10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2014

Or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-30973

MBT FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Michigan	38-3516922
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

102 E. Front Street

Monroe, Michigan 48161

(Address of principal executive offices)

(Zip Code)

(734) 241-3431

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller accelerated filer” in Rule 12b-2 of the Exchange Act (check one).

Large accelerated filer ¨	Accelerated Filer ¨
Non-accelerated filer ¨	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of May 14, 2014, there were 22,685,703 shares of the Company’s Common Stock outstanding.

Part I Financial Information

Item 1. Financial Statements

MBT FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

	March 31, 2014
Dollars in thousands	(Unaudited)			December 31, 2013
ASSETS
Cash and Cash Equivalents
Cash and due from banks
Non-interest bearing	$	12,228		$	15,448
Interest bearing		41,376			62,350
Total cash and cash equivalents		53,604			77,798
Securities - Held to Maturity		36,290			34,846
Securities - Available for Sale		419,968			394,956
Federal Home Loan Bank stock - at cost		10,605			10,605
Loans held for sale		218			668
Loans		591,806			597,590
Allowance for Loan Losses		(16,158	)		(16,209	)
Loans - Net		575,648			581,381
Accrued interest receivable and other assets		32,445			34,094
Other Real Estate Owned		9,775			9,628
Bank Owned Life Insurance		50,846			50,493
Premises and Equipment - Net		28,413			28,213
Total assets	$	1,217,812		$	1,222,682
LIABILITIES
Deposits:
Non-interest bearing	$	210,079		$	215,844
Interest-bearing		846,532			853,874
Total deposits		1,056,611			1,069,718
Federal Home Loan Bank advances		12,000			12,000
Repurchase agreements		15,000			15,000
Interest payable and other liabilities		16,094			15,356
Total liabilities		1,099,705			1,112,074
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 21,266,380 and 20,605,493 shares issued and outstanding)		17,199			14,671
Retained earnings		108,584			106,817
Unearned compensation		(31	)		(7	)
Accumulated other comprehensive loss		(7,645	)		(10,873	)
Total stockholders' equity		118,107			110,608
Total liabilities and stockholders' equity	$	1,217,812		$	1,222,682

The accompanying notes to consolidated financial statements are an integral part of these statements.

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MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - UNAUDITED

	Three Months Ended March 31,
Dollars in thousands, except per share data	2014			2013
Interest Income
Interest and fees on loans	$	7,079		$	7,902
Interest on investment securities-
Tax-exempt		307			323
Taxable		2,118			1,767
Interest on balances due from banks		32			69
Total interest income		9,536			10,061
Interest Expense
Interest on deposits		855			1,213
Interest on borrowed funds		186			804
Total interest expense		1,041			2,017
Net Interest Income		8,495			8,044
Provision For Loan Losses		100			1,500
Net Interest Income After
Provision For Loan Losses		8,395			6,544
Other Income
Income from wealth management services		1,134			1,097
Service charges and other fees		932			1,042
Debit card income		489			478
Net gain on sales of securities available for sale		57			10
Net gain on sales of Other Real Estate Owned		12			40
Origination fees on mortgage loans sold		62			289
Bank owned life insurance income		354			390
Rent income on Other Real Estate Owned		135			145
Other		489			537
Total other income		3,664			4,028
Other Expenses
Salaries and employee benefits		5,728			5,323
Occupancy expense		744			687
Equipment expense		617			700
Marketing expense		203			163
Professional fees		418			501
Other Real Estate Owned expenses		339			374
FDIC Deposit Insurance Assessment		640			689
Bonding and other insurance expense		264			269
Telephone expense		143			113
Other		603			639
Total other expenses		9,699			9,458
Income Before Income Taxes		2,360			1,114
Income Tax Expense		593			-
Net Income	$	1,767		$	1,114
Other Comprehensive Income (Loss) - Net of Tax
Unrealized gains (losses) on securities		3,559			(546	)
Reclassification adjustment for gains included in net income		(38	)		(6	)
Postretirement benefit liability		(293	)		31
Total Other Comprehensive Income (Loss) - Net of Tax		3,228			(521	)
Comprehensive Income	$	4,995		$	593
Basic Earnings Per Common Share	$	0.08		$	0.06
Diluted Earnings Per Common Share	$	0.08		$	0.06
Common Stock Dividends Declared Per Share	$	-		$	-

The accompanying notes to consolidated financial statements are an integral part of these statements.

