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8-K - FORM 8-K - MBT FINANCIAL CORPv332887_8-k.htm

EXHIBIT 99

 

 

MBT Financial Corp. Announces Fourth Quarter and Full Year 2012 Profit

 

MONROE, Mich., January 24, 2013 – MBT Financial Corp., (Nasdaq: MBTF), the parent company of Monroe Bank & Trust, reported a preliminary net profit of $6,118,000, or $0.36 per share (basic and diluted), in the fourth quarter of 2012, compared to the profit of $431,000, or $0.02 per share (basic and diluted) in the fourth quarter of 2011. The year to date profit is $8,976,000, or $0.52 per share (basic and diluted), compared to a loss of $3,762,000, or $0.22 per share in 2011. Included in the positive results for the quarter is a $5 million reduction in the Company’s valuation allowance against its deferred tax asset. Earnings for the quarter before such reduction in our deferred tax asset reserve were $1,118,000 or $0.06 per share (basic and diluted). This is the sixth consecutive quarterly profit for the company and the first full year profit since 2008.

 

The net interest margin decreased from 3.16% in the fourth quarter of 2011 to 2.92% in the fourth quarter of 2012. The decrease in asset yields due to the prolonged low interest rate environment and the increased investment in securities due to the low loan demand contributed to the decrease in the net interest margin. Although average earning assets increased $24.4 million compared to the fourth quarter of 2011, the decrease in the net interest margin resulted in a decrease of $508,000, or 5.8% in the net interest income.

 

The provision for loan losses decreased from $2.5 million in the fourth quarter of 2011 to $2.0 million in the fourth quarter of 2012 even though net charge offs increased from $3.5 million to $4.3 million. The continuing improvement in loan quality allowed us to reduce the Allowance for Loan and Lease Losses $4.1 million, lowering the ALLL from 3.07% of loans at the end of 2011 to 2.67% at the end of 2012.

 

Noninterest income, excluding securities gains and life insurance proceeds, increased $199,000, or 5.1% due to higher income from wealth management services and higher origination fees on mortgage loans sold, which increased 31.8% from $211,000 to $278,000 as mortgage loan activity has increased significantly in 2012. For the full year, mortgage loan origination fees increased by 87.1%.

 

Total noninterest expenses, excluding a death benefit payment in 2011, decreased $773,000, or 7.6% compared to the fourth quarter of 2011. The decrease in expenses was mainly due to lower losses on sales and writedowns of Other Real Estate Owned (OREO) as well as lower OREO carrying costs. Real estate values continued to increase in the Bank’s market area, reducing the need to write down the carrying values of foreclosed properties held for sale and resulting in gains on sales of some properties following earlier write downs.

 

The Company remains in the process of an Internal Revenue Service audit for its 2007 through 2010 tax years. During the second quarter of 2012 we recorded a federal income tax expense to reflect the amount of a settlement that we offered to the IRS early in the third quarter of 2012. 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.

 

Due to the Company’s large net operating loss carry forward that was accumulated during the years 2008 through 2010, we established a valuation allowance of a portion of our deferred tax asset in 2008. We subsequently increased the valuation allowance to 100% of the deferred tax asset in 2009, and maintained it at that level through the third quarter of 2012. As of December 31, 2012, our deferred tax asset totaled $24.8 million. Income tax accounting standards require us to assess positive and negative evidence to determine whether it is “more likely than not” that we will be able to utilize our net operating loss (NOL) carry forward to determine the continued need for a full deferred tax asset valuation allowance. Following six consecutive profitable quarters and growing expectations of generating future taxable income, Management has concluded that the amount of positive evidence indicating that we will be able to utilize our NOL carry forward exceeds the negative evidence. Since our preliminary analysis concludes that it is “more likely than not” that we will be able to recognize at least a portion of the deferred tax asset, we reduced the valuation allowance by recording a tax benefit of $5.0 million in the fourth quarter of 2012. While the evaluation process is highly subjective, in determining the amount of the reduction in the deferred tax asset valuation allowance, the Company considered a number of factors, including past performance, expected future performance, and the likelihood of continued recovery in the southeast Michigan and national economies. The positive evidence evaluated includes external factors beyond our control, such as regional employment and property values, and as this evidence changes in future periods, the valuation allowance will be adjusted accordingly.

