SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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MBT FINANCIAL CORP.
______________________________________________
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______________________________________________________________________
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MBT FINANCIAL CORP.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 2004
TO THE SHAREHOLDERS OF MBT FINANCIAL CORP.:
The Annual Meeting of Shareholders of MBT Financial Corp. will be held
at Monroe Bank & Trust's Executive Conference Center, 28 South Macomb Street,
Monroe, Michigan 48161 on Thursday, May 6, 2004, at 10:00 a.m. (local time), for
the following purposes:
1. ELECTION OF DIRECTORS - To elect ten directors of MBT Financial Corp.;
2. PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION - To consider and
act upon a proposed amendment to the Articles of Incorporation to
eliminate Article IV requiring a two-thirds vote by shareholders to
approve certain mergers involving the Corporation; and
3. To transact such other business as may properly come before the meeting
or any adjournment of it.
Only shareholders of record at the close of business on March 16, 2004
are entitled to notice of and to vote at the Annual Meeting or any adjournment
of it.
By order of the Board of Directors,
H. Douglas Chaffin, President and
Chief Executive Officer
YOUR VOTE IS IMPORTANT. YOU ARE CORDIALLY INVITED TO ATTEND THE
MEETING. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED IN THIS PROXY
STATEMENT.
MBT FINANCIAL CORP.
102 EAST FRONT STREET
MONROE, MICHIGAN 48161
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 6, 2004
INTRODUCTION
This Proxy Statement is being furnished to shareholders of MBT
Financial Corp. ("MBT" or the "Corporation") in connection with the solicitation
of proxies by the Board of Directors of the Corporation to be used at the Annual
Meeting of Shareholders, and any adjournment of the meeting, to be held at the
time and place set forth in the accompanying notice ("Annual Meeting"). It is
anticipated that the mailing of this Proxy Statement and the enclosed proxy card
will commence on or about April 1, 2004.
At the Annual Meeting, shareholders of the Corporation will be asked to
elect ten directors.
VOTING AND REVOCATION OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Corporation in time to be voted at the Annual Meeting, the shares represented by
your proxy will be voted in accordance with your instructions marked on the
proxy. Where properly executed proxies are returned but no such instructions are
given, the shares will be voted "For" the election to the Board of Directors of
the persons nominated by the Board of Directors of the Corporation.
The presence of a shareholder at the Annual Meeting will not
automatically revoke such shareholder's proxy. However, shareholders may revoke
a proxy at any time prior to its exercise by filing with the Secretary of the
Corporation a written notice of revocation, by delivering to the Corporation a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting in person. Written notices of revoked proxies may be directed to Herbert
J. Lock, Secretary, MBT Financial Corp., 102 East Front Street, Monroe, Michigan
48161.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Corporation. In addition to the solicitation of proxies by mail,
the Corporation, through its directors, officers and regular employees, may also
solicit proxies personally or by telephone or telecopy without additional
compensation. The Corporation will also request persons, firms and corporations
holding shares in their names or in the name of their nominees, which are
beneficially owned by others, to send proxy material to and obtain proxies from
the beneficial owners and will reimburse the holders for their reasonable
expenses in doing so.
1
MEETING INFORMATION
DATE, PLACE AND TIME
The Annual Meeting of Shareholders of the Corporation will be held on
Thursday, May 6, 2004, at 10:00 a.m., local time, at Monroe Bank & Trust's
Executive Conference Center, 28 South Macomb Street, Monroe, Michigan.
RECORD DATE; VOTING RIGHTS
Each common share entitles its record owner to one vote on all matters
at the Annual Meeting.
The close of business on March 16, 2004 (the "Record Date") has been
fixed as the record date for the determination of shareholders entitled to vote
at the Annual Meeting. There were 1,311 record holders of the Corporation's
common shares and 17,505,054 of the Corporation's common shares outstanding as
of the Record Date.
The presence in person or by proxy of a majority of the outstanding
shares of the Corporation entitled to vote at the meeting will constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
for purposes of determining the presence of a quorum.
The ten nominees for director who receive the largest number of votes
cast "For" will be elected as directors. Shares represented at the Annual
Meeting in person or by proxy but withheld or otherwise not cast for the
election of directors will have no impact on the outcome of the election of
directors.
OWNERSHIP OF VOTING SHARES
The following table sets forth the beneficial ownership of the
Corporation's common shares by each of the Corporation's directors and the
Corporation's named executive officers, and the directors and executive officers
as a group, as of December 31, 2003.
COMMON SHARES
NAME OF BENEFICIAL OWNER OWNED (1) PERCENT OF CLASS
- ------------------------ --------- ----------------
Connie S. Cape 9,307 (2) *
H. Douglas Chaffin 19,500 (3) *
Joseph S. Daly 1,247 *
Thomas M. Huner 26,007 (4) *
Gerald L. Kiser 5,407 (5) *
Ronald D. LaBeau 133,854 (6) *
Donald M. Lieto 29,713 (7) *
Rocque E. Lipford 46,999 (8) *
2
William D. McIntyre, Jr. 56,099 (9) *
Michael J. Miller 25,491 (10) *
James E. Morr 77,127 (11) *
Thomas G. Myers 4,166 (12) *
Richard A. Sieb 71,763 (13) *
Philip P. Swy 7,363 (14) *
All Directors and Executive 555,265 3.2%
Officers as a Group
(16 in group)
* Ownership is less than 1% of the class.
- ----------------------------
(1) Except as otherwise noted, none of the named individuals shares with
another person either voting or investment power as to the shares
reported.
(2) Includes 1,600 shares subject to shared voting and investment power and
3,407 shares subject to options, which are presently exercisable.
(3) Includes 1,000 shares subject to shared voting and investment power and
18,500 shares subject to options, which are presently exercisable.
(4) Includes 22,600 shares subject to shared voting and investment power
and 3,407 shares subject to options, which are presently exercisable.
(5) Includes 3,407 shares subject to options, which are presently
exercisable.
(6) Includes 8,855 shares subject to shared voting and investment power and
81,999 shares subject to options, which are presently exercisable.
(7) Includes 25,400 shares subject to options, which are presently
exercisable.
(8) Includes 277 shares subject to shared voting and investment power,
3,407 shares subject to options, which are presently exercisable, and
28,597 shares held in trusts for which the director, as co-trustee, has
shared voting and investment power.
(9) Includes 3,407 shares subject to options, which are presently
exercisable.
(10) Includes 23,919 shares subject to shared voting and investment power
and 1,572 shares subject to options, which are presently exercisable.
(11) Includes 7,270 shares subject to shared voting and investment power and
28,600 shares subject to options, which are presently exercisable.
(12) Includes 4,166 shares subject to options, which are presently
exercisable.
(13) Includes 52,774 shares subject to shared voting and investment power.
(14) Includes 3,093 shares subject to options, which are presently
exercisable.
