EXHIBIT 99
MBT Financial Corp. Reports Third Quarter 2005 Earnings
MONROE, Michigan, October 13, 2005 - MBT Financial Corp., (Nasdaq: MBTF), the parent company of Monroe Bank & Trust, reported third quarter net income of $2.6 million, a decrease of 57.9% from the $6.1 million reported for the third quarter of 2004. Basic and diluted earnings per share decreased 57.1% from $0.35 to $0.15. The decrease was the result of previously announced credit related charges of $4.9 million. Net Interest Income declined slightly to $13.1 million even though the average earning assets increased 3.8% as the fully taxable equivalent net interest margin declined from 3.93% to 3.61%. Net Income for the nine months ending September 30, 2005 was $12.8 million, a decrease of 25.3% from the $17.2 million earned in the first three quarters of 2004. Basic and diluted earnings per share decreased 24.5% from $0.98 to $0.74.
H. Douglas Chaffin, President and CEO, commented, “In the third quarter we took a special charge to earnings to realize certain losses incurred from the sale of Other Real Estate Owned (OREO) and to increase the provision for loan losses. The economy in southeast Michigan is not recovering as strongly as the rest of the nation, impacting the strength of the local real estate market.” Sales of OREO in the third quarter of 2005 resulted in losses of $789,000. Following these losses, the Bank wrote down the value of its remaining holdings of OREO, resulting in additional third quarter expense of $569,000. The Bank also reevaluated its loan portfolio in light of the current economic conditions. This resulted in a decision to increase the Provision for Loan Losses to $4.1 million in the third quarter of 2005. This is compared to the $600,000 provision recorded in both the third quarter of 2004 and the second quarter of 2005. This maintains the Bank’s Allowance for Loan and Lease Losses (ALLL) at $12.6 million, or 1.29% of Loans.
Mr. Chaffin further commented on the Bank’s continuing progress at improving asset quality. “Annualized Net Charge-offs increased to 1.70% of average loans this quarter as the process of cleaning up the non-performing assets progressed. The amount of charge offs was consistent with the specific allocations of our Allowance for Loan Losses for each of the credits charged off.”Non-performing assets decreased to 1.65% of total assets at September 30, 2005, down from 2.57% at December 31, 2004, and 2.55% at September 30, 2004. The Allowance for Loan Losses was $12.6 million, or 1.29% of total loans at September 30, 2005.
“The interest rate environment continued to challenge us in the third quarter. The net interest margin increased slightly compared to last quarter even though the flattening of the yield curve continued. We are pleased with the increase in non interest income, our expense control, and the reduction of non-performing assets. Compared to the third quarter of 2004, non interest income increased 8.5% while non interest expenses (excluding the OREO write downs) decreased 4.7%. We continue to focus on strategies that will result in future earnings growth: geographic expansion, product expansion, improving the quality of our staff, investment in technology, and asset quality improvement. At the same time, we are mindful of our traditional strengths: our dominant market position in Monroe County and our efficient operating structure.”
Total revenue, comprised of net interest income and non-interest income, was $16.8 million in the third quarter of 2005, a decrease of 1.3% compared to the same period of 2004. Mr. Chaffin noted, “Interest rate risk management is a crucial component of our strategy. We began to extend the duration of our liabilities and shorten the duration of our assets in the second half of 2003. This caused our cost of funds to increase while slowing the rate of increase in the yield on our earning assets. Although this reduced our net interest margin currently, we believe that we are better protected from future earnings volatility due to changes in interest rates.” The Bank’s balance sheet is insulated against additional interest rate risk; however, asset pricing tends to be influenced by longer term market rates while liability pricing tends to be influenced by shorter term rates. Over the last twelve months, the yield curve has flattened as short term rates increased and long term rates have decreased. This contributed to the decline in the Bank’s net interest margin.
Total assets were $1.61 billion at September 30, 2005, an increase of 3.6% from a year earlier. Loans grew $27.3 million, or 2.9% over the year, funded by deposit growth of $73.0 million, or 6.8% over the same period.
Shareholders’ equity at September 30, 2005 was $154.2 million, a twelve-month increase of 0.6%. Average equity to assets for the third quarter was 9.88% and total shares outstanding at quarter end were 17,272,923. Mr. Chaffin concluded, “Although the credit related charges are disappointing, we feel that we should be able to resume consistently growing earnings in future periods.”
Conference Call
MBT Financial Corp. will hold a conference call to discuss third quarter results on Friday, October 14, 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 by calling (877) 407-8031. The event will be archived on the Company’s web site and available for one month following the call.
