M B T Financial Corp (MBTF, Financial) filed Quarterly Report for the period ended 2009-06-30.
MBT Financial Corporation operates as the bank holding company of Monroe Bank & Trust. M B T Financial Corp has a market cap of $34.47 million; its shares were traded at around $2.13 with a P/E ratio of 4.63 and P/S ratio of 0.34. The dividend yield of M B T Financial Corp stocks is 1.88%.
Net Interest Income A comparison of the income statements for the three months ended June 30, 2008 and 2009 shows a decrease of $942,000, or 8.5% in Net Interest Income. Interest income on loans decreased $2.6 million or 16.5% as the average loans outstanding decreased $74.1 million and the average yield on loans decreased from 6.39% to 5.75%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $911,000 as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $12.1 million and the yield decreased from 5.13% to 4.41%. An improvement in the term structure of interest rates and a decrease in the overall level of interest rates allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $1.8 million or 28.0% as the average deposits decreased $21.6 million and the average cost of those deposits decreased from 2.38% to 1.74%. The cost of borrowed funds decreased $0.8 million as the average amount of borrowed funds decreased $45.4 million and the average cost of the borrowings decreased from 4.75% to 4.38%.
Other Expenses Total non interest expenses increased $4.4 million or 43.6% compared to the second quarter of 2008 primarily due to higher credit related expenses and an increase in our FDIC insurance assessment. Salaries and Employee Benefits decreased $41,000, or 0.8%, primarily due to a reduction in the incentive compensation accrual. Occupancy expense decreased $189,000 or 20.6% due to lower depreciation, maintenance, and property tax expenses. Equipment expenses decreased $77,000, or 9.1% due to a decrease of $59,000 in depreciation expense. The advertising program was reduced in 2009, resulting in a decrease of $77,000, or 21.6% in marketing expense. Losses on OREO transactions increased $3.8 million compared to the second quarter last year due to a loss of $1.8 million on 37 properties sold at an auction in the second quarter of 2009. We also wrote down the carrying values of several properties this year due to the continued decline in market values. The properties sold had quarterly carrying costs of approximately $58,000. FDIC insurance premium expense increased $1.1 million due to a special assessment of $663,000 in the second quarter of 2009, an increase in our regular assessment rate from 7 basis points to nearly 22 basis points, and because the Bank utilized its remaining assessment credits in 2008. Excluding the OREO losses and expenses and the FDIC assessments, non interest expenses decreased $543,000, or 5.9%.
Net Interest Income A comparison of the income statements for the six months ended June 30, 2008 and 2009 shows a decrease of $1.2 million, or 5.5% in Net Interest Income. Interest income on loans decreased $5.4 million or 16.9% as the average loans outstanding decreased $68.7 million and the average yield on loans decreased from 6.51% to 5.82%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $1.3 million even though the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $6.1 million as the yield decreased from 5.17% to 4.53%. An improvement in the term structure of interest rates and a decrease in the overall level of interest rates allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $3.8 million or 27.1% as the average deposits decreased $15.3 million and the average cost of those deposits decreased from 2.55% to 1.89%. The cost of borrowed funds decreased $1.8 million as the average amount of borrowed funds decreased $29.6 million and the average cost of the borrowings decreased from 5.15% to 4.44%.
Other Expenses Total non interest expenses increased $6.7 million or 33.9% compared to the first six months of 2008 primarily due to higher credit related expenses and an increase in our FDIC insurance assessment. Salaries and Employee Benefits decreased $189,000, or 1.7%, primarily due to a reduction in the incentive compensation accrual. Occupancy expense decreased $270,000 or 14.1% due to lower depreciation, maintenance, and property tax expenses. The advertising program was reduced in 2009, resulting in a decrease of $76,000, or 12.7% in marketing expense. Losses on OREO transactions increased $5.6 million compared to the second quarter last year due to a loss of $1.8 million on 37 properties sold at an auction in the second quarter of 2009 and the write down of $835,000 on a property sold in the first quarter of 2009. We also wrote down the carrying values of several properties this year due to the continued decline in market values. FDIC insurance premium expense increased $1.5 million due to a special assessment of $663,000 in the second quarter of 2009, an increase in our regular assessment rate from 7 basis points to nearly 22 basis points in the second quarter of 2009, and because the Bank utilized its remaining assessment credits in the first six months of 2008.