As of December 31, 2003, no person was known by the Corporation to be
the beneficial owner of more than 5% of the outstanding common shares of the
Corporation, except as follows:
NAME AND ADDRESS OF
BENEFICIAL OWNER COMMON SHARES OWNED PERCENT OF CLASS
Monroe Bank & Trust
102 East Front Street
Monroe, Michigan 48161 2,990,310 (1) 17.1%
John F. Weaver
305 West Elm Avenue
Monroe, Michigan 48162 900,000 5.1%
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(1) These shares are held in various fiduciary capacities in the ordinary
course of business under numerous trust relationships by Monroe Bank &
Trust. As fiduciary, Monroe Bank & Trust has sole power to dispose of
2,511,959 of these shares, shared power to dispose of 478,351 of these
shares, sole power to vote 2,511,959 of these shares and shared power
to vote 478,351 of these shares.
ELECTION OF DIRECTORS
The number of directors of the Corporation has been fixed at ten. At
the Annual Meeting, ten directors will be elected to a one-year term, to hold
office until the annual meeting of shareholders in 2005, or until their
successors shall be duly elected.
The nominees for election at the Annual Meeting are Connie S. Cape, H.
Douglas Chaffin, Joseph S. Daly, Thomas M. Huner, Gerald L. Kiser, Rocque E.
Lipford, William D. McIntyre, Jr., Michael J. Miller, Richard A. Sieb and Philip
P. Swy, each of whom is currently a director of the Corporation, except for Mr.
Chaffin.
The Board of Directors has determined that all current Directors and
nominees have met the independence standards of Rule 4200(a)(15) of the National
Association of Securities Dealers listing standards, with the exception of Mr.
LaBeau and Mr. Chaffin.
The Governance Committee of the Board of Directors selects nominees for
the Board of Directors who are subsequently authorized by the full Board for
submission for approval by stockholders. The Governance Committee has the
responsibility to actively seek individuals qualified to become members of the
board of directors. The Governance Committee is empowered to engage a third
party search firm to assist it in identifying qualified candidates but to date
has determined that such assistance has not been required.
MBT Corporate Governance Guidelines & Directors' Policy and Code of
Ethics set forth the following criteria for Directors: independence; honesty and
integrity; willingness to devote sufficient time to fulfilling duties as a
Director; particular experience, skills or expertise relevant to the
Corporation's business and ties to MBT geographic markets. MBT Corporate
Governance Guidelines provide that shareholders may submit names to the
Governance Committee for consideration as director nominees. The procedures to
be followed by shareholders are set forth in this Proxy under the caption:
"SHAREHOLDER NOMINATIONS, PROPOSALS AND COMMUNICATIONS- Shareholder
Nominations."
The Governance Committee reviews the performance of incumbent
directors whose terms expire prior to their re-nomination. The Governance
Committee seeks characteristics in proposed nominees to the Board of Directors
that will complement or expand those of the existing members and which are
particularly relevant to competitive and other issues anticipated by the Company
and its subsidiaries.
Neither the Board nor the Governance Committee have implemented a
formal policy regarding director attendance at the Annual Meeting. Typically,
the Board holds
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its annual organizational meeting directly following the Annual Meeting, which
results in most directors being able to attend the Annual Meeting. In 2003, 10
Directors attended the Annual Meeting.
Mr. Ronald D. LaBeau, the Chairman and Chief Executive Officer of the
Corporation, retired on April 2, 2004. The Board of Directors has extended its
thanks and appreciation to Mr. LaBeau for his outstanding leadership of the
Corporation and his many years of able service. The Board appointed H. Douglas
Chaffin to the position of President and Chief Executive Officer effective upon
Mr. LaBeau's retirement. Mr. Chaffin is a nominee for election to the Board at
the Annual Meeting.
DIRECTORS AND NOMINEES
The name of the retiring director and the nominees for election to
MBT's Board of Directors and information about them is set forth below.
PRINCIPAL OCCUPATION FOR PAST DIRECTOR
NAME AGE FIVE YEARS SINCE
Connie S. Cape 53 Health Care Consultant 2000
(2000-present); Vice President
Finance/Chief Financial Officer,
Mercy Memorial Hospital (1999-2000)
H. Douglas Chaffin (1) 47 President and Chief Operating N/A
Officer (2003), Executive Vice
President, Senior Lending Manager
(2001-2002),
Joseph S. Daly 44 President and General Counsel, Daly 2003
Merritt Insurance and President and
General Counsel, Daly Merritt
Properties, Inc., an investment
real estate company
Thomas M. Huner 54 General Partner, Thomas M. Huner 2000
Builders, a home building company
Gerald L. Kiser 55 Retired (2003) President and Chief 2000
Executive Officer (2002-2003),
President and Chief Operating
Officer (1999-2002) La-Z-Boy Inc.,
a furniture manufacturer; Director,
La-Z-Boy Inc.
Ronald D. LaBeau (2) 60 Chairman and Chief Executive 1998
Officer (2003), President and Chief
Executive Officer (1999 - 2002)
5
Rocque E. Lipford 65 Attorney and Senior Principal, 1981
Miller, Canfield, Paddock and
Stone, P.L.C.; Director, La-Z-Boy
Inc.
William D. McIntyre, Jr. 68 Chairman and Chief Executive 1971
Officer (2003), President and Chief
Executive Officer (2000-2003),
Allegra Network, LLC, a franchisor
of printing businesses; President &
Chief Executive Officer, American
Speedy Printing Centers, Inc., a
printing shop franchisor (1999-2000)
Michael J. Miller 55 Chief Executive Officer, Floral 2000
City Beverage, Inc., a wholesale
beer distributor
Richard A. Sieb 72 President, Sieb Plumbing & Heating 1993
Inc. and President, Nortel Inc., a
recreational bowling establishment
Philip P. Swy 50 President, Michigan Tube Swagers & 1997
Fabricators, Inc., a hospitality
table and chair manufacturer
marketing as MTS Seating
(1) Mr. Chaffin became employed with MBT on July 30, 2001. Prior to such
time he was Senior Vice President and City Executive for Huntington
National Bank.
(2) Mr. LaBeau is retiring upon the expiration of his term at the Annual
Meeting and, therefore, is not a nominee for reelection.
There were no agreements or understandings pursuant to which any of the
persons listed above was selected as a director.
The Board of Directors of MBT met 14 times in 2003. In 2003, each
director attended at least 75% of the combined total of meetings of the Board of
Directors and meetings of each committee on which such director served.
COMMITTEES OF THE BOARD
The Board of Directors of MBT has established the following standing
audit, compensation and nominating committees, with membership noted:
AUDIT COMMITTEE. (Ms. Cape, Chair, and Messrs. McIntyre, Miller and
Swy.)
