News Column

MBT Financial Corp. Announces First Quarter 2014 Profit

April 29, 2014

MONROE, Mich., April 29, 2014 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a profit of $1,767,000, or $0.08 per share (basic and diluted) for the first quarter of 2014, compared to the profit for the first quarter of 2013 of $1,114,000, or $0.06 per share (basic and diluted).

Earnings for the Company improved this quarter due to an increase in the net interest income and a decrease in the provision for loan losses. The net interest margin increased from 2.82% in the first quarter of 2013 to 3.18% in the first quarter of 2014 as the yield on earning assets increased and the cost of interest bearing liabilities decreased. The provision for loan losses decreased from $1,500,000 in the first quarter of 2013 to $100,000 in the first quarter of 2014 due to the significant improvement in asset quality. The improvement in loan quality over the past year allowed the Company to reduce the Allowance for Loan and Lease Losses $1.7 million, lowering the ALLL from 2.90% of loans at the end of the first quarter of 2013 to what remains a robust 2.73% as of the end of the first quarter of 2014.

Non-interest income decreased $364,000, or 9.0% in the first quarter of 2014 compared to the first quarter of 2013. Deposit account fees decreased $110,000, or 10.6% due to a decrease in overdraft fees. Mortgage loan origination income decreased $227,000, or 78.5% as higher mortgage rates significantly reduced mortgage loan origination activity compared to a year ago.

Total non-interest expenses increased $241,000, or 2.5% in the first quarter of 2014 compared to the first quarter of 2013, primarily due to an increase of $405,000, or 7.6% in salaries and benefits. This increase was partially offset by reductions in equipment expense, professional fees, and maintenance costs of Other Real Estate Owned.

The Company remains in the process of an Internal Revenue Service audit for its 2007 through 2010 tax years. There has not been any recent progress on our audit as the IRS is in the process of resolving a variety of issues that affect their audits of financial institutions. While we cannot predict the outcome of the IRS audit, or any appeal we may pursue as a result of an IRS assessment from the audit, we are optimistic that a settlement agreement will be reached without the need to record significant additional tax expense.

Total assets of the company decreased $4.9 million compared to December 31, 2013. Total loans held for investment decreased $5.8 million since the end of 2013 as loan payments received exceeded new loan origination. Capital increased $7.5 million since the end of last year due to the year to date profit of $1.8 million, the issuance of $2.5 million of common stock, and the decrease of $3.2 million in the Accumulated Other Comprehensive Loss (AOCL). The AOCL decreased due to an increase in the market values of our investment securities that are classified as available for sale. The ratio of equity to assets increased from 9.05% at the end of 2013 to 9.70% at March 31, 2014, however, the current rules regarding regulatory capital ratios exclude the unrealized gains or losses on securities available for sale and the amount of deferred tax assets that will not be realized in the next four quarters. As a result, the entire increase in equity capital is not reflected in the regulatory capital ratios and the Bank's Tier 1 Leverage ratio increased from 8.48% as of December 31, 2013 to 8.65% as of March 31, 2014. The Bank remains adequately capitalized as measured by applicable regulatory standards. The company's liquidity position remains very strong, with cash and investments increasing from 41.5% of assets at the end of 2013 to 41.9% at the end of the first quarter of 2014.

Economic conditions in southeast Michigan continue to improve, and this quarter we experienced another improvement in problem assets. During the first quarter of 2014, non-performing loans decreased $821,000, or 1.5% and problem loans still performing decreased $2,196,000, or 8.6%. Total problem assets, which include non-performing assets and problem loans that are still performing, decreased $2.9 million, or 3.0% compared to December 31, 2013 and $33.8 million, or 27.0% compared to a year ago.

H. Douglas Chaffin, President and CEO, commented, "We are pleased to report another profit and improvement in most asset quality metrics this quarter. As the economic conditions continue to improve, we are seeing an improvement in loan demand. New loan activity was good in the first quarter and our existing commercial loan pipeline remains strong. We expect loan growth to resume soon, and that will help our net interest margin and net interest income improve also. We continue to have a solid deposit base and a very liquid balance sheet. This liquidity and the addition of capital from the private placement in the first quarter and the rights offering to be completed in the second quarter have us well positioned for increased lending activity. We will be announcing the results of the rights offering as soon as it is completed.

