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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-30973
MBT FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-3516922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 E. FRONT STREET
MONROE, MICHIGAN 48161
(Address of principal executive offices)
(Zip Code)
(734) 241-3431
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
As of August 3, 2005, there were 17,292,108 shares of the Corporation's Common
Stock outstanding.
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
JUNE 30, DECEMBER 31,
Dollars in thousands 2005 2004
- ------------------------------------------------- ------------ ------------
ASSETS
Cash and Cash Equivalents
Cash and due from banks $ 23,554 $ 20,540
Federal funds sold - 14,000
------------ ------------
Total cash and cash equivalents 23,554 34,540
Securities - Held to Maturity 75,155 84,141
Securities - Available for Sale 437,646 408,353
Federal Home Loan Bank stock - at cost 13,221 12,947
Loans held for sale 948 778
Loans - Net 953,412 931,303
Accrued interest receivable and other assets 56,163 58,047
Premises and Equipment - Net 23,334 22,170
------------ ------------
Total assets $ 1,583,433 $ 1,552,279
============ ============
LIABILITIES
Deposits:
Non-interest bearing $ 156,449 $ 149,469
Interest-bearing 949,731 951,242
------------ ------------
Total deposits 1,106,180 1,100,711
Federal Home Loan Bank advances 256,500 256,500
Federal funds purchased 24,500 -
Repurchase agreements 30,000 30,000
Interest payable and other liabilities 9,113 9,722
------------ ------------
Total liabilities 1,426,293 1,396,933
------------ ------------
STOCKHOLDERS' EQUITY
Common stock (no par value) - -
Additional paid-in capital 16,104 19,806
Retained Earnings 140,333 135,647
Accumulated other comprehensive income (loss) 703 (107)
------------ ------------
Total stockholders' equity 157,140 155,346
------------ ------------
Total liabilities and stockholders' equity $ 1,583,433 $ 1,552,279
============ ============
The accompanying notes to consolidated financial statements are integral part of
these statements.
-2-
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
THREE MONTHS ENDED JUNE 30,
Dollars in thousands, except per share data 2005 2004
- ------------------------------------------- ------------ -----------
INTEREST INCOME
Interest and fees on loans $ 15,721 $ 13,954
Interest on investment securities-
Tax-exempt 1,264 1,420
Taxable 4,932 3,876
Interest on federal funds sold 2 -
------------ -----------
Total interest income 21,919 19,250
------------ -----------
INTEREST EXPENSE
Interest on deposits 5,485 3,427
Interest on borrowed funds 3,743 2,839
------------ -----------
Total interest expense 9,228 6,266
------------ -----------
NET INTEREST INCOME 12,691 12,984
PROVISION FOR LOAN LOSSES 600 600
------------ -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 12,091 12,384
------------ -----------
OTHER INCOME
Income from trust services 1,024 921
Service charges and other fees 1,469 1,372
Net gain (loss) on sales of securities 123 11
Other 1,048 1,057
------------ -----------
Total other income 3,664 3,361
------------ -----------
OTHER EXPENSES
Salaries and employee benefits 4,875 4,494
Occupancy expense 835 689
Other 2,500 2,812
------------ -----------
Total other expenses 8,210 7,995
------------ -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 7,545 7,750
PROVISION FOR INCOME TAXES 2,176 2,102
------------ -----------
NET INCOME $ 5,369 $ 5,648
============ ===========
BASIC EARNINGS PER COMMON SHARE $ 0.31 $ 0.32
============ ===========
DILUTED EARNINGS PER COMMON SHARE $ 0.31 $ 0.32
============ ===========
COMMON STOCK DIVIDENDS DECLARED PER SHARE $ 0.16 $ 0.15
============ ===========
The accompanying notes to consolidated financial statements are integral part of
these statements.
-3-
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
SIX MONTHS ENDED JUNE 30,
Dollars in thousands, except per share data 2005 2004
- ------------------------------------------- ------------ -----------
INTEREST INCOME
Interest and fees on loans $ 30,754 $ 27,513
Interest on investment securities-
Tax-exempt 2,522 2,860
Taxable 9,431 7,436
Interest on federal funds sold 131 1
------------ -----------
Total interest income 42,838 37,810
------------ -----------
INTEREST EXPENSE
Interest on deposits 10,405 6,666
Interest on borrowed funds 7,120 5,520
------------ -----------
Total interest expense 17,525 12,186
------------ -----------
NET INTEREST INCOME 25,313 25,624
PROVISION FOR LOAN LOSSES 1,200 1,200
------------ -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 24,113 24,424
------------ -----------
OTHER INCOME
Income from trust services 2,087 1,735
Service charges and other fees 2,776 2,650
Net gain on sales of securities 286 118
Other 1,961 2,084
------------ -----------
Total other income 7,110 6,587
------------ -----------
OTHER EXPENSES
Salaries and employee benefits 9,547 8,982
Occupancy expense 1,784 1,497
Other 5,608 5,405
------------ -----------
Total other expenses 16,939 15,884
------------ -----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 14,284 15,127
PROVISION FOR INCOME TAXES 4,036 4,079
------------ -----------
NET INCOME $ 10,248 $ 11,048
============ ===========
BASIC EARNINGS PER COMMON SHARE $ 0.59 $ 0.63
============ ===========
DILUTED EARNINGS PER COMMON SHARE $ 0.59 $ 0.63
============ ===========
COMMON STOCK DIVIDENDS DECLARED PER SHARE $ 0.32 $ 0.30
============ ===========
The accompanying notes to consolidated financial statements are integral part of
these statements.
