M B T Financial Corp (MBTF, Financial) filed Quarterly Report for the period ended 2010-06-30.
M B T Financial Corp has a market cap of $29.9 million; its shares were traded at around $1.84 with and P/S ratio of 0.4. MBTF is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Net Interest Income - A comparison of the income statements for the three months ended June 30, 2009 and 2010 shows a decrease of $997,000, or 9.8%, in Net Interest Income. Interest income on loans decreased $1.5 million or 11.6% as the average loans outstanding decreased $102.0 million and the average yield on loans decreased from 5.75% to 5.72%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $1.8 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $39.0 million and the yield decreased from 4.41% to 2.94%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity and prepayment of some high cost borrowings and brokered certificates of deposit allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $1.2 million or 27.2% as the average deposits decreased $36.7 million and the average cost of those deposits decreased from 1.74% to 1.31%. The cost of borrowed funds decreased $1.1 million as the average amount of borrowed funds decreased $71.4 million and the average cost of the borrowings decreased from 4.38% to 3.72%.
Other Expenses – Total non interest expenses decreased $2.0 million or 13.4% compared to the second quarter of 2009. Most expense categories were flat or decreased due to cost containment initiatives implemented throughout the last year. Salaries and Employee Benefits decreased $748,000, or 13.9%, due to a decrease in staff, elimination of the 401(k) matching contribution and the elimination of the incentive pay accrual. Professional fees increased $99,000 primarily due to increases in legal and other professional fees paid for collection activities. Losses on Other Real Estate Owned (OREO) properties decreased $3.2 million due to significant writedowns and losses from a large auction of foreclosed properties in the second quarter of 2009. The OREO losses of $954,000 in the second quarter of 2010 included writedowns of $994,000 and gains on sales of $40,000. In the second quarter of 2009, the OREO losses of $4,174,000 included writedowns of $3,372,000 and losses on sales of $802,000. FDIC deposit insurance premium expense decreased $639,000 due to a special assessment of $663,000 in the second quarter of 2009. In the second quarter of 2010 the Bank incurred a prepayment penalty of $2.5 million to prepay $115.0 million in borrowings from the Federal Home Loan Bank of Indianapolis. The prepayment of the borrowings improved the capital ratios and the loss will be recovered through lower interest expense in the second half of the year.
Net Interest Income - A comparison of the income statements for the six months ended June 30, 2009 and 2010 shows a decrease of $1.8 million, or 8.8%, in Net Interest Income. Interest income on loans decreased $3.2 million or 11.9% as the average loans outstanding decreased $100.3 million and the average yield on loans decreased from 5.82% to 5.76%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $3.9 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $46.0 million and the yield decreased from 4.53% to 3.11%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity and prepayment of some high cost borrowings and brokered certificates of deposit allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $3.4 million or 33.8% as the average deposits decreased $56.4 million and the average cost of those deposits decreased from 1.89% to 1.32%. The cost of borrowed funds decreased $1.8 million as the average amount of borrowed funds decreased $53.0 million and the average cost of the borrowings decreased from 4.44% to 3.88%.
Other Expenses – Total non interest expenses decreased $3.1 million or 11.5% compared to the first six months of 2009. Salaries and Employee Benefits decreased $1.1 million, or 10.3%, due to a decrease in staff, elimination of the 401(k) matching contribution in the second quarter of 2010, and the elimination of the incentive pay accrual. Collection expense decreased $368,000 due to a large expense in the first quarter of 2009 to secure our lien on a property that collateralized a loan. Losses on Other Real Estate Owned (OREO) properties decreased $4.0 million due to significant writedowns in 2009 due to the rapid decline in property values and losses from a large auction of foreclosed properties in the second quarter of 2009. The OREO losses of $1,990,000 in 2010 included writedowns of $1,814,000 and losses on sales of $176,000. In the first six months of 2009, the OREO losses of $6,030,000 included writedowns of $5,201,000 and losses on sales of $829,000. Other real estate expenses increased $586,000 due to increased property tax, maintenance, and insurance costs on properties held in OREO. FDIC deposit insurance premium expense decreased $444,000 due to a special assessment of $663,000 in the second quarter of 2009. In the second quarter of 2010 the Bank incurred a prepayment penalty of $2.5 million to prepay $115.0 million in borrowings from the Federal Home Loan Bank of Indianapolis. The prepayment of the borrowings improved the capital ratios and the loss will be recovered through lower interest expense in the second half of 2010.
