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MBT Financial Corp. Announces Second Quarter 2014 Profit

MBT Financial Corp. Logo

MONROE, Mich., July 24, 2014 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a profit of $1,687,000, or $0.08 per share (basic and diluted) for the second quarter of 2014, compared to the profit for the second quarter of 2013 of $1,496,000, or $0.08 per share (basic and diluted). The profit for the six months ended June 30, 2014 was $3,454,000, or $0.16 per share (basic and diluted), compared to $2,610,000, or $0.15 per share (basic and diluted) for the six months ended June 30, 2013.

Earnings for the Company improved this quarter due to an increase in the net interest income, a decrease in the provision for loan losses, and an increase in non-interest income. The net interest margin increased from 2.92% in the second quarter of 2013 to 3.15% in the second quarter of 2014 as the yield on earning assets was unchanged and the cost of interest bearing liabilities decreased. The provision for loan losses decreased from $400,000 in the second quarter of 2013 to $100,000 in the second 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 $2.2 million, lowering the ALLL from 2.79% of loans at the end of the second quarter of 2013 to what remains a robust 2.50% as of the end of the second quarter of 2014.

Non-interest income increased $342,000, or 10.5% in the second quarter of 2014 compared to the second quarter of 2013. Excluding gains and losses from securities and other real estate transactions, non-interest income decreased $128,000, or 3.3% as deposit account fees decreased $90,000 and mortgage loan origination income decreased $96,000. Wealth Management fees increased $87,000, or 8.0% as the market value of assets under management increased.

Total non-interest expenses increased $356,000, or 3.8% in the second quarter of 2014 compared to the second quarter of 2013, primarily due to an increase of $590,000, or 11.3% in salaries and benefits as the accrual for the Officer Incentive Plan increased by $262,000. This increase was partially offset by reductions in occupancy expense, equipment expense, professional fees, FDIC Deposit insurance, bonding expense, telephone expense, and other non-interest expense.

Total assets of the company decreased $12.9 million compared to December 31, 2013. Total loans increased $1.0 million since the end of 2013. New loan originations in the second quarter exceeded the reductions experienced in the first quarter, reflecting a $7.8 million increase on a linked quarter basis Capital increased $18.2 million since the end of last year due to the year to date profit of $3.5 million, the issuance of $8.2 million of common stock, and the decrease of $6.6 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 10.65% at June 30, 2014. The Bank's Tier 1 Leverage ratio increased from 8.48% as of December 31, 2013 to 9.24% as of June 30, 2014. This met the requirement of the Consent Order that was issued by the Bank's regulators in 2010, and that order was terminated by the regulators effective June 30, 2014.

Economic conditions in southeast Michigan continue to improve, and this quarter we experienced another improvement in problem assets. During the second quarter of 2014, non-performing assets decreased $8.4 million, or 12.3%. Total classified assets, which include internal watch list loans, other real estate, and our portfolio of pooled trust preferred CDO securities, decreased $7.4 million, or 8.4% compared to last quarter and $34.8 million, or 30.1% compared to a year ago. The classified assets to total capital ratio decreased from 114.76% a year ago to 63.80% in the second quarter of 2014 due to the improvement in both classified assets and total capital.

H. Douglas Chaffin, President and CEO, commented, "This quarter we experienced some significant accomplishments, including the completion of our capital offering, the termination of our regulatory Consent Order, the opening of our first office in Lenawee County, an increase in our total loans, another profit, and improvement in most of our asset quality metrics. Our existing commercial loan pipeline remains strong, and we continue to have a solid deposit base and a very liquid balance sheet, which has us well positioned for increased lending activity.

