Shares of MB Financial fell 6.9 percent in mid-day trading, after the Chicago-based bank reported a threefold rise in the money it set aside for bad loans and warned that the economy will remain weak and volatile well into 2011 and possibly into 2012.

MB Chief Executive Mitch Feiger noted during an earnings conference call with analysts that the new federal financial reform bill is “relatively benign,” particularly for banks with assets of less than $15 billion. But he said the bank is a “little worried” about a provision that would lengthen an already “painfully slow” foreclosure process in Cook County. Currently, it can take 18 months to 24 months from the time that a bank initiates a foreclosure until the time it takes possession of the property.

MB also noted that “Guard My Card,” the name that it has given to a product that provides overdraft protection, has been well received by its customers. Starting July 1 for new customers and Aug. 15 for existing ones, banks will need a consumer’s approval to process everyday debit and ATM card transactions that exceed the account balance. In the past, banks often have covered overdrafts but socked the account holder with a $20 or $30 fee. MB Guard My Card allows depositors’ MB Debit MasterCard purchases to be approved up to $500, at the bank’s discretion, even if there isn’t enough money available in an account at the time the transaction occurs.

During a question-and-answer session on the earnings call, one analyst said that “people are scratching their heads here a bit” about MB’s second quarter financial results as some other banks are reporting better numbers.

Feiger responded that it might be an instance of MB being more conservative. Its second-quarter set-aside for potential loan losses was $85 million, up from $27.1 million in the year-ago period.  “We’re trying to get through this as fast and as best as we can,” he said.

But “the weak economy means we need to remain cautious while underwriting loans,” MB said. “The economy will not bail out a bad loan if you wait long enough.”

The weak economy, however, bodes well for MB’s practice of buying failed banks with financial assistance from the Federal Deposit Insurance Corp.

“There will continue to be a high rate of bank failures,” said Feiger, nothing that MB is capable of doing more deals and wants to do more because they’ve been profitable to the bank. “Commercial real estate losses will make it difficult for many smaller banks to survive.”

MB said it expects the commercial real estate market to worsen, and that its own levels of foreclosed real estate will continue to rise.

Loans of Broadway Bank, which MB recently acquired in an FDIC-assisted deal, are performing as expected, MB said. Broadway was owned by the family of U.S. Senate candidate Alexi Giannoulias.

MB said it earned $12.1 million or 23 cents a share in the second quarter, up from $4.3 million or 12 cents a share in the year-ago period. Analysts on average had expected the company to earn 41 cents a share, excluding special items, according to Thomson Reuters I/B/E/S.

The provision for potential loan losses was $85 million, up from $27.1 million in the year-ago period.