MONROE, Mich., Oct. 23, 2014 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a preliminary pretax profit for the third quarter of $2,815,000 in 2014 and $2,492,000 in 2013, for an increase of 13%. Year to date pretax profits were $7,420,000 as of September 30, 2014 and $5,102,000 as of September 30, 2013, for an increase of 45%. Net profit for the third quarter of 2014 totaled $2,042,000, or $0.09 per share (basic and diluted), compared to the net profit for the third quarter of 2013 of $21,287,000, or $1.19 per share, basic and $1.17 per share, diluted. The net profit for the nine months ended September 30, 2014 was $5,496,000, or $0.25 per share (basic and diluted), compared to $23,897,000, or $1.34 per share, basic and $1.33 per share, diluted, for the nine months ended September 30, 2013. The net profits for the third quarter of 2013 and the nine months ended September 30, 2013 were positively impacted by the elimination of the $18.8 million deferred tax asset valuation allowance.
The earnings reported for the third quarter of 2014 are preliminary and are subject to revision. On October 29, 2014, Monroe Bank & Trust plans to auction 5 large commercial properties that account for approximately half of the value of its Other Real Estate Owned. The Bank has written the value of each of these properties down to the expected net proceeds from the auction; however, if the sale proceeds of any of these properties are materially less than the estimated value, an additional charge to earnings may be recorded in the third quarter. Final results for the quarter will be in our quarterly report on Form 10-Q, which we expect to file with the SEC on or before November 14, 2014.
Pretax 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 was unchanged from the third quarter of 2013 at 3.17%, but the average amount of interest earning assets increased $40.6 million. As a result, net interest income improved by 3.7% in the third quarter of 2014 compared to the third quarter of 2013. The provision for loan losses decreased $900,000 compared to the third quarter of 2013 as significantly improving asset quality allowed the bank to record a negative provision of $700,000 in the third quarter of 2014. As a result of a $15 million reduction in Classified Loans during the third quarter, and a $29 million reduction in this category since the third quarter of 2013 the Company reduced the Allowance for Loan and Lease Losses $3.6 million compared to a year ago, lowering the ALLL from 2.74% of loans at the end of the third quarter of 2013 to 2.24% as of the end of the third quarter of 2014.
The asset quality improvement strategy created a one-time difference in securities gains and losses as well as ORE expenses from a year ago. Non-interest income decreased $859,000, or 24.7% in the third quarter of 2014 compared to the third quarter of 2013. Excluding gains and losses from securities and other real estate transactions, non-interest income decreased $195,000, or 4.9% as deposit account fees decreased $74,000, mortgage loan origination income decreased $53,000, and rental income on Other Real Estate Owned decreased $248,000. Wealth Management fees increased $116,000, or 10.8% as the market value of assets under management increased. Debit Card income also increased $44,000, or 8.6% due to increased debit card activity.
Total non-interest expenses increased only $31,000, or 0.3% in the third quarter of 2014 compared to the third quarter of 2013. Salaries and benefits increased $321,000, or 6.0% as a result of increases in the accrual for the Officer Incentive Plan and in salaries and wages. Professional fees increased $154,000, or 29.2%, largely due to one-time fees associated with the sale of classified loans. FDIC insurance decreased $420,000 due to a decrease in our assessment rate following the termination of the Bank's Consent Order with the FDIC and the State of Michigan.
Total assets of the company increased $29.5 million compared to December 31, 2013. Total loans decreased $12.1 million since the end of 2013 and $13.7 million during the quarter mainly due to the sale of some classified loans. Capital increased $20.4 million since the end of last year due to the year to date profit of $5.5 million, the issuance of $8.1 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 and because we realized losses in the third quarter by selling our portfolio of pooled trust preferred CDO securities. The ratio of equity to assets increased from 9.05% at the end of 2013 to 10.46% at September 30, 2014. The Bank's Tier 1 Leverage ratio increased from 8.48% as of December 31, 2013 to 9.42% as of September 30, 2014.
