---

---

---

Item 1.	Business

---

•	Glenwood, Illinois-based Heritage Community Bank (Heritage);

•	Oak Forest, Illinois-based InBank;

•	Chicago, Illinois-based Corus Bank, N.A. (Corus);

•	Aurora, Illinois-based Benchmark Bank (Benchmark);

•	Chicago, Illinois-based New Century Bank (New Century); and

•	Chicago, Illinois-based Broadway Bank (Broadway).

---

---

---

---

•	Acquiring directly or indirectly, ownership or control of any voting shares of another bank or bank holding company if, after such acquisition, it would own or control more than 5% of such shares (unless it already owns or controls the majority of such shares);

•	Acquiring control of, or all or substantially all of the assets of, another bank or bank holding company, or

•	Merging or consolidating with another bank holding company.

•	Real estate lending standards, which provide guidelines concerning loan-to-value ratios for various types of real estate loans;

•	Risk-based capital rules, including accounting for interest rate risk, concentration of credit risk and the risks posed by non-traditional activities;

•	Rules requiring depository institutions to develop and implement internal procedures to evaluate and control credit and settlement exposure to their correspondent banks;

•	Rules restricting types and amounts of equity investments; and

•	Rules addressing various safety and soundness issues, including operations and managerial standards, standards for asset quality, earnings and compensation standards.

---

---

•	minimum capital ratios, including a minimum ratio of common equity to risk-weighted assets;

•	an additional countercyclical capital buffer to be imposed by banking regulators periodically at their discretion, with advance notice;

•	restrictions on capital distributions and discretionary bonuses when capital ratios fall within the buffer zone;

•	deduction from common equity of deferred tax assets that depend on future profitability to be realized;

•	increased capital requirements for counterparty credit risk relating to over the counter (OTC) derivatives, repos and securities financing activities; and

•	for capital instruments issued on or after January 13, 2013 (other than common equity), a loss-absorbency requirement.

---

---

---

---

•

Centralize responsibility for consumer financial protection by creating the Bureau of Consumer Financial Protection, with broad rulemaking, supervision and enforcement authority for a wide range of consumer protection laws that would apply to all banks and certain others, including the examination and enforcement powers with respect to any bank with more than $10 billion in assets and its affiliates, and the power to prohibit unfair, deceptive or abusive acts or practices.

•	Restrict the preemption of state consumer financial protection law by federal law and disallow subsidiaries and affiliates of national banks, such as MB Financial Bank, from availing themselves of such preemption.

•	Require new capital rules.

•	Require publicly-traded bank holding companies with assets of $10 billion or more to establish a risk committee responsible for enterprise-wide risk management practices, comprised of independent directors including one risk management expert.

•	Change the assessment base for federal deposit insurance from the amount of insured deposits to consolidated average assets less tangible capital.

•	Increase the minimum ratio of net worth to insured deposits of the Deposit Insurance Fund from 1.15% to 1.35% and require the FDIC, in setting assessments, to offset the effect of the increase on institutions with assets of less than $10 billion.  This increase is generally expected to impose more deposit insurance cost on institutions with assets of $10 billion or more.

•	Provide for new disclosure and other requirements relating to executive compensation and corporate governance, including guidelines or regulations on incentive-based compensation and a prohibition on compensation arrangements that encourage inappropriate risks or that could provide excessive compensation.

•	Make permanent the $250 thousand limit for federal deposit insurance and provided unlimited federal deposit insurance until January 1, 2013 for non-interest bearing demand transaction accounts at all insured depository institutions (later legislation extended this unlimited coverage to IOLTA accounts until January 1, 2013).

•	Repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts.

•	Allow de novo interstate branching by banks.

•

Give the Federal Reserve Board the authority to establish rules regarding interchange fees charged for electronic debit transactions by a payment card issuer that, together with its affiliates, has assets of $10 billion or more and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer.  The Federal Reserve Board has adopted rules under this provision that limit the swipe fees that a debit card issuer can charge a merchant for a transaction to the sum of 21 cents and five basis points times the value of the transaction, plus up to one cent for fraud prevention costs.

