MBT Financial Corp. :MBTF-US: Earnings Analysis: Q1, 2017 By the Numbers : May 18, 2017

MBT Financial Corp. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of MBT Financial Corp. – Macatawa Bank Corporation, Mackinac Financial Corporation, Mercantile Bank Corporation, Chemical Financial Corporation, Independent Bank Corporation and Huntington Bancshares Incorporated (MCBC-US, MFNC-US, MBWM-US, CHFC-US, IBCP-US and HBAN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 13.42 million, Net Earnings of USD 3.18 million.
  • Net interest income margins widened from 69.31% to 71.52% compared to the same period last year.
  • Net loan assets changed 7.76% compared to same period last year and 1.66% from previous period, total deposits changed 3.47% compared to same period last year and 0.28% from previous period.
  • Year-on-year change in operating cash flow of 62.86% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 13.42 13.38 13.55 14.8 13.4
Revenue Growth (%YOY) 0.08 1 2.67 14.85 3.37
Earnings (mil) 3.18 3.58 3.69 4.24 3
Earnings Growth (%YOY) 6.11 -10.86 22.65 85.51 7.92
Net Margin (%) 23.7 26.74 27.2 28.64 22.36
EPS 0.14 0.16 0.16 0.18 0.13
Return on Equity (%) 9.4 9.91 10.06 11.77 8.27
Return on Assets (%) 0.94 1.06 1.11 1.28 0.9

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Market Share Versus Profits

Revenues History
Earnings History

MBTF-US‘s change in revenue this period compared to the same period last year of 0.08% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that MBTF-US is holding onto its market share. Also, for comparison purposes, revenues changed by 0.27% and earnings by -11.12% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by the following factors: (1) Year-on-year improvements in net interest income margins from 69.31% to 71.52% and (2) improvement in loan loss provisions. As a result, net interest income after provisions margins improved from 71.55% to 73.02% compared to the same period last year. Loan loss provisions as a percentage of net interest income were -2.08% this period and -3.23% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (Qtr YOY)
Total Deposits Growth Rate History (Qtr YOY)

The firm’s improvement in net interest income margins was influenced by both the relative increase in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 7.76% compared to the same period last year and 1.66% from the previous period. Total deposits changed 3.47% compared to the same period last year and 0.28% from the previous period.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

MBTF-US‘s change in operating cash flow of 62.86% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 31.49% to 33.94% and (2) one-time items. The company’s pretax margins are now 33.94%, compared to 31.49% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for MBT Financial Corp.

Company Profile

MBT Financial Corp. is a bank holding company, which operates through its subsidiary Monroe Bank & Trust. It offers various deposit products which include checking and savings accounts, time deposits, safe deposit facilities, commercial loans, personal loans, real estate mortgage loans, installment loans, IRAs, ATM and night depository facilities, treasury management services, telephone and internet banking, personal trust, employee benefit and investment management services. The company was founded in January 2000 and is headquartered in Monroe, MI.

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