This quarter we experienced another improvement in problem assets. During the third quarter of 2014, non-performing assets decreased $16.1 million, or 26.7%. Total classified assets, which include internal watch list loans, other real estate, and pooled trust preferred CDO securities, decreased $25.8 million, or 31.8% compared to last quarter and $43.2 million, or 43.9% compared to a year ago. The classified assets to total capital ratio decreased from 94.54% a year ago to 42.95% in the third quarter of 2014 due to the improvements in both classified assets and capital.
H. Douglas Chaffin, President and CEO, commented, "Over the past few quarters we have focused our efforts on reducing our classified assets, and this quarter we completed two transactions that resulted in a significant improvement in our asset quality metrics. First, we sold $9.9 million of classified loan assets while only charging off $0.2 million more than we had previously allocated in our ALLL for these assets. Secondly, we sold our entire portfolio of $9.4 million of pooled trust preferred CDO securities. The after tax loss realized on these securities was $1.7 million, compared to the unrealized loss of $2.2 million that was included in the AOCL portion of our capital as of June 30, 2014. Payments, upgrades, and other activity resulted in an additional $6.5 million reduction in classified assets during the quarter. With the termination of our regulatory consent order at the end of the second quarter and the liquidity created by these classified asset sales, we are 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 into 2015. We will continue our efforts to improve asset quality and maintain liquidity, and we will 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 third quarter results on Friday, October 24, 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 (877) 510-3783. The toll free number for callers in Canada is (855) 669-9657 and international callers can access the call at (412) 902-4136. A replay will be available one hour after the conclusion of the call at (877) 344-7529, Conference #10052552. The replay will be available until November 24, 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 employee volunteers contribute approximately 9,000 hours of community service annually. MBT's Commercial Lending Group is a top SBA and MEDC lending partner. MBT's Wealth Management Group ("WMG") is one of the largest and most respected in Michigan. The Michigan Bankers Association ranks MBT fourth among all Michigan banks for total trust assets. 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 World Class Banking with a Local Address. 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 | 2014 | 2013 | 2013 | |||
| (dollars in thousands except per share data) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2014 | 2013 |
| EARNINGS | |||||||
| Net interest income | $ 8,852 | $ 8,552 | $ 8,495 | $ 8,529 | $ 8,539 | $ 25,899 | $ 24,672 |
| FTE Net interest income | $ 8,989 | $ 8,693 | $ 8,640 | $ 8,670 | $ 8,680 | $ 26,322 | $ 25,091 |
| Provision for loan and lease losses | $ (700) | $ 100 | $ 100 | $ 100 | $ 200 | $ (500) | $ 2,100 |
| Non interest income | $ 2,625 | $ 3,584 | $ 3,664 | $ 3,735 | $ 3,484 | $ 9,873 | $ 10,754 |
