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EXHIBIT 10.1
MBT FINANCIAL CORP. SEVERANCE AGREEMENT WITH SCOTT E. MCKELVEY

May 11, 2007

Mr. Scott McKelvey

Dear Scott:

          I want to take this opportunity to reiterate how important you are as
a senior member of the MBT Financial Corp. and/or its subsidiary Monroe Bank &
Trust (collectively the "Company") management team and to thank you for your
commitment to our success. As you know, we face many opportunities and
challenges as our industry continues to evolve, and this Agreement, which
addresses your entitlement to severance benefits should you separate from the
Company while these terms are in effect, is intended to give you the security to
focus on your contributions as we move forward.

     TERM OF AGREEMENT: This Agreement shall commence on the date hereof and
shall continue in effect until December 31, 2007, and will be automatically
renewed thereafter on an annual basis for successive one-year terms unless the
Company provides you with written notice that the Agreement will not be renewed
("Notice of Non-Renewal") no later than 60 days prior to the expiration of the
then-current term. Notwithstanding the foregoing, in the event a Change in
Control (as defined in Exhibit A) occurs during the then current term, the term
of this Agreement shall not end prior to the first anniversary of such Change in
Control.

     SEPARATION FROM EMPLOYMENT: Your employment with the Company is at-will.
Under certain circumstances, however, you will be entitled to severance benefits
should you separate from employment during the term of this Agreement. The
following provisions govern your compensation and benefits should you separate
from employment during the term of this Agreement.

     QUALIFYING TERMINATION: Should you incur a Qualifying Termination (as
defined below) you will be eligible for the following payments and benefits,
provided that you remain in compliance with your obligations under the terms of
this agreement, including, but not limited to the provisions regarding
non-competition, non-solicitation, and non-disparagement, and the Release (as
defined below). Should you fail to comply with your obligations under this
Agreement or the Release, the Company may, in addition to any other available
remedies, cease making any payment or benefit provided for herein.

     SEPARATION PAYMENT: A separation payment, before applicable deductions,
equal to one (1) times the sum of your base salary as in effect as of your
termination of employment, plus in the event of a Qualifying Termination under
subparagraphs (3) or (4) as set forth in the definition below of Qualifying
Termination, an amount equal to the average annual cash bonuses received by you
during the three year period ending prior to the year in which the Change in
Control occurs (the "Separation Payment").

     The Separation Payment shall be paid as follows: 50% of the Separation
Payment shall be paid to you within ten business days of your execution of the
Release, with the remaining 50% to be paid in equal installments, without
interest, commencing on the Company's second regularly scheduled payroll
following your execution of the Release and ending with the Company's regularly
scheduled payroll one year later (the "Separation Pay Period"). In the event of
a change in payroll practice during the Separation Pay Period, the Company may
adjust the amounts of such installments as necessary to ensure that the total
amount paid is equal to the Separation Payment, as defined above.
Notwithstanding the foregoing, in the event of a Qualifying Termination within
one year following a Change in Control, the Separation Payment shall be paid in
a single lump sum within 10 days following the effective date of the Qualifying
Termination.

     HEALTH BENEFIT CONTINUATION: The Company will pay the COBRA premiums for
continuation of healthcare benefits for you and your eligible dependents for so
long as you are otherwise eligible for such coverage during the 12-month period
following a Qualifying Termination. You will be responsible for all other costs,
such as co-payments and deductibles.

     ADDITIONAL RESTRICTION ON DISTRIBUTIONS TO KEY EMPLOYEES: Notwithstanding
the provisions of this agreement providing for payment of benefits, if at the
time a benefit would otherwise be payable, you are a "specified employee" [as
defined below], and the payment provided for would be deferred compensation
within the meaning of the Internal Revenue Code (the "Code"), section 409A, the
distribution of your benefit may not be made until six months after the date of
the your separation from service with the Company [as that term may be defined
in Section 409A(a)(2)(A)(i) of the Code and regulations promulgated thereunder],
or, if earlier the date of your death. This requirement shall remain in effect
only for periods in which the stock of the Company is publicly traded on an
established securities market.

