports the related income in other income versus net interest income, the net interest margin on a tax equivalent basis would have been 3.54% and 3.77% for the three months ended March 31, 2001 and 2000, respectively.

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Rate Volume Analysis of Net Interest Income

    The following table presents the extent to which changes in volume, changes in mix and changes in interest rates of interest earning assets and interest bearing liabilities have affected the Company's interest income and interest expense during the periods indicated. Information is provided on changes in each category due to (i) changes attributable to changes in volume (current period volume, less current mix percentage multiplied by prior period total volume, multiplied by prior period rate), (ii) changes attributable to changes in mix (current mix percentage multiplied by total prior period volume, less prior period volume multiplied by prior period rate) and (iii) changes attributable to changes in rate (changes in rate multiplied by current period volume) (in thousands).

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(1)

Non-taxable investment income is presented on a fully tax equivalent basis assuming a 35% rate for the three months ended March 31, 2001 and March 31, 2000.

Other Income

    Other income increased $258 thousand for the three months ended March 31, 2001 compared to the first quarter of 2000. The increase in other income was primarily due to a $361 thousand increase in income related to cash surrender value of life insurance which was purchased March 2000, and a $210 thousand increase in the Company's lease financing income which was the result of growth in leases and gains on residual dispositions at the end of lease terms. Offsetting these increases in other income were a $108 thousand decrease in loan service fees, which was due to expected principal paydowns in home equity loans which were securitized and reductions in related fees, a $264 thousand decrease in other operating income attributable to $116 thousand reduction in real estate owned gains for the first quarter of 2001 and a $35 thousand decrease in brokerage fees.

Other Expense

    Other expense for the three months ended March 31, 2001 remained relatively flat at $8.9 million compared to $9.0 million.

Income Taxes

    Income tax expense for the three months ended March 31, 2001 was $1.4 million compared to $1.3 million for the same period in 2000. The effective tax rate was 31.8% for the three months ended March 31, 2001 and March 31, 2000.

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Cash Earnings

    The purchase method of accounting has been used to record each of the Company's acquisitions. As a result, the recorded basis of the net assets of the acquired entities has been adjusted to fair value. Adjustments included recording core deposit intangibles to reflect the difference between the fair value and underlying basis of deposits purchased and recording goodwill for the excess of the acquisition cost over the fair value of net assets acquired. Core deposit intangibles and goodwill are being amortized as a non-cash expense over periods of up to eight and 20 years, respectively. Amortization expense reduces net income during the amortization periods.

    If the Company's acquisitions had met certain accounting rules, the pooling of interest method of accounting would have been used to account for the Company's acquisitions. Under this method of accounting, no goodwill or core deposit intangibles would have been recorded. Consequently, net income is not reduced for the amortization of core deposit intangibles or goodwill. Since application of the two methods can result in dramatically different net income, management, certain analysts and certain peer financial institutions have been computing cash earnings in order to compare results. Cash earnings is not a presently defined term or concept under generally accepted accounting principles.

    Cash earnings is defined by management as net income excluding amortization of core deposit intangibles and goodwill and the related deferred income tax effect. Cash earnings should not be considered an alternative to operating or net income as an indicator of the Company's performance or as an alternative to cash flows from operating activities as a measure of liquidity in each case determined in accordance with generally accepted accounting principles.

    The following table sets forth the Company's cash earnings (dollars in thousands):

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(1)

Tangible assets represents assets less the Company's intangible assets which include goodwill and core deposit intangibles. Core deposit intangibles is recognized on a fully tax equivalent basis.

(2)

Tangible equity represents common stockholders equity plus retained earnings less the Company's intangible assets which include goodwill and core deposit intangibles. Core deposit intangibles is recognized on a fully tax equivalent basis.

(3)

Cash return on average tangible assets and equity has been annualized for the three months ended March 31, 2001 and March 31, 2000.

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Balance Sheet Review

    Total assets were $1.5 billion at March 31, 2001 and December 31, 2000. Total assets included a $66.9 million increase in gross loans and a $5.7 million increase in lease investments due to growth in the Company's commercial and lease banking businesses. The increase in loans at March 31, 2001 also included a $22.8 million purchase of pooled home equity lines of credit previously securitized and sold to investors. These loans were repurchased by the Company in February 2001. At that time, the Company added $2.0 million to its allowance for loans losses and eliminated the $2.3 million interest only receivable which pertained to the previously securitized pool. Partially offsetting these increases in assets were a $19.1 million decrease in investment securities available for sale and a $2.8 million decrease in stock in Federal Home Loan Bank.

