updated 10/29/2010 2:15:31 AM ET 2010-10-29T06:15:31

MONROE, Mich., Oct. 28, 2010 (GLOBE NEWSWIRE) -- MBT Financial Corp., (Nasdaq:MBTF), the parent company of Monroe Bank & Trust, reported a net loss of $4.3 million, or $0.27 per share, in the third quarter of 2010, compared to the loss of $2.3 million, or $0.14 per share in the third quarter of 2009. The loss was due to continuing elevated credit costs and a decrease in the net interest income. The Company reported a year to date net loss of $4.4 million, or $0.27 per share, compared to the loss of $9.1 million, or $0.56 per share for the first nine months of 2009. The pre-tax loss for the quarter was $4.3 million, or $0.27 per share compared to $4.1 million, or $0.25 per share. The year to date pre-tax loss of $4.4, or $0.27 per share is significantly lower than the pre-tax loss last year of $15.5 million, or $0.96 per share.

The Net Interest Income for the second quarter of 2010 was $9.4 million, a decrease of $1.1 million, or 10.4% compared to the same period in 2009. The net interest income decreased because the average earning assets decreased $183 million, or 13.7%. This included a decrease of $98.5 million, or 11.0% in average loans, as weak economic conditions, coupled with ongoing stringent underwriting standards, continue to have a negative impact on loan demand and growth.

Non interest income, excluding securities gains, increased 12.1% from $3.7 million in the third quarter of 2009 to $4.2 million in the third quarter of 2010. Total non interest expenses increased $250,000, or 2.2%. The bank's efforts to control expenses resulted in significant reductions in salaries, employee benefits, occupancy expenses, and marketing. Write downs and carrying costs of Other Real Estate Owned and FDIC insurance costs increased compared to the third quarter of 2009. Excluding OREO related costs and FDIC deposit insurance assessments, non interest expenses decreased 5.1% from $8.4 million to $8.0 million in the third quarter of 2010 compared to the third quarter of 2009.

Total assets of the company decreased $182.6 million compared to September 30, 2009, mainly due to the previously mentioned decrease in loan demand and a reduction in borrowed funds. Core deposit activity remains strong and non interest bearing demand deposits increased by 17.9% over the 12 month period. The market continues to demonstrate the value of our customer focused community bank model and we regularly evaluate the activity in each of our branch locations. Due to the confidence our customers have demonstrated in us, we recently decided to restore full service at our Erie Office. This office had been reduced to drive up only service in March of 2009, and we have decided to reallocate resources so that we can reopen the lobby without adding staff to our total retail operation.

Although we have recorded a year to date loss of $4.4 million, capital has increased $2.3 million so far this year, and the ratio of equity to assets, a key indicator of bank strength and safety, increased from 5.91% at December 31, 2009 to 6.67% at September 30, 2010. In addition, the company's liquidity position remains good, with cash and investments totaling 28.8% of assets, down slightly from 29.9% at the end of 2009.

H. Douglas Chaffin, President and CEO, commented, "We are disappointed by the loss this quarter, but we are encouraged by the continuing fundamental improvements in our financial condition. Our net interest margin, non interest income, and recurring non interest expenses all improved compared to the third quarter last year. The loss this quarter is primarily attributable to the continued decline in real estate values. Although residential property values appear to have stabilized, we are now experiencing the impact of the decline in commercial and residential development properties. Because of this, write downs and losses on sales of other real estate owned totaled $2.0 million in the third quarter. These numbers include the write downs of 17 properties that we sold at an auction on September 30, and all of those transactions are expected to close in October."

Mr. Chaffin concluded, "Economic conditions in our market have stabilized, but the effects of this prolonged period of weakness continue to impact our commercial borrowers. We will continue to focus our efforts on improving asset quality, maintaining liquidity, strengthening capital, seeking new sources of revenue, and controlling expenses. During the quarter we commenced a private placement of debt and equity to improve the capital ratios of the Bank. To date we have raised over $1.2 million, and we continue to have frequent discussions with potential investors. We still have much work ahead of us given our current environment, but we remain confident in our plans and our ability to remain the premier independent community bank in our market."

Conference Call

MBT Financial Corp. will hold a conference call to discuss third quarter results on Friday, October 29, at 10:00 a.m. Eastern Time. The call will be webcast and can be accessed at the Investor Relations/Corporate Profile page of MBT Financial Corp.'s web site www.mbandt.com . The call can also be accessed by calling (800) 860-2442. The event will be archived on the Company's web site and available for twelve months following the call.

About the Company

MBT Financial Corp. (Nasdaq:MBTF), a single bank holding company headquartered in Monroe, Michigan, is the parent company of Monroe Bank & Trust (MBT).

Founded in 1858, MBT is one of the largest community banks in Southeast Michigan. MBT is a full-service bank, offering a complete range of business and personal accounts, credit options, and phone and online banking services. MBT's Wealth Management Group is one of the largest and most respected in Southeastern Michigan. With 25 offices, 41 ATMs, and a comprehensive array of products and services, MBT prides itself in offering an incomparable banking experience for its customers. Visit MBT's web site at www.mbandt.com .

The MBT Financial Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4214

Forward-Looking Statements

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 businesses, credit risk management, asset/liability management, change 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 undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

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