-4-
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
SIX MONTHS ENDED JUNE 30,
Dollars in thousands 2005 2004
- ------------------------------------------------------------------------------------ ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 10,248 $ 11,048
Adjustments to reconcile net income to net cash from operating activities
Depreciation 1,581 1,359
Provision for loan losses 1,200 1,200
(Increase) decrease in net deferred Federal income tax asset 715 (263)
Net amortization of investment premium and discount 109 385
Net increase (decrease) in interest payable and other liabilities (436) 3,017
Net (increase) decrease in interest receivable and other assets (2,685) (3,116)
Net gain on sales of securities (286) (118)
Increase in cash surrender value of life insurance (548) (765)
------------- -------------
Net cash provided by operating activities $ 9,898 $ 12,747
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and redemptions of investment securities held to maturity $ 10,937 $ 12,849
Proceeds from maturities and redemptions of investment securities available for sale 44,113 38,575
Proceeds from sales of investment securities held to maturity 2,994 -
Proceeds from sales of investment securities available for sale 48,023 51,247
Net increase in loans (23,479) (60,612)
Proceeds from sales of other real estate owned 4,010 5,153
Proceeds from sales of other assets 71 -
Purchase of investment securities held to maturity (5,451) (5,193)
Purchase of investment securities available for sale (119,775) (103,790)
Purchase of bank premises and equipment (2,831) (2,785)
------------- -------------
Net cash used for investing activities $ (41,388) $ (64,556)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ 5,469 $ (676)
Net increase in Federal funds purchased 24,500 12,500
Net increase in Federal Home Loan Bank borrowings - 28,500
Net increase in Repurchase Agreements - 21,900
Proceeds from issuance of common stock 1,090 1,050
Repurchase of common stock (4,966) (2,565)
Dividends paid (5,589) (5,249)
------------- -------------
Net cash provided by financing activities $ 20,504 $ 55,460
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (10,986) $ 3,651
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 34,540 22,525
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 23,554 $ 26,176
============= =============
The accompanying notes to consolidated financial statements are integral part of
these statements.
-5-
MBT FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
ACCUMULATED
ADDITIONAL OTHER
PAID-IN RETAINED COMPREHENSIVE
Dollars in thousands CAPITAL EARNINGS INCOME (LOSS) TOTAL
- ------------------------------------------------------- ---------- --------- ------------- ---------
BALANCE - JANUARY 1, 2005 $ 19,806 $ 135,647 $ (107) $ 155,346
Repurchase of Common Stock (255,000 shares) (4,965) - - (4,965)
Issuance of Common Stock
Stock options exercised (71,348 shares) 1,014 - - 1,014
Other stock issued (3,763 shares) 76 - - 76
Tax benefit from exercise of options 173 - 173
Dividends declared ($0.32 per share) - (5,562) - (5,562)
Comprehensive income:
Net income - 10,248 - 10,248
Change in net unrealized loss on securities
available for sale - Net of tax effect of ($436) - - 810 810
---------- --------- ------------- ---------
Total Comprehensive Income - 10,248 810 11,058
---------- --------- ------------- ---------
BALANCE - JUNE 30, 2005 $ 16,104 $ 140,333 $ 703 $ 157,140
========== ========= ============= =========
The accompanying notes to consolidated financial statements are integral part of
these statements.
-6-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The unaudited consolidated financial statements include the accounts of MBT
Financial Corp. (the "Corporation") and its subsidiary, Monroe Bank & Trust (the
"Bank"). The Bank includes the accounts of its wholly owned subsidiaries, MBT
Credit Company, Inc. and MB&T Financial Services, Inc. The Bank operates
twenty-one branches in Monroe County, Michigan and five branches in Wayne
County, Michigan. MBT Credit Company, Inc. operates a mortgage loan office in
Monroe County. The Bank's primary source of revenue is from providing loans to
customers, who are predominantly small and middle-market businesses and
middle-income individuals. The Corporation's sole business segment is community
banking.
The accounting and reporting policies of the Bank conform to practice within the
banking industry and are in accordance with accounting principles generally
accepted in the United States. Preparation of financial statements in conformity
with generally accepted accounting principles requires Management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant changes in
the near term are the determination of the allowance for loan losses and the
valuation of other real estate owned.
The accompanying unaudited consolidated financial statements of the Corporation
have been prepared in accordance with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
However, such information reflects all adjustments (consisting of normal
recurring adjustments), which are, in the opinion of Management, necessary for
fair statement of results for the interim periods.
The significant accounting policies are as follows:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Corporation
and its subsidiary. All material intercompany transactions and balances have
been eliminated. Certain prior period amounts have been reclassified to conform
to the current period presentation.
COMPREHENSIVE INCOME
Accounting principles generally require that revenue, expenses, gains, and
losses be included in net income. Certain changes in assets and liabilities,
however, such as unrealized gains and losses on securities available for sale,
are reported as a separate component of the equity section of the balance sheet.
Such items, along with net income, are components of comprehensive income.