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          For purposes of this subparagraph a "specified employee" shall mean
any employee of the Company who is a "key employee" of the Company within the
meaning of Code section 416(i). This shall include any employee who is (i) a
5-percent owner of the Company's common stock, or (ii) an officer of the Company
with annual compensation from the Company of $130,000.00 or more, or (iii) a
1-percent owner of Company's common stock with annual compensation from the
Company of $150,000.00 or more (or such higher annual limit as may be in effect
for years subsequent to 2005 pursuant to indexing section 416(i) of the Code).

          The provisions of this subparagraph have been adopted only in order to
comply with the requirements added by Code section 409A. These provisions shall
be interpreted and administered in a manner consistent with the requirements of
Code section 409A, together with any regulations or other guidance which may be
published by the Treasury Department or Internal Revenue Service interpreting
such Code section 409A.

     DEFINITION OF QUALIFYING TERMINATION: For purposes of this Agreement, a
Qualifying Termination shall mean any of the following:

(1) Involuntary termination of your employment without Cause. For purposes of
this Agreement, Cause shall mean and be limited to your (a) criminal dishonesty,
(b) refusal to perform your duties on an exclusive and substantially full-time
basis, (c) refusal to act in accordance with any specific substantive
instructions given by the Company with respect to your performance of duties
normally associated with your position prior to the Change in Control, or (d)
engaging in conduct which could be materially damaging to the Company without a
reasonable good faith belief that such conduct was in the best interest of the
Company.

(2) Resignation within 90 days of the occurrence (prior to a Change of Control)
of an event constituting Good Reason, which, for purposes of this Agreement,
shall mean: (a) a material reduction in your job responsibilities, duties,
and/or status within the Company, (b) a reduction in your base salary, unless
such reduction is part of an across-the-board reduction in base salary of all
officers of the Company, or (c) receipt of a Notice of Non-Renewal.
Notwithstanding the foregoing, you will not be eligible for a Separation Payment
unless you provide the Board of Directors with 60 days written notice of your
intent to resign for Good Reason, containing details regarding the grounds for
your resignation, and allow the Board of Directors to take action to remove or
correct the Good Reason within 30 days. If the Board of Directors fails to take
action to remove or correct the Good Reason within 30 days of receiving notice
of same, your resignation for Good Reason shall become effective.

(3) Involuntary termination of your employment by the Company for any reason
within one year following a Change in Control.

(4) Your resignation, within one year following a Change in Control, by reason
of any of the following events which occurs on or after a Change in Control: (a)
a material reduction in your job responsibilities, duties and/or status from
that which existed immediately prior to the Change in Control, (b) a reduction
in your base salary, or (c) receipt of a Notice of Non-Renewal.

          You will not be deemed to have incurred a Qualifying Termination
unless you execute, within 30 days of your separation, a release of claims in a
form substantially similar to the form attached as Exhibit B hereto (the
"Release"). Under no circumstances will your resignation or termination from
employment as a result of Disability (as defined below) or death constitute a
Qualifying Termination.

          INVOLUNTARY TERMINATION FOR CAUSE/RESIGNATION NOT CONSTITUTING A
QUALIFYING TERMINATION: If you are involuntarily terminated for Cause or resign
your employment (other than a resignation constituting a Qualifying
Termination), you will not be entitled to any severance payment under this
Agreement. The Company will have no other obligations under this Agreement, and
all compensation and benefits will be determined by the terms of the governing
plan or program.

          EXCISE TAX ROLLBACK: In the event the payments required under this
Agreement, when added together with any other amounts required to be included by
you under the provisions of the Internal Revenue Code of 1986, as amended,
result in an "Excess Parachute Payment," as that term is defined in Section 280G
of the Code, then the amount of the payments provided for in this agreement will
be reduced in an amount which eliminates any and all excise tax to be imposed
under Section 4999 (or any successor thereto) of the Code.