| Non interest expense | $ 9,362 | $ 9,791 | $ 9,699 | $ 9,842 | $ 9,331 | $ 28,852 | $ 28,224 |
| Net income | $ 2,042 | $ 1,687 | $ 1,767 | $ 1,640 | $ 21,287 | $ 5,496 | $ 23,897 |
| Basic earnings per share | $ 0.09 | $ 0.08 | $ 0.08 | $ 0.09 | $ 1.19 | $ 0.25 | $ 1.34 |
| Diluted earnings per share | $ 0.09 | $ 0.08 | $ 0.08 | $ 0.09 | $ 1.17 | $ 0.25 | $ 1.33 |
| Average shares outstanding | 22,691,593 | 22,205,086 | 20,818,727 | 18,185,178 | 17,912,946 | 21,911,996 | 17,779,924 |
| Average diluted shares outstanding | 22,986,918 | 22,498,236 | 21,112,926 | 18,391,184 | 18,179,335 | 22,203,459 | 18,033,387 |
| PERFORMANCE RATIOS | |||||||
| Return on average assets | 0.67% | 0.57% | 0.60% | 0.56% | 7.19% | 0.61% | 2.61% |
| Return on average common equity | 6.21% | 5.50% | 6.34% | 6.32% | 104.82% | 6.01% | 38.06% |
| Base Margin | 3.09% | 3.08% | 3.11% | 3.15% | 3.07% | 3.09% | 2.88% |
| FTE Adjustment | 0.05% | 0.05% | 0.05% | 0.05% | 0.05% | 0.05% | 0.05% |
| Loan Fees | 0.03% | 0.02% | 0.02% | 0.03% | 0.05% | 0.03% | 0.04% |
| FTE Net Interest Margin | 3.17% | 3.15% | 3.18% | 3.23% | 3.17% | 3.17% | 2.97% |
| Efficiency ratio | 71.66% | 75.85% | 76.14% | 77.84% | 72.25% | 74.51% | 74.06% |
| Full-time equivalent employees | 370 | 367 | 371 | 374 | 367 | 369 | 366 |
| CAPITAL | |||||||
| Average equity to average assets | 10.71% | 10.28% | 9.47% | 8.89% | 6.86% | 10.16% | 6.87% |
| Book value per share | $ 5.77 | $ 5.68 | $ 5.55 | $ 5.37 | $ 5.63 | $ 5.77 | $ 5.63 |
| Cash dividend per share | $ -- | $ -- | $ -- | $ -- | $ -- | $ -- | $ -- |
| ASSET QUALITY | |||||||
| Loan Charge-Offs | $ 3,353 | $ 1,662 | $ 674 | $ 1,040 | $ 1,324 | $ 5,689 | $ 4,584 |
| Loan Recoveries | $ 2,182 | $ 405 | $ 523 | $ 383 | $ 695 | $ 3,110 | $ 1,951 |
| Net Charge-Offs | $ 1,171 | $ 1,257 | $ 151 | $ 657 | $ 629 | $ 2,579 | $ 2,633 |
| Allowance for loan and lease losses | $ 13,130 | $ 15,001 | $ 16,158 | $ 16,209 | $ 16,766 | $ 13,130 | $ 16,766 |
| Nonaccrual Loans | $ 13,351 | $ 19,048 | $ 23,108 | $ 23,710 | $ 28,010 | $ 13,351 | $ 28,010 |
| Loans 90 days past due | $ 7 | $ 4 | $ 29 | $ 46 | $ 4 | $ 7 | $ 4 |
| Restructured loans | $ 24,094 | $ 29,658 | $ 32,248 | $ 32,450 | $ 29,926 | $ 24,094 | $ 29,926 |
| Total non performing loans | $ 37,452 | $ 48,710 | $ 55,385 | $ 56,206 | $ 57,940 | $ 37,452 | $ 57,940 |
| Other real estate owned & other assets | $ 6,543 | $ 7,933 | $ 9,784 | $ 9,638 | $ 10,840 | $ 6,543 | $ 10,840 |
| Nonaccrual Investment Securities | $ -- | $ 3,403 | $ 3,262 | $ 3,259 | $ 3,320 | $ -- | $ 3,320 |
| Total non performing assets | $ 43,995 | $ 60,046 | $ 68,431 | $ 69,103 | $ 72,100 | $ 43,995 | $ 72,100 |
| Classified Loans | $ 48,662 | $ 63,665 | $ 69,111 | $ 71,939 | $ 78,076 | $ 48,662 | $ 78,076 |
| Other real estate owned & other assets | $ 6,543 | $ 7,933 | $ 9,784 | $ 9,638 | $ 10,840 | $ 6,543 | $ 10,840 |
| Classified Investment Securities | $ -- | $ 9,379 | $ 9,505 | $ 9,509 | $ 9,513 | $ -- | $ 9,513 |
| Total classified assets | $ 55,205 | $ 80,977 | $ 88,400 | $ 91,086 | $ 98,429 | $ 55,205 | $ 98,429 |
| Net loan charge-offs to average loans | 0.78% | 0.84% | 0.10% | 0.43% | 0.41% | 0.58% | 0.57% |