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 second quarter results on Friday, July 25, 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 #10048054. The replay will be available until August 29, 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 bank holding company headquartered in Monroe, Michigan, is the parent company of Monroe Bank & Trust ("MBT"). Founded in 1858, MBT is one of the largest independently owned community banks in Southeast Michigan. With over $1.2 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 Commercial Lending Group is a top SBA lending partner. 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, and is ranked fourth by the Michigan Bankers Association for total assets managed by banks headquartered in Michigan. With 25 offices, 47 ATMs, convenient mobile and online banking, a robust online and social media presence and a comprehensive array of products and services, MBT prides itself in offering an incomparable banking experience. Visit MBT's website 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
Quarterly Year to Date
2014 2014 2013 2013 2013
(dollars in thousands except per share data) 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 2014 2013
EARNINGS
Net interest income $ 8,552 $ 8,495 $ 8,529 $ 8,539 $ 8,089 $ 17,047 $ 16,133
FTE Net interest income $ 8,693 $ 8,640 $ 8,670 $ 8,680 $ 8,226 $ 17,333 $ 16,411
Provision for loan and lease losses $ 100 $ 100 $ 100 $ 200 $ 400 $ 200 $ 1,900
Non interest income $ 3,584 $ 3,664 $ 3,735 $ 3,484 $ 3,242 $ 7,248 $ 7,270
Non interest expense $ 9,791 $ 9,699 $ 9,842 $ 9,331 $ 9,435 $ 19,490 $ 18,893
Net income $ 1,687 $ 1,767 $ 1,640 $ 21,287 $ 1,496 $ 3,454 $ 2,610
Basic earnings per share $ 0.08 $ 0.08 $ 0.09 $ 1.19 $ 0.08 $ 0.16 $ 0.15
Diluted earnings per share $ 0.08 $ 0.08 $ 0.09 $ 1.17 $ 0.08 $ 0.16 $ 0.15
Average shares outstanding 22,205,086 20,818,727 18,185,178 17,912,946 17,906,085 21,515,737 17,712,310
Average diluted shares outstanding 22,498,236 21,112,926 18,391,184 18,179,335 18,166,220 21,805,165 17,958,569
PERFORMANCE RATIOS
Return on average assets 0.57% 0.60% 0.56% 7.19% 0.49% 0.58% 0.42%
Return on average common equity 5.50% 6.34% 6.32% 104.82% 6.95% 5.90% 6.14%
Base Margin 3.08% 3.11% 3.15% 3.07% 2.83% 3.09% 2.79%
FTE Adjustment 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.05%
Loan Fees 0.02% 0.02% 0.03% 0.05% 0.04% 0.02% 0.04%
FTE Net Interest Margin 3.15% 3.18% 3.23% 3.17% 2.92% 3.16% 2.88%
Efficiency ratio 75.85% 76.14% 77.84% 72.25% 75.57% 75.99% 75.00%
Full-time equivalent employees 367 371 374 367 364 369 365
CAPITAL
Average equity to average assets 10.28% 9.47% 8.89% 6.86% 7.08% 9.88% 6.87%
Book value per share $ 5.68 $ 5.55 $ 5.37 $ 5.63 $ 4.42 $ 5.68 $ 4.42
Cash dividend per share $ -- $ -- $ -- $ -- $ -- $ -- $ --
ASSET QUALITY
Loan Charge-Offs $ 1,662 $ 674 $ 1,040 $ 1,324 $ 1,673 $ 2,336 $ 3,260
Loan Recoveries $ 405 $ 523 $ 383 $ 695 $ 569 $ 928 $ 1,256
Net Charge-Offs $ 1,257 $ 151 $ 657 $ 629 $ 1,104 $ 1,408 $ 2,004
Allowance for loan and lease losses $ 15,001 $ 16,158 $ 16,209 $ 16,766 $ 17,195 $ 15,001 $ 17,195
