KBRA Assigns Senior Unsecured Debt Rating of A- for MB Financial, Inc.

Kroll Bond Rating Agency (KBRA) has assigned a senior unsecured debt rating of A-, subordinated debt rating of BBB+, preferred stock rating of BBB and a short-term debt rating of K2 for Chicago-based, MB Financial, Inc. (NASDAQ: MBFI, “the Company”). KBRA has also assigned deposit and senior unsecured debt ratings of A, a subordinated debt rating of A-, and short-term deposit and debt ratings of K1 for its subsidiary, MB Financial Bank, N.A. The Outlook for all long-term ratings is Stable.

The ratings are supported by MB Financial’s solid post-crisis performance track record, driven by its diversified business mix that incorporates attractive fee generating businesses. MB Financial’s capitalization is considered suitable for the assigned rating, with the company’s recently released Dodd-Frank Act Stress test (DFAST) results underpinning that view. Ratings are primarily constrained by the company’s somewhat challenged performance during the financial crisis, as well as some leasing business concentration risk, though, with respect to the latter, mitigated by MB Financial’s demonstrated business expertise and track record.

The BBB rating for MB’s outstanding non-cumulative perpetual preferred stock is equivalent to an implied BBB rating for MB’s legacy trust preferreds (“trups”). KBRA currently considers ratings for these capital instruments on a case-by-case basis. Considered in the context of MB Financial’s Senior Unsecured Debt rating of A-, KBRA considers the likelihood of deferral for both the trups and the preferreds to not only be remote, but also extremely similar. Said differently, KBRA considers it extremely unlikely that regulators would allow coupon payments to be made on the trups, while forcing MB to defer paying on the preferreds. Additionally, in the extremely unlikely event of a Title II resolution, KBRA currently believes that the expected loss-given-default (LGD) associated with each instrument would be substantial and likely very similar.

The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.

A full rating report will be forthcoming.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

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