##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended September 30, 2007
 Or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number: 000-30973
 MBT FINANCIAL CORP.
  Michigan
    
    38-3516922(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 102 E. Front Street
Monroe, Michigan 48161
 (734) 241-3431
 þ o
  o þ o
 o þ
 .




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TABLE OF CONTENTS  Part I Financial InformationItem 1. Financial StatementsItem 3. Quantitative and Qualitative Disclosures about Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsExhibit IndexCertification by Chief Executive Officer Required by Rule 13a-14Certification by Chief Financial Officer Required by Rule 13a-14Certification by Chief Executive Officer Pursuant to Section 906Certification by Chief Financial Officer Pursuant to Section 906    Table of Contents  
 Part I Financial Information
 
 Item 1. Financial Statements
 MBT FINANCIAL CORP.
 September 30, 2007
    
    December 31,Dollars in thousands
    
    (Unaudited)
    
    2006ASSETSCash and Cash EquivalentsCash and due from banks
    
    $
    31,165
    
    
    $
    27,903Total cash and cash equivalents
    
    
    31,165
    
    
    
    27,903Securities  Held to Maturity
    
    
    49,857
    
    
    
    64,938Securities  Available for Sale
    
    
    367,548
    
    
    
    374,087Federal Home Loan Bank stock  at cost
    
    
    13,086
    
    
    
    13,086Loans held for sale
    
    
    625
    
    
    
    721Loans  Net
    
    
    993,927
    
    
    
    984,513Accrued interest receivable and other assets
    
    
    28,801
    
    
    
    27,961Bank Owned Life Insurance
    
    
    42,174
    
    
    
    39,631Premises and Equipment  Net
    
    
    33,051
    
    
    
    33,979Total assets
    
    $
    1,560,234
    
    
    $
    1,566,819LIABILITIESDeposits:Non-interest bearing
    
    $
    139,579
    
    
    $
    158,688Interest-bearing
    
    
    970,495
    
    
    
    957,369Total deposits
    
    
    1,110,074
    
    
    
    1,116,057Federal Home Loan Bank advances
    
    
    256,500
    
    
    
    256,500Federal funds purchased
    
    
    11,700
    
    
    
    3,500Repurchase agreements
    
    
    35,000
    
    
    
    40,000Interest payable and other liabilities
    
    
    15,309
    
    
    
    14,700Total liabilities
    
    
    1,428,583
    
    
    
    1,430,757STOCKHOLDERS EQUITYCommon stock (no par value)
    
    
    
    
    
    
    Additional paid-in capital
    
    
    141
    
    
    
    6,979Retained Earnings
    
    
    135,729
    
    
    
    134,162Accumulated other comprehensive loss
    
    
    (4,219
    )
    
    
    (5,079
    )Total stockholders equity
    
    
    131,651
    
    
    
    136,062Total liabilities and stockholders equity
    
    $
    1,560,234
    
    
    $
    1,566,819
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MBT FINANCIAL CORP.
 Three Months Ended September 30,Dollars in thousands, except per share data
    
    2007
    
    2006Interest IncomeInterest and fees on loans
    
    $
    18,116
    
    
    $
    18,080Interest on investment securities-Tax-exempt
    
    
    875
    
    
    
    1,041Taxable
    
    
    4,541
    
    
    
    5,039Interest on federal funds sold
    
    
    25
    
    
    
    5Total interest income
    
    
    23,557
    
    
    
    24,165Interest ExpenseInterest on deposits
    
    
    8,277
    
    
    
    7,954Interest on borrowed funds
    
    
    4,612
    
    
    
    4,831Total interest expense
    
    
    12,889
    
    
    
    12,785Net Interest Income
    
    
    10,668
    
    
    
    11,380Provision For Loan Losses
    
    
    1,000
    
    
    
    7,950Net Interest Income AfterProvision For Loan Losses
    
    
    9,668
    
    
    
    3,430Other Income (Loss)Income from trust services
    
    
    1,171
    
    
    
    1,060Service charges and other fees
    
    
    1,599
    
    
    
    1,591Net gain (loss) on sales of securities
    
    
    4
    
    
    
    6Origination fees on mortgage loans sold
    
    
    169
    
    
    
    152Bank owned life insurance income
    
    
    329
    
    
    
    310Other
    
    
    656
    
    
    
    604Total other income
    
    
    3,928
    
    
    
    3,723Other ExpensesSalaries and employee benefits
    
    
    5,363
    
    
    