Nonaccrual Loans $ 19,048 $ 23,108 $ 23,710 $ 28,010 $ 32,051 $ 19,048 $ 32,051
Loans 90 days past due $ 4 $ 29 $ 46 $ 4 $ 12 $ 4 $ 12
Restructured loans $ 29,658 $ 32,248 $ 32,450 $ 29,926 $ 32,192 $ 29,658 $ 32,192
Total non performing loans $ 48,710 $ 55,385 $ 56,206 $ 57,940 $ 64,255 $ 48,710 $ 64,255
Other real estate owned & other assets $ 7,933 $ 9,784 $ 9,638 $ 10,840 $ 11,469 $ 7,933 $ 11,469
Nonaccrual Investment Securities $ 3,403 $ 3,262 $ 3,259 $ 3,320 $ 3,144 $ 3,403 $ 3,144
Total non performing assets $ 60,046 $ 68,431 $ 69,103 $ 72,100 $ 78,868 $ 60,046 $ 78,868
Classified Loans $ 63,665 $ 69,111 $ 71,939 $ 78,076 $ 94,793 $ 63,665 $ 94,793
Other real estate owned & other assets $ 7,933 $ 9,784 $ 9,638 $ 10,840 $ 11,469 $ 7,933 $ 11,469
Classified Investment Securities $ 9,379 $ 9,505 $ 9,509 $ 9,513 $ 9,517 $ 9,379 $ 9,517
Total classified assets $ 80,977 $ 88,400 $ 91,086 $ 98,429 $ 115,779 $ 80,977 $ 115,779
Net loan charge-offs to average loans 0.84% 0.10% 0.43% 0.41% 0.72% 0.48% 0.65%
Allowance for loan losses to total loans 2.50% 2.73% 2.71% 2.74% 2.79% 2.50% 2.79%
Non performing loans to gross loans 8.12% 9.36% 9.39% 9.48% 10.43% 8.12% 10.43%
Non performing assets to total assets 4.96% 5.62% 5.65% 6.02% 6.78% 4.96% 6.78%
Classified assets to total capital 63.80% 73.15% 78.90% 94.54% 114.76% 63.80% 114.76%
Allowance to non performing loans 30.80% 29.17% 28.84% 28.94% 26.76% 30.80% 26.76%
END OF PERIOD BALANCES
Loans and leases $ 599,803 $ 592,024 $ 598,258 $ 611,094 $ 615,828 $ 599,803 $ 615,828
Total earning assets $ 1,093,461 $ 1,100,263 $ 1,101,015 $ 1,078,526 $ 1,057,862 $ 1,093,461 $ 1,057,862
Total assets $ 1,209,831 $ 1,217,812 $ 1,222,682 $ 1,198,132 $ 1,162,672 $ 1,209,831 $ 1,162,672
Deposits $ 1,049,789 $ 1,056,611 $ 1,069,718 $ 1,054,143 $ 1,040,860 $ 1,049,789 $ 1,040,860
Interest Bearing Liabilities $ 869,843 $ 873,532 $ 880,874 $ 894,134 $ 881,584 $ 869,843 $ 881,584
Shareholders' equity $ 128,794 $ 118,107 $ 110,608 $ 100,824 $ 79,075 $ 128,794 $ 79,075
Tier 1 Capital (Bank) $ 111,929 $ 104,691 $ 99,242 $ 87,343 $ 83,693 $ 111,929 $ 83,693
Total Shares Outstanding 22,690,142 21,266,380 20,605,493 17,917,512 17,909,898 22,690,142 17,909,898
AVERAGE BALANCES
Loans and leases $ 598,392 $ 596,925 $ 603,972 $ 611,229 $ 617,978 $ 597,664 $ 620,197
Total earning assets $ 1,106,590 $ 1,101,215 $ 1,066,010 $ 1,084,368 $ 1,127,714 $ 1,103,920 $ 1,152,994
Total assets $ 1,196,912 $ 1,192,791 $ 1,157,156 $ 1,175,090 $ 1,219,133 $ 1,194,863 $ 1,246,515
Deposits $ 1,058,873 $ 1,066,036 $ 1,038,794 $ 1,061,365 $ 1,044,412 $ 1,062,433 $ 1,050,868
Interest Bearing Liabilities $ 880,030 $ 884,809 $ 867,590 $ 894,835 $ 937,639 $ 882,405 $ 966,268
Shareholders' equity $ 123,011 $ 113,000 $ 102,891 $ 80,571 $ 86,350 $ 118,033 $ 85,665
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Quarter Ended June 30, Six Months Ended June 30,
Dollars in thousands (except per share data) 2014 2013 2014 2013
Interest Income
Interest and fees on loans $ 7,021 $ 7,599 $ 14,100 $ 15,501
Interest on investment securities--
Tax-exempt 297 310 604 633
Taxable 2,200 1,795 4,318 3,562