     COVENANTS: In your role with the Company (which, for purposes of these
Covenants includes the Company, its subsidiaries, affiliates, related entities,
and successors), you will have access to confidential and proprietary
information, and your access to such information is intrinsic to, and essential
to the success of, your employment by the Company. In consideration of your
access to such information, your continuing employment with the Company, and the
payments and benefits provided for under this Agreement, you agree to the
following Covenants, which you

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agree are reasonable and necessary for the protection of the Company's
legitimate business interests, including, but not limited to, goodwill and
information which is confidential and proprietary to the Company.

A.   Noncompetition Agreement and Nonsolicitation Agreement

1. In view of your importance to the success of the Company, you and the Company
agree that the Company would likely suffer significant harm from your competing
with Company during your term of employment with Company and for some period of
time thereafter. Accordingly, you agree that you will not engage in competitive
activities while employed by Company and during the Restricted Period. You will
be deemed to engage in competitive activities if you, without the prior written
consent of the Company, (i) in Monroe County, Michigan and counties contiguous
thereto (including the municipalities therein), render services directly or
indirectly, as an employee, officer, director, consultant, advisor, partner or
otherwise, for any organization or enterprise which competes directly or
indirectly with the business of the Company or any of its affiliates in
providing financial products or services (including, without limitation,
banking, insurance, or securities products or services) to consumers and
businesses, or (ii) directly or indirectly acquire any financial or beneficial
interest in (except as provided in the next sentence) any organization which
conducts or is otherwise engaged in a business or enterprise in Monroe County,
Michigan, and counties contiguous thereto (including all municipalities therein)
which competes directly or indirectly with the business of Company or any of its
affiliates in providing financial products or services (including, without
limitation, banking, insurance or securities products or services) to consumers
and businesses. Notwithstanding the preceding sentence, you will not be
prohibited from owning less than 1 percent of any publicly traded corporation,
whether or not such corporation is in competition with the Company. For purposes
hereof the term "Restricted Period" will equal one year, commencing as of the
date of your termination of employment.

2. While employed by the Company and for a period of one (1) year following your
termination of employment with the Company, you agree that you will not, in any
manner, directly or indirectly, (i) solicit by mail, by telephone, by personal
meeting, or by any other means, either directly or indirectly, any customer or
prospective customer of the Company to whom you provided services, or for whom
you transacted business, or whose identity became known to you in connection
with your services to the Company (including employment with or services to any
predecessor or successor entities), to transact business with a person or an
entity other than the Company or its affiliates or reduce or refrain from doing
any business with the Company or its affiliates or (ii) interfere with or damage
(or attempt to interfere with or damage) any relationship between the Company or
its affiliates and any such customer or prospective customer. The term "solicit"
as used in this Agreement means any communication of any kind whatsoever,
inviting, encouraging or requesting any person to take or refrain from taking
any action with respect to the business of the Company and its subsidiaries.

3. While employed by Company and for a period of one (1) year following your
termination of employment with the Company, you agree that you will not, in any
manner, directly or indirectly, solicit any person who is an employee of the
Company or any of its affiliates to apply for or accept employment or a business
opportunity with any other person or entity.

4. The Company and you agree that nothing herein will be construed to limit or
negate the common law of torts or trade secrets where it provides broader
protection than that provided herein.

B.   Confidential Information

You have obtained and may obtain confidential information concerning the
businesses, operations, financial affairs, organizational and personnel matters,
policies, procedures and other non-public matters of the Company and its
affiliates, and those of third-parties that is not generally disclosed to
persons not employed by the Company or its subsidiaries. Such information
(referred to herein as the "Confidential Information") may have been or may be
provided in written form or orally. You will not disclose to any other person
the Confidential Information at any time during your employment with the Company
or after the termination of your employment, provided that you may disclose such
Confidential Information only to a person who is then a director, officer,
employee, partner, attorney or agent of the Company who, in your reasonable good
faith judgment, has a need to know the Confidential Information.