About the Company
MBT Financial Corp., is a single bank holding company headquartered in Monroe, Michigan. Founded in 1858, Monroe Bank & Trust is one of the largest community banks in Southeast Michigan, with more than $1.6 billion in assets. MBT is a full-service bank, offering personal and business accounts and complete credit options, along with the Wealth Management Group, one of the largest in the area. 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 www.MBandT.com, where extensive financial and corporate information can be found in the Investor Relations section.
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, the financial and securities markets and the availability of and costs associated with sources of liquidity. The Corporation undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
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FOR FURTHER INFORMATION: | | |
| H. Douglas Chaffin | John L. Skibski | Herbert J. Lock |
| Chief Executive Officer | Chief Financial Officer | Investor Relations |
| (734) 384-8123 | (734) 242-1879 | (734) 242-2603 |
| doug.chaffin@mbandt.com | john.skibski@mbandt.com | herb.lock@mbandt.com |
MBT FINANCIAL CORP. |
| CONSOLIDATED FINANCIAL HIGHLIGHTS - UNAUDITED |
| | | | | | | | | | | | | |
| | | Quarterly | |
| | | 2005 | | 2005 | | 2005 | | 2004 | | 2004 | |
(dollars in thousands except per share data) | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | | 4th Qtr | | 3rd Qtr | |
| | | | | | | | | | | | |
EARNINGS | | | | | | | | | | | |
| Net interest income | | $ | 13,113 | | $ | 12,691 | | $ | 12,622 | | $ | 13,454 | | $ | 13,627 | |
| FTE Net interest income | | $ | 13,659 | | $ | 13,253 | | $ | 13,185 | | $ | 14,079 | | $ | 14,277 | |
| Provision for loan and lease losses | | $ | 4,100 | | $ | 600 | | $ | 600 | | $ | 691 | | $ | 600 | |
| Non-interest income | | $ | 3,683 | | $ | 3,664 | | $ | 3,446 | | $ | 3,793 | | $ | 3,396 | |
| Non-interest expense | | $ | 9,023 | | $ | 8,210 | | $ | 8,729 | | $ | 8,707 | | $ | 8,025 | |
| Net income | | $ | 2,571 | | $ | 5,369 | | $ | 4,879 | | $ | 5,442 | | $ | 6,109 | |
| Basic earnings per share | | $ | 0.15 | | $ | 0.31 | | $ | 0.28 | | $ | 0.32 | | $ | 0.35 | |
| Diluted earnings per share | | $ | 0.15 | | $ | 0.31 | | $ | 0.28 | | $ | 0.31 | | $ | 0.35 | |
| Average shares outstanding | | | 17,282,699 | | | 17,337,452 | | | 17,498,000 | | | 17,426,995 | | | 17,419,214 | |
| Average diluted shares outstanding | | | 17,366,349 | | | 17,411,942 | | | 17,593,705 | | | 17,562,768 | | | 17,520,938 | |
| | | | | | | | | | | | | | | | | |
PERFORMANCE RATIOS | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.64 | % | | 1.37 | % | | 1.26 | % | | 1.41 | % | | 1.59 | % |
| Return on average common equity | | | 6.45 | % | | 14.08 | % | | 12.72 | % | | 14.02 | % | | 16.58 | % |
| | | | | | | | | | | | | | | | | |
| Base Margin | | | 3.32 | % | | 3.27 | % | | 3.30 | % | | 3.49 | % | | 3.55 | % |
| FTE Adjustment | | | 0.14 | % | | 0.15 | % | | 0.15 | % | | 0.17 | % | | 0.18 | % |
| Loan Fees | | | 0.15 | % | | 0.17 | % | | 0.17 | % | | 0.19 | % | | 0.20 | % |
| FTE Net Interest Margin | | | 3.61 | % | | 3.59 | % | | 3.62 | % | | 3.85 | % | | 3.93 | % |
| | | | | | | | | | | | | | | | | |
| Efficiency ratio | | | 43.09 | % | | 49.98 | % | | 51.76 | % | | 47.47 | % | | 44.65 | % |
| Full-time equivalent employees | | | 421 | | | 423 | | | 404 | | | 396 | | | 404 | |
| | | | | | | | | | | | | | | | | |
