================================================================================
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, 2007
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 a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act (check
one).
Large accelerated filer [ ] Accelerated Filer [X] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
As of August 7, 2007, there were 16,300,970 shares of the Company's Common Stock
outstanding.
================================================================================
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MBT FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2007 DECEMBER 31,
Dollars in thousands (UNAUDITED) 2006
- -------------------- ------------- ------------
ASSETS
Cash and Cash Equivalents
Cash and due from banks $ 26,037 $ 27,903
Federal funds sold 5,800 --
---------- ----------
Total cash and cash equivalents 31,837 27,903
Securities - Held to Maturity 49,734 64,938
Securities - Available for Sale 331,940 374,087
Federal Home Loan Bank stock - at cost 13,086 13,086
Loans held for sale 1,475 721
Loans - Net 986,693 984,513
Accrued interest receivable and other assets 25,964 27,961
Bank Owned Life Insurance 41,845 39,631
Premises and Equipment - Net 33,452 33,979
---------- ----------
Total assets $1,516,026 $1,566,819
========== ==========
LIABILITIES
Deposits:
Non-interest bearing $ 145,870 $ 158,688
Interest-bearing 932,561 957,369
---------- ----------
Total deposits 1,078,431 1,116,057
Federal Home Loan Bank advances 256,500 256,500
Federal funds purchased -- 3,500
Repurchase agreements 35,000 40,000
Interest payable and other liabilities 15,039 14,700
---------- ----------
Total liabilities 1,384,970 1,430,757
---------- ----------
STOCKHOLDERS' EQUITY
Common stock (no par value) -- --
Additional paid-in capital 2,820 6,979
Retained Earnings 135,454 134,162
Accumulated other comprehensive loss (7,218) (5,079)
---------- ----------
Total stockholders' equity 131,056 136,062
---------- ----------
Total liabilities and stockholders' equity $1,516,026 $1,566,819
========== ==========
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 2007 2006
- ------------------------------------------- ------- -------
INTEREST INCOME
Interest and fees on loans $17,751 $17,840
Interest on investment securities-
Tax-exempt 871 1,085
Taxable 4,582 5,014
Interest on federal funds sold 84 1
------- -------
Total interest income 23,288 23,940
------- -------
INTEREST EXPENSE
Interest on deposits 7,981 7,266
Interest on borrowed funds 4,520 4,752
------- -------
Total interest expense 12,501 12,018
------- -------
NET INTEREST INCOME 10,787 11,922
PROVISION FOR LOAN LOSSES 750 6,675
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 10,037 5,247
------- -------
OTHER INCOME (LOSS)
Income from trust services 1,151 1,070
Service charges and other fees 1,574 1,566
Net gain (loss) on sales of securities 92 (4,927)
Origination fees on mortgage loans sold 210 135
Bank owned life insurance income 334 292
Other 758 624
------- -------
Total other income 4,119 (1,240)
------- -------
OTHER EXPENSES
Salaries and employee benefits 5,599 5,340
Occupancy expense 844 712
Equipment expense 850 747
Marketing expense 369 346
Professional fees 406 288
Net (gain) loss on other real estate owned (8) 1,287
Other 1,219 1,332
------- -------
Total other expenses 9,279 10,052
------- -------
INCOME (LOSS) BEFORE INCOME TAXES 4,877 (6,045)
INCOME TAX EXPENSE (BENEFIT) 1,342 (2,469)
------- -------
NET INCOME (LOSS) $ 3,535 $(3,576)
======= =======
BASIC EARNINGS (LOSS) PER COMMON SHARE $ 0.21 $ (0.21)
======= =======
DILUTED EARNINGS (LOSS) PER COMMON SHARE $ 0.21 $ (0.21)
======= =======
COMMON STOCK DIVIDENDS DECLARED PER SHARE $ 0.18 $ 0.17
======= =======
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 2007 2006
- ------------------------------------------- ------- -------
INTEREST INCOME
Interest and fees on loans $35,512 $35,009
Interest on investment securities-
Tax-exempt 1,880 2,242
Taxable 9,497 10,362
Interest on federal funds sold 116 55
------- -------
Total interest income 47,005 47,668
------- -------
INTEREST EXPENSE
Interest on deposits 15,936 14,763
Interest on borrowed funds 9,099 8,815
------- -------
Total interest expense 25,035 23,578
------- -------
NET INTEREST INCOME 21,970 24,090
PROVISION FOR LOAN LOSSES 1,500 7,350