    4,728Occupancy expense
    
    
    845
    
    
    
    805Equipment expense
    
    
    780
    
    
    
    723Marketing expense
    
    
    426
    
    
    
    351Professional fees
    
    
    369
    
    
    
    614Net (gain) loss on other real estate owned
    
    
    12
    
    
    
    593Other
    
    
    1,447
    
    
    
    1,604Total other expenses
    
    
    9,242
    
    
    
    9,418Income (Loss) Before Income Taxes
    
    
    4,354
    
    
    
    (2,265
    )Income Tax Expense (Benefit)
    
    
    1,173
    
    
    
    (1,147
    )Net Income (Loss)
    
    $
    3,181
    
    
    $
    (1,118
    )Basic Earnings (Loss) Per Common Share
    
    $
    0.20
    
    
    $
    (0.07
    )Diluted Earnings (Loss) Per Common Share
    
    $
    0.20
    
    
    $
    (0.07
    )Common Stock Dividends Declared Per Share
    
    $
    0.18
    
    
    $
    0.18
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MBT FINANCIAL CORP.
 Nine Months Ended September 30,Dollars in thousands, except per share data
    
    2007
    
    2006Interest IncomeInterest and fees on loans
    
    $
    53,628
    
    
    $
    53,089Interest on investment securities-Tax-exempt
    
    
    2,755
    
    
    
    3,283Taxable
    
    
    14,038
    
    
    
    15,401Interest on federal funds sold
    
    
    141
    
    
    
    60Total interest income
    
    
    70,562
    
    
    
    71,833Interest ExpenseInterest on deposits
    
    
    24,213
    
    
    
    22,717Interest on borrowed funds
    
    
    13,711
    
    
    
    13,646Total interest expense
    
    
    37,924
    
    
    
    36,363Net Interest Income
    
    
    32,638
    
    
    
    35,470Provision For Loan Losses
    
    
    2,500
    
    
    
    15,300Net Interest Income AfterProvision For Loan Losses
    
    
    30,138
    
    
    
    20,170Other IncomeIncome from trust services
    
    
    3,389
    
    
    
    3,192Service charges and other fees
    
    
    4,698
    
    
    
    4,621Net gain (loss) on sales of securities
    
    
    96
    
    
    
    (4,901
    )Origination fees on mortgage loans sold
    
    
    562
    
    
    
    428Bank Owned Life Insurance income
    
    
    959
    
    
    
    885Other
    
    
    2,106
    
    
    
    1,842Total other income
    
    
    11,810
    
    
    
    6,067Other ExpensesSalaries and employee benefits
    
    
    16,411
    
    
    
    15,246Occupancy expense
    
    
    2,569
    
    
    
    2,284Equipment expense
    
    
    2,475
    
    
    
    2,268Marketing expense
    
    
    1,047
    
    
    
    1,069Professional fees
    
    
    1,145
    
    
    
    1,230Net (gain) loss on other real estate
    
    
    22
    
    
    
    1,830Other
    
    
    3,964
    
    
    
    4,032Total other expenses
    
    
    27,633
    
    
    
    27,959Income Before Income Taxes
    
    
    14,315
    
    
    
    (1,722
    )Income Tax Expense (Benefit)
    
    
    3,896
    
    
    
    (1,754
    )Net Income
    
    $
    10,419
    
    
    $
    32Basic Earnings Per Common Share
    
    $
    0.63
    
    
    $
    Diluted Earnings Per Common Share
    
    $
    0.63
    
    
    $
    Common Stock Dividends Declared Per Share
    
    $
    0.54
    
    
    $
    0.52
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MBT FINANCIAL CORP.
 Nine Months Ended September 30,Dollars in thousands
    
    2007
    
    2006Cash Flows from Operating ActivitiesNet Income
    
    $
    10,419
    
    
    $
    32Adjustments to reconcile net income to net cash from operating activitiesDepreciation
    
    
    2,030
    
    
    
    1,889Provision for loan losses
    
    
    2,500
    
    
    
    15,300Increase in net deferred Federal income tax asset
    
    
    (475
    )
    
    
    (1,300
    )Net amortization of investment premium and discount
    
    
    (253
    )
    
    
    (23
    )Net increase in interest payable and other liabilities
    
    
    949
    
    
    
    452Net increase in interest receivable and other assets
    
    
    (2,184
    )
    
    
    (6,226
    )Equity Compensation
    
    
    502
    
    
    
    360Net (gain) loss on sales of securities
    
    
    (96
    )
    