CAPITAL | | | | | | | | | | | | | | | | |
| Average equity to average assets | | | 9.88 | % | | 9.72 | % | | 9.92 | % | | 10.04 | % | | 9.58 | % |
| Book value per share | | $ | 8.93 | | $ | 9.09 | | $ | 8.79 | | $ | 8.89 | | $ | 8.80 | |
| Cash dividend per share | | $ | 0.17 | | $ | 0.16 | | $ | 0.16 | | $ | 0.16 | | $ | 0.16 | |
| | | | | | | | | | | | | | | | | |
ASSET QUALITY | | | | | | | | | | | | | | | | |
| Loan Charge-Offs | | $ | 4,575 | | $ | 698 | | $ | 2,644 | | $ | 2,451 | | $ | 616 | |
| Loan Recoveries | | $ | 465 | | $ | 633 | | $ | 559 | | $ | 376 | | $ | 224 | |
| Net Charge-Offs | | $ | 4,110 | | $ | 65 | | $ | 2,085 | | $ | 2,075 | | $ | 392 | |
| | | | | | | | | | | | | | | | | |
| Allowance for loan and lease losses | | $ | 12,565 | | $ | 12,575 | | $ | 12,040 | | $ | 13,800 | | $ | 15,184 | |
| | | | | | | | | | | | | | | | | |
| Nonaccrual Loans | | $ | 14,872 | | $ | 27,990 | | $ | 27,625 | | $ | 29,015 | | $ | 29,993 | |
| Loans 90 days past due | | $ | 100 | | $ | 48 | | $ | 101 | | $ | 230 | | $ | 222 | |
| Restructured loans | | $ | 2,731 | | $ | 2,035 | | $ | 2,041 | | $ | 3,715 | | $ | 3,219 | |
| Total nonperforming loans | | $ | 17,703 | | $ | 30,073 | | $ | 29,767 | | $ | 32,960 | | $ | 33,434 | |
| Other real estate owned | | $ | 8,894 | | $ | 5,068 | | $ | 6,370 | | $ | 6,958 | | $ | 6,255 | |
| Nonperforming investment securities | | $ | – | | $ | | | $ | | | $ | | | $ | | |
| Total nonperforming assets | | $ | 26,597 | | $ | 35,141 | | $ | 36,137 | | $ | 39,918 | | $ | 39,689 | |
| | | | | | | | | | | | | | | | | |
| Net loan charge-offs to average loans | | | 1.70 | % | | 0.03 | % | | 0.89 | % | | 0.87 | % | | 0.17 | % |
| Allowance for losses to total loans | | | 1.29 | % | | 1.30 | % | | 1.28 | % | | 1.46 | % | | 1.61 | % |
| Nonperforming assets to Gross Loans | | | 2.73 | % | | 3.63 | % | | 3.84 | % | | 4.22 | % | | 4.20 | % |
| Nonperforming assets to total assets | | | 1.65 | % | | 2.22 | % | | 2.33 | % | | 2.57 | % | | 2.55 | % |
| Allowance to nonperforming assets | | | 47.24 | % | | 35.78 | % | | 33.32 | % | | 34.57 | % | | 38.26 | % |
| | | | | | | | | | | | | | | | | |
END OF PERIOD BALANCES | | | | | | | | | | | | | | | | |
| Loans and leases | | $ | 972,936 | | $ | 966,935 | | $ | 940,155 | | $ | 945,881 | | $ | 945,591 | |
| Total earning assets | | $ | 1,507,371 | | $ | 1,492,957 | | $ | 1,459,091 | | $ | 1,465,322 | | $ | 1,463,425 | |
| Total assets | | $ | 1,610,286 | | $ | 1,583,433 | | $ | 1,551,607 | | $ | 1,552,279 | | $ | 1,554,321 | |
| Deposits | | $ | 1,145,411 | | $ | 1,106,180 | | $ | 1,099,393 | | $ | 1,100,711 | | $ | 1,072,426 | |
| Interest Bearing Liabilities | | $ | 1,295,735 | | $ | 1,260,731 | | $ | 1,243,904 | | $ | 1,237,742 | | $ | 1,242,611 | |
| Shareholders' equity | | $ | 154,219 | | $ | 157,140 | | $ | 153,618 | | $ | 155,346 | | $ | 153,320 | |
| Total Shares Outstanding | | | 17,272,923 | | | 17,285,950 | | | 17,472,389 | | | 17,465,839 | | | 17,419,910 | |
| | | | | | | | | | | | | | | | | |
AVERAGE BALANCES | | | | | | | | | | | | | | | | |
| Loans and leases | | $ | 969,498 | | $ | 953,503 | | $ | 949,978 | | $ | 948,628 | | $ | 934,031 | |
| Total earning assets | | $ | 1,499,601 | | $ | 1,479,798 | | $ | 1,475,802 | | $ | 1,454,891 | | $ | 1,444,880 | |
| Total assets | | $ | 1,600,591 | | $ | 1,572,992 | | $ | 1,567,950 | | $ | 1,538,860 | | $ | 1,529,700 | |