C.   Remedies

1. You acknowledge that a violation on your part of the Covenants section of
this agreement would cause immeasurable and irreparable damage to the Company.
Accordingly, you agree that notwithstanding the agreement of the parties to
arbitrate disputes arising under the terms of this agreement, the Company will
be entitled to injunctive relief in any court of competent jurisdiction for any
actual or threatened violation of any of the provisions of the Covenants
sections of this agreement, in addition to any other remedies it may have.

2. In addition to the Company's right to seek injunctive relief as set forth
above, in the event that you violate the terms and conditions of the Covenants
sections of this agreement, the Company may: (i) make a general claim for
damages and (ii) terminate any payments or benefits payable by Company, if
applicable, to you.

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3. The Board will be responsible for determining whether you have violated the
Covenants sections of this agreement, and in the absence of your ability to show
that the Board has acted in bad faith and without fair dealing, such decision
will be final and binding. Upon your request, the Company will provide an
advance opinion as to whether a proposed activity would violate the provisions
of this Agreement.

     ARBITRATION: Except for claims by the Company arising out of your alleged
breach of obligations under the Covenants section of this Agreement, all
disputes arising out of or relating to this Agreement or to your employment or
the termination thereof, will be resolved by final and binding arbitration in
Monroe, Michigan, under the Federal Arbitration Act in accordance with the
Employment Dispute Resolution Rules then in effect with the American Arbitration
Association. This paragraph will apply both during and after termination of the
employment relationship. Either party will have the right to enforce this
agreement to arbitrate in either federal or state court.

     All proceedings and documents prepared in connection with any arbitration
under this Agreement will be Confidential Information and, unless otherwise
required by law, the contents or subject matter thereof will not be disclosed to
any person other than the parties to the proceedings, their counsel, witnesses
and experts, the arbitrator, and, if court enforcement of an arbitration award
is sought, the court and court staff hearing such matter.

     Should a dispute under this Agreement be submitted to arbitration and you
prevail in that arbitration, you will be entitled to recover your reasonable
expenses you incurred in connection with that arbitration, including but not
limited to attorneys' fees and arbitrators' fees, from the Company. Should the
Company prevail, each party will pay its own costs. Notwithstanding the
foregoing, the Company will promptly pay or reimburse you for all reasonable
legal fees incurred by you in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement relating to the termination of your
employment within one year following a Change in Control.

     IMPACT ON OTHER COMPENSATION AND BENEFIT PROGRAMS: There will be no
duplication between payments made under this Agreement and any payment or
benefit under any other plan, program, agreement, or arrangement. Except as
otherwise specifically provided for herein, payments under this Agreement will
not be considered compensation for purposes of any compensation, deferred
compensation, insurance, pension, savings, or other benefit plan.

     CONTROLLING LAW: Except where otherwise provided for herein, this Agreement
will be governed in all respects by the laws of the State of Michigan, excluding
any conflict-of-law rule or principle that might refer the construction of the
Agreement to the laws of another State or country.

     NOTICES: Any notices under this agreement that are required to be given to
the Company will be addressed to Corporate Secretary, MBT Financial Corp., 102
E. Front Street, Monroe, Michigan 48161, and any notices required to be given to
you will be sent to your address as shown in the Company's records.

     SEPARABILITY AND CONSTRUCTION: If any provision of this Agreement is
determined to be invalid, unenforceable, or unlawful by an arbitrator or a court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect, and the provisions that are determined to be invalid,
unenforceable, or unlawful will either be limited so that they will remain in
effect to the extent permissible by law or such arbitrator or court will
substitute, to the extent enforceable, provisions similar thereto or other
provision so as to provide, to the fullest extent allowed by law, the benefits
intended by this Agreement.