The Audit Committee met 12 times during 2004. The Audit Committee
serves in a multiple capacity as the Audit Committee of the Corporation and its
subsidiaries Monroe Bank & Trust and MBT Credit Company, Inc. The functions of
this Committee include the engagement of independent auditors, reviewing with
those independent
6
auditors the plans and results of the audit engagement of the Corporation,
approving the annual audit plan and reviewing the results of the procedures for
internal auditing, reviewing the independence of the independent auditors,
reviewing the Corporation's financial results and Securities and Exchange
Commission filings, reviewing the effectiveness of the Corporation's internal
controls and similar functions and approving all auditing and non-auditing
services performed by its independent auditors. The Board of Directors has
adopted a written charter for the Audit Committee, which is attached hereto as
Annex A and which may be found on the Corporation's website at www.mbandt.com.
All members of the Audit Committee meet the independence standards of Rule
4200(a)(15) and the audit committee qualifications of Rule 4350(d)(2) of the
National Association of Securities Dealers listing standards. The Board of
Directors has determined that Connie S. Cape is an audit committee financial
expert and is independent as described in the preceding sentence. The report of
the Audit Committee with respect to 2003 appears under the caption "Audit
Committee Report."
COMPENSATION COMMITTEE. (Mr. Huner, Chair, and Ms. Cape and Messrs. Kiser and
Sieb.)
The Compensation Committee met six (6) times during 2003. The
Compensation Committee is responsible for the oversight and administration of
the compensation and benefit plans of the Corporation. Director and executive
officer and senior management's compensation are determined by this Committee of
the Board of Directors. The Board of Directors has adopted a Compensation
Committee Charter which may be found on the Corporation's website at
www.mbandt.com. The Board has determined that each member of the Compensation
Committee meets the independence standards of Rule 4200(a)(15) of the National
Association of Securities Dealers as required under the MBT Corporate Governance
Guidelines & Directors' Policy. The report of the Compensation Committee with
respect to 2003 compensation appears under the caption "Report of Compensation
Committee on Executive Compensation."
GOVERNANCE COMMITTEE. (Mr. McIntyre, Chair, and Messrs. Lipford, Sieb
and Swy.)
The Governance Committee met 2 times in 2003. The Governance Committee
of MBT serves as the nominating committee of the Board. The Governance Committee
provides reports and makes recommendations to the Board of Directors on matters
such as nominees for director, the duties of directors, director qualifications,
Board structure, Board functions, Board committee structure and responsibilities
and general policies. The Board of Directors has adopted a Governance Committee
Charter which may be found on the Corporation's website at www.mbandt.com.
The Board has fixed the number of directors for the term beginning at
this year's Annual Meeting at ten and has nominated ten individuals for election
as director.
7
AUDIT COMMITTEE REPORT
The Audit Committee oversees MBT's financial reporting process on
behalf of the Board of Directors. The Committee is composed of four directors,
each of whom is independent as defined by the National Association of Securities
Dealers' listing standards and operates under a written charter adopted by the
Board of Directors which is attached to this proxy statement as Annex A. The
Committee retains MBT's independent accountants.
Management has the primary responsibility for the financial statements
and the reporting process, including the system of internal control. In
fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the Annual Report with management, including a
discussion of the quality, not just the acceptability, of the accounting
principles; the reasonableness of significant judgments; and the clarity of
disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of MBT's accounting
principles and such other matters as are required to be discussed with the
Committee under generally accepted auditing standards (including Statement on
Auditing Standards No. 61). In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and MBT,
including the matters in the written disclosures required by the Independence
Standards Board (including Independence Standards Board Standard No. 1), and
considered the compatibility of nonaudit services with the auditors'
independence.
The Committee discussed with MBT's internal and independent auditors
the overall scope and plans for their respective audits. The Committee meets
with the internal and independent auditors, with and without management present,
to discuss the results of their examinations, their evaluations of MBT's
internal control, and the overall quality of MBT's financial reporting.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2003 for filing with the Securities and
Exchange Commission.
Connie S. Cape, Chair
William D. McIntyre, Jr.
Michael J. Miller
Philip P. Swy
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PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to MBT for the
fiscal years ended December 31, 2003 and December 31, 2002 by MBT's principal
accounting firms.
DECEMBER 31,
================================
2003 2002
================================
Audit Fees $ 93,300 $103,000
Audit-Related Fees 71,450(a) 35,433(a)
Tax Fees 13,200(b) 27,000(b)
All Other Fees 10,850(d) 4,700(c)(d)
======== ========
$188,800 $170,133
All fees indicated above for the year ended December 31, 2003, and $43,000 of
Audit Fees and $4,700 of Other Fees indicated for the year-ended December 31,
2002, were paid to MBT's current independent auditor, Plante & Moran, PLLC.
Included in the amounts indicated for the year-ended December 31, 2002, are
amounts paid to MBT's former independent auditors, Arthur Andersen, LLP, which
were comprised of $60,000 in Audit Fees, $35,433 in Audit Related Fees, and
$4,700 in Tax Fees.
(a) Includes fees for services related to benefit plan audits, subsidiary
company audits, Statement on Auditing Standards No. 70 and trust compliance.
(b) Includes fees for services related to tax compliance and tax planning.
(c) Includes permitted internal audit outsourcing.
(d) The Audit Committee has considered whether the provision of these
services is compatible with maintaining the principal accountant's independence.
The Audit Committee is responsible for pre-approving all auditing
services and permitted non-audit services to be performed by its independent
auditors, except as described below.
The Audit Committee will establish general guidelines for the
permissible scope and nature of any permitted non-audit services in connection
with its annual review of the audit plan and will review such guidelines with
the Board of Directors. Pre-approval may be granted by action of the full Audit
Committee or, in the absence of such Audit Committee action, by the Audit
Committee Chair whose action shall be considered to be that of the entire
Committee. Pre-approval shall not be required for the provision of non-audit
services if (1) the aggregate amount of all such non-audit services constitutes
no more than 5% of the total amount of revenues paid by the Corporation to the
auditors during the fiscal year in which the non-audit services are provided,
(2) such services were not recognized by the Corporation at the time of
engagement to be non-audit services, and (3) such services are promptly brought
to the attention of the Audit Committee and approved prior to the completion of
the audit. No services were provided pursuant to these exceptions.
9
EXECUTIVE COMPENSATION
AND OTHER INFORMATION
GENERAL. The following information relates to compensation of
management for the years ended December 31, 2003, 2002 and 2001, unless
otherwise noted below. This information includes compensation of management by
the Corporation's subsidiaries.