BUSINESS SEGMENTS
While the Corporation's chief decision makers monitor the revenue streams of
various products and services, operations are managed and financial performance
is evaluated on a company wide basis. Accordingly, all of the Corporation's
operations are considered by management to be aggregated in one reportable
segment.
STOCK-BASED COMPENSATION
The Company applies the provisions of APB Opinion No. 25, "Accounting for
Stock-Based Compensation," for all employee stock option grants and has elected
to disclose pro forma net income and earnings per share amounts as if the
fair-value based method has been applied in measuring compensation costs.
-7-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
The Company's as reported and pro forma earnings information for the quarter and
six months ended June 30 were as follows:
Three Months Ended March 31, Six Months Ended June 30,
Dollars in thousands, except per share data 2005 2004 2005 2004
- ------------------------------------------- ------- ------- -------- --------
Net Income as Reported $ 5,369 $ 5,648 $ 10,248 $ 11,048
Pro Forma Adjustment
Due to Stock Options (115) (91) (230) (197)
------- ------- -------- --------
Pro Forma Net Income $ 5,254 $ 5,557 $ 10,018 $ 10,851
======= ======= ======== ========
Earnings per Share as Reported
Basic $ 0.31 $ 0.32 $ 0.59 $ 0.63
Diluted $ 0.31 $ 0.32 $ 0.59 $ 0.63
Pro Forma Earnings per Share
Basic $ 0.30 $ 0.32 $ 0.58 $ 0.62
Diluted $ 0.30 $ 0.32 $ 0.57 $ 0.62
Compensation expense in the pro forma disclosures is not indicative of future
amounts, as options vest over several years and additional grants are generally
made each year.
The weighted average fair value of options granted was $5.38 in 2005 and $3.84
in 2004. The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions used
for grants: expected option lives of seven years for both years; expected
volatility of 20.8% in 2005 and 25.3% in 2004; and risk-free interest rates of
3.8% in 2005 and 2004.
2. EARNINGS PER SHARE
The calculation of net income per common share for the three months ended June
30 is as follows:
2005 2004
----------- ------------
BASIC
Net income $ 5,369,000 $ 5,648,000
Less preferred dividends - -
----------- ------------
Net income applicable to common stock $ 5,369,000 $ 5,648,000
----------- ------------
Average common shares outstanding 17,337,452 17,429,648
----------- ------------
Earnings per common share - basic $ 0.31 $ 0.32
=========== ============
2005 2004
----------- ------------
DILUTED
Net income $ 5,369,000 $ 5,648,000
Less preferred dividends - -
----------- ------------
Net income applicable to common stock $ 5,369,000 $ 5,648,000
----------- ------------
Average common shares outstanding 17,337,452 17,429,648
Stock option adjustment 74,490 71,047
----------- ------------
Average common shares outstanding - diluted 17,411,942 17,500,695
----------- ------------
Earnings per common share - diluted $ 0.31 $ 0.32
=========== ============
-8-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
The calculation of net income per common share for the six months ended June 30
is as follows:
2005 2004
----------- ------------
BASIC
Net income $10,248,000 $ 11,048,000
Less preferred dividends - -
----------- ------------
Net income applicable to common stock $10,248,000 $ 11,048,000
----------- ------------
Average common shares outstanding 17,417,283 17,465,455
----------- ------------
Earnings per common share - basic $ 0.59 $ 0.63
=========== ============
2005 2004
----------- ------------
DILUTED
Net income $10,248,000 $ 11,048,000
Less preferred dividends - -
----------- ------------
Net income applicable to common stock $10,248,000 $ 11,048,000
----------- ------------
Average common shares outstanding 17,417,283 17,465,455
Stock option adjustment 85,558 69,009
----------- ------------
Average common shares outstanding - diluted 17,502,841 17,534,464
----------- ------------
Earnings per common share - diluted $ 0.59 $ 0.63
=========== ============
The following table summarizes the options that have been granted to
non-employee directors and certain key executives in accordance with the
Long-Term Incentive Compensation Plan that was approved by shareholders at the
Annual Meeting of Shareholders on April 6, 2000.
Weighted Average
Shares Exercise Price
------- ----------------
Options Outstanding, January 1, 2005 433,787 $ 15.22
Granted 136,000 23.40
Exercised 71,348 14.21
Cancelled - -
======= ================
Options Outstanding, June 30, 2005 498,439 $ 17.60
======= ================
Options Exercisable, June, 2005 195,289 $ 15.39
======= ================
3. LOANS
The Bank grants commercial, consumer, and mortgage loans primarily to customers
in Monroe County, Michigan, southern Wayne County, Michigan, and surrounding
areas. Although the Bank has a diversified loan portfolio, a substantial portion
of its debtors' ability to honor their contracts is dependent on the automotive,
manufacturing, and real estate development economic sectors.