Mr. Chaffin concluded, "Local and national economic indicators continue to improve, and we are cautiously monitoring the recent signs of relative strength in the local and regional recovery. While we remain concerned about the effect of global and national issues on our local economy, we are optimistic that our progress will continue throughout 2014. We will continue to focus our efforts on improving asset quality and maintaining liquidity, and also increase our efforts to improve profitability by growing our loan portfolio and improving our operational efficiency. Our current environment still presents challenges, but we remain confident in our ability to maintain our position as the premier independent provider of financial services in the communities we serve."

Conference Call

MBT Financial Corp. will hold a conference call to discuss the first quarter results on Wednesday, April 30, 2014, at 10:00 a.m. Eastern Time. The call will be webcast and can be accessed at the Investor Relations/Corporate Profile page of MBT Financial Corp.'s web site www.mbandt.com. The call can also be accessed in the United States by calling toll free (888) 317-6016. The toll free number for callers in Canada is (855) 669-9657 and international callers can access the call at (412) 317-6016. A replay will be available one hour after the conclusion of the call at (877) 344-7529, Conference #10043012. The replay will be available until May 30, 2014 at 9:00 a.m. Eastern. The webcast will be archived on the Company's web site and available for twelve months following the call.

About the Company

MBT Financial Corp. (Nasdaq:MBTF), a single bank holding company headquartered in Monroe, Michigan, is the parent company of Monroe Bank & Trust (MBT).

Founded in 1858, Monroe Bank & Trust (MBT) is one of the largest independently owned community banks in Southeast Michigan. With over $1 billion in assets, MBT is a full-service bank, offering a complete range of business and personal accounts, credit and mortgage options, investment and retirement services and award-winning financial literacy outreach. MBT's Wealth Management Group (WMG) is one of the largest and most respected in Michigan. The WMG has been listed as a Top Money Management firm for assets under management by Crain's Detroit Business. With 24 offices, 46 ATMs, convenient mobile and online banking, a robust Web and social media presence and a comprehensive array of products and services, MBT prides itself in offering an incomparable banking experience. Visit MBT's web site at www.mbandt.com.

Forward-Looking Statements

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, change in the financial and securities markets, including changes with respect to the market value of our financial assets, the availability of and costs associated with sources of liquidity, and the ability of the Company to resolve or dispose of problem loans. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

MBT FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - UNAUDITED
               
 QuarterlyYear to Date
 20142013201320132013    
(dollars in thousands except per share data)1st Qtr4th Qtr3rd Qtr2nd Qtr1st Qtr20142013
               
EARNINGS              
Net interest income  $ 8,495  $ 8,529  $ 8,539  $ 8,089  $ 8,044  $ 8,495  $ 8,044
FTE Net interest income  $ 8,640  $ 8,670  $ 8,680  $ 8,226  $ 8,185  $ 8,640  $ 8,185
Provision for loan and lease losses  $ 100  $ 100  $ 200  $ 400  $ 1,500  $ 100  $ 1,500
Non interest income  $ 3,664  $ 3,735  $ 3,484  $ 3,242  $ 4,028  $ 3,664  $ 4,028
Non interest expense  $ 9,699  $ 9,842  $ 9,331  $ 9,435  $ 9,458  $ 9,699  $ 9,458
Net income  $ 1,767  $ 1,640  $ 21,287  $ 1,496  $ 1,114  $ 1,767  $ 1,114
Basic earnings per share  $ 0.08  $ 0.09  $ 1.19  $ 0.08  $ 0.06  $ 0.08  $ 0.06
Diluted earnings per share  $ 0.08  $ 0.09  $ 1.17  $ 0.08  $ 0.06  $ 0.08  $ 0.06
Average shares outstanding  20,818,727 18,185,178 17,912,946 17,906,085 17,516,382 20,818,727 17,516,382
Average diluted shares outstanding 21,112,926 18,391,184 18,179,335 18,166,220 17,746,355 21,112,926 17,746,355
               
PERFORMANCE RATIOS              
Return on average assets 0.60% 0.56% 7.19% 0.49% 0.35% 0.60% 0.35%
Return on average common equity 6.34% 6.32% 104.82% 6.95% 5.32% 6.34% 5.32%
               
Base Margin 3.11% 3.15% 3.07% 2.83% 2.74% 3.11% 2.74%
FTE Adjustment 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.05%
Loan Fees 0.02% 0.03% 0.05% 0.04% 0.03% 0.02% 0.03%
FTE Net Interest Margin 3.18% 3.23% 3.17% 2.92% 2.82% 3.18% 2.82%
               