EXECUTIVE COMPENSATION. The following table sets forth the annual and
long-term compensation for MBT's Chief Executive Officer and the four highest
paid executive officers, as well as the total compensation paid to each
individual during the last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------
ANNUAL COMPENSATION SECURITIES ALL OTHER
------------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($) (A)
--------------------------- ---- ---------- --------- ----------- -------
Ronald D. LaBeau............................ 2003 $238,000 $ 66,830 36,000 $ 29,464
Chairman and Chief Executive Officer 2002 230,000 173,193 47,000 27,891
2001 218,400 222,359 0 25,075
H. Douglas Chaffin.......................... 2003 $159,000 $ 29,765 20,000 $ 9,983
President and 2002 133,700 67,398 19,000 8,602
Chief Operating Officer 2001 52,885 77,861 0 0
James E. Morr............................... 2003 $110,400 $ 17,222 12,500 $ 14,248
Executive Vice President, Senior Trust 2002 106,700 44,823 13,500 14,072
Officer and General Counsel 2001 90,800 71,902 0 12,249
Thomas G. Myers............................. 2003 $105,888 $ 16,519 12,500 $ 4,323
Executive Vice President, Senior Lending 2002 83,966 63,538 12,500 2,000
Manager 2001 0 0 0 0
Donald M. Lieto............................. 2003 $ 92,808 $ 14,478 11,000 $ 11,487
Executive Vice President, Senior 2002 85,100 28,599 10,000 9,944
Administration Manager 2001 71,700 52,196 10,000 10,019
(A) The amounts shown in this column for the most recently completed fiscal
year were derived from the following: (1) contributions by Monroe Bank
& Trust to the MBT Retirement Plan: Mr. LaBeau, $26,000; Mr. Chaffin,
$9,600; Mr. Morr, $14,019 Mr. Myers, $4,236; and Mr. Lieto, $11,371 and
(2) the economic benefit of life insurance coverage provided for the
executive officers: for the benefit of Mr. LaBeau, $3,464; for the
benefit of Mr. Chaffin, $383; for the benefit of Mr. Morr, $229; for
the benefit of Mr. Myers, $87; and for the benefit of Mr. Lieto, $116.
10
OPTION GRANTS TABLE. The following table presents information about
stock options granted during 2003 to the five named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE EXPIRATION GRANT DATE
NAME GRANTED (#)(1) FISCAL YEAR PRICE($/Sh) DATE PRESENT VALUE(2)
- ------------------ -------------- ------------ ----------- ---------- ----------------
Ronald D. LaBeau 47,000 26.18% $13.20 01/02/13 $142,880
H. Douglas Chaffin 19,000 10.58% $13.20 01/02/13 $57,760
James E. Morr 13,500 7.52% $13.20 01/02/13 $41,040
Thomas G. Myers 12,500 6.96% $13.20 01/02/13 $38,000
Donald M. Lieto 10,000 5.57% $13.20 01/02/13 $30,400
(1) All options are nonqualified stock options which vest ratably over a
three-year period commencing December 31, 2003. All options have an
exercise price equal to the fair market value on the date of grant. The
terms of MBT's Long-Term Incentive Compensation Plan provide that all
options become exercisable in full in the event of a change in control
as defined in the Long-Term Incentive Compensation Plan, or the death
or disability of the option holder.
(2) The option value was calculated to be $3.04 per share using the
Black-Scholes stock option pricing model. In making this calculation,
it was assumed that the average exercise period was seven years, the
volatility rate was 23.9%, the risk-free rate of return was 4.6%, and
the dividend yield was 3.0%.
OPTION EXERCISES AND YEAR-END VALUE TABLE. The following table presents
information about stock options exercised during 2003 and unexercised stock
options at December 31, 2003 for the five named executive officers.
11
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN 2003 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2003(#) DECEMBER 31, 2003($)
SHARES ACQUIRED VALUE -------------------- --------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
Ronald D. LaBeau 0 $ 0 81,999/47,001 $135,200 / $145,390
H. Douglas Chaffin 500 $ 738 18,500/19,000 $ 53,326 / $ 58,774
James E. Morr 4,500 $8,505 28,600/13,500 $ 26,865 / $ 41,760
Thomas G. Myers 0 $ 0 4,166/8,334 $ 13,789 / $ 27,586
Donald M. Lieto 0 $ 0 25,400/10,000 $ 13,366 / $ 30,934
LONG-TERM INCENTIVE COMPENSATION PLAN. MBT and its shareholders have
adopted the Long-Term Incentive Compensation Plan. A total of 1,000,000 shares
have been reserved for issuance under the Long-Term Incentive Compensation Plan,
subject to adjustment if MBT's capitalization changes as a result of a stock
split, stock dividend, recapitalization, merger or similar event. The plan
provides for the award of stock options, stock or restricted stock to any MBT or
Monroe Bank & Trust directors, officers, other key employees and consultants
designated by a committee of MBT's Board consisting of outside directors, which
administers the plan. The committee's authority includes the power to (a)
determine who will receive awards under the plan, (b) establish the terms and
conditions of awards and the schedule on which options become exercisable (or
other awards vest), (c) determine the amount and form of awards, (d) interpret
the plan and terms of awards, and (e) adopt rules for administration of the
plan. The only awards made under the plan to date are awards of stock options.
Stock options awarded under the plan have terms of up to 10 years and
may be nonqualified stock options, meaning stock options that do not qualify
under Section 422 of the Internal Revenue Code for the special tax treatment
available for qualified, or "incentive," stock options. Nonqualified stock
options may be granted to any eligible plan participant, but incentive stock
options may be granted solely to employees of MBT or Monroe Bank & Trust. All
stock option awards made to date are nonqualified stock options. The exercise
price of incentive stock options may not be less than the fair market value of
MBT's common stock on the date of grant, which under the terms of the plan means
the average of the bid and asked prices or the fair market value determined by
MBT's Board if bid and asked prices are not available. The plan does not require
that the exercise price of nonqualified stock options be at least equal to the
fair market value on the grant date, but the exercise price of awards made to
date is the fair market value on the date of grant.
An option holder whose service terminates generally has one year after
termination within which he may exercise options, forfeiting any options not
exercised by the end of one year from termination. An option holder whose
service is terminated for cause forfeits all unexercised stock options.
12
SALARY CONTINUATION AGREEMENTS. Monroe Bank & Trust entered into a
Salary Continuation Agreement with Mr. LaBeau on December 27, 2000, which
provides that Monroe Bank & Trust will pay an annual salary continuation benefit
to Mr. LaBeau or his designated beneficiaries after his retirement. Mr. LaBeau's
is taking early retirement on April 2, 2004. Under the terms of his Salary
Continuation Agreement, he will receive an annual benefit of $57,977, payable
commencing upon his reaching age 65 on December 12, 2009, for a period of ten
years.
Monroe Bank & Trust entered into a Salary Continuation Agreement with
Mr. Chaffin on July 1, 2003, which provides that Monroe Bank & Trust will pay an
annual salary continuation benefit to Mr. Chaffin or his designated
beneficiaries after his retirement. Under the terms of his Salary Continuation
Agreement, he will receive an annual benefit of $65,700, payable upon his
reaching age 65 on January 12, 2022. Mr. Chaffin's benefits will vest five years
after the date of Mr. LaBeau's retirement.