-9-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Loans consist of the following (000s omitted):
June 30, December 31,
2005 2004
-------- -----------
Real estate loans $792,339 $ 774,670
Loans to finance agricultural production and
other loans to farmers 3,541 2,333
Commercial and industrial loans 94,015 88,035
Loans to individuals for household, family,
and other personal expenditures 76,858 81,119
All other loans (including overdrafts) 1,775 1,297
-------- -----------
Total loans, gross 968,528 947,454
Less: Deferred loan fees 1,593 1,573
-------- -----------
Total loans, net of deferred loan fees 966,935 945,881
Less: Allowance for loan losses 12,575 13,800
-------- -----------
$954,360 $ 932,081
======== ===========
Loans are placed in a nonaccrual status when, in the opinion of Management, the
collection of additional interest is doubtful. All loan relationships over
$250,000 that are classified by Management as nonperforming are reviewed for
impairment. Allowances for loans determined to be impaired are included in the
allowance for loan losses. All cash received on nonaccrual loans is applied to
the principal balance. Nonperforming assets consist of nonaccrual loans, loans
90 days or more past due, restructured loans, real estate that has been acquired
in full or partial satisfaction of loan obligations or upon foreclosure, and
investment securities that are 90 days or more past due on the interest or
principal payments.
The following table summarizes nonperforming assets (000's omitted):
June 30, December 31,
2005 2004
-------- ------------
Nonaccrual loans $ 27,990 $ 29,015
Loans 90 days past due 48 230
Restructured loans 2,035 3,715
-------- ------------
Total nonperforming loans $ 30,073 $ 32,960
Other real estate owned 5,068 6,958
-------- ------------
Total nonperforming assets $ 35,141 $ 39,918
======== ============
Nonperforming assets to total assets 2.22% 2.57%
Allowance for loan losses to
nonperforming assets 35.78% 34.57%
-10-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
4. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was as follows (000's omitted):
June 30, December 31,
2005 2004
-------- ------------
Balance beginning of year $ 13,800 $ 14,500
Provision for loan losses 1,200 2,491
Loans charged off (3,342) (4,447)
Transfer to establish reserve for
unfunded loan commitments (275) -
Recoveries 1,192 1,256
-------- --------
Balance end of period $ 12,575 $ 13,800
======== ========
For each period, the provision for loan losses in the income statement is based
on Management's estimate of the amount required to maintain an adequate
Allowance for Loan Losses.
To serve as a basis for making this provision, the Bank maintains an extensive
credit risk monitoring process that considers several factors including: current
economic conditions affecting the Bank's customers, the payment performance of
individual loans and pools of homogeneous loans, portfolio seasoning, changes in
collateral values, and detailed reviews of specific loan relationships. For
loans deemed to be impaired due to an expectation that all contractual payments
will probably not be received, impairment is measured by comparing the Bank's
recorded investment in the loan to the present value of expected cash flows
discounted at the loan's effective interest rate, or the fair value of the
collateral, or the loan's observable market price.
The provision for loan losses increases the Allowance for Loan Losses, a
valuation account which is netted against loans on the consolidated statements
of condition. When it is determined that a customer will not repay a loan, the
loan is charged off, reducing the Allowance for Loan Losses. If, subsequent to a
charge off, the Bank is able to collect additional amounts from the customer or
sell collateral worth more than earlier estimated, a recovery is recorded.
-11-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
5. INVESTMENT SECURITIES
The following is a summary of the Bank's investment securities portfolio as of
June 30, 2005 and December 31, 2004 (000's omitted):
June 30, 2005 December 31, 2004
---------------------------------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
--------- ------------ --------- ------------
Held to Maturity
Obligations of U.S. Government Agencies $ 19 $ 20 $ 527 $ 578
Obligations of States and Political
Subdivisions 75,136 76,706 80,622 82,636
Other Securities - - 2,992 3,074
--------- ------------ --------- ------------
$ 75,155 $ 76,726 $ 84,141 $ 86,288
========= ============ ========= ============
June 30, 2005 December 31, 2004
---------------------------------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
--------- ------------ --------- ------------
Available for Sale
Obligations of U.S. Government Agencies $ 346,073 $ 346,068 $ 315,410 $ 314,381
Obligations of States and Political
Subdivisions 30,331 31,097 28,635 29,187
Other Securities 60,161 60,481 64,472 64,785
--------- ------------ --------- ------------
$ 436,565 $ 437,646 $ 408,517 $ 408,353
========= ============ ========= ============
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and standby letters
of credit. Those instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the consolidated
statements of condition.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those instruments.
The Bank uses the same credit policies in making commitments and conditional
obligations as it does for its other lending activities.
-12-
MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Financial instruments whose contractual amounts represent off-balance sheet
credit risk were as follows (000s omitted):
CONTRACTUAL AMOUNT
JUNE 30, DECEMBER 31,
2005 2004
-------- ------------
Commitments to extend credit:
Unused portion of commercial lines of credit $119,495 $ 123,739
Unused portion of credit card lines of credit 7,132 7,265
Unused portion of home equity lines of credit 22,662 23,709
Standby letters of credit and financial guarantees written 16,555 16,449
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Most
commercial lines of credit are secured by real estate mortgages or other
collateral, and generally have fixed expiration dates or other termination
clauses. Since the lines of credit may expire without being drawn upon, the
total committed amounts do not necessarily represent future cash requirements.
Credit card lines of credit have various established expiration dates, but are
fundable on demand. Home equity lines of credit are secured by real estate
mortgages, a majority of which have ten year expiration dates, but are fundable
on demand. The Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of the collateral obtained, if deemed necessary by the Bank
upon extension of credit, is based on Management's credit evaluation of the
counterparty.
Standby letters of credit written are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements and
other business transactions.
