H. Douglas Chaffin, President and CEO, commented, "Due to the interest rate environment and the economic conditions in southeast Michigan, we have continued to restrict our asset growth in order to manage our interest rate risk and credit risk. This contributed to the decrease in our net interest income, but we believe this strategy will prove beneficial in the long term."
"Many banks are experiencing asset quality problems, but we only experienced a small increase in problem assets this quarter. Although non performing assets (NPAs) increased slightly from $22.8 million to $24.6 million during the second quarter and total problem assets increased from $58.7 million to $59.4 million, this reflects a significant improvement in asset quality over the last four quarters. Net charge offs during the quarter were 0.30% of loans, annualized, and we increased our allowance for loan losses from 1.38% of loans to 1.40% in the first six months of 2007. In addition, we have been active in our capital management by purchasing our stock while the market values for financial stocks are at low levels. We also continue to provide value to our shareholders through our quarterly dividend, which is providing an annualized return in excess of 5.1% based on the price of our stock at the end of the second quarter."
Mr. Chaffin further commented on the Company's earnings for the quarter. "Net Interest Income decreased $1.1 million compared to the second quarter of 2006 due to the lower net interest margin and smaller amount of average earning assets. The yield curve has been flat or inverted for most of the last two years, putting considerable pressure on our net interest margin. Although we are beginning to see some improvement in the shape of the yield curve, the economic conditions in our region are not strong enough for us to resume significant asset growth. Non interest income, excluding securities transactions, increased 9.2% compared to the second quarter of 2006 and non interest expenses, net of OREO transactions, increased 6.0%."
Total assets decreased $31.7 million (2.0%) during the quarter to $1.52 billion at June 30, 2007. Total loans increased $12.9 million (1.3%) to $1.0 billion during the quarter and deposits decreased $17.8 million (1.6%). Shareholders' equity was $131.1 million, a decrease of $5.6 million (4.1%) since last quarter.
Conference Call
MBT Financial Corp. will hold a conference call to discuss second quarter results on Friday, July 27, 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 http://www.mbandt.com. The call can also be accessed by calling (877) 407-8031. The event will be archived on the Company's web site and available for three 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, MBT is one of the largest full service community banks in Southeast Michigan, with more than $1.5 billion in assets, offering personal and business products and services, and complete credit options. MBT's Wealth Management Group is one of the area's largest trust departments with over $800 Million in assets under management. With 26 offices, 38 ATMs, PhoneLink telephone banking and eLink online banking, MBT prides itself on an incomparable level of service and access for its customers. Visit MBT's web site at http://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
2007 2007 2006
(dollars in thousands except 2nd Qtr 1st Qtr 4th Qtr
per share data)
EARNINGS
Net interest income $10,787 $11,183 $11,165
FTE Net interest income $11,127 $11,587 $11,604
Provision for loan and lease losses $750 $750 $1,175
Non-interest income $4,119 $3,763 $3,475
Non-interest expense $9,279 $9,112 $8,349
Net income (loss) $3,535 $3,703 $3,741
Basic earnings (loss) per share $0.21 $0.22 $0.22
Diluted earnings (loss) per share $0.21 $0.22 $0.22
Average shares outstanding 16,558,137 16,686,983 16,815,634
Average diluted shares
outstanding 16,585,720 16,716,685 16,837,925
PERFORMANCE RATIOS
Return on average assets 0.94% 0.97% 0.95%
Return on average common equity 10.33% 10.92% 10.51%
Base Margin 2.98% 3.06% 2.93%
FTE Adjustment 0.10% 0.11% 0.12%