CHANGE OF CONTROL AGREEMENT. MBT has entered into a Change in Control
Agreement with Mr. Chaffin. The terms of the agreement provide that in the event
of a sale, merger or similar transaction of MBT in which MBT is not the
surviving corporation, Mr. Chaffin is entitled a severance payment equal to his
annual compensation, which is defined to include his then current Salary plus
his previous year's cash bonus. The severance payment is payable in the event of
his involuntary termination of employment within two years of the Change in
Control or his voluntary termination during the period beginning six months
following the Change in Control and ending nine months after the Change in
Control. In addition, Mr. Chaffin is entitled under the terms of the Agreement
to receive certain health, disability, dental, life insurance and other benefits
for a one-year period following a Change in Control. The agreement provides for
the reimbursement of certain excise taxes imposed upon payments received by Mr.
Chaffin, which are deemed "excess parachute" payments under the provisions of
Section 280G of the Internal Revenue Code.
BANK OWNED LIFE INSURANCE. MBT has split-dollar life insurance
agreements with its directors and executive officers. The economic benefit (the
imputed income amount of this insurance) for the year 2003 to MBT's Chief
Executive Officer and its other four highest paid executive officers is included
in the amounts for each of these executive officers set forth in the Summary
Compensation Table under the column "All Other Compensation." The economic
benefit (the imputed income amount of this insurance) for the year 2003 to each
director other than Mr. LaBeau is as follows: Ms. Cape, $582; Mr. Daly, $198;
Mr. Huner, $697; Mr. Kiser, $818; Mr. Lipford, $2,910; Mr. McIntyre, $3,985; Mr.
Miller, $704; Mr. Sieb, $4,560; and Mr. Swy, $649.
The insurance policies provide death benefits to the executive's
beneficiaries of (a) twice the executive's current annual salary at the time of
death, less $50,000, if he dies before retirement or, (b) the executive's annual
salary at the time his employment terminated if he dies after retirement or if
his employment has been terminated due to disability. An additional policy
provides Mr. LaBeau's beneficiaries life insurance proceeds of $958,837 if he
dies before age 65 while in active service to MBT.
13
The directors' death benefits under the policy provided for them, which
also covers Mr. LaBeau, are $500,000 for director service of less than 3 years,
$600,000 for service up to 5 years, $750,000 for service up to 10 years, and
$1,000,000 for director service of 10 years or more.
DIRECTOR COMPENSATION
Directors of MBT other than Mr. LaBeau are compensated for all services
as a director in the following manner: eligible directors receive $750 per board
meeting attended and are entitled to receive a quarterly retainer fee of $1,500.
In addition, the members of the Audit, Compensation, Nominating/Governance,
Trust, and Loan Review Committees receive $500 per committee meeting attended.
The Chairs of these committees receive $750 for each meeting at which they act
as Chair. As an employee, Mr. LaBeau does not receive any compensation for his
service as a director.
Directors receive life insurance benefits as explained above under the
caption, "Bank Owned Life Insurance."
In 2003 MBT established the MBT Director Compensation Plan (the
"Director Plan.") Under the terms of the Director Plan, non-employee directors
may elect each year to have their quarterly cash retainer paid in any
combination of the following: (i) cash paid on a quarterly basis; (ii) a
deferred cash payment pursuant to the Director Plan; (iii) deferred payment in
MBT stock; (iv) MBT stock; and (v) MBT stock options valued using the
Black-Scholes stock option pricing model. Non-employee directors may elect each
year to have their meeting fees paid in any of the forgoing except MBT options.
Amounts deferred are paid either in a lump sum at termination of service as a
director, over a 2-5 year period specified by the director following termination
of service, or a specified date indicated in the director's initial election.
Options granted and MBT stock issued to directors in connection with the
Director Plan are made pursuant to, and are subject to all of the terms of, the
MBT Long-Term Incentive Compensation Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY. The Board of Directors of MBT has established
a Compensation Committee comprised entirely of independent Directors as
determined by the MBT Corporate Governance Guidelines & Directors' Policy. The
Compensation Committee is responsible for developing and making recommendations
to the Board with respect to MBT's executive compensation policies. There are no
interlocking relationships between any members of the Compensation Committee.
Pursuant to authority delegated by the Board, the Compensation
Committee determines annually the compensation to be paid to the Chief Executive
Officer and senior management. The Chief Executive Officer does not participate
in any discussions regarding his own compensation.
14
The Compensation Committee has available to it an outside compensation
consultant, and has worked with the consultant to gather comparative
compensation data from independent sources and to develop a strategy which links
pay to performance.
The objectives of MBT's executive compensation program are to:
- Support the achievement of desired goals of MBT.
- Provide compensation that will attract and retain superior
talent and reward performance.
- Align the executive officers' interests with those of
shareholders by placing a significant portion of pay at risk
with payout dependent upon corporate performance, both on a
short-term and long-term basis.
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the banking industry. Actual
compensation levels may be greater or less than average competitive levels in
surveyed companies based upon annual and long-term MBT performance. The
Compensation Committee also uses its discretion to set executive compensation
based upon individual performance.
COMPENSATION MATTERS IN 2003. During 2003 the Compensation Committee
increased the levels of base salary of the Chief Executive Officer and certain
other Executive Officers. The increases in base salary were based upon an
analysis of compensation levels for management performing similar functions at
other banking companies of similar size, operations and financial performance.
The performance of MBT for the purpose of determining the annual cash
bonuses to be paid to employees, including the Chief Executive Officer and other
Executive Officers, was based on net operating income for the year 2003.
EXECUTIVE OFFICER COMPENSATION PROGRAM. MBT's executive officer
compensation program is comprised of base salary, annual cash incentive
compensation, long-term incentive compensation in the form of stock options
and various benefits.
BASE SALARY. Base salary levels for MBT's executive officers are set
relative to companies in the banking industry of similar size and complexity of
operations, as described above. In determining salaries, the Compensation
Committee also takes into account individual experience and performance, MBT
performance and specific issues particular to MBT.
ANNUAL INCENTIVE COMPENSATION. The Monroe Bank & Trust Annual Incentive
Plan is MBT's annual incentive program for all employees, including Executive
Officers. The purpose of the plan is to provide direct financial incentives in
the form of an annual cash bonus to executives to achieve MBT's annual goals.
For 2003, the Compensation Committee recommended and the Board of Directors
selected net operating income as the measurement of the Corporation's
performance, with threshold and target goals set for determining cash bonus
opportunities for all employees, including Executive Officers. The amount
distributed to each participant in the Annual Incentive Plan is based on his or
15
her base salary and is weighted to reflect each participant's ability to affect
the performance of the Corporation, with the Chief Executive Officer having the
largest weighting. For net operating income in excess of the target goal set,
each participant receives a ratable increase in his or her cash bonus and a
ratable decrease in target bonus in the case of net operating income below the
target goal. MBT did not meet its target goal for net operating income in 2003.