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 20,470 16,740
------- -------
OTHER INCOME
Income from trust services 2,218 2,132
Service charges and other fees 3,099 3,030
Net gain (loss) on sales of securities 92 (4,907)
Origination fees on mortgage loans sold 393 276
Bank Owned Life Insurance income 630 575
Other 1,450 1,238
------- -------
Total other income 7,882 2,344
------- -------
OTHER EXPENSES
Salaries and employee benefits 11,048 10,518
Occupancy expense 1,724 1,479
Equipment expense 1,695 1,545
Marketing expense 621 718
Professional fees 776 616
Net (gain) loss on other real estate 10 1,237
Other 2,517 2,428
------- -------
Total other expenses 18,391 18,541
------- -------
INCOME BEFORE INCOME TAXES 9,961 543
INCOME TAX EXPENSE (BENEFIT) 2,723 (607)
------- -------
NET INCOME $ 7,238 $ 1,150
======= =======
BASIC EARNINGS PER COMMON SHARE $ 0.43 $ 0.07
======= =======
DILUTED EARNINGS PER COMMON SHARE $ 0.43 $ 0.07
======= =======
COMMON STOCK DIVIDENDS DECLARED PER SHARE $ 0.36 $ 0.34
======= =======
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 2007 2006
- -------------------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 7,238 $ 1,150
Adjustments to reconcile net income to net cash from operating activities
Depreciation 1,379 1,256
Provision for loan losses 1,500 7,350
Increase in net deferred Federal income tax asset (351) (1,842)
Net amortization of investment premium and discount (160) 55
Net increase (decrease) in interest payable and other liabilities 562 (32)
Net (increase) decrease in interest receivable and other assets 2,430 (4,582)
Equity Compensation 340 240
Net (gain) loss on sales of securities (92) 4,907
Increase in cash surrender value of life insurance (630) (575)
-------- --------
Net cash provided by operating activities $ 12,216 $ 7,927
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and redemptions of investment securities held to maturity $ 16,595 $ 15,522
Proceeds from maturities and redemptions of investment securities available for sale 6,489 3,435
Proceeds from sales of investment securities available for sale 47,733 52,387
Net increase in loans (4,434) (38,975)
Proceeds from sales of other real estate owned 1,104 1,976
Proceeds from sales of other assets 26 44
Purchase of investment securities held to maturity (1,411) (1,574)
Purchase of bank owned life insurance (1,584) (2,138)
Purchase of investment securities available for sale (15,317) --
Purchase of bank premises and equipment (852) (6,731)
-------- --------
Net cash provided by investing activities $ 48,349 $ 23,946
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits $(37,626) $(68,680)
Net increase (decrease) in short term borrowings (3,500) 36,822
Net increase (decrease) in securities sold under repurchase agreements (5,000) 5,000
Proceeds from issuance of common stock 57 179
Repurchase of common stock (4,556) (5,651)
Dividends paid (6,006) (5,824)
-------- --------
Net cash used for financing activities $(56,631) $(38,154)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 3,934 $ (6,281)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 27,903 37,330
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 31,837 $ 31,049
======== ========
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, 2007 $ 6,979 $134,162 $(5,079) $136,062
Repurchase of Common Stock (338,600 shares) (4,556) -- -- (4,556)
Issuance of Common Stock (4,242 shares) 57 -- -- 57
Equity Compensation 340 -- -- 340
Dividends declared ($0.36 per share) -- (5,946) -- (5,946)
Comprehensive income:
Net income -- 7,238 -- 7,238
Change in net unrealized loss on securities
available for sale - Net of tax effect of $1,230 -- -- (2,284) (2,284)
Change in postretirement benefit obligation
Net of tax effect of ($78) -- -- 145 145
------- -------- ------- --------
Total Comprehensive Income 5,099
------- -------- ------- --------
BALANCE - JUNE 30, 2007 $ 2,820 $135,454 $(7,218) $131,056
======= ======== ======= ========
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 "Company") 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 Company'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 Company 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 Company 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 Company'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 Company's operations
are considered by management to be aggregated in one reportable segment.