-13-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 Corporation'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 does not undertake, and specifically disclaims any obligation,
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
FINANCIAL CONDITION
During the first half of 2005, the Bank's deposits increased only $5.5 million,
or 0.5%. During that same period, total loans increased $21.1 million, or 2.2%
and total assets increased $31.2 million, or 2%. In addition to the deposit
growth, the loan and asset growth was funded by an increase of $24.5 million, or
8.6% in borrowed funds. The Bank is the depository for several municipalities
which collect taxes beginning in December each year. This typically results in
an increase in deposit and asset totals near year end. These deposits gradually
decrease until early in the second quarter and deposit growth resumes later in
the second quarter. Loan growth was negatively impacted by the sale of a $3
million portion of a commercial account, the sale of $7 million of fixed rate
mortgage loans, the mutually agreeable exit of a large residential land
development account, and a $3 million reduction in non-performing loans. After a
decline in the fourth quarter of 2004, the loan pipeline returned to a normal
level in the second quarter of 2005. Loan growth remains strong in the downriver
market, with commercial growth there of $8 million, or 7.5% in the second
quarter of 2005.
The bank has continued its effort to expand into the southern Wayne County,
Michigan market, opening its fifth Wayne County branch in the second quarter of
2005. Deposits in this market now exceed $80 million and approximately one half
of our commercial loan volume is generated in Wayne County.
Management believes that the quality of the loan portfolio is continuing to
improve. Nonperforming assets ("NPAs") decreased $4.8 million, or 12% since year
end as we continue to work out the existing NPAs and improved lending practices
have resulted in a reduction of the amount of new NPAs being identified. Most of
the bank's lending is secured by real estate, which allows us to maintain a
lower ratio of Allowance for Loan Losses to NPAs compared to other banks. Net
charge offs in the first half were $2.2 million, which includes liquidating
three significant non-performing credits for a loss of $1.9 million in the first
quarter. In each of the three cases, the charge off was within the specified
allocation of the Allowance for Loan Losses, which provides support that our
allowance analysis methodology is effective. We may reduce the Allowance further
in the third quarter of 2005 as a non-performing loan may be partially charged
-14-
off prior to its transfer to Other Real Estate Owned. We do not expect the
amount charged off to exceed the specified allocation for that individual credit
relationship. Furthermore, we plan to liquidate some of our Other Real Estate
Owned in the second half of 2005.
RESULTS OF OPERATIONS - SECOND QUARTER 2005 VS. SECOND QUARTER 2004
A comparison of the income statements for the three months ended June 30, 2005
and 2004 shows a decrease of $293,000, or 2.3% in Net Interest Income. Interest
income on loans and investments increased $2.7 million, or 13.9% and interest
expense increased $3.0 million, or 47.3%. Average loans outstanding increased
$48.0 million and the average yield on those loans increased from 6.18% to
6.61%, resulting in an increase of $1.8 million in interest and fees on loans.
The fed rate increases that began late in the second quarter of 2004 and
continued through the second quarter of 2005 had a positive impact on our income
as our loan portfolio contains approximately $275 million of variable rate,
prime indexed loans. Average investments and fed funds sold increased $53.3
million and the yield increased from 4.49% to 4.72%. Longer term market interest
rates have not increased as much as short term rates, limiting the amount of
improvement in our fixed rate loan and investment yields.
Average deposits increased 7.4% from $1.03 billion in the second quarter of 2004
to $1.10 billion in the second quarter of 2005. At the same time the average
cost of these deposits increased from 1.34% to 1.99%. The result was a 60.1%
increase in Interest on Deposits from $3.4 million to $5.5 million. Average
borrowed funds increased from $283.0 million in the second quarter of 2004 to
$308.7 million in the second quarter of 2005, while the average cost of these
borrowings increased from 4.02% to 4.86%. This increase in the cost of the
borrowed funds was due to the increases in the fed funds rate and the repricing
of $123 million of Federal Home Loan Bank advances that are indexed to three
month LIBOR. The cost of deposits also increased slightly compared to the second
quarter of 2004 as customers continued to shift funds into higher yielding,
longer term certificates of deposit and we increased our use of brokered CDs as
a source of longer term funding. Rising market rates are expected to cause our
deposit costs to continue to increase in the third quarter. We also expect to
experience an increase in the cost of borrowed funds as higher short term rates
impact our LIBOR based variable rate FHLB borrowings and federal funds borrowed.
The Provision for Loan Losses was unchanged from the second quarter of 2004 at
$600,000. Net charge offs decreased from $384,000 in 2004 to $65,000 in 2005.
Although our Allowance for Loan Losses decreased from 1.62% of loans at June 30,
2004 to 1.30% at June 30, 2005, our analysis indicates that the Allowance for
Loan Losses is adequate to cover the losses expected in our portfolio. We
believe that we will be able to maintain the adequacy of the allowance without
significantly increasing the provision for loan losses.
