MONROE, Mich., Oct. 29, 2013 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a net profit of $21,287,000 ($1.19 per share, basic and $1.17 per share diluted), in the third quarter of 2013, compared to a profit of $1,388,000, or $0.08 per share (basic and diluted) in the third quarter of 2012. Profit for the quarter ended September 30, 2013 was significantly impacted by the Company's elimination of the valuation allowance on its deferred tax asset. Pre tax income for the quarter was $2,492,000, ($0.14 per share basic and $0.13 per share diluted) compared to $1,405,000 in the third quarter of 2012. Net profit for the nine months ended September 30, 2013 was $23,897,000, ($1.34 per share basic and $1.33 per share diluted), compared to $2,858,000, or $0.16 per share (basic and diluted) for the first nine months of 2012.
In 2010 the Company established a valuation allowance against its deferred tax asset due to its recent operating losses and uncertainty about its ability to utilize its tax loss carry forwards. In 2012, following six consecutive quarterly profits and based on its expectations for future earnings, the Company reversed $5 million of its then $24.2 million valuation allowance. This quarter the company achieved its ninth consecutive quarterly profit and has achieved a cumulative profit for the past twelve quarters. In addition, the Company has exceeded its earnings projections for 2013 and revised its future earnings projections. Based on this information, the Company has determined that it more likely than not will be able to fully utilize its tax loss carry forwards and determined that it was appropriate to reverse the remaining $18.8 million deferred tax asset valuation allowance by recording a credit to tax expense during the quarter.
Core earnings for the Company continued to improve this quarter. The net interest margin increased from 2.92% in the second quarter of 2013 to 3.17% in the third quarter of 2013 following the Bank's retirement of $95 million of high cost debt in the second quarter of 2013. Although the average earning assets decreased $43.3 million compared to the second quarter of this year, the increase in the net interest margin caused net interest income to increase $450,000, or 5.6% on a linked quarter basis. Compared to the same quarter a year ago, the average earning assets decreased $60.5 million, the net interest margin increased from 3.05% to 3.17% and the net interest income decreased only $82,000, or 1.0%.
The provision for loan losses decreased from $1.55 million in the third quarter of 2012 to $200,000 in the third quarter of 2013 and the net charge offs decreased from $1.9 million to $0.6 million. The improvement in loan quality over the past year allowed the Company to reduce the Allowance for Loan and Lease Losses $2.4 million, lowering the ALLL from 2.94% of loans at the end of the third quarter of 2012 to what remains a robust 2.74% as of September 30, 2013.
Non interest income increased $93,000, or 2.3%. Most sources of non interest income increased slightly, with the notable exception of mortgage loan origination income, which decreased $165,000, or 55.4% as an increase in mortgage rates at the end of the second quarter of 2013 significantly reduced mortgage loan origination activity this quarter.
Total non interest expenses increased $274,000, or 2.8% in the third quarter of 2013 compared to the third quarter of 2012, largely due to a $259,000, or 69.4% increase in net losses on Other Real Estate Owned properties.
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. 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 $70.5 million compared to December 31, 2012. Cash and investment securities decreased $74.3 million as the Bank used cash and proceeds from investment maturities and sales to retire $95 million of maturing Federal Home Loan Bank borrowings in the second quarter of 2013. Total loans held for investment decreased $16.3 million since the end of 2012 as loan pay downs continue to exceed new loan business. Capital increased $17.3 million since the end of last year as the year to date profit of $23.9 million and the issuance of $1.9 million of common stock were offset by the $8.5 million increase in the Accumulated Other Comprehensive Loss (AOCL). The AOCL increased due to an increase in market yields during the second quarter which caused the unrealized loss on investment securities that are classified as available for sale to increase. The ratio of equity to assets increased from 6.59% at the end of 2012 to 8.42% at September 30, 2013, 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 6.38% as of December 31, 2012 to 7.46% as of September 30, 2013. The Bank remains adequately capitalized as measured by applicable regulatory standards. The company's liquidity position remains very strong, with cash and investments only decreasing from 43.0% of assets at the end of 2012 to 39.3% at September 30, 2013.