STOCK-BASED COMPENSATION
On January 1, 2006, the Company adopted SFAS 123(R), "Accounting for Stock Based
Compensation" for all share based payments to employees, including grants of
stock options and restricted stock units. The amount of compensation is measured
at the fair value of the options
-7-
when granted, and this cost is expensed over the required service period, which
is normally the vesting period of the options.
SFAS 123(R) applies to awards granted or modified after January 1, 2006.
Compensation cost is also recorded for prior option grants that vest after the
date of adoption. The compensation expense recorded under FAS 123(R) in the six
months ended June 30, 2007 and June 30, 2006 was $340,000 and $240,000,
respectively.
The weighted average fair value of options granted was $2.76 in 2007 and $3.61
in 2006. The fair value of each option grant is estimated on the date of the
grant using the Black-Scholes option pricing model with the following
assumptions: expected option lives of seven years for both years; expected
volatility of 20.3% in 2007 and 22.9% in 2006; and risk-free interest rates of
4.7% in 2007 and 4.5% in 2006.
ACCOUNTING PRONOUNCEMENTS
In February 2007, the Financial Accounting Standards Board "FASB" issued FAS No.
159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS
159). FAS 159 is effective for fiscal years beginning after November 15, 2007.
Early adoption is permitted subject to specific requirements outlined in the new
Statement. Calendar year companies are able to adopt FAS 159 for their first
quarter 2007 financial statements.
FAS 159 allows the Company to choose, at specified election dates, to measure
eligible financial assets and financial liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes to that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities.
In April 2007, the Company elected early adoption of FAS 159 as of January 1,
2007. The Company did not select any financial assets or financial liabilities
for fair value measurement, but elected early adoption in order to be able to
apply the fair value option to financial assets and financial liabilities that
may be acquired prior to the effective date of the statements.
In September 2006, FASB issued FAS No. 157, Fair Value Measurements (FAS 157).
FAS 157 defines fair value, establishes a framework for measuring fair value,
and expands disclosures about the use of fair value measurements. FAS 157 is
effective for fiscal years beginning after November 15, 2007. Upon adoption of
FAS 159, the Company concurrently adopted the provisions of FAS 157, effective
January 1, 2007. Accordingly, the Company has developed a framework to measure
the fair value of financial assets and financial liabilities. Upon election to
apply fair value measurement of financial assets or financial liabilities, the
Company will expand disclosures in accordance with the requirements of FAS 157.
-8-
2. EARNINGS PER SHARE
The calculation of net income per common share for the three months ended June
30 is as follows:
2007 2006
----------- -----------
BASIC
Net income (loss) $ 3,535,000 $(3,576,000)
Less preferred dividends -- --
----------- -----------
Net income (loss) applicable to common stock $ 3,535,000 $(3,576,000)
----------- -----------
Average common shares outstanding 16,558,137 16,969,365
----------- -----------
Earnings (loss) per common share - basic $ 0.21 $ (0.21)
=========== ===========
2007 2006
----------- -----------
DILUTED
Net income (loss) $ 3,535,000 $(3,576,000)
Less preferred dividends -- --
----------- -----------
Net income (loss) applicable to common stock $ 3,535,000 $(3,576,000)
----------- -----------
Average common shares outstanding 16,558,137 16,969,365
Stock option adjustment 27,583 31,198
----------- -----------
Average common shares outstanding - diluted 16,585,720 17,000,563
----------- -----------
Earnings (loss) per common share - diluted $ 0.21 $ (0.21)
=========== ===========
The calculation of net income per common share for the six months ended June 30
is as follows:
2007 2006
----------- -----------
BASIC
Net income $ 7,238,000 $ 1,150,000
Less preferred dividends -- --
----------- -----------
Net income applicable to common stock $ 7,238,000 $ 1,150,000
----------- -----------
Average common shares outstanding 16,622,204 17,040,245
----------- -----------
Earnings per common share - basic $ 0.43 $ 0.07
=========== ===========
2007 2006
----------- -----------
DILUTED
Net income $ 7,238,000 $ 1,150,000
Less preferred dividends -- --
----------- -----------
Net income applicable to common stock $ 7,238,000 $ 1,150,000
----------- -----------
Average common shares outstanding 16,622,204 17,040,245
Stock option adjustment 28,969 35,529
----------- -----------
Average common shares outstanding - diluted 16,651,173 17,075,774
----------- -----------
Earnings per common share - diluted $ 0.43 $ 0.07
=========== ===========