Non interest income increased 9.0%. The table below summarizes the changes in
the components of non interest income (000s omitted) for the quarters ended:
June 30, June 30,
2005 2004 % Change
-------- -------- --------
Trust Income $ 1,024 $ 921 11.2%
Deposit Account Service Charges 291 412 -29.4%
Other Deposit Account Related Fees 1,178 960 22.7%
Origination Fees/Gains on Loans Sold 198 169 17.2%
Gains (Losses) on Securities Transactions 123 11 1018.2%
BOLI Earnings 274 379 -27.7%
Other Income 576 509 13.2%
-------- -------- --------
$ 3,664 $ 3,361 9.0%
-15-
Trust Income improved due to improvements in the market values of trust accounts
and increases in the fees charged. The decrease in Deposit Account Service
Charges was due to the introduction of our free checking product in the second
quarter of 2004. The introduction of this product has resulted in an increase in
non interest bearing transaction accounts and contributed to the increase in
Other Deposit Account Related Fees, which primarily consists of NSF and Stop
Payment fees. Origination Fees and Gains on Mortgage Loans Sold increased as the
low mortgage rates and strong housing market have kept mortgage loan activity
strong. The income from Bank Owned Life Insurance policies decreased as the
yields on the policies owned began to decline in the fourth quarter of 2004.
Salaries and Employee Benefits increased $381,000, or 8.5%, as the number of
full time equivalent employees increased 9.3% from 387 to 423. The increase in
the number of employees is attributed to three factors. The retail staff
increased due to the addition of two branches in the downriver market, seasonal
staffing to cover summer vacations was larger in 2005, and additional temporary
staffing to cover employees on temporary leaves of absence was also higher. We
expect the number of full time equivalent employees to decrease slightly in the
third quarter. Occupancy Expense increased $146,000, or 21.2%, due to the Bank's
expansion into the southern Wayne County area, the replacement of the Temperance
branch in 2004, and the acceleration of depreciation expense on a parking lot in
downtown Monroe that will become the site of the company's new headquarters.
Other Expenses decreased $312,000, or 11.1% primarily due to a gain of $394,000
on the sale of an Other Real Estate Owned property in the second quarter of
2005. Excluding OREO activity, Other Expenses increased $124,000, or 4.9%. Core
non interest expenses were consistent with our expectations for the quarter, and
we do not expect them to increase significantly during the second half of 2005.
As a result of the above activity, Income Before Provision for Income Taxes
decreased $205,000, or 2.6%. The Provision for Income Taxes increased $74,000,
or 3.5%, and reflects an effective tax rate of 28.8% compared to the effective
tax rate of 27.1% in the second quarter of 2004. The increase in the cost of
funds and the decrease in tax exempt interest income caused the increase in the
effective tax rate. Net Income decreased $279,000, or 4.9% compared to the
second quarter of 2005.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2005 VS. 2004
A comparison of the income statements for the six months ended June 30, 2005 and
2004 shows a decrease of $311,000, or 1.2% in Net Interest Income. Interest
income on loans and investments increased $5.0 million, or 13.3% and interest
expense increased $5.3 million, or 43.8%. Average loans outstanding increased
$62.6 million and the average yield on those loans increased from 6.21% to
6.52%, resulting in an increase of $3.2 million in interest and fees on loans.
The fed rate increases that began late in the second quarter of 2004 and
continued through the second quarter of 2005 had a positive impact on our
interest income as our loan portfolio contains approximately $275 million of
variable rate, prime indexed loans. Average investments and fed funds sold
increased $55.2 million and the yield increased from 4.26% to 4.63%. Longer term
market interest rates have not increased as much as short term rates, limiting
the amount of improvement in our fixed rate loan and investment yields.
Average deposits for the first six months of 2005 increased $81.8 million, or
8.0% compared to the first half of 2004. At the same time the average cost of
these deposits increased from 1.30% to 1.88%. The result was a 56.1% increase in
Interest on Deposits from $6.7 million to $10.4 million. Average borrowed funds
increased from $267.7 million in the first six months of 2004 to $298.4 million
in the first six months of 2005, while the average cost of these borrowings
increased from 4.14% to 4.81%. This increase in the cost of the borrowed funds
was due to the increases in the fed funds rate and the quarterly repricing of
$123 million of Federal Home Loan Bank advances that are indexed to three month
LIBOR. The cost of deposits also increased slightly compared to the first six
months of 2004 as customers continued to shift funds into
-16-
higher yielding, longer term certificates of deposit and we increased our use of
brokered CDs as a source of longer term funding. Rising market rates are
expected to cause our deposit costs to continue to increase in the second half
of 2005. We also expect to experience an increase in the cost of borrowed funds
as higher short term rates impact our LIBOR based variable rate FHLB borrowings
and federal funds borrowed.
The Provision for Loan Losses was unchanged from the first six months of 2004 at
$1.2 million. Net charge offs increased from $724,000 in 2004 to $2,150,000 in
2005. Although our Allowance for Loan Losses decreased from 1.62% of loans at
June 30, 2004 to 1.30% at June 30, 2005, our analysis indicates that the
Allowance for Loan Losses is adequate to cover the losses expected in our
portfolio. We believe that we will be able to maintain the adequacy of the
allowance without significantly increasing the provision for loan losses.
