MBT Financial Corp. Announces Fourth Quarter and Full Year 2013 Profit

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| Source: MBT Financial Corp.

MONROE, Mich., Jan. 30, 2014 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a pre-tax profit of $2,322,000 for the fourth quarter of 2013, compared to pre-tax profit for the fourth quarter of 2012 of $618,000. Pre-tax profit for the full year 2013 was $7,424,000, compared to the pre-tax profit of $5,042,000 for the full year 2012. Net profit for the fourth quarter totaled $1,640,000 ($0.09 per share, basic and diluted), compared to a net profit of $5,687,000 ($0.33 per share, basic and diluted) for the fourth quarter of 2012. Net profit for the year ended December 31, 2013 was $25,537,000, ($1.43 per share basic and $1.41 per share diluted), compared to $8,545,000, or $0.49 per share (basic and diluted) for the year ended December 31, 2012. The Company reversed $5.0 million of the valuation allowance on its deferred tax asset in the fourth quarter of 2012 and the remaining $18.8 million of the valuation allowance was eliminated in the third quarter of 2013.

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 2.92% in the fourth quarter of 2012 to 3.23% in the fourth quarter of 2013 as the cost of funds decreased more than the yield on assets, and the provision for loan losses decreased from $2,500,000 in the fourth quarter of 2012 to $100,000 in the fourth quarter of 2013 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 $1.1 million, lowering the ALLL from 2.75% of loans at the end of 2012 to what remains a robust 2.71% as of the end of 2013.

Non-interest income decreased $335,000, or 8.0% in the fourth quarter of 2013 compared to the fourth quarter of 2012. Wealth Management fees decreased $74,000, or 6.3% due to an estate settlement fee collected in the fourth quarter of 2012. Mortgage loan origination income decreased $182,000, or 65.5% as higher mortgage rates in 2013 significantly reduced mortgage loan origination activity compared to a year ago.

Total non-interest expenses increased $574,000, or 6.1% in the fourth quarter of 2013 compared to the fourth quarter of 2012, primarily due to an increase of $488,000, or 9.4% in salaries and benefits for the incentive compensation accrual and an increase of $288,000, or 46.5% in occupancy expenses for higher maintenance and property tax expenses.

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 $45.3 million compared to December 31, 2012. Cash and investment securities decreased $37.5 million as the Bank used cash and proceeds from investment maturities and sales to retire maturing Federal Home Loan Bank borrowings in 2013. Total loans held for investment decreased $29.7 million since the end of 2012 as loan payments received and a reduction in problem loans exceeded new loan origination. Capital increased $27.1 million since the end of last year as the year to date profit of $25.5 million and the issuance of $12.3 million of common stock were offset by the $10.8 million increase in the Accumulated Other Comprehensive Loss (AOCL). The AOCL increased due to an increase in market yields during 2013 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 9.04% at December 31, 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 8.43% as of December 31, 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 41.5% at the end of 2013.

Economic conditions in southeast Michigan continue to improve, and this quarter we experienced another significant improvement in problem assets. During the fourth quarter of 2013, non-performing loans decreased $1,734,000, or 3.0%, Other Real Estate Owned decreased $1,202,000, or 11.1%, and problem loans still performing decreased $3,780,000, or 12.9%. Total problem assets, which include non-performing assets and problem loans that are still performing, decreased $6.8 million, or 6.7% compared to September 30, 2013 and $30.7 million, or 24.5% 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 was good in the fourth quarter, however, the resolution of some problem credit relationships and payments received on other loans 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 and a very liquid balance sheet. This liquidity and the recent addition of capital from the private placement that we announced late in the year have us well positioned for increased lending activity. We are also very pleased with the announcement of our private placement of common stock with two highly regarded long term community bank investors.