-9-
3. STOCK BASED COMPENSATION
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, 2007 510,143 $17.73
Granted 94,500 15.33
Exercised -- --
Forfeited -- --
------- ------
Options Outstanding, June 30, 2007 604,643 $17.36
------- ------
Options Exercisable, June 30, 2007 407,991 $17.32
------- ------
On January 2, 2007, performance restricted stock units were awarded to 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. Each performance stock unit (PSU) is equivalent to one share of MBT
Financial Corp. common stock. Stock will be issued to the participants following
a three year performance period that ends on December 31, 2009 based on the
cumulative earnings per share during that three year period. The PSUs vest on
December 31, 2009. There were 23,800 PSUs granted, and none will be considered
vested and earned for payment if the Company's three year cumulative earnings
per share are less than $2.91. The expense recorded for the PSUs in accordance
with FAS 123(R) was $44,000 in the first six months of 2007. The total expense
for equity based compensation was $340,000 in the first six months of 2007 and
$240,000 in the first six months of 2006.
4. 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.
Loans consist of the following (000s omitted):
June 30, December 31,
2007 2006
---------- ------------
Residential real estate loans $ 503,812 $513,289
Non-residential real estate loans 345,080 328,145
Loans to finance agricultural production and
other loans to farmers 6,301 3,739
Commercial and industrial loans 98,332 97,959
Loans to individuals for household, family,
and other personal expenditures 47,458 55,443
All other loans (including overdrafts) 424 473
---------- --------
Total loans, gross 1,001,407 999,048
Less: Deferred loan fees 634 771
---------- --------
Total loans, net of deferred loan fees 1,000,773 998,277
Less: Allowance for loan losses 14,080 13,764
---------- --------
$ 986,693 $984,513
========== ========
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 as well as selected
performing accounts 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,
and other real estate owned. Other real estate owned includes real estate that
has been
-10-
acquired in full or partial satisfaction of loan obligations or upon foreclosure
and real estate that the bank has purchased but no longer intends to use for
bank premises.
The following table summarizes nonperforming assets (000's omitted):
June 30, December 31,
2007 2006
-------- ------------
Nonaccrual loans $20,017 $19,152
Loans 90 days past due 105 69
Restructured loans 1,371 888
------- -------
Total nonperforming loans $21,493 $20,109
Other real estate owned 3,064 2,432
------- -------
Total nonperforming assets $24,557 $22,541
======= =======
Nonperforming assets to total assets 1.62% 1.44%
Allowance for loan losses to
nonperforming assets 57.34% 61.06%
5. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses was as follows (000's omitted):
Six months Twelve months
ended ended
June 30, 2007 December 31, 2006
------------- -----------------
Balance beginning of year $13,764 $ 13,625
Provision for loan losses 1,500 16,475
Loans charged off (2,170) (18,377)
Recoveries 986 2,041
------- --------
Balance end of period $14,080 $ 13,764
======= ========
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-
6. INVESTMENT SECURITIES
The following is a summary of the Bank's investment securities portfolio as of
June 30, 2007 and December 31, 2006 (000's omitted):
June 30, 2007 December 31, 2006
------------------------ ------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
--------- ------------ --------- ------------
Held to Maturity
Obligations of U.S. Government Agencies $ 9 $ 9 $ 10 $ 10
Obligations of States and Political
Subdivisions 49,725 49,880 64,928 65,330
------- ------- ------- -------
$49,734 $49,889 $64,938 $65,340
======= ======= ======= =======
June 30, 2007 December 31, 2006
------------------------ ------------------------
Amortized Estimated Amortized Estimated
Cost Market Value Cost Market Value
--------- ------------ --------- ------------
Available for Sale
Obligations of U.S. Government Agencies $302,888 $295,813 $326,808 $322,934
Obligations of States and Political
Subdivisions 25,495 25,072 23,226 23,129
Other Securities 11,028 11,055 28,004 28,024
-------- -------- -------- --------
$339,411 $331,940 $378,038 $374,087
======== ======== ======== ========
The unrealized losses on investment securities are primarily the result of
increases in market interest rates and not the result of credit quality of the
issuers of the securities. The Company has the ability and intent to hold most
of these securities until recovery, which may be until maturity. For securities
in which the Company no longer has the intent to hold until recovery, the
securities are treated as other than temporarily impaired and the amount of
impairment is charged to earnings.
