Filed by MB Financial, Inc.
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: First SecurityFed Financial, Inc.
Commission File No. 00-23063
Additional Information
MB Financial, Inc. will file a registration statement on Form S-4 with the Securities and Exchange Commission in connection with the proposed merger of First SecurityFed Financial, Inc. with MB Financial. The registration statement will include a proxy statement/prospectus which will be sent to the stockholders of First SecurityFed seeking their approval of the proposed transaction. Investors and security holders are advised to read the proxy statement/prospectus because it will contain important information. When filed, these documents can be obtained free of charge from the web site maintained by the SEC at www.sec.gov. This document also can be obtained free of charge upon written request to MB Financial, Inc., Secretary, 1200 North Ashland Avenue, Chicago, Illinois 60622 or by calling (773) 645-7868.
First SecurityFed and its directors and executive officers may be deemed to be participants in the solicitation of proxies from First SecurityFed stockholders to approve the proposed transaction. Information about these participants may be obtained through the SECs web site from the definitive proxy statement filed with the SEC by First SecurityFed on March 21, 2003. Additional information regarding the interests of these participants may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.
Set forth below is material prepared for presentation at an industry conference.
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[LOGO]
Midwest 2004
Super-Community Bank Conference
February 24, 2004
Mitchell Feiger, President & CEO
Jill E. York, Vice President & CFO
NASDAQ: MBFI
Forward Looking Statements
When used in this presentation and in filings with the Securities and Exchange Commission, inother press releases or other public shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases believe, will likely result, are expected to, will continue, is anticipated, estimate, project, plans, or similar expressions areintended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.
Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected cost savings and synergies from the First SecurityFed transaction might not be realized within the expected time frames, and costs or difficulties relating to integration matters might be greater than expected; (2) the requisite stockholder and regulatory approvals for the First SecurityFed transaction might not be obtained; (3) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; (4)competitive pressures among depository institutions; (5) interest rate movements and their impact on customer behavior and net interest margin; (6) the impact of repricing and competitors pricing initiatives on loan and deposit products; (7) the ability to adapt successfully to technological changes to meet customers needs and developments in the market place; (8) MB Financials ability to realize the residual values of its direct finance, leveraged, and operating leases; (9) the ability to access cost-effectivefunding; (10) changes in financial markets; (11) changes in economic conditions in general and in the Chicago metropolitan area in particular; (12) the costs, effects and outcomes of litigation; (13) new legislation or regulatory changes, including but not limited to changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (14) changes in accounting principles, policies or guidelines; and (15) future acquisitions by MB Financial of other depository institutions or lines of business.
MB Financial does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
2
MB Financial Snapshot
As of December 31, 2003
Offices |
|
41 |
|
|
Bank subsidiaries |
|
2 |
|
|
Assets |
|
$ |
4.4 |
billion |
Loans |
|
$ |
2.8 |
billion |
Deposits |
|
$ |
3.4 |
billion |
Trust assets under management |
|
$ |
1.4 |
billion |
3
2003 Statistics:
Net income |
|
$ |
53.4 |
million (+15.1%) |
Cash return on tangible equity |
|
18.8 |
% |
|
Return on equity |
|
14.8 |
% |
|
Return on assets |
|
1.3 |
% |
|
Efficiency ratio |
|
55.7 |
% |
|
Fully diluted EPS |
|
$ |
1.96 |
(+14.0%) |
Fully diluted EPS 2004 IBES estimate |
|
$ |
2.27 |
(+15.8%) |
Market information:
Stock price February 17, 2004 |
|
$ |
36.76 |
|
Market capitalization |
|
$ |
983.3 |
million |
P/E (TTM) |
|
18.8 |
|
|
P/E forward (2004 based on IBES estimate) |
|
16.2 |
|
4
Chicago Area Branch Map
[GRAPHIC]
5
Key Strategies
Dual growth sources
Core businesses are growing rapidly
Commercial Banking
Wealth Management
Retail Banking
Mergers and acquisitions supplement core business growth
6
Balanced revenue and profit streams from our business lines
Decreasing dependence on net interest related revenues
Expanding fee businesses
Remaining focused on current business segments
7
Commercial Banking
Well developed Commercial Banking business including:
Middle-market business financing
Lease banking
Treasury management
Capital markets products (swaps, floors, caps)
Real estate investor, construction, developer financing
8
Target market is companies with revenues ranging from $5-50 million
Loans are granular typical size is $3-6 million
Focus is on relationship banking
We are adding senior lenders focused on growing the business
9
Commercial Banking
Loans Outstanding
+17%
CAGR
[CHART]
*Includes commercial loans collateralized by assignment of lease payments.