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 in 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 fourth quarter results on Friday, January 31, 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 #10039077. The replay will be available until February 28, 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
               
  Quarterly Year to Date
  2013 2013 2013 2013 2012    
(dollars in thousands except per share data) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 2013 2012
               
EARNINGS              
Net interest income  $ 8,529  $ 8,539  $ 8,089  $ 8,044  $ 8,316  $ 33,201  $ 34,649
FTE Net interest income  $ 8,670  $ 8,680  $ 8,226  $ 8,185  $ 8,456  $ 33,761  $ 35,263
Provision for loan and lease losses  $ 100  $ 200  $ 400  $ 1,500  $ 2,500  $ 2,200  $ 7,350
Non interest income  $ 3,838  $ 4,116  $ 3,989  $ 3,988  $ 4,173  $ 15,931  $ 16,437
Non interest expense  $ 9,945  $ 9,963  $ 10,182  $ 9,418  $ 9,371  $ 39,508  $ 38,694
Net income  $ 1,640  $ 21,287  $ 1,496  $ 1,114  $ 5,687  $ 25,537  $ 8,545
Basic earnings per share  $ 0.09  $ 1.19  $ 0.08  $ 0.06  $ 0.33  $ 1.43  $ 0.49
Diluted earnings per share  $ 0.09  $ 1.17  $ 0.08  $ 0.06  $ 0.33  $ 1.41  $ 0.49
Average shares outstanding 18,185,178 17,912,946 17,906,085 17,516,382 17,385,761 17,882,070 17,332,012
Average diluted shares outstanding 18,391,184 18,179,335 18,166,220 17,746,355 17,452,206 18,085,094 17,387,059
               
PERFORMANCE RATIOS              
Return on average assets 0.56% 7.19% 0.49% 0.35% 1.81% 2.12% 0.69%
Return on average common equity 6.32% 104.82% 6.95% 5.32% 28.30% 28.78% 10.99%
               
Base Margin 3.15% 3.07% 2.83% 2.74% 2.84% 2.94% 2.98%
FTE Adjustment 0.05% 0.05% 0.05% 0.05% 0.05% 0.05% 0.05%
Loan Fees 0.03% 0.05% 0.04% 0.03% 0.03% 0.04% 0.04%
FTE Net Interest Margin 3.23% 3.17% 2.92% 2.82% 2.92% 3.03% 3.07%
               
Efficiency ratio 77.84% 72.25% 75.57% 74.43% 70.33% 75.01% 70.51%
Full-time equivalent employees  374  367  364  367  357  368  352
               
CAPITAL              
Average equity to average assets 8.89% 6.86% 7.08% 6.67% 6.41% 7.36% 6.26%
Book value per share  $ 5.37  $ 5.63  $ 4.42  $ 4.80  $ 4.80  $ 5.37  $ 4.80
Cash dividend per share  $ --   $ --   $ --   $ --   $ --   $ --   $ -- 
               
ASSET QUALITY              
Loan Charge-Offs  $ 1,040  $ 1,324  $ 1,673  $ 1,587  $ 4,658  $ 5,624  $ 12,015
Loan Recoveries  $ 383  $ 695  $ 569  $ 687  $ 334  $ 2,334  $ 1,099
Net Charge-Offs  $ 657  $ 629  $ 1,104  $ 900  $ 4,324  $ 3,290  $ 10,916
               
Allowance for loan and lease losses  $ 16,209  $ 16,766  $ 17,195  $ 17,899  $ 17,299  $ 16,209  $ 17,299
               