7. 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-
Financial instruments whose contractual amounts represent off-balance sheet
credit risk were as follows (000s omitted):
Contractual Amount
-----------------------
June 30, December 31,
2007 2006
-------- ------------
Commitments to extend credit:
Unused portion of commercial lines of credit $95,343 $100,265
Unused portion of credit card lines of credit 5,898 5,802
Unused portion of home equity lines of credit 20,857 20,873
Standby letters of credit and financial guarantees written 11,690 12,234
All other off-balance sheet assets 12,522 3,922
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
MBT Financial Corp. (the "Company) is a bank holding company with one
subsidiary, Monroe Bank & Trust ("the Bank"). The Bank is a commercial bank with
two wholly owned subsidiaries, MBT Credit Company, Inc. and MB&T Financial
Services. MBT Credit Company, Inc. conducts lending operations for the Bank and
MB&T Financial Services is an insurance agency which sells insurance policies to
the Bank. The Bank operates 21 branch offices in Monroe County, Michigan and 5
offices in Wayne County, Michigan. The Bank's primary source of income is
interest income on its loans and investments and its primary expense is interest
expense on its deposits and borrowings.
Certain statements contained herein are not based on historical facts and are
"forward-looking statements" within the meaning of Section 21A of the Securities
Exchange Act of 1934. Forward-looking statements which are based on various
assumptions (some of which are beyond the Company's control), may be identified
by reference to a future period or periods, or by the use of forward-looking
terminology, such as "may," "will," "believe," "expect," "estimate,"
"anticipate," "continue," or similar terms or variations on those terms, or the
negative of these terms. Actual results could differ materially from those set
forth in forward-looking statements, due to a variety of factors, including, but
not limited to, those related to the economic environment, particularly in the
market areas in which the Company operates, competitive products and pricing,
fiscal and monetary policies of the U.S. Government, changes in government
regulations affecting financial institutions, including regulatory fees and
capital requirements, changes in prevailing interest rates, acquisitions and the
integration of acquired
-13-
businesses, credit risk management, asset/liability management, changes in the
financial and securities markets, including changes with respect to the market
value of our financial assets, the availability of and costs associated with
sources of liquidity, and the ability of the Company to resolve or dispose of
problem loans.
The Company 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.
Critical Accounting Policies
The Company's Allowance for Loan Losses is a "critical accounting estimate"
because it is an estimate that is based on assumptions that are highly
uncertain, and if different assumptions were used or if any of the assumptions
used were to change, there could be a material impact on the presentation of the
Company's financial condition. These assumptions include, but are not limited
to, collateral values and the effect of economic conditions on the financial
condition of the borrowers. To determine the Allowance for Loan Losses, the
Company estimates losses on all loans that are not classified as non accrual or
renegotiated by applying historical loss rates to those loans in accordance with
SFAS 5. In addition, all loans that are non accrual or renegotiated are
individually tested for impairment. Any amount of monetary impairment is
included in the Allowance for Loan Losses in accordance with SFAS 114.
Financial Condition
The flat yield curve environment that began in 2005 persisted through the first
half of 2007. In this environment the spread between the yield on assets and the
cost of funds is narrow, providing little opportunity for profitable growth
without increasing exposure to interest rate risk. The Company continued its
strategy of controlling the decline in its net interest margin by restricting
its growth and changing the mix of its assets to increase the percent invested
in loans. Compared to June 30, 2006, the loan to asset ratio increased from
64.1% to 66.1% and total assets decreased $82.6 million.