 

 

 
 

 

Total assets of the company increased $31.1 million compared to December 31, 2011, with total loans decreasing $51.7 million and cash and investments increasing $78.8 million. Capital increased $8.3 million since last year, and even with the increase in assets, the ratio of equity to assets increased from 6.12% at the end of 2011 to 6.62% at December 31, 2012. The Tier 1 Leverage ratio, which is one of the primary ratios used by banking regulators, increased from 6.03% as of December 31, 2011 to 6.45% as of December 31, 2012. The Bank remains adequately capitalized as measured by applicable regulatory standards. The company’s liquidity position remained very strong, with cash and investments increasing from 37.7% of assets at the end of 2011 to 42.9% at December 31, 2012.

 

Economic conditions in southeast Michigan continue to improve, and this quarter we experienced another improvement in both nonperforming and problem loans. Nonaccrual loans decreased $13.1 million during the quarter, and are down $19.4 million, or 38.2% compared to a year ago. We are continuing to see an improvement in real estate sales activity and prices, and that has helped us reduce the amount of Other Real Estate Owned over the past year. Our total OREO increased $510,000 during the fourth quarter as credit relationships move through the collection process, however, OREO decreased $2.4 million, or 14.5% compared to a year ago. Total problem assets, which include nonperforming assets and problem loans that are still performing, decreased by $6.6 million from the third quarter, or 5.0%. Total problem assets have reflected a net decrease of $11.5 million for the past twelve months, which is an improvement of 8.4% compared to a year ago.

 

H. Douglas Chaffin, President and CEO, commented, “We are pleased to report a sixth consecutive profit this quarter, especially with the improvement of our asset quality metrics this quarter. As the economic conditions continue to improve, we expect to see the improvements in our asset quality and earnings continue. Loan demand was not sufficient to replace payments, but our existing commercial loan pipeline remains strong compared to a year ago. 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 pleased with our progress for 2012. 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.”

 

The results included in the announcement are preliminary and unaudited. Final, audited results will be included in the Company’s Annual Report on Form 10-K which we anticipate filing with the SEC in mid March. These preliminary results include significant estimates based on preliminary analyses which may change due to subsequent events or completion of more thorough analyses. The most significant estimates included in these results are the Allowance for Loan Losses and the Deferred Tax Asset Valuation Allowance.

 