    Total liabilities were $1.4 billion at March 31, 2001 and December 31, 2000. Total liabilities included an $11.5 million increase in interest bearing deposits primarily consisting of a $23.3 million increase in time deposits and a $7.8 million decrease in money market deposit accounts. The increase in time deposits included a $31.9 million increase in time deposits less than $100 thousand, and an $8.6 million decrease in time deposits of $100 thousand or more which was net of a $13.9 million increase in brokered accounts. In addition, total liabilities included a $39.9 million increase in short-term borrowings due to an $84.8 million increase in repurchase agreements and a $10.9 million increase in federal funds purchased offset by a $55.0 million decrease in Federal Home Loan Bank advances. Offsetting the increases in time deposits and short-term borrowings was a $15.5 million decrease in noninterest bearing deposits.

    Total stockholders' equity increased $4.7 million at March 31, 2001 compared to December 31, 2000 primarily due to earnings reflected in retained earnings as well as a $1.7 million decrease in accumulated other comprehensive loss.

    Total assets increased $140.6 million, or 10.4%, to $1.5 billion at March 31, 2001 compared to $1.4 billion at March 31, 2000. The increase in total assets was due to a $195.5 million increase in loans and a $12.7 million increase in the Company's lease investments as a result of growth in the Company's commercial and lease banking businesses. As noted earlier, the $22.8 million purchase of pooled home equity lines of credit previously securitized and sold to investors also attributed to the increase in loans at March 31, 2001. Partially offsetting these increases in total assets were a $52.8 million decrease in investment securities available for sale and a $5.3 million decrease in interest only receivables.

    Total liabilities increased $125.6 million, or 9.8%, to $1.4 billion at March 31, 2001 compared to $1.3 billion at March 31, 2000. The majority of the increase in total liabilities was due to a $108.0 million increase in interest bearing deposits which included a $127.6 million increase in time deposits net of a $19.4 million decrease in savings deposits. The remaining increase in total liabilities was due to a $21.9 million increase in short-term borrowings consisting of a $90.3 million increase in repurchase agreements, a $7.1 million increase in correspondent bank lines of credit, a $55.0 million decrease in Federal Home Loan Bank advances and a $20.5 million decrease in federal funds purchased.

    Total stockholders' equity increased $15.0 million at March 31, 2001 compared to March 31, 2000 primarily due to earnings reflected in retained earnings as well as a $3.1 million decrease in accumulated other comprehensive loss.

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Loan Portfolio

    The following table sets forth the composition of the loan portfolio (dollars in thousands):

			March 31, 2001					December 31, 2000					March 31, 2001
			Amount			Percent		Amount			Percent		Amount			Percent
Commercial			$	238,418		21.21	%	$	229,239		21.68	%	$	161,827		17.43	%
Commercial loans collateralized by assignment of lease payments				260,318		23.16	%		245,212		23.20	%		195,752		21.08	%
Commercial real estate				325,610		28.97	%		312,714		29.58	%		285,074		30.70	%
Residential real estate				142,133		12.64	%		137,612		13.02	%		146,219		15.75	%
Construction real estate				47,252		4.20	%		46,664		4.41	%		57,126		6.15	%
Installment and other				110,355		9.82	%		85,722		8.11	%		82,569		8.89	%
	Gross loans			1,124,086		100.00	%		1,057,163		100.00	%		928,567		100.00	%
Allowance for loan losses				(16,129	)				(13,837	)				(12,248	)
	Net loans		$	1,107,957				$	1,043,326				$	916,319

    Net loans increased $64.6 million from $1.0 billion at December 31, 2000 and $191.6 million from $916.3 million at March 31, 2000 to $1.1 billion at March 31, 2001 primarily due to growth in commercial and lease banking businesses, as well as the $22.8 million purchase of pooled home equity lines of credit previously securitized and sold to investors.

Asset Quality

    The following table presents a summary of non-performing assets as of the dates indicated (dollars in thousands):

			March 31, 2001			December 31, 2000			March 31, 2000
Non-performing loans:
	Non-accrual loans		$	7,778		$	5,381		$	10,598
	Loans 90 days or more past due, still accruing interest			20			239			214
Total				7,798			5,620			10,812
Other real estate owned				63			—			511
Other repossessed assets				88			101			—
Total non-performing assets			$	7,949		$	5,721		$	11,323
Total non-performing loans to total loans				0.69	%		0.53	%		1.16	%
Allowance for loan losses to non-performing loans				206.84	%		246.21	%		113.28	%
Total non-performing assets to total assets				0.53	%		0.39	%		0.83	%

    Total non-performing assets increased $2.2 million, or 38.9%, to $7.9 million at March 31, 2001 from $5.7 million at December 31, 2000. The increase in non-performing assets was primarily due to a $1.9 million commercial real estate loan placed on non-accrual in the first quarter of 2001.