Since December 31, 2006, total loans increased only $3.3 million (0.3%) as weak
regional economic conditions have resulted in slower loan demand. Total cash and
investments decreased $53.4 million (11.1%), and total assets decreased $50.8
million (3.2%). Consumer loans decreased $8.0 million, or 14.4% due to a
reduction in lending for autos and other personal expenditures. Loan growth
efforts are focused on real estate secured loans, particularly home equity
lending. Deposits decreased $37.6 million, or 3.4%, due to the normal seasonal
reduction in public fund deposits and pricing strategies designed to restrict
our certificate of deposit growth and control our interest expense. Total
capital decreased $5.0 million or 3.7% as the Company repurchased 338,600 shares
of its stock for $4.6 million, net income exceeded dividends declared by $1.3
million, and accumulated other comprehensive income decreased $2.1 million,
primarily due to the decrease in the value of securities available for sale. The
capital to assets ratio decreased from 8.68% at December 31, 2006 to 8.64% at
June 30, 2007.
The amount of nonperforming assets ("NPAs") increased $2.0 million or 8.9% since
year end, but total problem assets decreased $2.8 million, or 4.5%. The
Company's Allowance for Loan and Lease Losses ("ALLL") increased $316,000 since
December 31, 2006, as the provision for loan losses exceeded the net charge offs
during the first two quarters of 2007. The ALLL is now 1.40% of loans, compared
to 1.38% at year end. The ALLL is 57.3% of NPAs, a decrease from 61.1% at year
end, but an increase from 53.9% a year ago. Because a significant portion of the
Bank's lending is secured by real estate, we believe that at this level the ALLL
adequately estimates the potential losses in the loan portfolio.
-14-
Results of Operations - Second Quarter 2007 vs. Second Quarter 2006
Net Interest Income - A comparison of the income statements for the three months
ended June 30, 2006 and 2007 shows a decrease of $1.1 million, or 9.5% in Net
Interest Income. Interest income on loans decreased $89,000 or 0.5% as the
average loans outstanding decreased $23.0 million but the average yield on loans
increased from 7.04% to 7.16%. Even though the yield on investments and fed
funds sold increased from 5.01% to 5.21%, the interest income on investments and
fed funds sold decreased $563,000 as the average amount of investments and fed
funds sold decreased $62.7 million. The yields on assets increased slightly due
to the increases in market interest rates and the restructuring of the
investment portfolio that was completed early in the third quarter of 2006.
Shorter term market interest rates have increased more rapidly than the longer
term rates, causing funding costs to rise faster than asset yields. The interest
expense on deposits increased $715,000, or 9.8% as average deposits decreased
$39.7 million but the average cost of those deposits increased from 2.61% to
2.98%. The cost of borrowed funds decreased $232,000 as the average amount of
borrowed funds decreased $38.5 million and the average cost of the borrowings
increased from 5.65% to 6.07%.
Provision for Loan Losses - The Provision for Loan Losses decreased from $6.7
million in the second quarter of 2006 to $750,000 in the second quarter of 2007
due to a $6.0 million charge to provide for an individual credit relationship in
the second quarter of 2006. The provision in the second quarter of 2007 was
sufficient to provide for the net charge offs and to increase our Allowance for
Loan Losses as regional economic conditions remain weaker than the rest of the
country. Net charge offs were $739,000 during the second quarter of 2007,
compared to $3.4 million in the second quarter of 2006. Each quarter, the
Company conducts a review and analysis of its ALLL to ensure its adequacy. This
analysis involves specific allocations for impaired credits and a general
allocation for losses expected based on historical experience adjusted for
current conditions.