•	Increase the authority of the Federal Reserve Board to examine the Company and its non-bank subsidiaries.

---

•	Require all bank holding companies to serve as a source of financial strength to their depository institution subsidiaries in the event such subsidiaries suffer from financial distress.

•	Restrict proprietary trading by banks, bank holding companies and others, and their acquisition and retention of ownership interests in and sponsorship of hedge funds and private equity funds, as described above under “--Volcker Rule.”

•	Require annual stress testing by banks with more than $10 billion in assets and impose certain reporting and disclosure requirements.

---

Item 1A.	Risk Factors

---

•	loan delinquencies may increase;

•	problem assets and foreclosures may increase;

•	demand for our products and services may decline;

•	collateral for our loans may decline in value, in turn reducing a customer’s borrowing power; and

•	the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.

---

•	cash flow of the borrower and/or the project being financed;

•	changes and uncertainties as to the future value of the collateral, in the case of a collateralized loan;

•	credit experience of a particular borrower;

•	changes in economic and industry conditions; and

•	duration of the loan.

•	our general reserve, based on our historical default and loss experience as well as current macroeconomic factors; and

•	our specific reserve, based on our evaluation of non-performing loans and their underlying collateral.

---

•	We may be exposed to potential asset quality issues or unknown or contingent liabilities of the banks, businesses, assets, and liabilities we acquire. If these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected;

•	Prices at which acquisitions can be made fluctuate with market conditions. We have experienced times during which acquisitions could not be made in specific markets at prices we considered acceptable and expect that we will experience this condition in the future;

•

The acquisition of other entities generally requires integration of systems, procedures and personnel of the acquired entity into our company to make the transaction economically successful. This integration process is complicated and time consuming and can also be disruptive to the customers of the acquired business. If the integration process is not conducted successfully and with minimal effect on the acquired business and its customers, we may not realize the anticipated economic benefits of particular acquisitions within the expected time frame, and we may lose customers or employees of the acquired business. We may also experience greater than anticipated customer losses even if the integration process is successful;

•	To the extent our costs of an acquisition exceed the fair value of the net assets acquired, the acquisition will generate goodwill.  As discussed below, we are required to assess our goodwill for impairment at least annually, and any goodwill impairment charge could have a material adverse effect on our results of operations and financial condition;

•	To finance an acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise additional capital, which could dilute the interests of our existing stockholders; and

•	We have completed various acquisitions in the past few years that enhanced our rate of growth.  We may not be able to continue to sustain our past rate of growth or to grow at all in the future.

---

•

obtaining the requisite regulatory approvals in order to consummate the transactions. MB Financial and Taylor Capital must obtain approvals from the Federal Reserve Board and the Office of the Comptroller of the Currency. Other approvals, waivers or consents from regulators may also be required. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain approval or delay their receipt. These regulators may impose conditions on the completion of the transactions. It is a condition to each company’s obligation to complete the merger that the requisite regulatory approvals be obtained without the imposition of any condition or restriction that would reasonably be expected to have a material adverse effect on, or materially and adversely affect the economic benefits to be realized by MB Financial (as the surviving corporation of the merger) and its subsidiaries, taken as a whole, after giving effect to the merger;

•	obtaining the requisite stockholder approvals from the MB Financial and Taylor Capital stockholders;

•	our ability to realize expected revenues, cost savings, synergies and other benefits from the acquisition within the expected time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; and

•	the credit quality of loans and other assets acquired from Taylor Capital.

---

---

---

---

---

Item 1B.	Unresolved Staff Comments

Item 2.	Properties

Item 3.	Legal Proceedings

---

Item 4.	Mine Safety Disclosures

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

---

---

---

Item 6.	Selected Financial Data

---

(1)	In 2010, we completed two FDIC-assisted transactions.  See Note 2 in the notes to consolidated financial statements contained under Item 8. Financial Statements and Supplementary Data.