    Total non-performing assets decreased $3.4 million, or 29.8%, to $7.9 million at March 31, 2001 from $11.3 million at March 31, 2000. Non-performing assets decreased due to the Company's diligent collection efforts.

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Allowance for Loan Losses

    A reconciliation of the activity in the Company's allowance for loan losses follows (dollars in thousands):

    The allowance for loan losses at March 31, 2001 included $2.0 million as part of the $22.8 million purchase of previously securitized pooled loans in February 2001.

    The Company maintains its allowance for loan losses at a level that management believes will be adequate to absorb estimated losses on existing loans based on an evaluation of the collectibility of loans and prior loss experience. The Company further uses a risk rating system to evaluate the adequacy of the allowance for loan losses. With this system, each loan is risk rated between one and nine, by the originating loan officer or loan committee, with one being the best case and nine being a loss or the worst case. Loan loss reserve factors are multiplied against the balances in each risk-rating category to determine an appropriate level for the allowance for loan losses. Loans with risk ratings between six and eight are monitored much closer by the officers. Control of the Company's loan quality is continually monitored by management and is reviewed by the Board of Directors and loan committee of the Company on a monthly basis, subject to oversight by the Company's Board of Directors through its members who serve on the loan committee. Independent external review of the loan portfolio is also conducted by regulatory authorities. The Company consistently applies its methodology for determining the adequacy of the allowance for loan losses, but may make adjustments to its system based on historical information related to charge-offs and management's evaluation of the current loan portfolio. When adjustments are made, they are carefully reviewed by the loan committee before they are implemented.

Potential Problem Loans

    Manufacturers Bank utilizes an internal asset classification system as a means of reporting problem and potential problem assets. At each scheduled Board of Directors meeting, a watch list is presented, showing all loans listed as "Special Mention," "Substandard," "Doubtful" and "Loss." An asset is classified Substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that Manufacturers Bank will sustain some loss if the deficiencies are not corrected. Assets classified as Doubtful have all the weaknesses inherent in those classified Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Assets classified as Loss are those considered uncollectible and viewed as non-bankable assets, worthy of charge-off. Assets which do not currently expose Manufacturers Bank to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses which may or may not be out of the control of the customer, are deemed to be Special Mention.

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    Manufacturers Bank's determination as to the classification of its assets and the amount of its valuation allowances is subject to review by Manufacturers Bank's primary regulators, which can order the establishment of additional general or specific loss allowances. The FDIC, in conjunction with the other federal banking agencies, has adopted an interagency policy statement on the allowance for loan losses. The policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of adequate allowances and guidance for banking agency examiners to use in determining the adequacy of general valuation guidelines. Generally, the policy statement recommends that (i) institutions have effective systems and controls to identify, monitor and address asset quality problems; (ii) management has analyzed all significant factors that affect the collectibility of the portfolio in a reasonable manner; and (iii) management has established acceptable allowance evaluation processes that meet the objectives set forth in the policy statement. Management believes it has established an adequate allowance for possible loan losses. Manufacturers Bank analyzes its process regularly, with modifications made if needed, and reports those results four times per year at Board of Directors meetings. However, there can be no assurance that the regulators, in reviewing Manufacturers Bank's loan portfolio, will not request Manufacturers Bank to materially increase its allowance for loan losses at the time. 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.

    The aggregate principal amounts of potential problem loans as of March 31, 2001 and 2000 were approximately $14.9 million and $17.2 million, respectively. Included in these potential problem loan totals are non-accrual, Special Mention, Substandard and Doubtful classifications, which represent the watch list presented to the Board of Directors. All loans classified as Loss have been charged-off. Loans in this category generally include loans that were classified for regulatory purposes.

Lease Investments

    Lease investments by categories follow (in thousands):

    Lease investments are investments in equipment leased to other companies by Manufacturers Bank. The Company has steadily grown its lease portfolio over the past five years from virtually nothing to $51.1 million at March 31, 2001. Manufacturers Bank funds most of its lease equipment purchases, but has some loans at other banks totaling $5.9 million at March 31, 2001, $5.8 million at December 31, 2000 and $6.6 million at March 31, 2000.