| Allowance for loan losses to total loans | 2.24% | 2.50% | 2.73% | 2.71% | 2.74% | 2.24% | 2.74% |
| Non performing loans to gross loans | 6.39% | 8.12% | 9.36% | 9.39% | 9.48% | 6.39% | 9.48% |
| Non performing assets to total assets | 3.51% | 4.96% | 5.62% | 5.65% | 6.02% | 3.51% | 6.02% |
| Classified assets to total capital | 42.95% | 63.80% | 73.15% | 78.90% | 94.54% | 42.95% | 94.54% |
| Allowance to non performing loans | 35.06% | 30.80% | 29.17% | 28.84% | 28.94% | 35.06% | 28.94% |
| END OF PERIOD BALANCES | |||||||
| Loans and leases | $ 586,152 | $ 599,803 | $ 592,024 | $ 598,258 | $ 611,094 | $ 586,152 | $ 611,094 |
| Total earning assets | $ 1,135,016 | $ 1,093,461 | $ 1,100,263 | $ 1,101,015 | $ 1,078,526 | $ 1,135,016 | $ 1,078,526 |
| Total assets | $ 1,252,142 | $ 1,209,831 | $ 1,217,812 | $ 1,222,682 | $ 1,198,132 | $ 1,252,142 | $ 1,198,132 |
| Deposits | $ 1,089,484 | $ 1,049,789 | $ 1,056,611 | $ 1,069,718 | $ 1,054,143 | $ 1,089,484 | $ 1,054,143 |
| Interest Bearing Liabilities | $ 894,753 | $ 869,843 | $ 873,532 | $ 880,874 | $ 894,134 | $ 894,753 | $ 894,134 |
| Shareholders' equity | $ 130,982 | $ 128,794 | $ 118,107 | $ 110,608 | $ 100,824 | $ 130,982 | $ 100,824 |
| Tier 1 Capital (Bank) | $ 115,398 | $ 111,929 | $ 104,691 | $ 99,242 | $ 87,343 | $ 115,398 | $ 87,343 |
| Total Shares Outstanding | 22,694,906 | 22,690,142 | 21,266,380 | 20,605,493 | 17,917,512 | 22,694,906 | 17,917,512 |
| AVERAGE BALANCES | |||||||
| Loans and leases | $ 597,771 | $ 598,392 | $ 596,925 | $ 603,972 | $ 611,229 | $ 597,699 | $ 617,172 |
| Total earning assets | $ 1,124,988 | $ 1,106,590 | $ 1,101,215 | $ 1,066,010 | $ 1,084,368 | $ 1,111,019 | $ 1,129,865 |
| Total assets | $ 1,217,645 | $ 1,196,912 | $ 1,192,791 | $ 1,157,156 | $ 1,175,090 | $ 1,202,540 | $ 1,222,445 |
| Deposits | $ 1,079,425 | $ 1,058,873 | $ 1,066,036 | $ 1,038,794 | $ 1,061,365 | $ 1,068,156 | $ 1,054,404 |
| Interest Bearing Liabilities | $ 884,832 | $ 880,030 | $ 884,809 | $ 867,590 | $ 894,835 | $ 883,221 | $ 942,194 |
| Shareholders' equity | $ 130,407 | $ 123,011 | $ 113,000 | $ 102,891 | $ 80,571 | $ 122,203 | $ 83,948 |
| MBT FINANCIAL CORP. | ||||
| CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED | ||||
| Quarter Ended September 30, | Nine Months Ended September 30, | |||
| Dollars in thousands (except per share data) | 2014 | 2013 | 2014 | 2013 |
| Interest Income | ||||
| Interest and fees on loans | $ 7,255 | $ 7,605 | $ 21,355 | $ 23,106 |
| Interest on investment securities-- | ||||
| Tax-exempt | 288 | 313 | 892 | 946 |
| Taxable | 2,222 | 1,821 | 6,540 | 5,383 |
| Interest on balances due from banks | 32 | 25 | 86 | 131 |
| Total interest income | 9,797 | 9,764 | 28,873 | 29,566 |
| Interest Expense | ||||
| Interest on deposits | 767 | 1,033 | 2,423 | 3,361 |
| Interest on borrowed funds | 178 | 192 | 551 | 1,533 |
| Total interest expense | 945 | 1,225 | 2,974 | 4,894 |
| Net Interest Income | 8,852 | 8,539 | 25,899 | 24,672 |
| Provision For Loan Losses | (700) | 200 | (500) | 2,100 |
| Net Interest Income After | ||||
| Provision For Loan Losses | 9,552 | 8,339 | 26,399 | 22,572 |
| Other Income | ||||
| Income from wealth management services | 1,194 | 1,078 | 3,496 | 3,256 |