| Deposits | | $ | 1,139,831 | | $ | 1,104,715 | | $ | 1,117,572 | | $ | 1,079,610 | | $ | 1,062,755 | |
| Interest Bearing Liabilities | | $ | 1,279,137 | | $ | 1,259,412 | | $ | 1,253,664 | | $ | 1,229,373 | | $ | 1,228,637 | |
| Shareholders' equity | | $ | 158,097 | | $ | 152,934 | | $ | 155,580 | | $ | 154,428 | | $ | 146,579 | |
MBT FINANCIAL CORP. |
| CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
| | | | | | |
| | | Quarter Ended September 30, | |
| Dollars in thousands (except per share data) | | 2005 | | 2004 | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 16,841 | | $ | 14,888 | |
| Interest on investment securities- | | | | | | | |
| Tax-exempt | | | 1,242 | | | 1,398 | |
| Taxable | | | 5,037 | | | 4,458 | |
| Interest on federal funds sold | | | 57 | | | – | |
| Total interest income | | | 23,177 | | | 20,744 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 6,218 | | | 3,904 | |
| Interest on borrowed funds | | | 3,846 | | | 3,213 | |
| Total interest expense | | | 10,064 | | | 7,117 | |
| | | | | | | | |
Net Interest Income | | | 13,113 | | | 13,627 | |
Provision For Loan Losses | | | 4,100 | | | 600 | |
| | | | | | | | |
Net Interest Income After | | | | | | | |
Provision For Loan Losses | | | 9,013 | | | 13,027 | |
| | | | | | | | |
Other Income | | | | | | | |
| Income from trust services | | | 1,045 | | | 953 | |
| Service charges and other fees | | | 1,555 | | | 1,423 | |
| Net gain (loss) on sales of securities | | | (13 | ) | | (2 | ) |
| Origination fees on mortgage loans sold | | | 232 | | | 131 | |
| Bank Owned Life Insurance income | | | 276 | | | 362 | |
| Other | | | 588 | | | 529 | |
| Total other income | | | 3,683 | | | 3,396 | |
| | | | | | | | |
Other Expenses | | | | | | | |
| Salaries and employee benefits | | | 4,368 | | | 4,437 | |
| Occupancy expense | | | 723 | | | 695 | |
| Other | | | 3,932 | | | 2,893 | |
| Total other expenses | | | 9,023 | | | 8,025 | |
| | | | | | | | |
Income Before Provision | | | | | | | |
For Income Taxes | | | 3,673 | | | 8,398 | |
Provision For Income Taxes | | | 1,102 | | | 2,289 | |
Net Income | | $ | 2,571 | | $ | 6,109 | |
| | | | | | | | |
Basic Earnings Per Common Share | | $ | 0.15 | | $ | 0.35 | |
| | | | | | | | |
Diluted Earnings Per Common Share | | $ | 0.15 | | $ | 0.35 | |
| | | | | | | | |
Dividends Declared Per Common Share | | $ | 0.17 | | $ | 0.16 | |
| | | | | | | | |
MBT FINANCIAL CORP. |
| CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED |
| | | | | | |
| | | Nine Months Ended September 30, | |
| Dollars in thousands (except per share data) | | 2005 | | 2004 | |
Interest Income | | | | | |
| Interest and fees on loans | | $ | 47,595 | | $ | 42,401 | |
| Interest on investment securities- | | | | | | | |
| Tax-exempt | | | 3,764 | | | 4,258 | |
| Taxable | | | 14,468 | | | 11,893 | |
| Interest on federal funds sold | | | 188 | | | 2 | |
| Total interest income | | | 66,015 | | | 58,554 | |
| | | | | | | | |
Interest Expense | | | | | | | |
| Interest on deposits | | | 16,623 | | | 10,570 | |
| Interest on borrowed funds | | | 10,966 | | | 8,733 | |
| Total interest expense | | | 27,589 | | | 19,303 | |
| | | | | | | | |
Net Interest Income | | | 38,426 | | | 39,251 | |
Provision For Loan Losses | | | 5,300 | | | 1,800 | |
| | | | | | | | |
Net Interest Income After | | | | | | | |
Provision For Loan Losses | | | 33,126 | | | 37,451 | |
| | | | | | | | |
Other Income | | | | | | | |