Cash flows provided by operating activities decreased from $3.3 million in the first six months of 2009 to $1.9 million in the first six months of 2010 as the smaller net loss was offset by smaller non cash charges for the provision for loan losses, writedowns of OREO, and OTTI of investment securities. Cash flows provided by investing activities increased from $80.6 million in the first six months of 2009 to $130.0 million in the first six months of 2010 primarily due to an increase in the sales, maturities, and redemptions of investment securities. The increase in the sales of investment securities was due to the sales of federal agency debt and mortgage backed securities to prepay FHLB borrowings in the first six months of 2010. The amount of cash used for financing activities increased from $111.1 million in the first six months of 2009 to $123.1 million in the first six months of 2010 even though the decrease in deposits decreased from $96.6 million in 2009 to $8.1 million in 2010 because the amount of cash used for repayment of FHLB borrowings increased from $13.0 million to $115.0 million. Also, dividends paid decreased from $1.6 million in the first six months of 2009 to zero in the first six months of 2010 as the dividend was eliminated in the third quarter of 2009.
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M B T Financial Corp has a market cap of $29.9 million; its shares were traded at around $1.84 with and P/S ratio of 0.4. MBTF is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
The amount of nonperforming assets (“NPAs”) increased $3.7 million or 3.4% since year end. NPAs include non performing loans, which increased 4.8% from $86.1 million to $90.3 million, and Other Real Estate Owned and Other Assets (“OREO”), which decreased 2.4% from $18.8 million to $18.4 million. Total problem assets, which includes all NPAs and performing loans that are internally classified as substandard, decreased $0.9 million, or 0.5%. As of June 30, 2010, the largest concentrations in the NPA category are commercial real estate investment properties at approximately $18 million, residential mortgage loans at $16 million, and residential development loans at $14 million. The Company s Allowance for Loan and Lease Losses (“ALLL”) decreased $37,000 since December 31, 2009, resulting from an increase in our FAS 114 allocation from $6.5 million to $11.5 million, and a decrease from $17.6 million to $12.5 million in our FAS 5 general allocation due to the overall decrease in the size of the loan portfolio and the amount of the portfolio that is subject to the FAS 5 allocation. The loss factors utilized in the general allocation include loss averages for the most recent eight quarters and adjustments for various current factors, such as recent delinquency trends and national and local economic conditions. The ALLL is now 2.97% of loans, compared to 2.83% at December 31, 2009. The ALLL is 26.6% of NPLs, compared to 27.9% at year end. In light of current economic conditions, we believe that at this level the ALLL adequately estimates the potential losses in the loan portfolio.Net Interest Income - A comparison of the income statements for the three months ended June 30, 2009 and 2010 shows a decrease of $997,000, or 9.8%, in Net Interest Income. Interest income on loans decreased $1.5 million or 11.6% as the average loans outstanding decreased $102.0 million and the average yield on loans decreased from 5.75% to 5.72%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $1.8 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $39.0 million and the yield decreased from 4.41% to 2.94%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity and prepayment of some high cost borrowings and brokered certificates of deposit allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $1.2 million or 27.2% as the average deposits decreased $36.7 million and the average cost of those deposits decreased from 1.74% to 1.31%. The cost of borrowed funds decreased $1.1 million as the average amount of borrowed funds decreased $71.4 million and the average cost of the borrowings decreased from 4.38% to 3.72%.