| Service charges and other fees | 1,054 | 1,128 | 2,954 | 3,228 |
| Debit Card income | 557 | 513 | 1,588 | 1,521 |
| Net gain (loss) on sales of securities | (1,020) | 142 | (744) | 306 |
| Net gain (loss) on other real estate owned | (134) | (632) | (464) | (1,339) |
| Origination fees on mortgage loans sold | 80 | 133 | 230 | 606 |
| Bank Owned Life Insurance income | 357 | 363 | 1,062 | 1,117 |
| Other real estate owned rent | 99 | 347 | 364 | 639 |
| Other | 438 | 412 | 1,387 | 1,420 |
| Total other income | 2,625 | 3,484 | 9,873 | 10,754 |
| Other Expenses | ||||
| Salaries and employee benefits | 5,631 | 5,310 | 17,163 | 15,847 |
| Occupancy expense | 626 | 737 | 2,040 | 2,146 |
| Equipment expense | 723 | 650 | 2,002 | 2,024 |
| Marketing expense | 225 | 180 | 640 | 548 |
| Professional fees | 681 | 527 | 1,620 | 1,578 |
| Other real estate owned expense | 187 | 162 | 887 | 829 |
| FDIC deposit insurance assessment | 275 | 695 | 1,535 | 2,078 |
| Bonding and other insurance expense | 258 | 267 | 777 | 802 |
| Telephone expense | 108 | 212 | 355 | 455 |
| Other | 648 | 591 | 1,833 | 1,917 |
| Total other expenses | 9,362 | 9,331 | 28,852 | 28,224 |
| Profit Before Income Taxes | 2,815 | 2,492 | 7,420 | 5,102 |
| Income Tax Expense | 773 | (18,795) | 1,924 | (18,795) |
| Net Profit | $ 2,042 | $ 21,287 | $ 5,496 | $ 23,897 |
| Basic Earnings Per Common Share | $ 0.09 | $ 1.19 | $ 0.25 | $ 1.34 |
| Diluted Earnings Per Common Share | $ 0.09 | $ 1.17 | $ 0.25 | $ 1.33 |
| Dividends Declared Per Common Share | $ -- | $ -- | $ -- | $ -- |
| MBT FINANCIAL CORP. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| September 30, 2014 | December 31, | |
| Dollars in thousands | (Unaudited) | 2013 |
| Assets | ||
| Cash and Cash Equivalents | ||
| Cash and due from banks | ||
| Non-interest bearing | $ 13,891 | $ 15,448 |
| Interest bearing | 39,050 | 62,350 |
| Total cash and cash equivalents | 52,941 | 77,798 |
| Securities - Held to Maturity | 31,744 | 34,846 |
| Securities - Available for Sale | 467,465 | 394,956 |
| Federal Home Loan Bank stock - at cost | 10,605 | 10,605 |
| Loans held for sale | 382 | 668 |
| Loans | 585,770 | 597,590 |
| Allowance for Loan Losses | (13,130) | (16,209) |
| Loans - Net | 572,640 | 581,381 |
| Accrued interest receivable and other assets | 29,613 | 34,094 |
| Other Real Estate Owned | 6,536 | 9,628 |
| Bank Owned Life Insurance | 51,471 | 50,493 |
| Premises and Equipment - Net | 28,745 | 28,213 |
| Total assets | $ 1,252,142 | $ 1,222,682 |
| Liabilities | ||
| Deposits: | ||
| Non-interest bearing | $ 209,731 | $ 215,844 |
| Interest-bearing | 879,753 | 853,874 |
| Total deposits | 1,089,484 | 1,069,718 |
| Federal Home Loan Bank advances | -- | 12,000 |
| Repurchase agreements | 15,000 | 15,000 |
| Accrued interest payable and other liabilities | 16,676 | 15,356 |
| Total liabilities | 1,121,160 | 1,112,074 |
| Shareholders' Equity | ||
| Common stock (no par value) | 22,946 | 14,671 |
| Retained Earnings | 112,313 | 106,817 |
| Unearned Compensation | (8) | (7) |
| Accumulated other comprehensive loss | (4,269) | (10,873) |
| Total shareholders' equity | 130,982 | 110,608 |
| Total liabilities and shareholders' equity | $ 1,252,142 | $ 1,222,682 |