10
Wealth Management
Rapidly expanding business and capabilities:
Private Banking
High touch/high service approach
Staff are deep generalists (loans, deposits, trust and asset management services, estate and financial planning)
Trust/Asset Management
High touch/high service approach
Asset management side uses an open architecture format
Objective advice
Superior returns
11
Vision Investment Services
High quality provider
Provides brokerage services through MB and other community banks
Rapidly growing
Works closely with Retail
Overall
Relationship focused
Team approach
Focused on whats best for the client
Significant growth potential Commercial side holds strong potential for referrals and new business
12
Wealth Management Revenue
49%
CAGR
[CHART]
13
Retail Banking
Consumer and small business
Deposit and credit services
Sales/service culture
Focused on growing core transaction accounts
Free Checking
Top Rate NOW
Bank @ Work
Gateway to other services Brokerage platform, Trust/Asset Management, Private Banking
Efficient expertise in mortgage platform low cost; can scale quickly to react to volume changes
Upgrading branch locations to maximize growth and profitability
14
Bank Holding
Companies
Cook County Deposit Market Share
As of June 30, 2003 |
|
Pending Ownership as of February 17, 2004 |
|
|
Rank |
|
Institution |
|
Type |
|
Branch |
|
Total |
|
Total |
|
|
|
|
|
|
|
|
|
|
($000) |
|
(%) |
|
|
|
1 |
|
J.P. Morgan Chase & Co. (NY (Bank One) |
|
Bank |
|
119 |
|
36,949,238 |
|
23.73 |
|
|
2 |
|
LaSalle Bank Corporation (IL) |
|
Bank |
|
87 |
|
23,966,499 |
|
15.39 |
|
|
3 |
|
Bank of Montreal (Harris) |
|
Bank |
|
68 |
|
13,811,017 |
|
8.87 |
|
|
4 |
|
Citigroup Inc. (NY) |
|
Bank |
|
38 |
|
7,546,703 |
|
4.85 |
|
|
5 |
|
Northern Trust Corp. (IL) |
|
Bank |
|
9 |
|
7,220,877 |
|
4.64 |
|
|
6 |
|
Charter One Financial (OH) |
|
Bank |
|
68 |
|
5,015,087 |
|
3.22 |
|
|
7 |
|
Bank of America Corp. (NC) |
|
Bank |
|
7 |
|
3,608,341 |
|
2.32 |
|
|
8 |
|
Fifth Third Bancorp (OH) |
|
Bank |
|
28 |
|
3,322,016 |
|
2.13 |
|
|
9 |
|
MB Financial Inc. (IL)* |
|
Bank |
|
34 |
|
3,144,652 |
|
2.02 |
|
|
10 |
|
MAF Bancorp Inc. (IL) |
|
Thrift |
|
28 |
|
3,077,599 |
|
1.98 |
|
|
11 |
|
Corus Bankshares Inc. (IL) |
|
Bank |
|
11 |
|
2,252,641 |
|
1.45 |
|
|
12 |
|
FBOP Corp. (IL) |
|
Bank |
|
19 |
|
2,008,449 |
|
1.29 |
|
|
13 |
|
Taylor Capital Group Inc. (IL) |
|
Bank |
|
10 |
|
1,971,699 |
|
1.27 |
|
|
14 |
|
TCF Financial Corp. (MN) |
|
Bank |
|
109 |
|
1,897,549 |
|
1.22 |
|
|
15 |
|
First Midwest Bancorp Inc. (IL) |
|
Bank |
|
15 |
|
1,808,512 |
|
1.16 |
|
|
16 |
|
Wintrust Financial Corp. (IL) |
|
Bank |
|
13 |
|
1,568,565 |
|
1.01 |
|
|
17 |
|
Metropolitan Bank Group Inc. (IL) |
|
Bank |
|
44 |
|
1,458,670 |
|
0.94 |
|
|
18 |
|
U.S. Bancorp (MN) |
|
Bank |
|
21 |
|
1,304,944 |
|
0.84 |
|
|
19 |
|
Parkway Bancorp Inc. (IL) |
|
Bank |
|
14 |
|
1,293,476 |
|
0.83 |
|
|
20 |
|
Popular Inc. (PR) |
|
Bank |
|
16 |
|
1,196,972 |
|
0.77 |
|
* - Includes First SecurityFed Financial, Inc.