| Income from trust services | | | 3,132 | | | 2,688 | |
| Service charges and other fees | | | 4,331 | | | 4,073 | |
| Net gain on sales of securities | | | 273 | | | 116 | |
| Origination fees on mortgage loans sold | | | 537 | | | 460 | |
| Bank Owned Life Insurance income | | | 824 | | | 1,128 | |
| Other | | | 1,696 | | | 1,518 | |
| Total other income | | | 10,793 | | | 9,983 | |
| | | | | | | | |
Other Expenses | | | | | | | |
| Salaries and employee benefits | | | 13,915 | | | 13,419 | |
| Occupancy expense | | | 2,507 | | | 2,192 | |
| Other | | | 9,540 | | | 8,298 | |
| Total other expenses | | | 25,962 | | | 23,909 | |
| | | | | | | | |
Income Before Provision | | | | | | | |
For Income Taxes | | | 17,957 | | | 23,525 | |
Provision For Income Taxes | | | 5,138 | | | 6,368 | |
Net Income | | $ | 12,819 | | $ | 17,157 | |
| | | | | | | | |
Basic Earnings Per Common Share | | $ | 0.74 | | $ | 0.98 | |
| | | | | | | | |
Diluted Earnings Per Common Share | | $ | 0.74 | | $ | 0.98 | |
| | | | | | | | |
Dividends Declared Per Common Share | | $ | 0.49 | | $ | 0.46 | |
MBT FINANCIAL CORP. |
| CONSOLIDATED BALANCE SHEETS - UNAUDITED |
| | | | | | | | |
| | | September 30, | | December 31, | | September 30, | |
| Dollars in thousands | | 2005 | | 2004 | | 2004 | |
Assets | | | �� | | | | |
| Cash and Cash Equivalents | | | | | | | |
| Cash and due from banks | | $ | 28,399 | | $ | 20,540 | | $ | 27,110 | |
| Federal funds sold | | | 1,000 | | | 14,000 | | | | |
| Total cash and cash equivalents | | | 29,399 | | | 34,540 | | | 27,110 | |
| | | | | | | | | | | |
| Securities - Held to Maturity | | | 75,528 | | | 84,141 | | | 88,045 | |
| Securities - Available for Sale | | | 444,686 | | | 408,353 | | | 417,350 | |
| Federal Home Loan Bank stock - at cost | | | 13,221 | | | 12,947 | | | 12,810 | |
| Loans held for sale | | | 640 | | | 778 | | | 371 | |
| Loans - Net | | | 959,731 | | | 931,303 | | | 930,036 | |
| Accrued interest receivable and other assets | | | 26,738 | | | 22,895 | | | 23,385 | |
| Bank Owned Life Insurance | | | 35,976 | | | 35,152 | | | 34,908 | |
| Premises and Equipment - Net | | | 24,367 | | | 22,170 | | | 20,306 | |
| Total assets | | $ | 1,610,286 | | $ | 1,552,279 | | $ | 1,554,321 | |
| | | | | | | | | | | |
Liabilities | | | | | | | | | | |
| Deposits: | | | | | | | | | | |
| Non-interest bearing | | $ | 151,376 | | $ | 149,469 | | $ | 148,515 | |
| Interest-bearing | | | 994,035 | | | 951,242 | | | 923,911 | |
| Total deposits | | | 1,145,411 | | | 1,100,711 | | | 1,072,426 | |
| | | | | | | | | | | |
| Federal Home Loan Bank advances | | | 256,500 | | | 256,500 | | | 253,500 | |
| Federal funds purchased | | | 10,200 | | | | | | 44,200 | |
| Repurchase agreements | | | 35,000 | | | 30,000 | | | 21,000 | |
| Interest payable and other liabilities | | | 8,956 | | | 9,722 | | | 9,875 | |
| Total liabilities | | | 1,456,067 | | | 1,396,933 | | | 1,401,001 | |
| | | | | | | | | | | |
Stockholders' Equity | | | | | | | | | | |
| Common stock (no par value) | | | – | | | | | | | |
| Additional paid-in capital | | | 15,836 | | | 19,806 | | | 18,945 | |
| Retained Earnings | | | 139,968 | | | 135,647 | | | 132,999 | |
| Accumulated other comprehensive income | | | (1,585 | ) | | (107 | ) | | 1,376 | |
| Total stockholders' equity | | | 154,219 | | | 155,346 | | | 153,320 | |
| Total liabilities and stockholders' equity | | $ | 1,610,286 | | $ | 1,552,279 | | $ | 1,554,321 | |