     WAIVER OF BREACH: No failure by any party to give notice of any breach of,
or to require compliance with, any condition or provision of this Agreement will
be deemed a waiver or relinquishment of that party's rights, and no waiver or
relinquishment of rights by any party at any one or more times will be deemed to
be a waiver or relinquishment of such right or power at any other time or times.

     ENTIRE AGREEMENT: This Agreement, together with the plan documents referred
to herein, as amended from time to time, will constitute the entire
understanding relating to the severance benefits for which you are eligible upon
your separation from employment with the Company, and any previous severance
agreements (or other agreements providing for severance benefits, to the extent
that they provide for severance benefits), whether written or oral, between you
and the Company will be deemed to be revoked and canceled for all purposes as of
the date of this Agreement. There will be no duplication between payments made
pursuant to this Agreement and payments made under any other plan, program,
arrangement, or agreement.

     MODIFICATION IN WRITING: No addition to, or modification of, this Agreement
will be effective, unless it is in writing and signed by both you and an
authorized representative of the Company.

     I hope that this Agreement provides you with the level of security and
incentive that will allow you to continue as a leader at the Company to the best
of your abilities. Please sign below and return an executed original to indicate
your acceptance of these terms.

Sincerely,


/s/ H. Douglas Chaffin
-------------------------------------
H. Douglas Chaffin
President & Chief Executive Officer
MBT Financial Corp.

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I have read, understand, and agree to the foregoing terms and conditions.


/s/ Scott E. McKelvey                   May 16, 2007
-------------------------------------   Date
Scott E. McKelvey
Executive Vice President &
Senior Wealth Management Officer

Exhibit A
Change in Control Definition

A "Change in Control" shall mean a "Change in Ownership" as defined in (a)
hereof; a "Change in Effective Control" as defined in (b), hereof; or a "Change
in Ownership of a Substantial Portion of Assets" as defined in (c) hereof.

(a) Change in Ownership. For purposes of this Agreement, a change in the
ownership of the Company occurs on the date that any one person, or more than
one person acting as a group (as defined in subsection (d) hereof), acquires
ownership of stock of the Company that, together with stock held by such person
or group, constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Company. However, if any one person, or
more than one person acting as a group, is considered to own more than 50
percent of the total fair market value or total voting power of the stock of the
Company, the acquisition of additional stock by the same person or persons is
not considered to cause a change in the ownership of the Company (or to cause a
change in the effective control of the Company within the meaning of subsection
(b) hereof). An increase in the percentage of stock owned by any one person, or
persons acting as a group, as a result of a transaction in which the Company
acquires its stock in exchange for property will be treated as an acquisition of
stock for purposes of this section.

(b) Change in the Effective Control. For purposes of this Agreement, a change in
the effective control of the Company occurs on the date that either -

     (i) Any one person, or more than one person acting as a group (as
     determined under subsection (d) hereof), acquires (or has acquired during
     the 12 month period ending on the date of the most recent acquisition by
     such person or persons) ownership of stock of the Company possessing 35
     percent or more of the total voting power of the stock of the Company; or

     (ii) a majority of members of the Company's board of directors is replaced
     during any 12 month period by directors whose appointment or election is
     not endorsed by a majority of the members of the Company's board of
     directors prior to the date of the appointment or election.

In the absence of an event described in subsection (b)(i) or (ii) above, a
change in the effective control of a Company will not have occurred.

(c) Change in the Ownership of a Substantial Portion of the Company's Assets.
For purposes of this Agreement, a change in the ownership of a substantial
portion of the Company's assets occurs on the date that any one person, or more
than one person acting as a group (as determined in subsection(d) hereof),
acquires (or has acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the Company immediately
prior to such acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with
such assets.