Economic conditions in southeast Michigan continue to slowly improve, and this quarter we experienced another significant improvement in problem assets. During the third quarter of 2013, non performing loans decreased $6.3 million, or 9.8%, Other Real Estate Owned decreased $629,000, or 5.5%, and problem loans still performing decreased $7.7 million, or 20.8%. Total problem assets, which include non performing assets and problem loans that are still performing, decreased $14.4 million, or 12.5% compared to June 30, 2013 and $30.5 million, or 23.1% compared to a year ago.
H. Douglas Chaffin, President and CEO, commented, "We are pleased to report another profit and considerable improvement in most asset quality metrics this quarter. As the economic conditions continue to improve, we expect to see an improvement in loan demand. New loan activity did improve in the third quarter, however, the resolution of some large problem credit relationships exceeded the new loan activity, resulting in a small decrease in total loans during the quarter. Our existing commercial loan pipeline remains strong compared to a year ago, and when loan growth resumes it will help our net interest margin and net interest income improve also. We continue to have a solid deposit base, a very liquid balance sheet, and adequate capital, so we are well positioned for increased lending activity."
Mr. Chaffin concluded, "Local and national economic indicators continue to improve, but 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 through the rest of 2013 and into 2014. We will continue to focus our efforts on improving asset quality, maintaining liquidity, seeking new sources of revenue and capital, and controlling expenses. 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."
MBT Financial Corp. will hold a conference call to discuss the third quarter results on Wednesday, October 30, 2013, 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. The event 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.
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|
|Quarterly||Year to Date|
|(dollars in thousands except per share data)||3rd Qtr||2nd Qtr||1st Qtr||4th Qtr||3rd Qtr||2013||2012|
|Net interest income||$ 8,539||$ 8,089||$ 8,044||$ 8,316||$ 8,621||$ 24,672||$ 26,333|
|FTE Net interest income||$ 8,680||$ 8,226||$ 8,185||$ 8,456||$ 8,766||$ 25,091||$ 26,807|
|Provision for loan and lease losses||$ 200||$ 400||$ 1,500||$ 2,500||$ 1,550||$ 2,100||$ 4,850|
|Non interest income||$ 4,116||$ 3,989||$ 3,988||$ 4,173||$ 4,023||$ 12,093||$ 12,264|
|Non interest expense||$ 9,963||$ 10,182||$ 9,418||$ 9,371||$ 9,689||$ 29,563||$ 29,323|
|Net income||$ 21,287||$ 1,496||$ 1,114||$ 5,687||$ 1,388||$ 23,897||$ 2,858|
|Basic earnings per share||$ 1.19||$ 0.08||$ 0.06||$ 0.33||$ 0.08||$ 1.34||$ 0.16|
|Diluted earnings per share||$ 1.17||$ 0.08||$ 0.06||$ 0.33||$ 0.08||$ 1.33||$ 0.16|
|Average shares outstanding||17,912,946||17,906,085||17,516,382||17,385,761||17,321,337||17,779,924||17,313,965|
|Average diluted shares outstanding||18,179,335||18,166,220||17,746,355||17,452,206||17,402,653||18,033,387||17,364,881|
|Return on average assets||7.19%||0.49%||0.35%||1.81%||0.45%||2.61%||0.31%|
|Return on average common equity||104.82%||6.95%||5.32%||28.30%||7.09%||38.06%||4.95%|