Interest on balances due from banks 22 37 54 106
Total interest income 9,540 9,741 19,076 19,802
Interest Expense
Interest on deposits 801 1,115 1,656 2,328
Interest on borrowed funds 187 537 373 1,341
Total interest expense 988 1,652 2,029 3,669
Net Interest Income 8,552 8,089 17,047 16,133
Provision For Loan Losses 100 400 200 1,900
Net Interest Income After
Provision For Loan Losses 8,452 7,689 16,847 14,233
Other Income
Income from wealth management services 1,168 1,081 2,302 2,178
Service charges and other fees 968 1,058 1,900 2,100
Debit Card income 542 530 1,031 1,008
Net gain on sales of securities 219 154 276 164
Net gain (loss) on other real estate owned (342) (747) (330) (707)
Origination fees on mortgage loans sold 88 184 150 473
Bank Owned Life Insurance income 351 364 705 754
Other real estate owned rent 130 147 265 292
Other 460 471 949 1,008
Total other income 3,584 3,242 7,248 7,270
Other Expenses
Salaries and employee benefits 5,804 5,214 11,532 10,537
Occupancy expense 670 722 1,414 1,409
Equipment expense 662 674 1,279 1,374
Marketing expense 212 205 415 368
Professional fees 521 550 939 1,051
Other real estate owned expense 361 293 700 667
FDIC deposit insurance assessment 620 694 1,260 1,383
Bonding cost expense 255 266 519 535
Telephone expense 104 130 247 243
Other 582 687 1,185 1,326
Total other expenses 9,791 9,435 19,490 18,893
Profit Before Income Taxes 2,245 1,496 4,605 2,610
Income Tax Expense 558 -- 1,151 --
Net Profit $ 1,687 $ 1,496 $ 3,454 $ 2,610
Basic Earnings Per Common Share $ 0.08 $ 0.08 $ 0.16 $ 0.15
Diluted Earnings Per Common Share $ 0.08 $ 0.08 $ 0.16 $ 0.15
Dividends Declared Per Common Share $ -- $ -- $ -- $ --
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
June 30, 2014 December 31,
Dollars in thousands (Unaudited) 2013
Assets
Cash and Cash Equivalents
Cash and due from banks
Non-interest bearing $ 13,041 $ 15,448
Interest bearing 13,675 62,350
Total cash and cash equivalents 26,716 77,798
Securities - Held to Maturity 33,378 34,846
Securities - Available for Sale 436,000 394,956
Federal Home Loan Bank stock - at cost 10,605 10,605
Loans held for sale 1,219 668
Loans 598,584 597,590
Allowance for Loan Losses (15,001) (16,209)
Loans - Net 583,583 581,381
Accrued interest receivable and other assets 30,537 34,094
Other Real Estate Owned 7,911 9,628
Bank Owned Life Insurance 51,114 50,493
Premises and Equipment - Net 28,768 28,213
Total assets $ 1,209,831 $ 1,222,682
Liabilities
Deposits:
Non-interest bearing $ 194,946 $ 215,844
Interest-bearing 854,843 853,874
Total deposits 1,049,789 1,069,718
Federal Home Loan Bank advances -- 12,000
Repurchase agreements 15,000 15,000
Accrued interest payable and other liabilities 16,248 15,356
Total liabilities 1,081,037 1,112,074
Shareholders' Equity
Common stock (no par value) 22,859 14,671
Retained Earnings 110,271 106,817
Unearned Compensation (17) (7)
Accumulated other comprehensive loss (4,319) (10,873)
Total shareholders' equity 128,794 110,608
Total liabilities and shareholders' equity $ 1,209,831 $ 1,222,682

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

Source:MBT Financial Corp.