Efficiency ratio 76.14% 77.84% 72.25% 75.57% 74.43% 76.14% 74.43%
Full-time equivalent employees  371  374  367  364  367  371  367
               
CAPITAL              
Average equity to average assets 9.47% 8.89% 6.86% 7.08% 6.67% 9.47% 6.67%
Book value per share  $ 5.55  $ 5.37  $ 5.63  $ 4.42  $ 4.80  $ 5.55  $ 4.80
Cash dividend per share  $ --   $ --   $ --   $ --   $ --   $ --   $ -- 
               
ASSET QUALITY              
Loan Charge-Offs  $ 674  $ 1,040  $ 1,324  $ 1,673  $ 1,587  $ 674  $ 1,587
Loan Recoveries  $ 523  $ 383  $ 695  $ 569  $ 687  $ 523  $ 687
Net Charge-Offs  $ 151  $ 657  $ 629  $ 1,104  $ 900  $ 151  $ 900
               
Allowance for loan and lease losses  $ 16,158  $ 16,209  $ 16,766  $ 17,195  $ 17,899  $ 16,158  $ 17,899
               
Nonaccrual Loans  $ 23,108  $ 23,710  $ 28,010  $ 32,051  $ 31,558  $ 23,108  $ 31,558
Loans 90 days past due  $ 29  $ 46  $ 4  $ 12  $ 314  $ 29  $ 314
Restructured loans  $ 32,248  $ 32,450  $ 29,926  $ 32,192  $ 37,581  $ 32,248  $ 37,581
Total non performing loans  $ 55,385  $ 56,206  $ 57,940  $ 64,255  $ 69,453  $ 55,385  $ 69,453
Other real estate owned & other assets  $ 9,784  $ 9,638  $ 10,840  $ 11,469  $ 15,177  $ 9,784  $ 15,177
Nonaccrual Investment Securities  $ 3,262  $ 3,259  $ 3,320  $ 3,144  $ 3,045  $ 3,262  $ 3,045
Total non performing assets  $ 68,431  $ 69,103  $ 72,100  $ 78,868  $ 87,675  $ 68,431  $ 87,675
Problem Loans Still Performing  $ 23,215  $ 25,411  $ 29,191  $ 36,867  $ 37,815  $ 23,215  $ 37,815
Total Problem Assets  $ 91,646  $ 94,514  $ 101,291  $ 115,735  $ 125,490  $ 91,646  $ 125,490
               
Net loan charge-offs to average loans 0.10% 0.43% 0.41% 0.72% 0.59% 0.10% 0.58%
Allowance for loan losses to total loans 2.73% 2.71% 2.74% 2.79% 2.90% 2.73% 2.90%
Non performing loans to gross loans 9.36% 9.39% 9.48% 10.43% 11.26% 9.36% 11.26%
Non performing assets to total assets 5.62% 5.65% 6.02% 6.78% 6.82% 5.62% 6.82%
Allowance to non performing loans 29.17% 28.84% 28.94% 26.76% 25.77% 29.17% 25.77%
               
END OF PERIOD BALANCES              
Loans and leases  $ 592,024  $ 598,258  $ 611,094  $ 615,828  $ 616,805  $ 592,024  $ 616,805
Total earning assets  $ 1,100,263  $ 1,101,015  $ 1,078,526  $ 1,057,862  $ 1,188,905  $ 1,100,263  $ 1,188,905
Total assets  $ 1,217,812  $ 1,222,682  $ 1,198,132  $ 1,162,672  $ 1,286,146  $ 1,217,812  $ 1,286,146
Deposits  $ 1,056,611  $ 1,069,718  $ 1,054,143  $ 1,040,860  $ 1,062,465  $ 1,056,611  $ 1,062,465
Interest Bearing Liabilities  $ 873,532  $ 880,874  $ 894,134  $ 881,584  $ 998,380  $ 873,532  $ 998,380
Shareholders' equity  $ 118,107  $ 110,608  $ 100,824  $ 79,075  $ 85,949  $ 118,107  $ 85,949
Total Shares Outstanding  21,266,380  20,605,493  17,917,512  17,909,898  17,903,656  21,266,380  17,903,656
               
