Academic journal article Federal Reserve Bulletin

MB Financial Inc. Chicago, Illinois

Academic journal article Federal Reserve Bulletin

MB Financial Inc. Chicago, Illinois

Article excerpt

Order Approving the Acquisition of a Bank Holding Company FRB Order No. 2014-12 (June 30, 2014)

MB Financial, Inc. ("MB Financial"), Chicago, has requested the Board's approval under section 3 of the Bank Holding Company Act ("BHC Act") (1) to merge with Taylor Capital Group, Inc. ("Taylor Capital"), Rosemont, and thereby indirectly acquire its subsidiary bank, Cole Taylor Bank, Chicago, all of Illinois. Following the proposed acquisition, Cole Taylor Bank would be merged into MB Financial's subsidiary bank, MB Financial Bank, National Association ("MB Financial Bank"), Chicago. (2)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published in the Federal Register (78 Federal Register 59938 (September 30, 2013)). The time for submitting comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act.

MB Financial, with consolidated assets of approximately $9.6 billion, is the 101st largest insured depository organization in the United States, controlling approximately $7.4 billion in consolidated deposits. (3) MB Financial Bank operates in Illinois, Indiana, and Pennsylvania. MB Financial Bank is the 12th largest depository institution in Illinois, controlling deposits of approximately $7.5 billion, which represent 1.8 percent of the total deposits of insured depository institutions in the state. (4) In addition, MB Financial Bank is the 199th largest depository institution in Pennsylvania, controlling deposits of $46.7 million, and is the 168th largest depository institution in Indiana with approximately $3.0 million in deposits, which represent less than 1 percent of the total deposits of insured depository institutions in each of those states.

Taylor Capital, with total consolidated assets of $5.7 billion, controls Cole Taylor Bank, which operates in Illinois. Cole Taylor Bank is the 18th largest insured depository institution in Illinois, controlling deposits of approximately $3.8 billion, which represent less than 1 percent of the total deposits of insured depository institutions in that state.

On consummation of this proposal, MB Financial would become the 81st largest insured depository organization in the United States, with total consolidated assets of approximately $15.3 billion. MB Financial would have total consolidated deposits of approximately $11.0 billion. In Illinois, MB Financial would become the ninth largest depository organization, controlling deposits of approximately $11 billion, which represent 2.8 percent of the total deposits of insured depository institutions in that state.

Competitive Considerations

Section 3 of the BHC Act prohibits the Board from approving a proposal that would result in a monopoly or would be in furtherance of any attempt to monopolize the business of banking in any relevant market. The BHC Act also prohibits the Board from approving a proposal that would substantially lessen competition in any relevant banking market, unless the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. (5)

MB Financial and Taylor Capital have subsidiary depository institutions that compete directly in the Chicago, Illinois, banking market. (6) The Board has considered the competitive effects of the proposal in this banking market in light of all the facts of record. In particular, the Board has considered the number of competitors that would remain in the banking market; the relative shares of total deposits in insured depository institutions in the markets ("market deposits") controlled by MB Financial and Taylor Capital; (7) the concentration levels of market deposits and the increase in those levels, as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Bank Merger Competitive Review guidelines ("DOJ Bank Merger Guidelines");8 and other characteristics of the market. …

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