    The operating lease portfolio is made up of various types of equipment, generally technology related, such as computer systems, satellite equipment, and general manufacturing equipment. The credit quality of the lessee generally must be in one of the top four rating categories of Moody's or Standard & Poors, or the equivalent. In most cases, during the early years of the lease, Manufacturers Bank recognizes a loss on its investment due to funding costs, and as a lease ages, a gain. Consequently, as Manufacturers Bank has built its leased equipment portfolio, current earnings have been reduced. However, gains on leased equipment periodically result when a lessee renews a lease or purchases the equipment at the end of a lease, or the equipment is sold to a third party at a profit. Individual lease transactions can, however, result in a loss. This generally happens when, at the end of a lease, the lessee does not renew the lease or purchase the equipment. To mitigate this risk of loss, Manufacturers Bank usually limits individual leased equipment residuals (expected lease book values at the end of initial lease terms) to approximately $500 thousand per transaction and seeks to diversify both the type of equipment leased and the industries in which the lessees to whom such equipment is leased participate.

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    At March 31, 2001, the following schedule represents the residual values for operating leases in the year initial lease terms are ended (in thousands):

    There were approximately 150 lease schedules at March 31, 2001 compared to 136 at December 31, 2000 and 119 at March 31, 2000. In addition, residual lease values were $11.9 million, $11.0 million, and $9.3 million at March 31, 2001, December 31, 2000 and March 31, 2000, respectively, resulting in an average residual per lease of $79 thousand, $81 thousand and $78 thousand for the respective periods.

Interest Only Receivables

    In 1996, 1997 and 1998, Avondale Federal Savings Bank securitized certain home equity lines of credit to investors with limited recourse, retaining the right to service the underlying loans. The securitizations were done using qualified special purpose entities (securitization trusts). Avondale Federal Savings Bank received annual servicing fees and rights to future cash flows (interest only receivables) arising after the investors in the securitization trusts received the return for which they had contracted. In addition, Avondale Federal Savings Bank retained a security interest in the securitization trusts, reflecting the excess of the total amount of loans transferred to the trusts over the portion represented by certificates sold to investors. Through the Avondale merger the Company acquired servicing rights related to these loans, the retained security interest in the investor trusts and interest only receivables. The annual servicing fees received by the Company approximate 1.00% of the outstanding loan balance. The investors and their securitization trusts have no recourse to the Company's other assets for failure of debtors to pay when due. Most of the Company's retained interest in the securitization trusts are generally restricted until investors have been fully paid and is subordinate to investor's interest. The retained security interest is included with securities available for sale and is reflected as investments in equity lines of credit trusts. The Company estimates the fair value of these securities by using prices paid for similar securities.

    At March 31, 2001, interest only receivables were $8.5 million. The value of interest only receivables are subject to substantial credit, prepayment, and interest rate risk on the transferred financial assets. On a quarterly basis, the Company performs a review to determine the fair value of its interest only receivables. As part of the review, the Company reviews its assumptions of prepayment speeds, discount rates and the remaining anticipated credit losses.

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    The following table shows the results of the Company's assumptions used to estimate the fair value at March 31, 2001 (dollars in thousands):

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(1)

Rates for these loans are adjusted based on the prime rate as published in the Wall Street Journal.

(2)

The remaining weighted-average life in years of prepayable assets is calculated by summing (a) the principal collections expected in each future year multiplied by (b) the number of years until collection, and then dividing that sum by the initial principal balance. This is not explicitly assumed but it reflects the overall effect of prepayment assumptions.

(3)

Assumed remaining credit losses over the life remaining on the loans outstanding at March 31, 2001 are $319 thousand, $637 thousand, and $2.9 million for 96-1, 97-1, and 98-1, respectively. The estimated credit loss percentage is derived by dividing the remaining credit losses by the related loan balance outstanding in the pool. Credit losses are estimated using loss migration analysis for each pool.

    In February 2001, the Company acquired in the market 100% of the securities outstanding in the 97-2 securitization trust held by investors. After the acquisition, the Company applied purchase accounting and the securitization trust and its activities were consolidated into the Company's financial statements.