There is no Change in Control Event under this subsection (c) when there is a
transfer to an entity that is controlled by the shareholders of the Company
immediately after the transfer, as provided in this paragraph. A transfer of
assets by the Company is not treated as a change in the ownership of such assets
if the assets are transferred to --

     (i) A shareholder of the Company (immediately before the asset transfer) in
     exchange for or with respect to its stock;

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     (ii) An entity, 50 percent or more of the total value or voting power of
     which is owned, directly or indirectly, by the Company;

     (iii) A person, or more than one person acting as a group, that owns,
     directly or indirectly, 50 percent or more of the total value or voting
     power of all the outstanding stock of the Company; or

     (iv) An entity, at least 50 percent of the total value or voting power of
     which is owned, directly or indirectly, by a person described in section
     (iii) above.

For purposes of this subsection (c) and except as otherwise provided, a person's
status is determined immediately after the transfer of the assets. For example,
a transfer to a corporation in which the transferor corporation has no ownership
interest before the transaction, but which is a majority-owned subsidiary of the
transferor corporation after the transaction is not treated as a change in the
ownership of the assets of the transferor corporation.

(d) Persons Acting as a Group. Persons will not be considered to be acting as a
group solely because they purchase assets or purchase or own stock of the same
corporation at the same time, or as a result of the same public offering.
However, persons will be considered to be acting as a group if they are owners
of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, purchase or acquisition of assets, or similar business
transaction with the Company. If a person, including an entity shareholder, owns
stock in both corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders in a corporation only to the extent
of the ownership in that corporation prior to the transaction giving rise to the
change and not with the ownership interest in the other corporation.

Exhibit B
Release of Claims

     I acknowledge that I have had twenty-one days to decide whether to execute
this Release of Claims ("Release") and that I have been advised in writing to
consult an attorney before executing this Release. I acknowledge that I have
seven days from the date I execute this Release to revoke my signature. I
understand that if I choose to revoke this Release I must deliver my written
revocation to the Company before the end of the seven-day period.

     I, for myself, my heirs, successors, and assigns do hereby settle, waive,
and release the Company ("the Company") and any of its past and present
officers, owners, stockholders, partners, directors, agents, employees,
successors, predecessors, assigns, representatives, attorneys, divisions,
subsidiaries, or affiliates from any and all claims, charges, complaints,
rights, demands, actions, and causes of action of any kind or character, in
contract, tort, or otherwise, based on actions or omissions occurring in the
past and/or present, and regardless of whether known or unknown to me at this
time, including those not specifically mentioned in this Release. Among the
rights, claims, and causes of action which I give up under this Release are
those arising in connection with my employment and the termination of my
employment, including rights or claims under federal, state and local fair
employment practice or discrimination laws (including the various Civil Rights
Acts, the Age Discrimination in Employment Act, the Equal Pay Act, and any
similar state laws of the State of Michigan), laws pertaining to breach of
employment contract, wrongful termination or other wrongful treatment, and any
other laws or rights relating to my employment with the Company and the
termination of that employment. I acknowledge that I am aware of my rights under
the Age Discrimination in Employment Act, and that I am knowingly and
voluntarily waiving and releasing any claim of age discrimination which I may
have under that statute as part of this Release. This agreement does not waive
or release any rights, claims, or causes of action that may arise from acts or
omissions occurring after the date I execute this Release, nor does this
agreement waive or release any rights, claims or causes of action relating to
(A) indemnification from the Company and its affiliates with respect to my
activities on behalf of the Company and its affiliates prior to my termination
of employment, (B) compensation or benefits to which I am entitled under any
compensation or benefit plans of the Company or its affiliates or (C) amounts to
which I am entitled pursuant to the Agreement to which a form of this Release of
Claims was attached as Exhibit B. Except as contemplated by the preceding
sentence, I agree not to bring or join any lawsuit or file any claim against the
Company in any court relating to my employment or the termination of my
employment.