LONG-TERM INCENTIVES. Stock options awarded under the Long-Term
Incentive Compensation Plan constitute MBT's long-term incentive plan for
executive officers. The objectives of the stock option awards are to align
executive and shareholder long-term interests by creating a strong and direct
link between executive pay and shareholder return, and to enable executives to
develop and maintain a long-term stock ownership position in MBT's common
shares.
The Long-Term Incentive Compensation Plan authorizes a committee of
outside directors to award stock options and other stock compensation to key
executives. Awards are made at levels considered to be competitive within the
banking industry.
BENEFITS. MBT provides medical and other employee benefits to its
executive officers that are generally available to all fulltime MBT employees.
CHIEF EXECUTIVE OFFICER COMPENSATION. The base salary of Mr. LaBeau,
MBT's CEO was increased to $238,000, effective January 1, 2003, based upon the
recommendation of an outside compensation consultant arising from its survey of
other banking companies, as described above.
In respect to the limits on deductibility for federal income tax
purposes of compensation paid an executive officer in excess of $1 million, MBT
intends to strive to structure components of its executive compensation to
achieve maximum deductibility, while at the same time considering the goals of
its executive compensation philosophy.
MEMBERSHIP OF THE COMPENSATION COMMITTEE. MBT Financial Corp. directors
serving on the Compensation Committee are named below:
Thomas M. Huner, Chair
Connie S. Cape
Gerald L. Kiser
Richard A. Sieb
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
In 2003 the Compensation Committee members were Thomas M. Huner,
Chair, Connie S. Cape, Gerald L. Kiser, and Richard A. Sieb. No executive
officer of the Company serves on any board of directors or compensation
committee of any entity that compensates any member of the Compensation
Committee. The Regulations of the
16
Securities and Exchange Commission require the disclosure of any related party
transactions with members of the Compensation Committee. During the past year,
certain directors and officers, including members of the Compensation Committee,
and one or more of their associates may have been customers of and had business
transactions with Monroe Bank & Trust. All loans included in such transactions
were made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the same
time for comparable transactions with other persons, and did not involve more
than normal risk of collectibility or present other unfavorable features. It is
expected that similar transactions will occur in the future. Mr. LaBeau, Chief
Executive Officer of the Corporation, does not participate in any discussions or
decisions regarding his own compensation. Mr. Lipford is also a senior principal
in the law firm of Miller, Canfield, Paddock and Stone, P.L.C., which provides
legal services to MBT and Monroe Bank & Trust.
PROPOSAL #2 TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY
The Board of Directors is proposing to shareholders for their approval
at the 2004 annual meeting of shareholders of this Corporation, an amendment to
the Restated Articles of Incorporation of this Corporation to eliminate Article
IV thereof so that the provisions of the Michigan Business Corporation Act will
apply to any merger of this Corporation with another corporation, without
imposition of the voting requirements currently set forth in Article IV of the
Corporation's Restated Articles of Incorporation. Pursuant to the provisions of
Article IV, the affirmative vote of two-thirds of the outstanding voting shares
of the Corporation are required to approve any merger or consolidation of the
Corporation with any other corporation, other than certain controlled
subsidiaries. Under Michigan law only the affirmative vote of a majority of the
outstanding shares are required to approve mergers and consolidations of the
Corporation with another corporation, unless the articles of incorporation
require a higher vote.
The Board of Directors believes that this amendment to the
Corporation's Restated Articles of Incorporation is in the best interests of the
Corporation and its shareholders in providing greater flexibility to the Board
of Directors and the shareholders of the Corporation in determining whether to
approve a merger of the Corporation with another corporation. The present
provision was required to be included in the Company's articles of incorporation
and patterned after a similar provision which was contained in the Articles of
Incorporation of Monroe Bank & Trust at the time of the reorganization of Monroe
& Bank & Trust into a one-bank holding company during 2000.
If proposal #2 is adopted by shareholders the present Article IV of the
Company would be deleted from the Restated Articles of Incorporation and the
remaining articles renumbered accordingly.
Adoption of Proposal #2 requires the affirmative vote of two-thirds of
the outstanding shares of the Corporation
17
MBT FINANCIAL CORP. PERFORMANCE
The following graph shows a comparison of cumulative total shareholder
returns for the Corporation, the NASDAQ Composite Index and the NASDAQ Bank
Index for the five-year period ended December 31, 2003. The total shareholder
return assumes a $100 investment in the common stock of the Corporation, and
each index on December 31, 1998 and that all dividends were reinvested.
[PERFORMANCE GRAPH]
*THE ABOVE COMPARISON OF TOTAL RETURN ASSUMES REINVESTMENT OF ALL DIVIDENDS.
The graph shown above is based on the following data points:
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
MBT Financial Corp. $100 $ 96 $ 61 $ 65 $ 66 $ 85
NASDAQ Composite Index 100 186 113 89 61 91
NASDAQ Bank Index 100 92 106 116 121 158
18
CERTAIN TRANSACTIONS
Directors and executive officers of MBT and their associates were
customers of, or had transactions with, Monroe Bank & Trust in the ordinary
course of business during 2003. We expect additional transactions to take place
in the future. All outstanding loans to directors and executive officers and
their associates, commitments and sales, purchases and placements of investment
securities and other financial instruments included in such transactions were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral where applicable, as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than normal risk of collectibility or present other unfavorable features.
In addition, Monroe Bank & Trust, pursuant to the terms of a lease entered into
on October 15, 2002, paid D-M Company $64,899 in 2003, and over the ten year
term of the lease, payments will total $739,094 as lease payments for the branch
located at 2517 Fort Street, Wyandotte, Michigan. Mr. Daly is an officer of D-M
Company. The lease agreement was entered into prior to Mr. Daly becoming a
director, and Management believes the lease between the Bank and D-M Company was
made on an arms-length basis.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires MBT
Financial Corp.'s executive officers, directors and more than ten percent
shareholders ("Insiders") to file with the Securities and Exchange Commission
and MBT Financial Corp. reports of their ownership of MBT Financial Corp.
securities. Based upon written representations and copies of reports furnished
to MBT Financial Corp. by Insiders, all Section 16 reporting requirements
applicable to Insiders during 2003 were satisfied on a timely basis with the
exception of Ms. Cape and Messrs. Daly, Kiser, Miller and Swy who each filed one
late report covering one transaction in 2003.
SHAREHOLDER NOMINATIONS, PROPOSALS AND COMMUNICATIONS
SHAREHOLDER NOMINATIONS
Under its Corporate Governance Guidelines and Director Policy, the
Governance Committee of the Board will consider recommendations for nominations
received by shareholders in accordance with the Corporation's Bylaws.