Non interest income increased 7.9%. The table below summarizes the changes in
the components of non interest income (000s omitted) for the six months ended:
June 30, June 30,
2005 2004 % Change
-------- -------- --------
Trust Income $ 2,087 $ 1,735 20.3%
Deposit Account Service Charges 607 822 -26.2%
Other Deposit Account Related Fees 2,169 1,828 18.7%
Origination Fees on Loans Sold 304 329 -7.6%
Gains on Securities Transactions 286 118 142.4%
BOLI Earnings 548 765 -28.4%
Other Income 1,109 990 12.0%
-------- -------- -----
$ 7,110 $ 6,587 7.9%
Trust Income improved due to improvements in the market values of trust accounts
and increases in the fees charged. The decrease in Deposit Account Service
Charges was due to the introduction of our free checking product in the second
quarter of 2004. The introduction of this product has resulted in an increase in
non interest bearing transaction accounts and contributed to the increase in
Other Deposit Account Related Fees, which primarily consists of NSF and Stop
Payment fees. Although the low mortgage rates and strong housing market have
kept mortgage loan activity strong, the Origination Fees and Gains on Mortgage
Loans Sold decreased slightly as refinance activity decreased slightly. The
income from Bank Owned Life Insurance policies decreased as the yields on the
policies owned began to decline in the fourth quarter of 2004.
Salaries and Employee Benefits increased $565,000, or 6.3%, as the number of
full time equivalent employees increased 9.3% from 387 to 423. The annual
incentive compensation is based on corporate earnings performance compared to
our goal. During the first six months of 2005 our earnings performance was below
our goal, and as a result, the amount of incentive payment accrued was $131,000
less than the amount accrued in the first six months of 2004. Occupancy Expense
increased $287,000, or 19.2%, due to the Bank's expansion into the southern
Wayne County area, the replacement of the Temperance branch in 2004, and the
acceleration of depreciation expense on a parking lot in downtown Monroe that
will become the site of the company's new headquarters. Other Expenses increased
$203,000, or 3.8% compared to the first six months of 2004. We do not expect
core non interest expenses to increase significantly during the second half of
2005 as compared to the first half of 2005.
As a result of the above activity, Income Before Provision for Income Taxes
decreased $843,000, or 5.6%. The Provision for Income Taxes decreased $43,000,
or 1.1%, and reflects an effective tax rate of 28.3% compared to the effective
tax rate of 27.0% in the first six months of 2004. The increase in the cost of
funds and the decrease in tax exempt interest income caused the
-17-
increase in the effective tax rate. Net Income decreased $800,000, or 7.2%
compared to the second quarter of 2004.
LIQUIDITY AND CAPITAL
The Corporation has maintained sufficient liquidity to fund its loan growth and
allow for fluctuations in deposit levels. Internal sources of liquidity are
provided by the maturities of loans and securities as well as holdings of
securities Available for Sale. External sources of liquidity include a line of
credit with the Federal Home Loan Bank of Indianapolis, the Federal funds lines
that have been established with correspondent banks, and Repurchase Agreements
with money center banks that allow us to pledge securities as collateral for
borrowings. As of June 30, 2005, the Bank utilized $256.5 million of its
authorized limit of $275 million with the Federal Home Loan Bank of Indianapolis
and $24.5 million of its $110 million of federal funds lines with its
correspondent banks.
Total stockholders' equity of the Corporation was $157.1 million at June 30,
2005 and $155.3 million at December 31, 2004. The ratio of equity to assets was
9.9% at June 30, 2005 and 10.0% at December 31, 2004. Federal bank regulatory
agencies have set capital adequacy standards for Total Risk Based Capital, Tier
1 Risk Based Capital, and Leverage Capital. These standards require banks to
maintain Leverage and Tier 1 ratios of at least 4% and a Total Capital ratio of
at least 8% to be adequately capitalized. The regulatory agencies consider a
bank to be well capitalized if its Total Risk Based Capital is at least 10% of
Risk Weighted Assets, Tier 1 Capital is at least 6% of Risk Weighted Assets, and
Leverage Capital Ratio is at least 5%.
The following table summarizes the capital ratios of the Corporation:
Minimum to be Well
June 30, 2005 December 31, 2004 Capitalized
------------- ----------------- ------------------
Leverage Capital 9.9% 10.0% 5.0%
Tier 1 Risk Based Capital 14.2% 14.3% 6.0%
Total Risk Based Capital 15.4% 15.6% 10.0%
At June 30, 2005 and December 31, 2004, the Bank was in compliance with the
capital guidelines and is considered "well-capitalized" under regulatory
standards.
Market risk for the Bank, as is typical for most banks, consists mainly of
interest rate risk and market price risk. The Bank's earnings and the economic
value of its equity are exposed to interest rate risk and market price risk, and
monitoring this risk is the responsibility of the Asset/Liability Management
Committee (ALCO) of the Bank. The Bank's market risk is monitored monthly and it
has not changed significantly since year-end 2004.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Bank faces market risk to the extent that the fair values of its financial
instruments are affected by changes in interest rates. The Bank does not face
market risk due to changes in foreign currency exchange rates, commodity prices,
or equity prices. The asset and liability management process of the Bank seeks
to monitor and manage the amount of interest rate risk. This is accomplished by
analyzing the differences in repricing opportunities for assets and liabilities,
by simulating operating results under varying interest rate scenarios, and by
estimating the change in the net present value of the Bank's assets and
liabilities due to interest rate changes.
Each month, the Asset and Liability Committee (ALCO), which includes the senior
management of the Bank, estimates the effect of interest rate changes on the
projected net interest income of the Bank. The sensitivity of the Bank's net
interest income to changes in interest rates is
-18-
measured by using a computer based simulation model to estimate the impact on
earnings of a gradual increase or decrease of 100 basis points in the prime
rate. The net interest income projections are compared to a base case
projection, which assumes no changes in interest rates.