Other Expenses – Total non interest expenses decreased $2.0 million or 13.4% compared to the second quarter of 2009. Most expense categories were flat or decreased due to cost containment initiatives implemented throughout the last year. Salaries and Employee Benefits decreased $748,000, or 13.9%, due to a decrease in staff, elimination of the 401(k) matching contribution and the elimination of the incentive pay accrual. Professional fees increased $99,000 primarily due to increases in legal and other professional fees paid for collection activities. Losses on Other Real Estate Owned (OREO) properties decreased $3.2 million due to significant writedowns and losses from a large auction of foreclosed properties in the second quarter of 2009. The OREO losses of $954,000 in the second quarter of 2010 included writedowns of $994,000 and gains on sales of $40,000. In the second quarter of 2009, the OREO losses of $4,174,000 included writedowns of $3,372,000 and losses on sales of $802,000. FDIC deposit insurance premium expense decreased $639,000 due to a special assessment of $663,000 in the second quarter of 2009. In the second quarter of 2010 the Bank incurred a prepayment penalty of $2.5 million to prepay $115.0 million in borrowings from the Federal Home Loan Bank of Indianapolis. The prepayment of the borrowings improved the capital ratios and the loss will be recovered through lower interest expense in the second half of the year.
Net Interest Income - A comparison of the income statements for the six months ended June 30, 2009 and 2010 shows a decrease of $1.8 million, or 8.8%, in Net Interest Income. Interest income on loans decreased $3.2 million or 11.9% as the average loans outstanding decreased $100.3 million and the average yield on loans decreased from 5.82% to 5.76%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $3.9 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $46.0 million and the yield decreased from 4.53% to 3.11%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity and prepayment of some high cost borrowings and brokered certificates of deposit allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $3.4 million or 33.8% as the average deposits decreased $56.4 million and the average cost of those deposits decreased from 1.89% to 1.32%. The cost of borrowed funds decreased $1.8 million as the average amount of borrowed funds decreased $53.0 million and the average cost of the borrowings decreased from 4.44% to 3.88%.
Other Expenses – Total non interest expenses decreased $3.1 million or 11.5% compared to the first six months of 2009. Salaries and Employee Benefits decreased $1.1 million, or 10.3%, due to a decrease in staff, elimination of the 401(k) matching contribution in the second quarter of 2010, and the elimination of the incentive pay accrual. Collection expense decreased $368,000 due to a large expense in the first quarter of 2009 to secure our lien on a property that collateralized a loan. Losses on Other Real Estate Owned (OREO) properties decreased $4.0 million due to significant writedowns in 2009 due to the rapid decline in property values and losses from a large auction of foreclosed properties in the second quarter of 2009. The OREO losses of $1,990,000 in 2010 included writedowns of $1,814,000 and losses on sales of $176,000. In the first six months of 2009, the OREO losses of $6,030,000 included writedowns of $5,201,000 and losses on sales of $829,000. Other real estate expenses increased $586,000 due to increased property tax, maintenance, and insurance costs on properties held in OREO. FDIC deposit insurance premium expense decreased $444,000 due to a special assessment of $663,000 in the second quarter of 2009. In the second quarter of 2010 the Bank incurred a prepayment penalty of $2.5 million to prepay $115.0 million in borrowings from the Federal Home Loan Bank of Indianapolis. The prepayment of the borrowings improved the capital ratios and the loss will be recovered through lower interest expense in the second half of 2010.
Cash flows provided by operating activities decreased from $3.3 million in the first six months of 2009 to $1.9 million in the first six months of 2010 as the smaller net loss was offset by smaller non cash charges for the provision for loan losses, writedowns of OREO, and OTTI of investment securities. Cash flows provided by investing activities increased from $80.6 million in the first six months of 2009 to $130.0 million in the first six months of 2010 primarily due to an increase in the sales, maturities, and redemptions of investment securities. The increase in the sales of investment securities was due to the sales of federal agency debt and mortgage backed securities to prepay FHLB borrowings in the first six months of 2010. The amount of cash used for financing activities increased from $111.1 million in the first six months of 2009 to $123.1 million in the first six months of 2010 even though the decrease in deposits decreased from $96.6 million in 2009 to $8.1 million in 2010 because the amount of cash used for repayment of FHLB borrowings increased from $13.0 million to $115.0 million. Also, dividends paid decreased from $1.6 million in the first six months of 2009 to zero in the first six months of 2010 as the dividend was eliminated in the third quarter of 2009.
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