Shareholder recommendations for nomination should be submitted in writing to the
Corporation at its principal office in Monroe, Michigan, and must include the
shareholder's name, address, and the number of shares of the Corporation owned
by the shareholder. In considering recommendations the Governance Committee does
not distinguish between shareholder recommendations and those made by directors.
The recommendation should also include the name, age, business address,
residence address, principal occupation of and number of shares of the
Corporation owned by the recommended candidate for nomination. Shareholder
recommendations must also include the information that would be required to be
disclosed in the
19
solicitation of proxies for the election of directors under federal securities
laws, including the candidate's consent to be elected and to serve. The
Corporation may also require any nominee to furnish additional information
regarding the eligibility and qualifications of the recommended candidate.
The Corporation's Bylaws establish advance notice procedures as to the
nomination, other than by the Board of Directors, of candidates for election as
directors. In order to make a director nomination, it is necessary that you
notify the Secretary of the Corporation no fewer than 30 days in advance of next
year's Annual Meeting unless the Corporation gives you less than 40 days notice
or prior public disclosure of the Annual Meeting and then notice of nominations
must be given no later than the tenth day after we mailed notice of the Annual
Meeting to you or made public disclosure of the meeting, but in no event may a
nomination be received by the Secretary of the Corporation less than seven days
prior to the Annual Meeting. Notice of nominations of directors must also meet
all other requirements contained in the Corporation's Bylaws. You may obtain the
Bylaws by written request to the Corporation's Secretary at our principal
executive offices.
SHAREHOLDER PROPOSALS
To be considered eligible for inclusion in the Corporation's Proxy
Statement for the 2005 Annual Meeting of Shareholders, a proposal must be made
by a qualified shareholder and received by the Corporation at its principal
office in Monroe, Michigan, prior to December 3, 2004. Any shareholder who
intends to propose any other matter to be acted upon at the 2005 Annual Meeting
of Shareholders must inform the Corporation not less than thirty days prior to
the meeting; provided, however, that if less than forty days' notice or prior
public disclosure of the date of the meeting is given to shareholders, notice by
the shareholder must be received not later than the close of business on the
tenth day following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. If notice is not provided by that
date, the persons named in the Corporation's proxy for the 2005 Annual Meeting
will be allowed to exercise their discretionary authority to vote upon any such
proposal without the matter having been discussed in the Proxy Statement for the
2005 Annual Meeting. Shareholder proposals should be directed to Mr. Herbert J.
Lock, Secretary, MBT Financial Corp., 102 East Front Street, Monroe, Michigan
48161.
SHAREHOLDER COMMUNICATIONS
Shareholders of the Corporation may send communications to the Board of
Directors through the Corporation's office of Corporate Secretary, MBT Financial
Corp., Inc., 102 E. Front Street, Monroe, Michigan 48161. Communications sent by
qualified shareholders for proper, non-commercial purposes will be transmitted
to the Board of Directors or the appropriate committee, as soon as practicable.
20
SELECTION OF AUDITORS
On April 18, 2002, upon the recommendation of the Audit Committee of
the Board of Directors, the Corporation dismissed Arthur Andersen LLP, as its
independent auditors and engaged the services of Plante & Moran, PLLC, as its
new independent auditors for 2002. Plante & Moran, PLLC was engaged to provide
independent audit services for the Corporation and its subsidiaries and to
provide certain non-audit services including advice on accounting, tax, and
reporting matters. The Audit Committee has retained Plante & Moran, PLLC as
MBT's independent auditors for 2004. Representatives of Plante & Moran, PLLC
will be in attendance at the Annual Meeting of Shareholders, and such
representatives will have an opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions.
During two fiscal years ended December 31, 2001, and the subsequent
interim period through April 18, 2002, there were no disagreements between the
Corporation and Arthur Andersen LLP, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Arthur Andersen LLP's satisfaction, would have
caused Arthur Andersen LLP, to make a reference to the subject matter of the
disagreement in connection with its reports. During the two fiscal years ended
December 31, 2003 and 2002, there were no disagreements between the Corporation
and Plante & Moran, PLLC, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Plante & Moran, PLLC's satisfaction, would
have caused Plante & Moran, PLLC, to make a reference to the subject matter of
the disagreement in connection with its reports.
The audit reports of Plante & Moran, PLLC on our consolidated financial
statements as of and for the fiscal years ended December 31, 2002 and 2003 did
not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During our two fiscal years ended December 31, 2002 and 2003 we did not
consult with Arthur Anderson LLP, or Plante & Moran, PLLC, respectively,
regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii)
of Regulation S-K.
OTHER BUSINESS
Management is not aware of any other matter which may be presented for
action at the meeting other than the matters set forth herein. Should any matter
other than those set forth herein be presented for a vote of the shareholders,
the proxy in the enclosed form directs the persons voting such proxy to vote in
accordance with their judgment.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
21
ANNEX A
MBT FINANCIAL CORP.
MONROE BANK & TRUST
MBT CREDIT COMPANY, INC.
BOARD OF DIRECTORS'
AUDIT POLICY AND AUDIT COMMITTEE CHARTER
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling its oversight responsibilities by reviewing the financial reports and
related financial information provided by the Corporation to governmental
agencies or the general public, the Corporation's system of internal controls
and the effectiveness of its control structure, the Corporation's compliance
with designated laws and regulations, and the Corporation's accounting, internal
and external auditing and financial reporting processes. In discharging its
responsibilities, the audit committee shall:
- - Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
- - Review and evaluate the audit procedures and results of the
Corporation's independent auditor and audit manager.
- - Approve, engage and terminate the independent auditor.
- - Review and evaluate the independent auditor's qualifications,
performance and independence.
- - Review, evaluate and approve any non-audit services the independent
auditor may perform for the Corporation and disclose such approved
non-auditor services in periodic reports to stockholders.
- - Maintain free and open means of communication between the board of
directors, the independent auditor, the audit manager, and the
management of the Corporation.
- - Maintain free and open means of communication between employees and the
audit committee for the processing of complaints received by the
Corporation regarding questionable accounting or auditing matters,
including suspicions of fraudulent activity. See Exhibit A.
- - At least annually, review and update this charter for consideration by
the board of directors and perform an evaluation of the audit committee
performance and function.
ORGANIZATION
The members of the audit committee shall be appointed by the board of directors
and may be removed by the board of directors. The audit committee may consult or
retain its own outside legal, accounting or other advisors and shall determine
the degree of independence from the Corporation required from said advisors. The
audit committee shall meet at least four times per year and report directly to
the full board any issues that arise with the respect to the quality and
integrity of the Corporation's general financial performance and reporting and
regulatory compliance. The audit committee may also meet periodically by itself
to discuss matters it determines require private audit committee or board of
directors' attention. Further, the audit committee shall meet separately with
management, with the audit manager and with the independent auditor. Half of the
audit committee shall be a quorum to transact business.