|FTE Net Interest Margin||3.17%||2.92%||2.82%||2.92%||3.05%||2.97%||3.13%|
|Full-time equivalent employees||367||364||367||357||352||366||350|
|Average equity to average assets||6.86%||7.08%||6.67%||6.41%||6.28%||6.87%||6.22%|
|Book value per share||$ 5.63||$ 4.42||$ 4.80||$ 4.80||$ 4.57||$ 5.63||$ 4.57|
|Cash dividend per share||$ --||$ --||$ --||$ --||$ --||$ --||$ --|
|Loan Charge-Offs||$ 1,324||$ 1,673||$ 1,587||$ 4,658||$ 2,156||$ 4,584||$ 7,357|
|Loan Recoveries||$ 695||$ 569||$ 687||$ 334||$ 243||$ 1,951||$ 765|
|Net Charge-Offs||$ 629||$ 1,104||$ 900||$ 4,324||$ 1,913||$ 2,633||$ 6,592|
|Allowance for loan and lease losses||$ 16,766||$ 17,195||$ 17,899||$ 17,299||$ 19,123||$ 16,766||$ 19,123|
|Nonaccrual Loans||$ 28,010||$ 32,051||$ 31,558||$ 31,343||$ 44,422||$ 28,010||$ 44,422|
|Loans 90 days past due||$ 4||$ 12||$ 314||$ 1||$ 138||$ 4||$ 138|
|Restructured loans||$ 29,926||$ 32,192||$ 37,581||$ 38,460||$ 28,184||$ 29,926||$ 28,184|
|Total non performing loans||$ 57,940||$ 64,255||$ 69,453||$ 69,804||$ 72,744||$ 57,940||$ 72,744|
|Other real estate owned & other assets||$ 10,840||$ 11,469||$ 15,177||$ 14,294||$ 13,784||$ 10,840||$ 13,784|
|Nonaccrual Investment Securities||$ 3,320||$ 3,144||$ 3,045||$ 3,045||$ 2,916||$ 3,320||$ 2,916|
|Total non performing assets||$ 72,100||$ 78,868||$ 87,675||$ 87,143||$ 89,444||$ 72,100||$ 89,444|
|Problem Loans Still Performing||$ 29,191||$ 36,867||$ 37,815||$ 38,086||$ 42,359||$ 29,191||$ 42,359|
|Total Problem Assets||$ 101,291||$ 115,735||$ 125,490||$ 125,229||$ 131,803||$ 101,291||$ 131,803|
|Net loan charge-offs to average loans||0.41%||0.72%||0.59%||2.69%||1.15%||0.57%||1.32%|
|Allowance for loan losses to total loans||2.74%||2.79%||2.90%||2.75%||2.94%||2.74%||2.94%|
|Non performing loans to gross loans||9.48%||10.43%||11.26%||11.10%||11.17%||9.48%||11.17%|
|Non performing assets to total assets||6.02%||6.78%||6.82%||6.87%||7.24%||6.02%||7.24%|
|Allowance to non performing loans||28.94%||26.76%||25.77%||24.78%||26.29%||28.94%||26.29%|
|END OF PERIOD BALANCES|
|Loans and leases||$ 611,094||$ 615,828||$ 616,805||$ 628,769||$ 651,218||$ 611,094||$ 651,218|
|Total earning assets||$ 1,078,526||$ 1,057,862||$ 1,188,905||$ 1,167,318||$ 1,138,424||$ 1,078,526||$ 1,138,424|
|Total assets||$ 1,198,132||$ 1,162,672||$ 1,286,146||$ 1,268,595||$ 1,236,064||$ 1,198,132||$ 1,236,064|
|Deposits||$ 1,054,143||$ 1,040,860||$ 1,062,465||$ 1,048,830||$ 1,020,410||$ 1,054,143||$ 1,020,410|
|Interest Bearing Liabilities||$ 894,134||$ 881,584||$ 998,380||$ 987,949||$ 974,097||$ 894,134||$ 974,097|
|Shareholders' equity||$ 100,824||$ 79,075||$ 85,949||$ 83,574||$ 79,098||$ 100,824||$ 79,098|
|Total Shares Outstanding||17,917,512||17,909,898||17,903,656||17,396,179||17,324,063||17,917,512||17,324,063|
|Loans and leases||$ 611,229||$ 617,978||$ 622,437||$ 640,558||$ 660,901||$ 617,172||$ 667,455|
|Total earning assets||$ 1,084,368||$ 1,127,714||$ 1,178,554||$ 1,154,384||$ 1,144,823||$ 1,129,865||$ 1,143,702|
|Total assets||$ 1,175,090||$ 1,219,133||$ 1,274,201||$ 1,247,128||$ 1,240,752||$ 1,222,445||$ 1,239,582|
|Deposits||$ 1,061,365||$ 1,044,412||$ 1,057,395||$ 1,030,677||$ 1,025,730||$ 1,054,404||$ 1,024,185|
|Interest Bearing Liabilities||$ 894,835||$ 937,639||$ 995,213||$ 972,104||$ 979,494||$ 942,194||$ 984,386|
|Shareholders' equity||$ 80,571||$ 86,350||$ 84,975||$ 79,940||$ 77,884||$ 83,948||$ 77,051|
