M B T Financial Corp (MBTF, Financial) filed Quarterly Report for the period ended 2010-03-31.
M B T Financial Corp has a market cap of $51 million; its shares were traded at around $3.14 with and P/S ratio of 0.7. MBTF is in the portfolios of Jim Simons of Renaissance Technologies LLC.
The amount of nonperforming assets (“NPAs”) increased $4.5 million or 4.1% since year end. NPAs include non performing loans, which increased 4.3% from $86.1 million to $89.8 million, and Other Real Estate Owned and Other Assets (“OREO”), which increased 4.3% from $18.8 million to $19.6 million. Total problem assets, which includes all NPAs and performing loans that are internally classified as substandard, increased $2.3 million, or 1.5%. The Company s Allowance for Loan and Lease Losses (“ALLL”) increased $49,000 since December 31, 2009, resulting from an increase in our FAS 114 allocation from $6.5 million to $8.3 million, and a decrease from $17.6 million to $15.8 million in our FAS 5 general allocation due to the decrease in the size of the loan portfolio. 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 2.93% of loans, compared to 2.83% at year end. The ALLL is 26.9% 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 March 31, 2009 and 2010 shows a decrease of $808,000, or 7.9%, in Net Interest Income. Interest income on loans decreased $1.7 million or 12.1% as the average loans outstanding decreased $108.3 million and the average yield on loans decreased from 5.90% to 5.86%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $2.0 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $35.5 million and the yield decreased from 4.65% to 3.14%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity 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 $2.2 million or 39.3% as the average deposits decreased $67.5 million and the average cost of those deposits decreased from 2.03% to 1.32%. The cost of borrowed funds decreased $0.7 million as the average amount of borrowed funds decreased $33.8 million and the average cost of the borrowings decreased from 4.52% to 4.01%.
Other Expenses – Total non interest expenses decreased $1.1 million or 9.2% compared to the first 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 $365,000, or 6.7%, due to a decrease in staff, a decrease in the 401(k) matching contribution and the elimination of the incentive pay accrual. Occupancy expense decreased $109,000, or 11.9% due to lower rent, maintenance, and utilities costs. Collection expenses decreased significantly due to a large charge for an unusual item last year to secure our lien on loan collateral. FDIC deposit insurance premium expense increased $195,000, or 44.7% primarily due to an increase in the assessment rate.
As a result of the above activity, the Income Before Income Taxes increased $3.0 million to a profit of $348,000. The income tax benefit of $207,000 was not recorded due to the uncertainty of our expected ability to utilize our existing deferred tax assets. Our first quarter net profit of $348,000 is an increase of $1.7 million from the loss of $1.4 million in the first quarter of 2009.
Cash flows used by operating activities decreased from $3.2 million in the first three months of 2009 to $0.9 million in the first three months of 2010 due to the increase in net income and the increase in the net deferred federal income tax asset in the first quarter of 2009. Cash flows provided by investing activities decreased from $45.2 million in the first three months of 2009 to $3.5 million in the first three months of 2010 primarily due to a decrease in the maturities and redemptions of investment securities. The amount of cash used for financing activities decreased from $70.6 million in the first three months of 2009 to $2.9 million in the first three months of 2010 as the decrease in deposits decreased from $69.2 million in 2009 to $2.9 million in 2010. Also, dividends paid decreased from $1.5 million in the first quarter of 2009 to zero in the first quarter 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 $51 million; its shares were traded at around $3.14 with and P/S ratio of 0.7. MBTF is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Net Interest Income decreased $808,000 compared to the first quarter of 2009 even though the net interest margin increased from 3.04% to 3.11% as the average earning assets decreased $143.8 million, or 10.2%. The provision for loan losses decreased from $4.2 million in the first quarter of 2009 to $2.2 million in 2010 as the recent stability in the local economic conditions lessened the need to build the ALLL. Non interest income increased $710,000 compared to last year as each source of non interest income increased except for NSF fees, which decreased due to a significant decrease in overdraft activity. Our ongoing efforts to control costs continue to produce results, and our non interest expenses decreased $1.1 million, or 9.2% compared to the first quarter of 2009. We expect credit related expenses, including the costs of carrying a high level of Other Real Estate Owned (OREO), to remain high, but we should continue to see meaningful expense improvement in most other areas.The amount of nonperforming assets (“NPAs”) increased $4.5 million or 4.1% since year end. NPAs include non performing loans, which increased 4.3% from $86.1 million to $89.8 million, and Other Real Estate Owned and Other Assets (“OREO”), which increased 4.3% from $18.8 million to $19.6 million. Total problem assets, which includes all NPAs and performing loans that are internally classified as substandard, increased $2.3 million, or 1.5%. The Company s Allowance for Loan and Lease Losses (“ALLL”) increased $49,000 since December 31, 2009, resulting from an increase in our FAS 114 allocation from $6.5 million to $8.3 million, and a decrease from $17.6 million to $15.8 million in our FAS 5 general allocation due to the decrease in the size of the loan portfolio. 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 2.93% of loans, compared to 2.83% at year end. The ALLL is 26.9% 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 March 31, 2009 and 2010 shows a decrease of $808,000, or 7.9%, in Net Interest Income. Interest income on loans decreased $1.7 million or 12.1% as the average loans outstanding decreased $108.3 million and the average yield on loans decreased from 5.90% to 5.86%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $2.0 million as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $35.5 million and the yield decreased from 4.65% to 3.14%. An improvement in the term structure of interest rates, a decrease in the overall level of interest rates, and the maturity 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 $2.2 million or 39.3% as the average deposits decreased $67.5 million and the average cost of those deposits decreased from 2.03% to 1.32%. The cost of borrowed funds decreased $0.7 million as the average amount of borrowed funds decreased $33.8 million and the average cost of the borrowings decreased from 4.52% to 4.01%.
Other Expenses – Total non interest expenses decreased $1.1 million or 9.2% compared to the first 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 $365,000, or 6.7%, due to a decrease in staff, a decrease in the 401(k) matching contribution and the elimination of the incentive pay accrual. Occupancy expense decreased $109,000, or 11.9% due to lower rent, maintenance, and utilities costs. Collection expenses decreased significantly due to a large charge for an unusual item last year to secure our lien on loan collateral. FDIC deposit insurance premium expense increased $195,000, or 44.7% primarily due to an increase in the assessment rate.
As a result of the above activity, the Income Before Income Taxes increased $3.0 million to a profit of $348,000. The income tax benefit of $207,000 was not recorded due to the uncertainty of our expected ability to utilize our existing deferred tax assets. Our first quarter net profit of $348,000 is an increase of $1.7 million from the loss of $1.4 million in the first quarter of 2009.
Cash flows used by operating activities decreased from $3.2 million in the first three months of 2009 to $0.9 million in the first three months of 2010 due to the increase in net income and the increase in the net deferred federal income tax asset in the first quarter of 2009. Cash flows provided by investing activities decreased from $45.2 million in the first three months of 2009 to $3.5 million in the first three months of 2010 primarily due to a decrease in the maturities and redemptions of investment securities. The amount of cash used for financing activities decreased from $70.6 million in the first three months of 2009 to $2.9 million in the first three months of 2010 as the decrease in deposits decreased from $69.2 million in 2009 to $2.9 million in 2010. Also, dividends paid decreased from $1.5 million in the first quarter of 2009 to zero in the first quarter of 2010 as the dividend was eliminated in the third quarter of 2009.
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