    
    4,901Increase in cash surrender value of life insurance
    
    
    (959
    )
    
    
    (885
    )Net cash provided by operating activities
    
    $
    12,433
    
    
    $
    14,500Cash Flows from Investing ActivitiesProceeds from maturities and redemptions of investment securities held to maturity
    
    $
    19,818
    
    
    $
    18,639Proceeds from maturities and redemptions of investment securities available for sale
    
    
    23,290
    
    
    
    6,401Proceeds from sales of investment securities available for sale
    
    
    47,737
    
    
    
    130,652Net increase in loans
    
    
    (11,818
    )
    
    
    (34,987
    )Proceeds from sales of other real estate owned
    
    
    1,482
    
    
    
    5,279Proceeds from sales of other assets
    
    
    219
    
    
    
    83Purchase of investment securities held to maturity
    
    
    (4,757
    )
    
    
    (3,724
    )Purchase of bank owned life insurance
    
    
    (1,584
    )
    
    
    (2,238
    )Purchase of investment securities available for sale
    
    
    (63,137
    )
    
    
    (84,568
    )Purchase of bank premises and equipment
    
    
    (1,344
    )
    
    
    (8,558
    )Net cash provided by investing activities
    
    $
    9,906
    
    
    $
    26,979Cash Flows from Financing ActivitiesNet decrease in deposits
    
    $
    (5,983
    )
    
    $
    (59,926
    )Net increase in short term borrowings
    
    
    8,200
    
    
    
    16,100Net increase (decrease) in securities sold under repurchase agreements
    
    
    (5,000
    )
    
    
    5,000Proceeds from issuance of common stock
    
    
    87
    
    
    
    210Repurchase of common stock
    
    
    (7,427
    )
    
    
    (5,651
    )Dividends paid
    
    
    (8,954
    )
    
    
    (8,692
    )Net cash used for financing activities
    
    $
    (19,077
    )
    
    $
    (52,959
    )Net Increase (Decrease) In Cash and Cash Equivalents
    
    $
    3,262
    
    
    $
    (11,480
    )Cash and Cash Equivalents at Beginning Of Period
    
    
    27,903
    
    
    
    37,330Cash And Cash Equivalents At End Of Period
    
    $
    31,165
    
    
    $
    25,850
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MBT FINANCIAL CORP.
 AccumulatedAdditional
    
    
    
    
    
    OtherPaid-in
    
    Retained
    
    ComprehensiveDollars in thousands
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    TotalBalance  January 1, 2007
    
    $
    6,979
    
    
    $
    134,162
    
    
    $
    (5,079
    )
    
    $
    136,062Repurchase of Common Stock (571,662 shares)
    
    
    (7,427
    )
    
    
    
    
    
    
    
    
    
    
    (7,427
    )Issuance of Common Stock (6,565 shares)
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    87Equity Compensation
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    502Dividends declared ($0.54 per share)
    
    
    
    
    
    
    (8,852
    )
    
    
    
    
    
    
    (8,852
    )Comprehensive income:Net income
    
    
    
    
    
    
    10,419
    
    
    
    
    
    
    
    10,419Change in net unrealized loss on securities
available for sale  Net of tax effect of
$(343)
    
    
    
    
    
    
    
    
    
    
    639
    
    
    
    639Change in postretirement benefit obligation
Net of tax effect of ($119)
    
    
    
    
    
    
    
    
    
    
    221
    
    
    
    221Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,279Balance  September 30, 2007
    
    $
    141
    
    
    $
    135,729
    
    
    $
    (4,219
    )
    
    $
    131,651
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MBT FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
              -7-




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2007
    
    2006BasicNet income (loss)
    
    $
    3,181,000
    
    
    $
    (1,118,000
    )Less preferred dividends
    
    
    
    
    
    
    Net income (loss) applicable to common stock
    
    $
    3,181,000
    
    
    $
    (1,118,000
    )Average common shares outstanding
    
    
    16,288,696
    
    
    
    16,872,826Earnings (loss) per common share  basic
    
    $
    0.20
    
    
    $
    (0.07
    )
 2007
    
    2006DilutedNet income (loss)
    
    $
    3,181,000
    
    
    $
    (1,118,000
    )Less preferred dividends
    
    
    
    
    
    
    Net income (loss) applicable to common stock
    
    $
    3,181,000
    
    
    $
    (1,118,000
    )Average common shares outstanding
    
    
    16,288,696
    
    
    
    16,872,826Stock option adjustment
    
    
    21,583
    
    
    