Nonaccrual Loans  $ 23,710  $ 28,010  $ 32,051  $ 31,558  $ 31,343  $ 23,710  $ 31,343
Loans 90 days past due  $ 46  $ 4  $ 12  $ 314  $ 1  $ 46  $ 1
Restructured loans  $ 32,450  $ 29,926  $ 32,192  $ 37,581  $ 38,460  $ 32,450  $ 38,460
Total non performing loans  $ 56,206  $ 57,940  $ 64,255  $ 69,453  $ 69,804  $ 56,206  $ 69,804
Other real estate owned & other assets  $ 9,638  $ 10,840  $ 11,469  $ 15,177  $ 14,294  $ 9,638  $ 14,294
Nonaccrual Investment Securities  $ 3,259  $ 3,320  $ 3,144  $ 3,045  $ 3,045  $ 3,259  $ 3,045
Total non performing assets  $ 69,103  $ 72,100  $ 78,868  $ 87,675  $ 87,143  $ 69,103  $ 87,143
Problem Loans Still Performing  $ 25,411  $ 29,191  $ 36,867  $ 37,815  $ 38,086  $ 25,411  $ 38,086
Total Problem Assets  $ 94,514  $ 101,291  $ 115,735  $ 125,490  $ 125,229  $ 94,514  $ 125,229
               
Net loan charge-offs to average loans 0.43% 0.41% 0.72% 0.59% 2.69% 0.54% 1.65%
Allowance for loan losses to total loans 2.71% 2.74% 2.79% 2.90% 2.75% 2.71% 2.75%
Non performing loans to gross loans 9.39% 9.48% 10.43% 11.26% 11.10% 9.39% 11.10%
Non performing assets to total assets 5.65% 6.02% 6.78% 6.82% 6.87% 5.65% 6.87%
Allowance to non performing loans 28.84% 28.94% 26.76% 25.77% 24.78% 28.84% 24.78%
               
END OF PERIOD BALANCES              
Loans and leases  $ 598,258  $ 611,094  $ 615,828  $ 616,805  $ 628,769  $ 598,258  $ 628,769
Total earning assets  $ 1,101,014  $ 1,078,526  $ 1,057,862  $ 1,188,905  $ 1,167,318  $ 1,101,014  $ 1,167,318
Total assets  $ 1,223,322  $ 1,198,132  $ 1,162,672  $ 1,286,146  $ 1,268,595  $ 1,223,322  $ 1,268,595
Deposits  $ 1,069,718  $ 1,054,143  $ 1,040,860  $ 1,062,465  $ 1,048,830  $ 1,069,718  $ 1,048,830
Interest Bearing Liabilities  $ 880,874  $ 894,134  $ 881,584  $ 998,380  $ 987,949  $ 880,874  $ 987,949
Shareholders' equity  $ 110,639  $ 100,824  $ 79,075  $ 85,949  $ 83,574  $ 110,639  $ 83,574
Total Shares Outstanding  20,605,493  17,917,512  17,909,898  17,903,656  17,396,179  20,605,493  17,396,179
               
AVERAGE BALANCES              
Loans and leases  $ 603,972  $ 611,229  $ 617,978  $ 622,437  $ 640,558  $ 613,844  $ 660,694
Total earning assets  $ 1,066,010  $ 1,084,368  $ 1,127,714  $ 1,178,554  $ 1,154,384  $ 1,113,769  $ 1,146,388
Total assets  $ 1,157,156  $ 1,175,090  $ 1,219,133  $ 1,274,201  $ 1,247,128  $ 1,205,988  $ 1,241,480
Deposits  $ 1,038,794  $ 1,061,365  $ 1,044,412  $ 1,057,395  $ 1,030,677  $ 1,050,470  $ 1,025,817
Interest Bearing Liabilities  $ 867,590  $ 894,835  $ 937,639  $ 995,213  $ 972,104  $ 923,389  $ 981,298
Shareholders' equity  $ 102,891  $ 80,571  $ 86,350  $ 84,975  $ 79,940  $ 88,723  $ 77,777
 
 
 
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
         
  Quarter Ended December 31, Twelve Months Ended December 31,
Dollars in thousands (except per share data) 2013 2012 2013 2012
Interest Income        
Interest and fees on loans  $ 7,364  $ 8,277  $ 30,470  $ 35,050
Interest on investment securities--        
Tax-exempt  309  329  1,255  1,405
Taxable  1,984  1,862  7,367  7,885
Interest on balances due from banks  15  50  146  195
Total interest income  9,672  10,518  39,238  44,535
         