QUALIFICATIONS
The audit committee shall be composed entirely of independent directors,
determined by the board of directors under MB&T's Corporate Governance
Guidelines and Directors' Policy. The members of the audit committee, as
determined by the board of directors, shall also meet the independence and
financial expertise requirements as indicated by the Securities and Exchange
Commission and the NASDAQ Stock Market, Inc. If the requirements for the above
issues by these institutions are conflicting, the more conservative of the two
shall apply.
INDEPENDENT AUDITORS
The independent auditor shall be engaged by and accountable to the audit
committee and the board of directors. The audit committee shall have the sole
authority to engage and terminate the independent auditor, to review with the
independent auditor the nature and scope of any disclosed relationships or
professional services including all audit engagement fees and terms, and to
take, or recommend that the board of directors take, appropriate action to
ensure the continuing independence of the auditor. The audit committee shall
also set clear policies and standards relating to the Corporations' hiring of
employees or former employees of the independent auditor to ensure continued
independence throughout.
The audit committee shall, on an annual basis, obtain from the independent
auditor a written disclosure delineating all of its relationships and
professional services as required by applicable standards. Additionally, the
audit committee will obtain and review a report of the independent auditor
describing its internal quality-control procedures, material issues raised by
the most recent internal quality-control review of the independent auditor or an
inquiry or investigation by a governmental authority involving one or more
audits
A-2
carried out by the independent auditor in the preceding five years and any steps
or procedures taken to deal with any such issues. After reviewing the
independent auditor's report, the audit committee shall evaluate the auditor's
qualifications, performance and independence. The audit committee shall consider
the opinions of management in making such evaluation.
As required by law, the audit committee shall assure the regular rotation of the
lead and concurring audit partner, and consider whether there should be a
regular rotation of the auditor itself.
The independent auditor shall ascertain that the audit committee is made aware
of, by timely report to the audit committee, all necessary accounting policies
and practices to be used, all alternative treatments of financial information
within generally accepted accounting principles that have been discussed with
management and the risks of using such alternative treatments, and inform the
audit committee of other material written communications between the independent
auditor and management.
INTERNAL AUDIT
The audit committee will oversee the internal audit function and determine that
the audit manager is establishing, maintaining and executing appropriate audit
programs, policies and procedures that govern the examination and audit of the
ledgers, records, procedures and operations of the Corporation and its
affiliates. The audit manager of the Corporation shall communicate directly
report to the audit committee. Administrative oversight shall be provided by an
appropriate executive officer of the Corporation.
FINANCIAL REPORTING OVERSIGHT
In discharging its responsibilities to oversee governmental and public reporting
of financial information, the audit committee shall:
- - Review and discuss the annual audited financial statements, footnotes
and related disclosures included in the Corporation's annual report to
stockholders and its annual report on Form 10-K with financial
management and the independent auditor prior to the release and filing
of such documents. Review with the independent auditor the results of
its annual examination of the financial statements, including their
report thereon, and determine its satisfaction with the disclosures and
content of the financial statements. This review shall cover discussion
of all items required by generally accepted auditing standards
regarding required communications with audit committees. Ascertain that
the results of any internal audit activity or regulatory reports were
appropriately considered in preparing the financial statements.
A-3
- - Review and discuss the quarterly financial results and information with
financial management and the independent auditor to determine that the
independent auditor does not take exception to the disclosure and
content of the financial statements on Form 10-Q, to determine that the
results of any internal audit activity or regulatory reports were
appropriately considered in preparing the financial statements, and to
discuss any other matters required to be communicated to the audit
committee by the independent auditor.
- - Inquire of management, the audit manager, and the independent auditor
about significant risks or exposures and discuss guidelines and
policies to govern the steps management has taken to minimize such risk
to the Corporation.
- - Review and discuss the certification process for the quarterly reports
on Form 10-Q and the annual report on Form 10-K with the audit manager,
the independent auditor, and the chief financial officer.
- - Review the basis for the disclosures made in the annual report to
stockholders under the heading Management's Report on Internal Controls
regarding the control environment of the Corporation and the annual
filing required under the Federal Deposit Insurance Corporation
Improvement Act of 1991.
- - Prepare, review and approve the annual proxy disclosure regarding the
activities and report of the audit committee for the year.
A-4
PROXY FOR MBT FINANCIAL CORP.
SHAREHOLDERS' ANNUAL MEETING
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned holder of _______ common
shares of MBT Financial Corp.
do hereby constitute and
appoint with the full power
of substitution, H. Douglas
Chaffin, James E. Morr, and
John L. Skibski my true and
lawful attorneys and proxies,
and each of them my true and
lawful attorney and proxy, to
attend the annual meeting of
shareholders of MBT Financial
Corp. to be held at 28 South
Macomb Street, Monroe,
Michigan, on May 6, 2004 at
10:00 o'clock A.M., or at any
adjournment thereof, and at
such meeting or any
adjournment thereof, to vote
the shares of stock of MBT
Financial Corp. standing in
my name with respect to the
following matters.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTOR OF EACH OF
THE NOMINEES LISTED BELOW.
1. ELECTION OF DIRECTORS - To elect a Board of Directors for the ensuing
year.
[ ] FOR the election as director of the nominees listed below (except
as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Connie S. Cape William D. McIntyre, Jr
H. Douglas Chaffin Michael J. Miller
Joseph S. Daly Gerald L. Kiser
Thomas M. Huner Richard A. Sieb
Rocque E. Lipford Philip P. Swy
2. PROPOSAL #2 - PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION - To
approve an amendment to the Articles of Incorporation to eliminate
Article IV requiring a two-thirds vote by shareholders to approve
certain mergers involving the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To take any action which may be necessary or proper in connection with
the foregoing matters, or any other matter legally coming before the
meeting, or any adjournments thereof.
I hereby give to said attorneys and proxies, and to each of them, or to any
substitute or substitutes, full power and authority to do any and all acts and
things which I might or could do if personally present, and hereby ratify and
confirm all that said attorneys and proxies, and each of them, or their
substitute or substitutes, might lawfully do or cause to be done by virtue
thereof.
In their discretion, the proxies are authorized to vote in their judgment upon
such other business as properly may come before the meeting or any adjournment
thereof. At the present time, the Board of Directors knows of no other business
to be presented at the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES FOR ELECTION AS DIRECTOR.
WITNESS, my hand and seal this _____________day of ______________, 2004.
_________________________________________
(L.S.)
_________________________________________
(L.S.)
1. Date this Proxy.
2. Sign your name. Each shareholder must sign. If you hold your shares as
a Trustee, Guardian, Custodian or otherwise, indicate such fiduciary
capacity after your signature.
3. Mail this Proxy in the enclosed envelope to American Stock Transfer &
Trust Company, 59 Maiden Lane, New York, NY 10038.
4. THIS PROXY IS REVOCABLE AND IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.