    21,678Average common shares outstanding  diluted
    
    
    16,310,279
    
    
    
    16,894,504Earnings (loss) per common share  diluted
    
    $
    0.20
    
    
    $
    (0.07
    )
  2007
    
    2006BasicNet income
    
    $
    10,419,000
    
    
    $
    32,000Less preferred dividends
    
    
    
    
    
    
    Net income applicable to common stock
    
    $
    10,419,000
    
    
    $
    32,000Average common shares outstanding
    
    
    16,509,813
    
    
    
    16,983,826Earnings per common share  basic
    
    $
    0.63
    
    
    $
    
 2007
    
    2006DilutedNet income
    
    $
    10,419,000
    
    
    $
    32,000Less preferred dividends
    
    
    
    
    
    
    Net income applicable to common stock
    
    $
    10,419,000
    
    
    $
    32,000Average common shares outstanding
    
    
    16,509,813
    
    
    
    16,983,826Stock option adjustment
    
    
    21,583
    
    
    
    26,447Average common shares outstanding  diluted
    
    
    16,531,396
    
    
    
    17,010,273Earnings per common share  diluted
    
    $
    0.63
    
    
    $
    0.00
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Weighted AverageShares
    
    Exercise PriceOptions Outstanding, January 1, 2007
    
    
    510,143
    
    
    $
    17.73Granted
    
    
    94,500
    
    
    
    15.33Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Options Outstanding, September 30, 2007
    
    
    604,643
    
    
    $
    17.36Options Exercisable, September 30, 2007
    
    
    407,991
    
    
    $
    17.32
     September 30,
    
    December 31,2007
    
    2006Residential real estate loans
    
    $
    495,357
    
    
    $
    513,289Non-residential real estate loans
    
    
    358,691
    
    
    
    328,145Loans to finance agricultural production and
other loans to farmers
    
    
    6,571
    
    
    
    3,739Commercial and industrial loans
    
    
    103,192
    
    
    
    97,959Loans to individuals for household, family,
and other personal expenditures
    
    
    44,738
    
    
    
    55,443All other loans (including overdrafts)
    
    
    315
    
    
    
    473Total loans, gross
    
    
    1,008,864
    
    
    
    999,048Less: Deferred loan fees
    
    
    614
    
    
    
    771Total loans, net of deferred loan fees
    
    
    1,008,250
    
    
    
    998,277Less: Allowance for loan losses
    
    
    14,323
    
    
    
    13,764$
    993,927
    
    
    $
    984,513
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September 30,
    
    December 31,2007
    
    2006Nonaccrual loans
    
    $
    26,440
    
    
    $
    19,152Loans 90 days past due
    
    
    105
    
    
    
    69Restructured loans
    
    
    938
    
    
    
    888Total nonperforming loans
    
    $
    27,483
    
    
    $
    20,109Other real estate owned
    
    
    6,389
    
    
    
    2,432Total nonperforming assets
    
    $
    33,872
    
    
    $
    22,541Nonperforming assets to total assets
    
    
    2.17
    %
    
    
    1.44
    %Allowance for loan losses to
nonperforming assets
    
    
    42.29
    %
    
    
    61.06
    %
   Nine months ended
    
    Twelve months endedSeptember 30, 2007
    
    December 31, 2006Balance beginning of year
    
    $
    13,764
    
    
    $
    13,625Provision for loan losses
    
    
    2,500
    
    
    
    16,475Loans charged off
    
    
    (3,183
    )
    
    
    (18,377
    )Recoveries
    
    
    1,242
    
    
    
    2,041Balance end of period
    
    $
    14,323
    
    
    $
    13,764
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September 30, 2007
    
    December 31, 2006Amortized
    
    Estimated
    
    Amortized
    
    EstimatedCost
    
    Market Value
    
    Cost
    
    Market ValueHeld to MaturityObligations of U.S. Government Agencies
    
    $
    9
    
    
    $
    9
    
    
    $
    10
    
    
    $
    10Obligations of States and Political
Subdivisions
    
    
    49,848
    
    
    
    50,069
    
    
    
    64,928
    
    
    
    65,330$
    49,857
    
    
    $
    50,078
    
    
    $
    64,938
    
    
    $
    65,340
 September 30, 2007
    
    December 31, 2006Amortized
    
    Estimated
    
    Amortized
    
    EstimatedCost
    
    Market Value
    
    Cost
    
    Market ValueAvailable for SaleObligations of U.S. Government Agencies
    
    $
    322,716
    
    
    $
    319,903
    
    
    $
    326,808
    
    
    $
    322,934Obligations of States and Political
Subdivisions
    
    
    25,738
    
    
    