Other Income - Non interest income increased $5.4 million in the second quarter
of 2007 compared to the second quarter of 2006 due to a loss of $5.0 million to
write down investment securities prior to their sale in 2006. Excluding this
transaction, non interest income increased $0.4 million, or 9.5%. Origination
Fees and Gains on Mortgage Loans Sold increased as the amount of fixed rate
mortgage loans originated for sale has increased. Bank Owned Life Insurance
earnings increased due to an increase in the investment in BOLI from $39.0
million as of June 30, 2006 to $41.8 million at June 30, 2007. Other income
increased due to increased ATM and debit card activity.
Other Expenses - Total non interest expenses decreased $773,000 or 7.7% compared
to the second quarter of 2006 due to losses of $1.3 million on sales and write
downs of Other Real Estate Owned in 2006. Excluding the OREO activity, non
interest expenses increased $522,000, or 6.0%. Salaries and Employee Benefits
increased $259,000, or 4.9%, as the number of full time equivalent employees
increased from 418 to 425. Occupancy Expense increased $132,000, or 18.5%,
compared to the second quarter of 2006. Depreciation increased, primarily due to
the new headquarters building completed in the third quarter of 2006. Various
other expenses increased $131,000, or 4.8%.
As a result of the above activity, the Income (Loss) Before Income Taxes
increased $10.9 million to $4.9 million. The income tax expense (benefit)
increased $3.8 million from a benefit of $2.5 million to an expense of $1.3
million, and reflects an effective tax rate of 27.5%. The Net Profit of $3.5
million is an improvement of $7.1 million from the Loss of $3.6 million in the
second quarter of 2006.
-15-
Results of Operations - Six Months Ended June 30, 2007 vs. June 30, 2006
Net Interest Income - A comparison of the income statements for the six months
ended June 30, 2006 and 2007 shows a decrease of $2.1 million, or 8.8% in Net
Interest Income. Interest income on loans increased $503,000 or 1.4% as the
average loans outstanding decreased $13.7 million but the average yield on loans
increased from 7.01% to 7.21%. Even though the yield on investments and fed
funds sold increased from 5.00% to 5.28%, the interest income on investments and
fed funds sold decreased $1.2 million as the average amount of investments and
fed funds sold decreased $71.0 million. The yields on assets increased slightly
due to the increases in market interest rates and the restructuring of the
investment portfolio that was completed early in the third quarter of 2006.
Shorter term market interest rates have increased more rapidly than the longer
term rates, causing funding costs to rise faster than asset yields. The interest
expense on deposits increased $1.2 million, or 7.9% even though average deposits
decreased $55.8 million because the average cost of those deposits increased
from 2.60% to 2.95%. The cost of borrowed funds increased $284,000 as the
average amount of borrowed funds decreased $15.9 million while the average cost
of the borrowings increased from 5.57% to 6.06%.
Provision for Loan Losses - The Provision for Loan Losses decreased from $7.4
million in the first half of 2006 to $1.5 million in the first half of 2007 due
to a $6.0 million charge for an individual credit relationship in the 2006. The
provision in 2007 was sufficient to provide for the net charge offs and to
increase our Allowance for Loan Losses as regional economic conditions remain
weaker than the rest of the country. Net charge offs were $1.2 million during
the first six months of 2007, compared to $3.5 million in the first six months
of 2006. Each quarter, the Company conducts a review and analysis of its ALLL to
ensure its adequacy. This analysis involves specific allocations for impaired
credits and a general allocation for losses expected based on historical
experience adjusted for current conditions.
Other Income - Non interest income increased $5.5 million in the first six
months of 2007 compared to the first six months of 2006 due to a charge of $5.0
million to write down investment securities prior to their sale in 2006.
Excluding this transaction, non interest income increased $0.6 million, or 7.8%.
Origination Fees and Gains on Mortgage Loans Sold increased $117,000, or 42.4%
as the amount of fixed rate mortgage loans originated for sale has increased.
Bank Owned Life Insurance earnings increased due to an increase in the
investment in BOLI. Other income increased due to increased ATM and debit card
activity.