Source: SNL Datasource
15
Mergers and Acquisitions
Supplements our core growth
Allows us to strengthen our Company in key business areas
We have capitalized on good opportunities over the past ten years
16
M & A Highlights
2001 to 2004
|
|
Assets |
|
|
|
|
|
|
|
1990 to 2000 (10 mergers and acquisitions) |
|
$ |
1.9 |
billion |
|
|
|
|
|
Acquired FSL Holdings, Inc. |
|
|
|
|
April 2001 |
|
$ |
222 |
million |
|
|
|
|
|
MidCity Financial and MB Financial merge |
|
|
|
|
November 2001 |
|
|
MOE |
|
|
|
|
|
|
Acquired Lincolnwood Financial Corp. |
|
|
|
|
April 2002 |
|
$ |
228 |
million |
|
|
|
|
|
Acquired LaSalle Systems Leasing |
|
|
|
|
August 2002 |
|
$ |
92 |
million |
|
|
|
|
|
Acquired South Holland Bancorp |
|
|
|
|
February 2003 |
|
$ |
560 |
million |
|
|
|
|
|
Divested Abrams Centre Bancshares |
|
|
|
|
May 2003 |
|
$ |
98 |
million |
|
|
|
|
|
Announced First SecurityFed Financial merger |
|
|
|
|
January 2004 |
|
$ |
491 |
million |
17
M & A Success Factors
Integration starts as soon as the deal is signed and is completed rapidly
We deliver promised results
Financial modeling is realistic
Cost savings targets are met
Very experienced M&A management team with proven M&A performance
Disciplined acquisition pricing
18
Recent Acquisition Pricing
Transaction |
|
P/E |
|
P/E |
|
P/B |
|
Prem/ |
|
|
|
|
|
|
|
|
|
|
|
FSL |
|
21.7 |
|
9.7 |
|
1.2 |
|
4.3 |
% |
Lincolnwood |
|
14.4 |
|
9.7 |
|
1.6 |
|
6.9 |
% |
LaSalle Leasing |
|
10.0 |
|
6.3 |
|
1.3 |
|
N/A |
|
South Holland |
|
18.1 |
|
10.3 |
|
1.2 |
|
4.4 |
% |
First SecurityFed |
|
16.8 |
|
9.8 |
|
1.7 |
|
18.8 |
% |
* P/E Adj is computed as (price excess equity) / (pre-acquisition core earnings + after-tax cost savings in year one after tax earnings on excess equity).
19
Transaction |
|
IRR |
|
1st Yr |
|
1st Yr |
|
|
|
|
|
|
|
|
|
FSL |
|
27 |
% |
+3.5 |
% |
42 |
% |
Lincolnwood |
|
27 |
% |
+4.5 |
% |
50 |
% |
LaSalle Leasing |
|
22 |
% |
+3.4 |
% |
0 |
% |
South Holland |
|
22 |
% |
+3.5 |
% |
21 |
% |
First SecurityFed* |
|
21 |
% |
+3.5 |
% |
15 |
% |
* For First SecurityFed, second year EPS accretion is projected to be 3.8% and second year cost saves are estimated to be 32%.
20
Fully Diluted
Earnings Per Share
We are rapidly growing earnings
[CHART]
* Including $19.2 million after tax merger charge.
** All data has been adjusted to reflect 50% stock dividend.
21
Net Income
Company has consistently grown earnings
Both core business growth and M&A contribute
[CHART]
*Excludes $19.2 million after tax merger charge.
22
Net Interest Income
Consistently growing as we expand our business
Similar on loan growth trend
[CHART]
23
Net Interest Margin
Margins have been stable through various interest rate environments
Prepayment fees and loan rate floors have protected margins
Company is insulated from parallel shifts in yield curve
[CHART]
24
Non-Performing Loans to Total Loans
Credit quality has been
Excellent, stable, predictable
Better than peers with large C&I portfolios
[CHART]
25
Net Charge-offs to Average Loans
Charge-offs have been manageable
Portfolio is granular
We avoid big bets on loans
Extensive due diligence is done prior to acquiring loans through acquisition
[CHART]
26
Allowance to Loans
Appropriate reserves for potential losses
Statistical modeling techniques used to determine appropriate allowance
Default risk is appropriately priced into loans originated
[CHART]
27
Other Income
Focus area for growth in Strategic Plan
Diversifying and rapidly growing revenue sources
Wealth Management, Deposit Services and Lease Banking are strong contributors to growth
[CHART]
28
Other Income to Total Revenues
Revenue streams are becoming more balanced
Will continue to be a strategic area of focus
[CHART]
29
Efficiency Ratio
We are carefully managing expenses
Investments are being made in revenue producing personnel
Uptick in 2003 related to large increase in fee revenue
[CHART]
*Excludes $19.2 million after tax merger charge.
30
Cash Return on Tangible Equity
[CHART]
*Excludes $19.2 million after tax merger charge.
31
MBFI Stock Price
[CHART]
32
[CHART]
33
[LOGO]
Midwest 2004
Super-Community Bank Conference
February 24, 2004
Mitchell Feiger, President & CEO
Jill E. York, Vice President & CFO
NASDAQ: MBFI