    25,630
    
    
    
    23,226
    
    
    
    23,129Other Securities
    
    
    22,063
    
    
    
    22,015
    
    
    
    28,004
    
    
    
    28,024$
    370,517
    
    
    $
    367,548
    
    
    $
    378,038
    
    
    $
    374,087
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Contractual AmountSeptember 30,
    
    December 31,2007
    
    2006Commitments to extend credit:Unused portion of commercial lines of credit
    
    $
    76,404
    
    
    $
    100,265Unused portion of credit card lines of credit
    
    
    5,878
    
    
    
    5,802Unused portion of home equity lines of credit
    
    
    20,746
    
    
    
    20,873Standby letters of credit and financial guarantees written
    
    
    11,511
    
    
    
    12,234All other off-balance sheet assets
    
    
    3,622
    
    
    
    3,922
   Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 General
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Critical Accounting Policies
  Financial Condition
    -14-




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Results
of Operations  Third Quarter 2007 vs. Third Quarter 2006
      -15-




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Results
of Operations  Nine Months Ended September 30, 2007 vs. September 30, 2006
      -16-




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Liquidity and Capital
    Minimum to be WellSeptember 30, 2007
    
    December 31, 2006
    
    CapitalizedLeverage Capital
    
    
    8.9
    %
    
    
    8.9
    %
    
    
    5.0
    %Tier 1 Risk Based Capital
    
    
    12.3
    %
    
    
    12.8
    %
    
    
    6.0
    %Total Risk Based Capital
    
    
    13.5
    %
    
    
    14.0
    %
    
    
    10.0
    %
   
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
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Item 4. Controls and Procedures
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Part II Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Total Number of Shares
    
    Maximum Number ofAverage
    
    Purchased as Part of
    
    Shares that May YetTotal Number of
    
    Price Paid
    
    Publicly Announced
    
    Be Purchased UnderShares Purchased
    
    per Share
    
    Plans or Programs
    
    the Plans or ProgramsJuly 1, 2007 - July 31, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    661,400August 1, 2007 - August 31, 2007
    
    
    112,000
    
    
    $
    12.50
    
    
    
    112,000
    
    
    
    549,400September 1, 2007 - September 30, 2007
    
    
    121,062
    
    
    $
    12.15
    
    
    
    121,062
    
    
    
    428,338Total
    
    
    233,062
    
    
    $
    12.32
    
    
    
    233,062
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  3.1
    
    Restated Articles of Incorporation of MBT Financial Corp. Previously filed as Exhibit
3.1 to MBT Financial Corp.s Form 10-K for its fiscal year ended December 31, 2000.3.2
    
    Amended and Restated Bylaws of MBT Financial Corp. Previously filed as Exhibit 3.2 to
MBT Financial Corp.s Form 10-K for its fiscal year ended December 31, 2004.31.1
    
    Certification by Chief Executive Officer required by Securities and Exchange
Commission Rule 13a-14.31.2
    
    Certification by Chief Financial Officer required by Securities and Exchange
Commission Rule 13a-14.
 -19-




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##### Table of Contents



32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 -20-




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##### Table of Contents



Signatures
  MBT Financial Corp.

(Registrant)November 7, 2007

Date
    
    
    
    By
    
    /s/ H. Douglas Chaffin

H. Douglas ChaffinPresident &
Chief Executive OfficerNovember 7, 2007
    
    
    
    By
    
    /s/ John L. SkibskiDate
    
    
    
    
    
    John L. SkibskiExecutive Vice President and 
Chief Financial Officer
 -21-




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##### Table of Contents



Exhibit Index
 Exhibit Number
    
    Description of Exhibits3.1
    
    Restated Articles of Incorporation of MBT Financial Corp.
Previously filed as Exhibit 3.1 to MBT Financial Corp.s
Form 10-K for its fiscal year ended December 31, 2000.3.2
    
    Amended and Restated Bylaws of MBT Financial Corp.
Previously filed as Exhibit 3.2 to MBT Financial Corp.s
Form 10-K for its fiscal year ended December 31, 2004.31.1
    
    Certification by Chief Executive Officer required by
Securities and Exchange Commission Rule 13a-14.31.2
    
    Certification by Chief Financial Officer required by
Securities and Exchange Commission Rule 13a-14.32.1
    
    Certification by Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as enacted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as enacted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.