Conference Call

MBT Financial Corp. will hold a conference call to discuss the fourth quarter results on Friday, January 25, 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 (877) 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, MBT is one of the largest community banks in Southeast Michigan. MBT is a full-service bank, offering a complete range of business and personal accounts, credit options, and phone and online banking services. MBT’s Wealth Management Group is one of the largest and most respected in Southeastern Michigan. With 24 offices, 40 ATMs, and a comprehensive array of products and services, MBT prides itself in offering an incomparable banking experience for its customers. 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 
  2012   2012   2012   2012   2011       
(dollars in thousands except per share data)  4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr   2012   2011 
EARNINGS                                   
Net interest income  $8,316   $8,621   $8,784   $8,928   $8,824   $34,649   $35,127 
FTE Net interest income  $8,456   $8,766   $8,936   $9,105   $8,981   $35,263   $35,768 
Provision for loan and lease losses  $2,000   $1,550   $1,050   $2,250   $2,500   $6,850   $13,800 
Non interest income  $4,173   $4,023   $3,564   $4,677   $6,390   $16,437   $18,230 
Non interest expense  $9,371   $9,689   $9,622   $10,012   $11,783   $38,694   $42,819 
Net income (loss)  $6,118   $1,388   $253   $1,217   $431   $8,976   $(3,762)
Basic earnings (loss) per share  $0.36   $0.08   $0.01   $0.07   $0.02   $0.52   $(0.22)
Diluted earnings (loss) per share  $0.36   $0.08   $0.01   $0.07   $0.02   $0.52   $(0.22)
Average shares outstanding   17,385,761    17,321,337    17,315,696    17,304,781    17,285,762    17,332,012    17,270,528 
Average diluted shares outstanding   17,452,206    17,402,653    17,382,419    17,347,641    17,285,762    17,387,059    17,270,528 
PERFORMANCE RATIOS                                   
Return on average assets   1.95%    0.45%    0.08%    0.39%    0.14%    0.72%    -0.30% 
Return on average common equity   30.44%    7.09%    1.33%    6.39%    2.26%    11.54%    -5.11% 
Base Margin   2.84%    2.94%    3.06%    3.10%    3.07%    2.98%    3.03% 
FTE Adjustment   0.05%    0.05%    0.05%    0.06%    0.06%    0.05%    0.06% 
Loan Fees   0.03%    0.06%    0.04%    0.03%    0.03%    0.04%    0.04% 
FTE Net Interest Margin   2.92%    3.05%    3.15%    3.19%    3.16%    3.07%    3.13% 
Efficiency ratio   70.69%    69.72%    68.86%    73.19%    68.80%    70.59%    69.74% 
Full-time equivalent employees   357    352    348    349    349    352    349 
CAPITAL                                   
Average equity to average assets   6.41%    6.28%    6.21%    6.16%    6.14%    6.26%    5.89% 
Book value per share  $4.83   $4.57   $4.43   $4.38   $4.38   $4.83   $4.38 
Cash dividend per share  $-   $-   $-   $-   $-   $-   $- 
ASSET QUALITY                                   
Loan Charge-Offs  $4,658   $2,156   $2,369   $2,832   $3,733   $12,015   $15,872 
Loan Recoveries  $334   $243   $324   $198   $229   $1,099   $1,714 
Net Charge-Offs  $4,324   $1,913   $2,045   $2,634   $3,504   $10,916   $14,158 
Allowance for loan and lease losses  $16,799   $19,123   $19,486   $20,481   $20,865   $16,799   $20,865 
Nonaccrual Loans  $31,343   $44,422   $40,139   $45,436   $50,717   $31,343   $50,717 
Loans 90 days past due  $1   $138   $2   $2   $20   $1   $20 
Restructured loans  $38,460   $28,184   $26,134   $25,954   $24,774   $38,460   $24,774 
Total non performing loans  $69,804   $72,744   $66,275   $71,392   $75,511   $69,804   $75,511 
Other real estate owned & other assets  $14,294   $13,784   $12,777   $14,277   $16,711   $14,294   $16,711 
Nonaccrual Investment Securities  $3,045   $2,916   $2,829   $2,888   $2,984   $3,045   $2,984 
Total non performing assets  $87,143   $89,444   $81,881   $88,557   $95,206   $87,143   $95,206 
Problem Loans Still Performing  $38,086   $42,359   $44,918   $40,592   $41,558   $38,086   $41,558 
Total Problem Assets  $125,229   $131,803   $126,799   $129,149   $136,764   $125,229   $136,764 
Net loan charge-offs to average loans   2.69%    1.15%    1.23%    1.57%    2.01%    1.65%    1.97% 
Allowance for loan losses to total loans   2.67%    2.94%    2.91%    3.07%    3.07%    2.67%    3.07% 
Non performing loans to gross loans   11.10%    11.17%    9.91%    10.70%    11.10%    11.10%    11.10% 
Non performing assets to total assets   6.87%    7.24%    6.63%    7.08%    7.69%    6.87%    7.69% 
Allowance to non performing loans   24.07%    26.29%    29.40%    28.69%    27.63%    24.07%    27.63% 
END OF PERIOD BALANCES                                   
Loans and leases  $628,769   $651,218   $668,604   $667,294   $680,510   $628,769   $680,510 
Total earning assets  $1,167,318   $1,138,424   $1,138,191   $1,152,128   $1,139,172   $1,167,318   $1,139,172 
Total assets  $1,269,095   $1,236,064   $1,235,271   $1,250,449   $1,238,027   $1,269,095   $1,238,027 
Deposits  $1,048,830   $1,020,410   $1,017,502   $1,035,550   $1,022,310   $1,048,830   $1,022,310 
Interest Bearing Liabilities  $987,949   $974,097   $976,218   $998,226   $984,593   $987,949   $984,593 
Shareholders' equity  $84,005   $79,098   $76,784   $75,899   $75,711   $84,005   $75,711 
Total Shares Outstanding   17,396,179    17,324,063    17,318,153    17,312,707    17,291,729    17,396,179    17,291,729 
AVERAGE BALANCES                                   
Loans and leases  $640,558   $660,901   $668,632   $672,907   $690,569   $660,694   $717,772 
Total earning assets  $1,154,384   $1,144,823   $1,140,410   $1,145,865   $1,129,960   $1,146,388   $1,145,439 
Total assets  $1,247,134   $1,240,752   $1,234,984   $1,242,995   $1,231,959   $1,241,481   $1,248,822 
Deposits  $1,030,677   $1,025,730   $1,019,305   $1,027,501   $1,015,703   $1,025,817   $1,030,717 
Interest Bearing Liabilities  $972,104   $979,494   $980,007   $993,711   $977,956   $981,298   $1,010,671 
Shareholders' equity  $79,945   $77,884   $76,637   $76,625   $75,673   $77,778   $73,584 