Investment Securities

    The following table sets forth the amortized cost and fair value of the Company's investment securities by accounting classification and type of security (in thousands):

				At March 31, 2001						At December 31, 2000						At March 31, 2001
				Amortized Cost			Fair Value			Amortized Cost			Fair Value			Amortized Cost			Fair Value
Securities Available for Sale:
	U.S. Government agencies			$	75,089		$	75,118		$	85,044		$	84,221		$	99,929		$	97,261
	States and political subdivisions				4,360			4,522			4,505			4,650			5,168			5,336
	Mortgage-backed securities				83,352			83,493			93,248			92,456			114,441			113,593
	Corporate bonds				43,087			39,656			43,085			39,250			43,090			39,879
	Other securities				1,088			1,250			1,088			1,280			958			958
	Investment in equity lines of credit trusts				9,921			9,921			11,206			11,206			9,723			9,723
		Total securities available for sale		$	216,897		$	213,960		$	238,176		$	233,063		$	273,309		$	266,750

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Liquidity and Sources of Capital

    The Company's cash flows are composed of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Net cash provided by operating activities was $7.8 million and $6.9 million for the three months ended March 31, 2001 and 2000, respectively. Net cash used in investing activities was $48.5 million for the three months ended March 31, 2001 and $58.0 million for the same period in 2000. The Company's investing activities for the first quarter of 2001 compared to 2000 included additional cash outflows of $39.1 million in net loans, $5.5 million in purchases of leased equipment, partially offset by increases in net proceeds including $23.9 million from investment securities, whereas the first quarter of 2000 included a $30.0 million purchase of life insurance. Net cash provided by financing activities was $36.1 million for the three months ended March 31, 2001 and $43.7 million for the same period in 2000. The $7.6 million decrease in net cash provided by financing activities was due to in the three months ended March 31, 2001 deposits decreased $4.0 million while in the three months ended March 31, 2000 deposits increased $20.8 million. This was partially offset by a $16.8 million greater increase in short-term borrowings in the three months ended March 31, 2001 compared to the three months ended March 31, 2000.

    The Company expects to have available cash to meet its liquidity needs. Liquidity management is monitored by the asset liability committee of Manufacturers Bank, which takes into account the marketability of assets, the sources and stability of funding and the level of unfunded commitments. In the event that additional short-term liquidity is needed, Manufacturers Bank has established relationships with several large regional banks to provide short-term borrowings in the form of federal funds purchased. While there are no firm lending commitments in place, Manufacturers Bank has borrowed, and management believes that Manufacturers Bank could again borrow, more than $130.0 million for a short time from these banks on a collective basis. Additionally, Manufacturers Bank is a member of the Federal Home Loan Bank (FHLB) and has the ability to borrow from the FHLB. MB Financial, Inc. also maintains a line of credit with a large regional correspondent bank in the amount of $15.0 million. As of March 31, 2001, MB Financial had $2.9 million undrawn and available under its line of credit.

    Manufacturers Bank's total risk-based capital ratio was 10.42%, Tier 1 capital to risk-weighted assets ratio was 9.19%, and Tier 1 capital to average asset ratio was 8.23% at March 31, 2001. The FDIC has categorized the bank subsidiary as "well capitalized" at March 31, 2001.

    As of March 31, 2001, the Company's book value per share was $13.65 compared to $11.53 at March 31, 2000. In addition, the Company's tangible book value per share (calculated on a fully tax equivalent basis) was $11.76 at March 31, 2001 compared to $9.43 at March 31, 2000.

Forward Looking Statements

    Statements made about the Company's future economic performance, strategic plans or objectives, revenues or earnings projections, or other financial items and similar statements are not guarantees of future performance, but are forward looking statements. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those in the statements. Important factors that might cause the Company's actual results to differ materially include, but are not limited to, the following:

•

Federal and state legislative and regulatory developments;



•

Changes in management's estimate of the adequacy of the allowance for loan losses;



•

Changes in management's valuation of the interest only receivables;



•

Changes in the level and direction of loan delinquencies and write-offs;



•

Interest rate movements and their impact on customer behavior and the Company's net interest margin;



•

The impact of repricing and competitors' pricing initiatives on loan and deposit products;



•

The Company's ability to adapt successfully to technological changes to meet customers' needs and developments in the market place;



•

The Company's ability to access cost effective funding; and



•

Changes in financial markets and general economic conditions.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

    At March 31, 2001, there has been no material change in market risk from December 31, 2000.

PART II.—OTHER INFORMATION

    None

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, MB Financial, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 14th day of May 2001.

		MB FINANCIAL, INC.
		By:		/s/ MITCHELL FEIGER    Mitchell Feiger Chief Executive Officer (Principal Executive Officer)
		By:		/s/ JILL YORK    Jill York Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)

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QuickLinks

MB FINANCIAL, INC. AND SUBSIDIARIES FORM 10-Q MARCH 31, 2001 INDEX

PART I.—FINANCIAL INFORMATION
Item 1.—Financial Statements

Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to Unaudited Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II.—OTHER INFORMATION

SIGNATURES