Loan Fees 0.07% 0.07% 0.09%
FTE Net Interest Margin 3.15% 3.24% 3.14%
Efficiency ratio 60.74% 58.82% 54.82%
Full-time equivalent employees 425 429 415
CAPITAL
Average equity to average assets 9.06% 8.91% 9.02%
Book value per share $8.00 $8.21 $8.14
Cash dividend per share $0.18 $0.18 $0.18
ASSET QUALITY
Loan Charge-Offs $1,082 $1,088 $1,343
Loan Recoveries $343 $643 $390
Net Charge-Offs $739 $445 $953
Allowance for loan and lease losses $14,080 $14,069 $13,764
Nonaccrual Loans $20,017 $19,527 $19,152
Loans 90 days past due $105 $61 $69
Restructured loans $1,371 $572 $888
Total non performing loans $21,493 $20,160 $20,109
Other real estate owned $3,064 $2,598 $2,432
Total non performing assets $24,557 $22,758 $22,541
Problem Loans Still Performing $34,859 $35,918 $39,650
Total Problem Assets $59,416 $58,676 $62,191
Net loan charge-offs to average loans 0.30% 0.18% 0.38%
Allowance for losses to total loans 1.40% 1.42% 1.38%
Non performing assets to Gross Loans 2.45% 2.30% 2.26%
Non performing assets to total assets 1.62% 1.47% 1.44%
Allowance to non performing assets 57.34% 61.82% 61.06%
END OF PERIOD BALANCES
Loans and leases $1,002,248 $989,322 $998,998
Total earning assets $1,402,808 $1,438,870 $1,451,109
Total assets $1,516,026 $1,547,709 $1,566,819
Deposits $1,078,431 $1,096,210 $1,116,057
Interest Bearing Liabilities $1,224,061 $1,251,379 $1,257,366
Shareholders' equity $131,056 $136,611 $136,062
Total Shares Outstanding 16,379,602 16,644,463 16,713,960
AVERAGE BALANCES
Loans and leases $994,093 $993,498 $1,001,549
Total earning assets $1,420,183 $1,446,247 $1,467,136
Total assets $1,516,209 $1,544,515 $1,565,707
Deposits $1,075,960 $1,099,850 $1,112,521
Interest Bearing Liabilities $1,236,703 $1,263,342 $1,280,146
Shareholders' equity $137,322 $137,573 $141,256
MBT FINANCIAL CORP.
CONSOLIDATED FINANCIAL HIGHLIGHTS - UNAUDITED
Quarterly
2006 2006
(dollars in thousands except per 3rd Qtr 2nd Qtr
share data)
EARNINGS
Net interest income $11,380 $11,922
FTE Net interest income $11,803 $12,369
Provision for loan and lease losses $7,950 $6,675
Non-interest income $3,723 $(1,240)
Non-interest expense $9,418 $10,052
Net income (loss) $(1,118) $(3,576)
Basic earnings (loss) per share $(0.07) $(0.21)
Diluted earnings (loss) per share $(0.07) $(0.21)
Average shares outstanding 16,872,826 16,969,365
Average diluted shares outstanding 16,894,504 17,000,563
PERFORMANCE RATIOS
Return on average assets -0.28% -0.90%
Return on average common equity -3.15% -9.61%
Base Margin 2.95% 3.08%
FTE Adjustment 0.11% 0.12%
Loan Fees 0.10% 0.09%
FTE Net Interest Margin 3.16% 3.29%
Efficiency ratio 55.94% 53.73%
Full-time equivalent employees 416 418
CAPITAL
Average equity to average assets 8.93% 9.34%
Book value per share $8.30 $8.23
Cash dividend per share $0.18 $0.17
ASSET QUALITY
Loan Charge-Offs $12,407 $3,880
Loan Recoveries $497 $504
Net Charge-Offs $11,910 $3,376
Allowance for loan and lease losses $13,542 $17,502
Nonaccrual Loans $13,334 $22,132
Loans 90 days past due $99 $85
Restructured loans $944 $2,485
Total non performing loans $14,377 $24,702
Other real estate owned $4,873 $7,748
Total non performing assets $19,250 $32,450
Problem Loans Still Performing $43,618 $58,007
Total Problem Assets $62,868 $90,457
Net loan charge-offs to average loans 4.61% 1.33%
Allowance for losses to total loans 1.34% 1.71%
Non performing assets to Gross Loans 1.91% 3.17%
Non performing assets to total assets 1.21% 2.03%
Allowance to non performing assets 70.35% 53.94%
END OF PERIOD BALANCES
Loans and leases $1,008,914 $1,024,813
Total earning assets $1,473,804 $1,479,252
Total assets $1,588,374 $1,598,665
Deposits $1,124,784 $1,116,030
Interest Bearing Liabilities $1,284,862 $1,305,280
Shareholders' equity $140,017 $138,823
Total Shares Outstanding 16,873,671 16,871,683
AVERAGE BALANCES
Loans and leases $1,025,729 $1,017,097
Total earning assets $1,480,840 $1,506,062
Total assets $1,578,802 $1,597,107
Deposits $1,113,447 $1,115,672
Interest Bearing Liabilities $1,291,485 $1,298,117
Shareholders' equity $140,954 $149,195