(2)	In 2009, we completed four FDIC-assisted transactions.

(3)	Not meaningful for 2009 due to our net loss for that year.

---

(1)	Net interest margin represents net interest income from continuing operations as a percentage of average interest earning assets.

(2)

Non-performing loans include loans accounted for on a non-accrual basis and accruing loans contractually past due 90 days or more as to interest or principal.  Non-performing loans excludes purchased credit-impaired loans that were acquired as part of the Heritage, InBank, Corus, Benchmark, Broadway, and New Century FDIC-assisted transactions.  See Note 5 in the notes to consolidated financial statements contained under Item 8. Financial Statements and Supplementary Data.

(3)	Non-performing assets include non-performing loans, other real estate owned and other repossessed assets.  Non-performing assets exclude other real estate owned that is related to the Heritage, InBank, Benchmark, Broadway, and New Century FDIC-assisted transactions.  See Note 5 in the notes to consolidated financial statements contained under Item 8. Financial Statements and Supplementary Data.

---

---

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

---

---

---

---

---

•	Net lease financing income increased as a result of leasing revenues attributable to the addition of Celtic ($25.9 million).

•	Card fee income increased due to higher revenues on prepaid, debit and credit cards.

•	Commercial deposit and treasury management fees increased as a result of the addition of new treasury management services customers.

•	Trust and asset management fees increased due to strong equity market performance and the addition of new clients.

•	Capital markets and international banking service fees decreased due to lower swap, syndication, and merger and acquisition advisory revenues.

•	Accretion of FDIC indemnification asset decreased, consistent with the decrease in the related asset balance.

---

•	Net lease financing income increased as a result of an increase in equipment remarketing gain and fees from the sale of equipment maintenance contracts.

•	Capital markets and international banking service fees increased due to an increase in interest rate swap fees, merger and acquisition advisory fees, and international banking activities.

•	Card fee income increased primarily due to card interchange income being limited in the fourth quarter of 2011 as a result of the Durbin Amendment of the Dodd-Frank Act, additional debit card activity, and an increase in fees earned on credit cards and prepaid cards.

•	Losses recognized on the sale of assets increased as a result of the disposal of fixed assets.

•	Accretion of FDIC indemnification asset decreased $3.8 million, consistent with the decrease in the related asset balance.

•	Brokerage fees declined due to a decrease in third party brokerage revenues.

•	Consumer and other deposit service fees decreased as a result of lower NSF fees.

---

•	Salaries and employee benefits increased primarily due to the addition of Celtic (approximately $11 million).

•	Other operating expenses were higher in 2013 as a result of an increase in the clawback liability related to our loss share agreements with the FDIC.

•	Computer services and telecommunication expenses increased due primarily to an increase in spending on IT security, data warehouse, investments in our key fee initiatives, as well as higher transaction volumes in leasing, treasury management and card areas.

•	Professional and legal expense increased due to merger-related expenses of $2.4 million primarily related to fairness opinion, legal and consulting expense incurred in connection with the pending acquisition of Taylor Capital.

•	Other intangible amortization expense increased due to the impact of Celtic.

•	Other real estate expense decreased due to a reduced other real estate owned inventory in 2013.

•	Net gain of $1.5 million was recognized on other real estate owned in 2013 compared to a net loss of $17.6 million in 2012.

•	Non-interest expense for 2012 was impacted by $12.7 million in prepayment fees related to the early redemption of interest bearing liabilities and $2.2 million in branch impairment charges.

---

•

We recognized $12.7 million in prepayment fees on interest bearing liabilities in the third quarter of 2012 in order to lower our future funding costs, including a $100 million FHLB advance with a 3.85% interest rate, brokered certificates of deposit of $101 million with a 3.16% average interest rate and the $6.2 million of junior subordinated notes issued to FOBB Statutory Trust I with a 10.6% interest rate.

•	Salaries and employee benefits expense increased primarily due to annual salary increases, an increase in incentives, commissions on higher lease revenues, and higher health insurance claims.