|MBT FINANCIAL CORP.|
|CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED|
|Quarter Ended September 30,||Nine Months Ended September 30,|
|Dollars in thousands (except per share data)||2013||2012||2013||2012|
|Interest and fees on loans||$ 7,605||$ 8,696||$ 23,106||$ 26,773|
|Interest on investment securities--|
|Interest on balances due from banks||25||56||131||145|
|Total interest income||9,764||10,987||29,566||34,017|
|Interest on deposits||1,033||1,488||3,361||4,964|
|Interest on borrowed funds||192||878||1,533||2,720|
|Total interest expense||1,225||2,366||4,894||7,684|
|Net Interest Income||8,539||8,621||24,672||26,333|
|Provision For Loan Losses||200||1,550||2,100||4,850|
|Net Interest Income After|
|Provision For Loan Losses||8,339||7,071||22,572||21,483|
|Income from wealth management services||1,078||1,063||3,256||2,859|
|Service charges and other fees||1,128||1,177||3,228||3,392|
|Debit Card income||513||490||1,521||1,490|
|Net gain on sales of securities||142||99||306||1,239|
|Origination fees on mortgage loans sold||133||298||606||624|
|Bank Owned Life Insurance income||363||375||1,117||1,078|
|Total other income||4,116||4,023||12,093||12,264|
|Salaries and employee benefits||5,310||5,069||15,847||15,128|
|Net loss on other real estate owned||632||373||1,339||872|
|Other real estate owned expense||162||350||829||1,258|
|FDIC deposit insurance assessment||695||694||2,078||2,067|
|Total other expenses||9,963||9,689||29,563||29,323|
|Profit Before Income Taxes||2,492||1,405||5,102||4,424|
|Income Tax Expense (Benefit)||(18,795)||17||(18,795)||1,566|
|Net Profit||$ 21,287||$ 1,388||$ 23,897||$ 2,858|
|Basic Earnings Per Common Share||$ 1.19||$ 0.08||$ 1.34||$ 0.16|
|Diluted Earnings Per Common Share||$ 1.17||$ 0.08||$ 1.33||$ 0.16|
|Dividends Declared Per Common Share||$ --||$ --||$ --||$ --|
|MBT FINANCIAL CORP.|
|CONSOLIDATED BALANCE SHEETS|
|September 30, 2013||December 31,|
|Dollars in thousands||(Unaudited)||2012|
|Cash and Cash Equivalents|
|Cash and due from banks|
|Non-interest bearing||$ 13,928||$ 17,116|
|Total cash and cash equivalents||35,434||112,507|
|Securities - Held to Maturity||31,881||38,786|
|Securities - Available for Sale||403,440||393,767|
|Federal Home Loan Bank stock - at cost||10,605||10,605|
|Loans held for sale||166||1,520|
|Allowance for Loan Losses||(16,766)||(17,299)|
|Loans - Net||594,162||609,950|
|Accrued interest receivable and other assets||33,658||10,037|
|Other Real Estate Owned||10,801||14,262|
|Bank Owned Life Insurance||50,143||49,111|
|Premises and Equipment - Net||27,842||28,050|
|Total assets||$ 1,198,132||$ 1,268,595|
|Non-interest bearing||$ 187,009||$ 183,016|
|Federal Home Loan Bank advances||12,000||107,000|
|Accrued interest payable and other liabilities||16,165||14,191|
|Common stock (no par value)||4,280||2,397|
|Accumulated other comprehensive loss||(8,623)||(76)|
|Total shareholders' equity||100,824||83,574|
|Total liabilities and shareholders' equity||$ 1,198,132||$ 1,268,595|
CONTACT: FOR FURTHER INFORMATION: H. Douglas Chaffin Chief Executive Officer (734) 384-8123 firstname.lastname@example.org John L. Skibski Chief Financial Officer (734) 242-1879 email@example.com John Betrus Director of Marketing (734) 240-2341 firstname.lastname@example.org
Source:MBT Financial Corp.