AVERAGE BALANCES              
Loans and leases  $ 596,925  $ 603,972  $ 611,229  $ 617,978  $ 622,437  $ 596,925  $ 622,437
Total earning assets  $ 1,101,215  $ 1,066,010  $ 1,084,368  $ 1,127,714  $ 1,178,554  $ 1,101,215  $ 1,178,554
Total assets  $ 1,192,791  $ 1,157,156  $ 1,175,090  $ 1,219,133  $ 1,274,201  $ 1,192,791  $ 1,274,201
Deposits  $ 1,066,036  $ 1,038,794  $ 1,061,365  $ 1,044,412  $ 1,057,395  $ 1,066,036  $ 1,057,395
Interest Bearing Liabilities  $ 884,809  $ 867,590  $ 894,835  $ 937,639  $ 995,213  $ 884,809  $ 995,213
Shareholders' equity  $ 113,000  $ 102,891  $ 80,571  $ 86,350  $ 84,975  $ 113,000  $ 84,975
               
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
     
 Quarter Ended March 31,
Dollars in thousands (except per share data)20142013
Interest Income    
Interest and fees on loans  $ 7,079  $ 7,902
Interest on investment securities--    
Tax-exempt  307  323
Taxable  2,118  1,767
Interest on balances due from banks  32  69
Total interest income  9,536  10,061
     
Interest Expense    
Interest on deposits  855  1,213
Interest on borrowed funds  186  804
Total interest expense  1,041  2,017
     
Net Interest Income  8,495  8,044
Provision For Loan Losses  100  1,500
     
Net Interest Income After    
Provision For Loan Losses  8,395  6,544
     
Other Income    
Income from wealth management services  1,134  1,097
Service charges and other fees  932  1,042
Debit Card income  489  478
Net gain on sales of securities  57  10
Net gain on other real estate owned  12  40
Origination fees on mortgage loans sold  62  289
Bank Owned Life Insurance income  354  390
Other  624  682
Total other income  3,664  4,028
     
Other Expenses    
Salaries and employee benefits  5,728  5,323
Occupancy expense  744  687
Equipment expense  617  700
Marketing expense  203  163
Professional fees  418  501
Collection expense  36  46
Other real estate owned expense  339  374
FDIC deposit insurance assessment  640  689
Other  974  975
Total other expenses  9,699  9,458
     
Profit Before Income Taxes  2,360  1,114
Income Tax Expense  593  -- 
Net Profit  $ 1,767  $ 1,114
     
Basic Earnings Per Common Share  $ 0.08  $ 0.06
     
Diluted Earnings Per Common Share  $ 0.08  $ 0.06
     
Dividends Declared Per Common Share  $ --   $ -- 
     
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
     
     
 March 31, 2014December 31,
Dollars in thousands(Unaudited)2013
Assets    
Cash and Cash Equivalents    
Cash and due from banks    
Non-interest bearing  $ 12,228  $ 15,448
Interest bearing  41,376  62,350
Total cash and cash equivalents  53,604  77,798
     
Securities - Held to Maturity  36,290  34,846
Securities - Available for Sale  419,968  394,956
Federal Home Loan Bank stock - at cost  10,605  10,605
Loans held for sale  218  668
     
Loans  591,806  597,590
Allowance for Loan Losses  (16,158)  (16,209)
Loans - Net  575,648  581,381
     
Accrued interest receivable and other assets  32,445  34,094
Other Real Estate Owned  9,775  9,628
Bank Owned Life Insurance  50,846  50,493
Premises and Equipment - Net  28,413  28,213
Total assets  $ 1,217,812  $ 1,222,682
     
Liabilities    
Deposits:    
Non-interest bearing  $ 210,079  $ 215,844
Interest-bearing  846,532  853,874
Total deposits  1,056,611  1,069,718
     
Federal Home Loan Bank advances  12,000  12,000
Repurchase agreements  15,000  15,000
Accrued interest payable and other liabilities  16,094  15,356
Total liabilities  1,099,705  1,112,074
     
Shareholders' Equity    
Common stock (no par value)  17,199  14,671
Retained Earnings  108,584  106,817
Unearned Compensation  (31)  (7)
Accumulated other comprehensive loss  (7,645)  (10,873)
Total shareholders' equity  118,107  110,608
Total liabilities and shareholders' equity  $ 1,217,812  $ 1,222,682
     

CONTACT: H. Douglas Chaffin Chief Executive Officer (734) 384-8123 doug.chaffin@mbandt.comJohn L. Skibski Chief Financial Officer (734) 242-1879 john.skibski@mbandt.comJohn Betrus Director of Marketing (734) 240-2341 john.betrus@mbandt.com



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Source: MBT Financial Corp.


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