Cash flows from operating activities decreased from $4.9 million in the first six months of 2008 to $3.3 million in the first six months of 2009 due to the decrease in net income and the increase in the net deferred federal income tax asset. Cash flows provided by investing activities increased from $5.7 million in the first six months of 2008 to $80.6 million in the first six months of 2009 primarily due to a decrease in the amount of investment securities purchased, an increase in the amount of investment securities sold, and a decrease in loans in the first six months of 2009. A significant portion of the investment activity proceeds was used to fund the reduction in deposits. The amount of cash used for financing activities increased from $13.8 million in the first six months of 2008 to $111.1 million in the first six months of 2009 as the decrease in deposits increased from $44.2 million in 2008 to $96.6 million in 2009. Also, the increase in short term borrowing was $41.2 million in 2008, compared to zero in 2009, and Federal Home Loan Bank advances decreased $13.0 million in 2009. This is a result of the Banks efforts to improve its capital position and net interest margin by reducing higher cost funding and lower yield assets.
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MBT Financial Corporation operates as the bank holding company of Monroe Bank & Trust. M B T Financial Corp has a market cap of $34.47 million; its shares were traded at around $2.13 with a P/E ratio of 4.63 and P/S ratio of 0.34. The dividend yield of M B T Financial Corp stocks is 1.88%.
Highlight of Business Operations:
The amount of nonperforming assets (NPAs) increased $16.0 million or 21.9% since year end. NPAs include non performing loans, which increased 29.7% from $53.8 million to $69.8 million, and Other Real Estate Owned and Other Assets (OREO), which was unchanged at $19.2 million. Total problem assets, which includes all NPAs and performing loans that are internally classified as substandard, increased $11.1 million, or 8.1%. The Companys Allowance for Loan and Lease Losses (ALLL) increased $5.3 million since December 31, 2008, as the amount of specific allocations required by FAS 114 increased from $5.2 million to $11.4 million, mainly due to decreased values of real estate collateral. The FAS 5 portion of the allowance decreased slightly from $13.2 million to $12.5 million because the impact of the decrease in the size of the loan portfolio was greater than the impact of the increase in the loss factors. The loss factors, which include five year loss averages, and adjustments for various current factors, such as recent delinquency and charge off trends and national and local economic conditions, were increased due to the weak economic conditions and declining real estate values. The ALLL is now 2.62% of loans, compared to 1.97% at year end. The ALLL is 34.2% of NPLs, compared to 34.4% at year end. 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, 2008 and 2009 shows a decrease of $942,000, or 8.5% in Net Interest Income. Interest income on loans decreased $2.6 million or 16.5% as the average loans outstanding decreased $74.1 million and the average yield on loans decreased from 6.39% to 5.75%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $911,000 as the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $12.1 million and the yield decreased from 5.13% to 4.41%. An improvement in the term structure of interest rates and a decrease in the overall level of interest rates allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $1.8 million or 28.0% as the average deposits decreased $21.6 million and the average cost of those deposits decreased from 2.38% to 1.74%. The cost of borrowed funds decreased $0.8 million as the average amount of borrowed funds decreased $45.4 million and the average cost of the borrowings decreased from 4.75% to 4.38%.