Other Expenses - Total non interest expenses decreased $150,000 or 0.8% compared
to the first six months of 2006 due to losses of $1.2 million on sales and write
downs of Other Real Estate Owned in 2006. Excluding the OREO activity, non
interest expenses increased $1.1 million, or 6.2%. Salaries and Employee
Benefits increased $530,000, or 5.0%, as the number of full time equivalent
employees increased from 418 to 425. Occupancy Expense increased $245,000, or
16.6%, compared to the first six months of 2006. Depreciation increased,
primarily due to the new headquarters building completed in the third quarter of
2006. Various other expenses increased $302,000, or 5.7%.
As a result of the above activity, the Income Before Income Taxes increased $9.4
million to $10.0 million. The income tax expense (benefit) increased $3.3
million from a benefit of $0.6 million to an expense of $2.7 million, and
reflects an effective tax rate of 27.3%. The Net Profit of $7.2 million is an
increase of $6.1 million compared to the profit of $1.1 million earned in the
first six months of 2006.
-16-
Liquidity and Capital
The Company 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, 2007, the Bank utilized $256.5 million of its
authorized limit of $275 million with the Federal Home Loan Bank of Indianapolis
and none of its $110 million of federal funds lines with its correspondent
banks.
Total stockholders' equity of the Company was $131.1 million at June 30, 2007
and $136.1 million at December 31, 2006. The ratio of equity to assets was 8.6%
at June 30, 2007 and 8.7% at December 31, 2006. 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 the
Leverage Capital Ratio is at least 5%.
The following table summarizes the capital ratios of the Company:
Minimum to be Well
June 30, 2007 December 31, 2006 Capitalized
------------- ----------------- ------------------
Leverage Capital 9.1% 8.9% 5.0%
Tier 1 Risk Based Capital 12.8% 12.8% 6.0%
Total Risk Based Capital 14.1% 14.0% 10.0%
At June 30, 2007 and December 31, 2006, 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 2006.
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 measured by using a computer
based simulation model to estimate the impact on earnings of a
-17-
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 2007, 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 2007, 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, 2006.
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, 2007, 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, 2007,
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, 2007, 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.
-18-
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors disclosed by the Company
in its Report on Form 10-K for the fiscal year ended December 31, 2006.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The Company has a stock repurchase program which it publicly announced on
January 9, 2007. On that date, the Board of Directors authorized the repurchase
of 1 million of the Company's common shares, which authorization will expire on
December 31, 2007. The following table summarizes the repurchase activity of the
Company's stock during the three months ended June 30, 2007:
Total Number of
Shares Purchased as Maximum Number of
Total Number Average Part of Shares that May
of Shares Price Paid Publicly Announced Yet Be Purchased Under
Purchased per Share Plans or Programs the Plans or Programs
------------ ---------- ------------------- ----------------------
April 1, 2007 - April 30, 2007 24,000 $12.83 24,000 904,500
May 1, 2007 - May 31, 2007 98,900 $12.65 98,900 805,600
June 1, 2007 - June 30, 2007 144,200 $14.07 144,200 661,400
------- ------ ------- -------
Total 267,100 $13.43 267,100
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 3,
2007. 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
Debra J. Shah
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.
-19-
The results of the voting are as follows:
Proposal 1, Election of Directors:
Withhold
For Authority
---------- ---------
Peter H. Carlton 14,242,078 312,960
H. Douglas Chaffin 14,342,580 212,458
Joseph S. Daly 13,146,378 1,408,660
Thomas M. Huner 14,204,740 350,298
Rocque E. Lipford 11,049,027 3,506,012
William D. McIntyre, Jr. 13,212,079 1,342,959
Michael J. Miller 14,215,533 339,506
Debra J. Shah 14,089,369 465,669
Philip P. Swy 14,134,060 420,978
Karen M. Wilson 13,894,872 660,166
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.
10.1 MBT Financial Corp. Severance Agreement with Scott E. McKelvey.
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.
-20-
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 7, 2007 By /s/ H. Douglas Chaffin
Date -------------------------------------
H. Douglas Chaffin
President & Chief Executive Officer
August 7, 2007 By /s/ John L. Skibski
Date ------------------------------------
John L. Skibski
Executive Vice President and
Chief Financial Officer
-21-
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.
10.1 MBT Financial Corp. Severance Agreement with Scott E. McKelvey
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 Executive Officer pursuant to 18 U.S.C.
Section 1350, as enacted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.