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Quarter Ended June 30,
Dollars in thousands (except per share data) 2007 2006
Interest Income
Interest and fees on loans $17,751 $17,840
Interest on investment securities-
Tax-exempt 871 1,085
Taxable 4,582 5,014
Interest on federal funds sold 84 1
Total interest income 23,288 23,940
Interest Expense
Interest on deposits 7,981 7,266
Interest on borrowed funds 4,520 4,752
Total interest expense 12,501 12,018
Net Interest Income 10,787 11,922
Provision For Loan Losses 750 6,675
Net Interest Income After
Provision For Loan Losses 10,037 5,247
Other Income
Income from trust services 1,151 1,070
Service charges and other fees 1,574 1,566
Net gain (loss) on sales of securities 92 (4,927)
Origination fees on mortgage loans sold 210 135
Bank Owned Life Insurance income 334 292
Other 758 624
Total other income 4,119 (1,240)
Other Expenses
Salaries and employee benefits 5,599 5,340
Occupancy expense 844 712
Equipment expense 850 747
Marketing expense 369 346
Professional fees 406 288
Net (gain) loss on other real estate owned (8) 1,287
Other 1,219 1,332
Total other expenses 9,279 10,052
Income (Loss) Before Income Taxes 4,877 (6,045)
Income Tax Expense (Benefit) 1,342 (2,469)
Net Income (Loss) $3,535 $(3,576)
Basic Earnings (Loss) Per Common
Share $0.21 $(0.21)
Diluted Earnings (Loss) Per Common
Share $0.21 $(0.21)
Dividends Declared Per Common Share $0.18 $0.17
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Six Months Ended June 30,
Dollars in thousands (except per share data) 2007 2006
Interest Income
Interest and fees on loans $35,512 $35,009
Interest on investment securities-
Tax-exempt 1,880 2,242
Taxable 9,497 10,362
Interest on federal funds sold 116 55
Total interest income 47,005 47,668
Interest Expense
Interest on deposits 15,936 14,763
Interest on borrowed funds 9,099 8,815
Total interest expense 25,035 23,578
Net Interest Income 21,970 24,090
Provision For Loan Losses 1,500 7,350
Net Interest Income After
Provision For Loan Losses 20,470 16,740
Other Income
Income from trust services 2,218 2,132
Service charges and other fees 3,099 3,030
Net gain (loss) on sales of securities 92 (4,907)
Origination fees on mortgage loans sold 393 276
Bank Owned Life Insurance income 630 575
Other 1,450 1,238
Total other income 7,882 2,344
Other Expenses
Salaries and employee benefits 11,048 10,518
Occupancy expense 1,724 1,479
Equipment expense 1,695 1,545
Marketing expense 621 718
Professional fees 776 616
Net loss on other real estate owned 10 1,237
Other 2,517 2,428
Total other expenses 18,391 18,541
Income (Loss) Before Income Taxes 9,961 543
Income Tax Expense (Benefit) 2,723 (607)
Net Income $7,238 $1,150
Basic Earnings Per Common Share $0.43 $0.07
Diluted Earnings Per Common Share $0.43 $0.07
Dividends Declared Per Common Share $0.36 $0.34
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
June 30, 2007 December 31,
Dollars in thousands (Unaudited) 2006
Assets
Cash and Cash Equivalents
Cash and due from banks $26,037 $27,903
Federal funds sold 5,800 -
Total cash and cash equivalents 31,837 27,903
Securities - Held to Maturity 49,734 64,938
Securities - Available for Sale 331,940 374,087
Federal Home Loan Bank stock - at cost 13,086 13,086
Loans held for sale 1,475 721
Loans - Net 986,693 984,513
Accrued interest receivable and other assets 25,964 27,961
Bank Owned Life Insurance 41,845 39,631
Premises and Equipment - Net 33,452 33,979
Total assets $1,516,026 $1,566,819
Liabilities
Deposits:
Non-interest bearing $145,870 $158,688
Interest-bearing 932,561 957,369
Total deposits 1,078,431 1,116,057
Federal Home Loan Bank advances 256,500 256,500
Federal funds purchased - 3,500
Repurchase agreements 35,000 40,000
Interest payable and other liabilities 15,039 14,700
Total liabilities 1,384,970 1,430,757
Shareholders' Equity
Common stock (no par value) - -
Additional paid-in capital 2,820 6,979
Retained Earnings 135,454 134,162
Accumulated other comprehensive income (7,218) (5,079)
Total shareholders' equity 131,056 136,062
Total liabilities and shareholders'
equity $1,516,026 $1,566,819