•	Losses recognized on other real estate owned were higher as a result of increased impairments due to a decline in the value of land held in other real estate owned.

•	Other operating expenses were down partially due to the decrease in FDIC insurance premiums as a result of a change in the assessment computation during the second quarter of 2012 and the impact of improved credit quality on the computation.

•	Other operating expenses were also favorably impacted in 2012 by a decrease in the clawback liability related to our loss share agreements with the FDIC recorded during the year.

•	Other real estate expense decreased as a result of fewer properties in other real estate owned throughout 2012 compared to 2011.

---

•	Cash and cash equivalents increased by $185.9 million from December 31, 2012 to December 31, 2013 due to a higher cash balance held at the Federal Reserve to increase on-balance sheet liquidity.

•	Investment securities decreased $64.1 million, or 2.7%, from December 31, 2012 to December 31, 2013 mostly as a result of the principal payments received on mortgage-backed securities that were not reinvested in the portfolio.

•	Gross loans, excluding covered loans, increased from 2012 to 2013 by $159.8 million, or 3.0%. The growth in loans was driven by increases in commercial and industrial and commercial loans collateralized by assignment of lease payments, offset by decreases in commercial real estate loans.

•	Gross loans decreased by $54.4 million, or 0.9%, to $5.7 billion at December 31, 2013 from $5.8 billion at December 31, 2012 mainly as a result of the decrease in covered loans, which decreased $214.1 million.

•	Total deposits decreased by $161.4 million, or 2.1%, to $7.4 billion at December 31, 2013 from $7.5 billion at December 31, 2012, primarily due to a decrease in certificates of deposit balances.

•	Noninterest bearing deposits increased by 9.8% and comprised 32.2% of total deposits at December 31, 2013 compared to 28.7% at December 31, 2012. Over the past year, our deposit mix improved as low cost deposits (noninterest bearing deposits, money market and NOW accounts and savings accounts) increased by $190.5 million, or 3.3%, driven by the growth in noninterest bearing deposits.

•

Total borrowings increased by $218.9 million, or 44.8%, to $707.6 million at December 31, 2013. Early in the fourth quarter of 2013, we entered into a $300.0 million short-term advance from the Federal Home Loan Bank of Chicago ("FHLB") at an annual interest rate of 0.17% for 80 days and held cash at the Federal Reserve to increase our on-balance sheet liquidity in preparation for an adverse market reaction to the Federal government shutdown and potential breach of the debt ceiling.

•	This increase in short-term borrowings was partially offset by the prepayment of the $50.0 million subordinated debt facility in the first quarter of 2013.

---

---

(1)	Loans that MB Financial Bank will share losses with the FDIC are referred to as “covered loans.”

(2)	Gross loan balances at December 31, 2013, 2012, 2011, 2010, and 2009 are net of unearned income, including net deferred loans fees of $1.9 million, $1.1 million, $1.0 million, $3.3 million, and $4.6 million, respectively.

---

(1)	Excludes purchased credit-impaired loans that were acquired as part of the Heritage, InBank, Corus, Benchmark, Broadway, and New Century transactions.  See Note 5 to our Consolidated Financial Statements for further information regarding purchased credit-impaired loans.

(2)	Excludes non-performing loans.

---

(1)	The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011.  Includes $13.6 million and $3.1 million of reserves on unfunded credit commitments at December 31, 2010, and 2009, respectively.

(2)	Accruing restructured loans consists primarily of commercial real estate, home equity and residential real estate loans that have been modified and are performing in accordance with those modified terms. The balance consisted primarily of commercial real estate loans in 2010 and 2011, and residential real estate and home equity loans in 2012 and 2013.

---

---

---

---

(1)	The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011.

(2)	Includes $13.6 million and $3.1 million of reserves on unfunded credit commitments at December 31, 2010, and 2009, respectively.

---

(1)	The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011.  Includes $13.6 million and $3.1 million of reserves on unfunded credit commitments at December 31, 2010 and 2009, respectively.