Interest Expense        
Interest on deposits  953  1,366  4,314  6,330
Interest on borrowed funds  190  836  1,723  3,556
Total interest expense  1,143  2,202  6,037  9,886
         
Net Interest Income  8,529  8,316  33,201  34,649
Provision For Loan Losses  100  2,500  2,200  7,350
         
Net Interest Income After        
Provision For Loan Losses  8,429  5,816  31,001  27,299
         
Other Income        
Income from wealth management services  1,095  1,169  4,351  4,028
Service charges and other fees  1,097  1,172  4,325  4,564
Debit Card income  511  508  2,032  1,998
Net gain on sales of securities  118  41  424  1,280
Origination fees on mortgage loans sold  96  278  702  902
Bank Owned Life Insurance income  349  380  1,466  1,458
Other  572  625  2,631  2,207
Total other income  3,838  4,173  15,931  16,437
         
Other Expenses        
Salaries and employee benefits  5,673  5,185  21,520  20,313
Occupancy expense  907  619  3,053  2,677
Equipment expense  655  689  2,679  2,915
Marketing expense  177  177  725  701
Professional fees  387  617  1,965  2,263
Collection expense  37  50  193  238
Net loss on other real estate owned  103  206  1,442  1,078
Other real estate owned expense  172  238  1,001  1,496
FDIC deposit insurance assessment  695  677  2,773  2,744
Other  1,139  913  4,157  4,269
Total other expenses  9,945  9,371  39,508  38,694
         
Profit Before Income Taxes  2,322  618  7,424  5,042
Income Tax Expense (Benefit)  682  (5,069)  (18,113)  (3,503)
Net Profit  $ 1,640  $ 5,687  $ 25,537  $ 8,545
         
Basic Earnings Per Common Share  $ 0.09  $ 0.33  $ 1.43  $ 0.49
         
Diluted Earnings Per Common Share  $ 0.09  $ 0.33  $ 1.41  $ 0.49
         
Dividends Declared Per Common Share  $ --   $ --   $ --   $ -- 
 
 
 
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
     
  December 31, 2013 December 31,
Dollars in thousands (Unaudited) 2012
Assets    
Cash and Cash Equivalents    
Cash and due from banks    
Non-interest bearing  $ 15,448  $ 17,116
Interest bearing  62,349  95,391
Total cash and cash equivalents  77,797  112,507
     
Securities - Held to Maturity  34,846  38,786
Securities - Available for Sale  394,956  393,767
Federal Home Loan Bank stock - at cost  10,605  10,605
Loans held for sale  668  1,520
     
Loans  597,590  627,249
Allowance for Loan Losses  (16,209)  (17,299)
Loans - Net  581,381  609,950
     
Accrued interest receivable and other assets  34,735  10,037
Other Real Estate Owned  9,628  14,262
Bank Owned Life Insurance  50,493  49,111
Premises and Equipment - Net  28,213  28,050
Total assets  $ 1,223,322  $ 1,268,595
     
Liabilities    
Deposits:    
Non-interest bearing  $ 215,844  $ 183,016
Interest-bearing  853,874  865,814
Total deposits  1,069,718  1,048,830
     
Federal Home Loan Bank advances  12,000  107,000
Repurchase agreements  15,000  15,000
Accrued interest payable and other liabilities  15,965  14,191
Total liabilities  1,112,683  1,185,021
     
Shareholders' Equity    
Common stock (no par value)  14,703  2,397
Retained Earnings  106,817  81,280
Unearned Compensation  (7)  (27)
Accumulated other comprehensive loss  (10,874)  (76)
Total shareholders' equity  110,639  83,574
Total liabilities and shareholders' equity  $ 1,223,322  $ 1,268,595
H. Douglas Chaffin
Chief Executive Officer
(734) 384-8123


John L. Skibski
Chief Financial Officer
(734) 242-1879


John Betrus
Director of Marketing
(734) 240-2341