The Bank's ALCO has established limits in the acceptable amount of interest rate
risk, as measured by the change in the Bank's projected net interest income, in
its policy. Throughout the first six months of 2005, the estimated variability
of the net interest income was within the Bank's established policy limits.
The ALCO also monitors interest rate risk by estimating the effect of changes in
interest rates on the economic value of the Bank's equity each month. The actual
economic value of the Bank's equity is first determined by subtracting the fair
value of the Bank's liabilities from the fair value of the Bank's assets. The
fair values are determined in accordance with Statement of Financial Accounting
Standards Number 107, Disclosures about Fair Value of Financial Instruments. The
Bank estimates the interest rate risk by calculating the effect of market
interest rate shocks on the economic value of its equity. For this analysis, the
Bank assumes immediate parallel shifts of plus or minus 100 and 200 basis points
in interest rates. The discount rates used to determine the present values of
the loans and deposits, as well as the prepayment rates for the loans, are based
on Management's expectations of the effect of the rate shock on the market for
loans and deposits.
The Bank's ALCO has established limits in the acceptable amount of interest rate
risk, as measured by the change in economic value of the Bank's equity, in its
policy. Throughout the first six months of 2005, the estimated variability of
the economic value of equity was within the Bank's established policy limits.
The Bank's interest rate risk, as measured by the net interest income and
economic value of equity simulations, has not changed significantly from
December 31, 2004.
ITEM 4. CONTROLS AND PROCEDURES
The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures as of
June 30, 2005, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of June 30, 2005,
in alerting them in a timely manner to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the
Company's periodic SEC filings.
There was no change in the Company's internal control over financial reporting
that occurred during the Company's fiscal quarter ended June 30, 2005, that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
MBT Financial Corp. and its subsidiaries are not a party to, nor is any of their
property the subject of any material legal proceedings other than ordinary
routine litigation incidental to their respective businesses, nor are any such
proceedings known to be contemplated by governmental authorities.
-19-
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. The
following table summarizes the repurchase activity of the Company's stock during
the three months ended June 30, 2005:
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Total Number of Average Part of Publicly Be Purchased Under
Shares Price Paid Announced Plans or the Plans or
Purchased per Share Programs Programs
--------------- ---------- ------------------- -------------------
April 1, 2005 - April 30, 2005 140,000 $ 19.30 140,000 1,805,000
May 1, 2005 - May 31, 2005 60,000 $ 19.08 60,000 1,745,000
June 1, 2005 - June 30, 2005 - $ - - 1,745,000
------- --------- ------- ---------
Total 200,000 $ 19.23 200,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of MBT Financial Corp. was held on May 5,
2005. The following directors were elected to a new term of office:
Peter H. Carlton
H. Douglas Chaffin
Joseph S. Daly
Thomas M. Huner
Rocque E. Lipford
William D. McIntyre, Jr.
Michael J. Miller
Philip P. Swy
Karen M. Wilson
The Annual Meeting of Shareholders of MBT Financial Corp. was held for the
following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The results of the voting are as follows:
Proposal 1, Election of Directors:
Withhold
For Authority
---------- ---------
Peter H. Carlton 9,938,741 392,380
H. Douglas Chaffin 10,158,640 172,481
Joseph S. Daly 10,151,251 179,870
Thomas M. Huner 10,071,553 259,568
Rocque E. Lipford 7,582,965 2,748,156
William D. McIntyre, Jr. 9,011,748 1,319,373
Michael J. Miller 10,135,123 195,998
Philip P. Swy 9,995,034 336,087
Karen M. Wilson 9,970,615 360,506
-20-
ITEM 5. OTHER INFORMATION
No matters to be reported.
ITEM 6. EXHIBITS
The following exhibits are filed as a part of this report:
3.1 Restated Articles of Incorporation of MBT Financial Corp. Previously filed
as Exhibit 3.1 to MBT Financial Corp.'s Form 10-K for its fiscal year
ended December 31, 2000.
3.2 Amended and Restated Bylaws of MBT Financial Corp. Previously filed as
Exhibit 3.2 to MBT Financial Corp.'s Form 10-K for its fiscal year ended
December 31, 2004.
31.1 Certification by Chief Executive Officer required by Securities and
Exchange Commission Rule 13a-14.
31.2 Certification by Chief Financial Officer required by Securities and
Exchange Commission Rule 13a-14.
32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MBT Financial Corp.
---------------------------
(Registrant)
August 3, 2005 /s/ H. Douglas Chaffin
- -------------- ---------------------------
Date H. Douglas Chaffin
President &
Chief Executive Officer
August 3, 2005 John L. Skibski
- -------------- ---------------------------
Date John L. Skibski
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Number Description of Exhibits
- -------------- -----------------------
3.1 Restated Articles of Incorporation of MBT Financial Corp.
Previously filed as Exhibit 3.1 to MBT Financial Corp.'s
Form 10-K for its fiscal year ended December 31, 2000.
3.2 Amended and Restated Bylaws of MBT Financial Corp.
Previously filed as Exhibit 3.2 to MBT Financial Corp.'s
Form 10-K for its fiscal year ended December 31, 2004.
31.1 Certification by Chief Executive Officer required by
Securities and Exchange Commission Rule 13a-14.
31.2 Certification by Chief Financial Officer required by
Securities and Exchange Commission Rule 13a-14.
32.1 Certification by Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as enacted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification by Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as enacted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.