Other Expenses Total non interest expenses increased $4.4 million or 43.6% compared to the second quarter of 2008 primarily due to higher credit related expenses and an increase in our FDIC insurance assessment. Salaries and Employee Benefits decreased $41,000, or 0.8%, primarily due to a reduction in the incentive compensation accrual. Occupancy expense decreased $189,000 or 20.6% due to lower depreciation, maintenance, and property tax expenses. Equipment expenses decreased $77,000, or 9.1% due to a decrease of $59,000 in depreciation expense. The advertising program was reduced in 2009, resulting in a decrease of $77,000, or 21.6% in marketing expense. Losses on OREO transactions increased $3.8 million compared to the second quarter last year due to a loss of $1.8 million on 37 properties sold at an auction in the second quarter of 2009. We also wrote down the carrying values of several properties this year due to the continued decline in market values. The properties sold had quarterly carrying costs of approximately $58,000. FDIC insurance premium expense increased $1.1 million due to a special assessment of $663,000 in the second quarter of 2009, an increase in our regular assessment rate from 7 basis points to nearly 22 basis points, and because the Bank utilized its remaining assessment credits in 2008. Excluding the OREO losses and expenses and the FDIC assessments, non interest expenses decreased $543,000, or 5.9%.
Net Interest Income A comparison of the income statements for the six months ended June 30, 2008 and 2009 shows a decrease of $1.2 million, or 5.5% in Net Interest Income. Interest income on loans decreased $5.4 million or 16.9% as the average loans outstanding decreased $68.7 million and the average yield on loans decreased from 6.51% to 5.82%. The interest income on investments, fed funds sold, and interest bearing balances due from banks decreased $1.3 million even though the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $6.1 million as the yield decreased from 5.17% to 4.53%. An improvement in the term structure of interest rates and a decrease in the overall level of interest rates allowed funding costs to decrease faster than asset yields. The interest expense on deposits decreased $3.8 million or 27.1% as the average deposits decreased $15.3 million and the average cost of those deposits decreased from 2.55% to 1.89%. The cost of borrowed funds decreased $1.8 million as the average amount of borrowed funds decreased $29.6 million and the average cost of the borrowings decreased from 5.15% to 4.44%.
Other Expenses Total non interest expenses increased $6.7 million or 33.9% compared to the first six months of 2008 primarily due to higher credit related expenses and an increase in our FDIC insurance assessment. Salaries and Employee Benefits decreased $189,000, or 1.7%, primarily due to a reduction in the incentive compensation accrual. Occupancy expense decreased $270,000 or 14.1% due to lower depreciation, maintenance, and property tax expenses. The advertising program was reduced in 2009, resulting in a decrease of $76,000, or 12.7% in marketing expense. Losses on OREO transactions increased $5.6 million compared to the second quarter last year due to a loss of $1.8 million on 37 properties sold at an auction in the second quarter of 2009 and the write down of $835,000 on a property sold in the first quarter of 2009. We also wrote down the carrying values of several properties this year due to the continued decline in market values. FDIC insurance premium expense increased $1.5 million due to a special assessment of $663,000 in the second quarter of 2009, an increase in our regular assessment rate from 7 basis points to nearly 22 basis points in the second quarter of 2009, and because the Bank utilized its remaining assessment credits in the first six months of 2008.
Cash flows from operating activities decreased from $4.9 million in the first six months of 2008 to $3.3 million in the first six months of 2009 due to the decrease in net income and the increase in the net deferred federal income tax asset. Cash flows provided by investing activities increased from $5.7 million in the first six months of 2008 to $80.6 million in the first six months of 2009 primarily due to a decrease in the amount of investment securities purchased, an increase in the amount of investment securities sold, and a decrease in loans in the first six months of 2009. A significant portion of the investment activity proceeds was used to fund the reduction in deposits. The amount of cash used for financing activities increased from $13.8 million in the first six months of 2008 to $111.1 million in the first six months of 2009 as the decrease in deposits increased from $44.2 million in 2008 to $96.6 million in 2009. Also, the increase in short term borrowing was $41.2 million in 2008, compared to zero in 2009, and Federal Home Loan Bank advances decreased $13.0 million in 2009. This is a result of the Banks efforts to improve its capital position and net interest margin by reducing higher cost funding and lower yield assets.
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