---

---

(1)	Includes brokered deposits of $224.2 million.

(2)	Consists of time deposits held in individual retirement accounts (IRAs) and time certificates that the customer has the option to increase the principal balance and maintain the original interest rate.

---

---

---

(1)	May be called for redemption by us at any time. See Note 12 to the audited consolidated financial statements under Item 8. Financial Statements and Supplementary Data.

---

---

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk

---

---

---

Item 8.	Financial Statements and Supplementary Data

---

---

---

---

---

---

---

---

---

---

---

---

Note 1.	Significant Accounting Policies

---

---

---

---

•	Pass rated loans (typically performing loans) are accounted for in accordance with ASC 310-20 “Nonrefundable Fees and Other Costs” as these loans do not have evidence of credit deterioration since origination.

•	Non-impaired loans (typically past-due loans, special mention loans and performing substandard loans) are accounted for in accordance with ASC 310-30 “Receivables - Loans and Debt Securities Acquired with Deteriorated Credit Quality” as they display at least some level of credit deterioration since origination.

•	Impaired loans (typically substandard loans on non-accrual status) are accounted for in accordance with ASC 310-30 as they display significant credit deterioration since origination.

---

---

---

---

Note 2.	Business Combinations

---

---

Note 3.	Restrictions on Cash and Due From Banks

Note 4.	Investment Securities

---

---

---

Note 5.	Loans

---

---

---

---

---

---

---

---

---

---

---

---

•	Pass rated loans (typically performing loans) are accounted for in accordance with ASC 310-20 "Nonrefundable Fees and Other Costs" as these loans do not have evidence of credit deterioration since origination.

•	Non-impaired loans (typically past-due loans, special mention loans and performing substandard loans) are accounted for in accordance with ASC 310-30 as they display at least some level of credit deterioration since origination.

•	Impaired loans (typically substandard loans on non-accrual status) are accounted for in accordance with ASC 310-30 as they display significant credit deterioration since origination.

---

(1)	Covered commercial related loans include commercial, commercial real estate and construction real estate loans acquired in connection with the Heritage and Benchmark FDIC-assisted transactions.

(2)	Estimated reimbursable amounts from the FDIC under the loss-share agreement exclude $1.1 million in reimbursable amounts related to covered other real estate owned.

(3)	Non covered commercial related loans include commercial, commercial real estate and construction real estate for InBank.

---

Note 6.	Lease Investments

---

---

Note 7.	Premises and Equipment

Note 8.	Goodwill and Intangibles

---

Note 9.	Deposits

Note 10.	Short-Term Borrowings

---

Note 11.	Long-term Borrowings

Note 12.	Junior Subordinated Notes Issued to Capital Trusts

---

(1)	All distributions are cumulative and paid in cash.

(2)	FOBB Statutory Trust III was established by First Oak Brook Bancshares, Inc. (“FOBB”) prior to the Company's acquisition of FOBB, and the junior subordinated note issued by FOBB to FOBB Statutory Trust III was assumed by the Company upon completion of the acquisition.

---

Note 13.	Lease Commitments and Rental Expense

Note 14.	Employee Benefit Plans

---

Note 15.	Income Taxes

---

---

Note 16.	Commitments and Contingencies

---

Note 17.	Regulatory Matters

---

Note 18.	Fair Value Measurements

---

---

---

---

---

---

---

---

Note 19.	Stock Incentive Plans

---

---

Note 20.	Derivative Financial Instruments

---

---

---

Note 21.	Operating Segments

---

Note 22.	Condensed Parent Company Financial Information

---

Note 23.	Preferred Stock

---

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.	Controls and Procedures

---

Item 10.	Directors, Executive Officers and Corporate Governance

Item 11.	Executive Compensation

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

---

Item 13.	Certain Relationships, Related Transactions and Director Independence

Item 14.	Principal Accountant Fees and Services

Item 15.	Exhibits and Financial Statement Schedules

---

---

---

---

---

---