M B T Financial Corp (MBTF)

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MBT Financial (MBTF)

Q1 2013 Earnings Call

April 26, 2013 10:00 am ET


H. Douglas Chaffin - Chief Executive Officer, President, Director, Chief Executive Officer of Monroe Bank & Trust and President of Monroe Bank & Trust

John L. Skibski - Chief Financial Officer, Executive Vice President, Treasurer, Director, Chief Financial Officer of Monroe Bank & Trust and Executive Vice President of Monroe Bank & Trust

Thomas G. Myers - Chief Lending Manager, Executive Vice President, Chief Lending Manager of Monroe Bank & Trust and Executive Vice President of Monroe Bank & Trust


Jonathan Evans

Marc Franklin



Welcome to the MBT Financial Corp. First Quarter Earnings Conference Call. [Operator Instructions] Please note, today's conference is being recorded.

Before we begin today's call, I would like to remind everyone that this call may involve certain statements that are not based on historical facts and are forward-looking statements within the meaning of the 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 terminologies such as may, will, believe, expect, estimate, anticipate, continue or similar terms or variations on these terms or the negative of these terms. Actual results could differ materially from those set forth in the forward-looking statements due to a variety of factors, including but not limited to, those related to the economic environment, particularly in the market areas in which the company operates; competitive products and pricing; fiscal and monetary policies of the U.S. government; changes in government regulations affecting financial institutions, including regulatory fees and capital requirements; changes in prevailing interest rates; acquisitions and the integration of acquired businesses; credit risk management; asset liability management; changes in the financial and securities markets, including changes with respect to the market value of our financial assets; the availability and costs associated with sources of liquidity; and the ability of the company to resolve or dispose of problem loans. MBT Financial Corp. does not undertake and specifically disclaims any obligation to publicly release the results of any revisions, which may be made to any forward-looking statements made to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. If anyone does not already have a copy of the press release issued by MBT Financial yesterday, please check. You can access it at the company's website at www.mbandt.com.

On the conference today from MBT Financial Corp., we have Doug Chaffin, President and Chief Executive Officer; John Skibski, Executive Vice President and Chief Financial Officer; and Tom Myers, Executive Vice President and Chief Lending Manager. We will begin the call with management's prepared remarks and then open the call up to questions.

At this point, I would like to turn the call over to Mr. Chaffin.

H. Douglas Chaffin

Thank you, Laura, and good morning, everyone. At the close of business yesterday, we announced a net profit for the first quarter of 2013, totaling $1.1 million or $0.06 per share. This compares favorably to the first quarter of 2012, when considering actual quarter earnings for both periods. And in the effect of securities gains for both periods, net income for the first quarter of 2012 totaled $117,000, compared to $1.1 million for the first quarter of 2013. This represents the seventh consecutive quarter in which we posted positive earnings. Credit related charges have continued to decline.

The net interest margin, however, declined from 2.92% in the fourth quarter of 2012 to 2.82% in the first quarter of 2013.

Asset yields continue to be challenged due to relatively low loan demand and a high -- highly liquid balance sheet. As a result, net interest income for the quarter of 2013 declined by $884,000, compared to that of first quarter of 2012. It is notable, however, that noninterest income, net of securities gains, increased by $401,000 or 11% in the first quarter of 2013 compared to the first quarter of 2012. Increases in wealth management income and origination fees for mortgage loans sold led the way for this improvement, with increases of 13% and 137%, respectively.

Our occupancy, marketing and equipment expenses showed notable declines in the first quarter, compared to a year ago of $176,000 for a interest and improvement. The most [ph] significant improvement in noninterest expenses occurred in credit-related charges.

Collection expenses, losses on ORE properties and expenses related to these -- expenses related to carrying these properties combined for a reduction of $420,000 in cost for the first quarter 2013, compared to that in 2012, or 53%.

In addition, due to reductions in loan portfolio balances and improvements in underlying asset values, we were able to reduce our provision for loan losses by $750,000 in the first quarter compared to last year, with 33%.

We continue to be engaged with the IRS for an ongoing audit for the years 2007 through 2010 . We are optimistic that a settlement agreement will be reached in the near future, without the need to record significant additional tax expenses beyond what has been previously recorded. No expense regarding this pending settlement was recorded for the first quarter.

We continue to see gradual improvements in local economic conditions as well, while total problem assets and nonperforming loans have remained at the same level for the past couple of quarters, there are underlying improvements in asset quality. Over 40% of our NPAs are performing renegotiated loans. We continue to see reduced levels of past dues.

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