 

 
 

 

MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

 

   Quarter Ended December 31,   Year Ended December 31, 
Dollars in thousands (except per share data)  2012   2011   2012   2011 
Interest Income                    
Interest and fees on loans  $8,277   $9,342   $35,050   $39,712 
Interest on investment securities-                    
Tax-exempt   329    346    1,405    1,415 
Taxable   1,862    2,071    7,885    8,282 
Interest on balances due from banks   50    39    195    151 
Total interest income   10,518    11,798    44,535    49,560 
                     
Interest Expense                    
Interest on deposits   1,366    2,077    6,330    10,698 
Interest on borrowed funds   836    897    3,556    3,735 
Total interest expense   2,202    2,974    9,886    14,433 
                     
Net Interest Income   8,316    8,824    34,649    35,127 
Provision For Loan Losses   2,000    2,500    6,850    13,800 
                     
Net Interest Income After                    
Provision For Loan Losses   6,316    6,324    27,799    21,327 
                     
Other Income                    
Income from wealth management services   1,169    964    4,028    3,919 
Service charges and other fees   1,172    1,172    4,564    4,694 
Net gain on sales of securities   41    433    1,280    1,084 
Origination fees on mortgage loans sold   278    211    902    482 
Bank Owned Life Insurance income   380    2,400    1,458    3,607 
Other   1,133    1,210    4,205    4,444 
Total other income   4,173    6,390    16,437    18,230 
                     
Other Expenses                    
Salaries and employee benefits   5,185    4,864    20,313    19,475 
Occupancy expense   619    857    2,677    3,103 
Equipment expense   689    777    2,915    2,941 
Marketing expense   177    154    701    849 
Professional fees   617    644    2,263    2,477 
Collection expense   50    52    238    233 
Net loss on other real estate owned   206    618    1,078    3,561 
Other real estate owned expense   238    650    1,496    2,108 
FDIC deposit insurance assessment   677    693    2,744    2,947 
Death benefit expense   -    1,639    -    1,639 
Other   913    835    4,269    3,486 
Total other expenses   9,371    11,783    38,694    42,819 
                     
Profit (Loss) Before Income Taxes   1,118    931    5,542    (3,262)
Income Tax (Benefit) Expense   (5,000)   500    (3,434)   500 
Net Profit (Loss)  $6,118   $431   $8,976   $(3,762)
                     
Basic Earnings (Loss) Per Common Share  $0.36   $0.02   $0.52   $(0.22)
                     
Diluted Earnings (Loss) Per Common Share  $0.36   $0.02   $0.52   $(0.22)
                     
Dividends Declared Per Common Share  $-   $-   $-   $- 

 

 
 

 

MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS

 

  December 31, 2012   December 31, 
Dollars in thousands  (Unaudited)   2011 
Assets          
Cash and Cash Equivalents          
Cash and due from banks          
Non-interest bearing  $17,116   $18,201 
Interest bearing   95,391    57,794 
Total cash and cash equivalents   112,507    75,995 
Securities - Held to Maturity   38,786    35,364 
Securities - Available for Sale   393,767    354,899 
Federal Home Loan Bank stock - at cost   10,605    10,605 
Loans held for sale   1,520    1,035 
Loans   627,249    679,475 
Allowance for Loan Losses   (16,799)   (20,865)
Loans - Net   610,450    658,610 
Accrued interest receivable and other assets   10,037    7,700 
Other Real Estate Owned   14,262    16,650 
Bank Owned Life Insurance   49,111    47,653 
Premises and Equipment - Net   28,050    29,516 
Total assets  $1,269,095   $1,238,027 
Liabilities          
Deposits:          
Non-interest bearing  $183,016   $164,852 
Interest-bearing   865,814    857,458 
Total deposits   1,048,830    1,022,310 
Federal Home Loan Bank advances   107,000    107,000 
Repurchase agreements   15,000    20,000 
Accrued interest payable and other liabilities   14,260    13,006 
Total liabilities   1,185,090    1,162,316 
Shareholders' Equity          
Common stock (no par value)   2,397    2,099 
Retained Earnings   81,711    72,735 
Unearned Compensation   (27)   (87)
Accumulated other comprehensive income (loss)   (76)   964 
Total shareholders' equity   84,005    75,711 
Total liabilities and shareholders' equity  $1,269,095   $1,238,027 

 

 

FOR FURTHER INFORMATION:

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