-3-

MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED

									Accumulated
									Other
	Common			Retained		Unearned			Comprehensive
Dollars in thousands	Stock			Earnings		Compensation			Income (Loss)			Total
Balance - January 1, 2014	$	14,671		$	106,817	$	(7	)	$	(10,873	)	$	110,608
Issuance of Common Stock
SOSARs exercised (2,162 shares)		-			-		-			-			-
Restricted stock awards (6,000 shares)		29			-		(29	)		-			-
Other stock issued (652,725 shares)		2,778			-		-			-			2,778
Stock Offering Expense		(325	)		-		-			-			(325	)
Equity Compensation		46			-		5			-			51
Net income		-			1,767		-			-			1,767
Other comprehensive income - net of tax		-			-		-			3,228			3,228
Balance - March 31, 2014	$	17,199		$	108,584	$	(31	)	$	(7,645	)	$	118,107

									Accumulated
									Other
	Common			Retained		Unearned			Comprehensive
Dollars in thousands	Stock			Earnings		Compensation			Income (Loss)			Total
Balance - January 1, 2013	$	2,397		$	81,280	$	(27	)	$	(76	)	$	83,574
Issuance of Common Stock
SOSARs exercised (674 shares)		4			-		-			-			4
Other stock issued (506,801 shares)		1,760			-		-			-			1,760
Stock Offering Expense		(15	)		-		-			-			(15	)
Equity Compensation		27			-		6			-			33
Net income		-			1,114		-			-			1,114
Other comprehensive loss - net of tax		-			-		-			(521	)		(521	)
Balance - March 31, 2013	$	4,173		$	82,394	$	(21	)	$	(597	)	$	85,949

The accompanying notes to consolidated financial statements are an integral part of these statements.

-4-

MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

	Three Months Ended March 31,
Dollars in thousands	2014			2013
Cash Flows from Operating Activities
Net Income	$	1,767		$	1,114
Adjustments to reconcile net income to net cash from operating activities
Provision for loan losses		100			1,500
Depreciation		415			488
Deferred income tax benefit		593			-
Net amortization of investment premium and discount		255			493
Writedowns of Other Real Estate Owned		59			164
Net increase in interest payable and other liabilities		294			1,552
Net increase in interest receivable and other assets		(679	)		(1,106	)
Equity based compensation expense		51			69
Net gain on sale/settlement of securities		(57	)		(10	)
Increase in cash surrender value of life insurance		(353	)		(390	)
Net cash provided by operating activities	$	2,445		$	3,874
Cash Flows from Investing Activities
Proceeds from maturities and redemptions of investment securities held to maturity	$	3,146		$	273
Proceeds from maturities and redemptions of investment securities available for sale		4,578			24,611
Proceeds from sales of investment securities available for sale		22,376			5,180
Net decrease in loans		4,803			8,260
Proceeds from sales of other real estate owned		1,145			1,945
Proceeds from sales of other assets		1			18
Purchase of investment securities held to maturity		(4,590	)		-
Purchase of investment securities available for sale		(46,829	)		(53,823	)
Purchase of bank premises and equipment		(615	)		(206	)
Net cash used for investing activities	$	(15,985	)	$	(13,742	)
Cash Flows from Financing Activities
Net increase (decrease) in deposits	$	(13,107	)	$	13,635
Proceeds from issuance of common stock		2,453			1,764
Net cash (used for) provided by financing activities	$	(10,654	)	$	15,399
Net Increase (Decrease) in Cash and Cash Equivalents	$	(24,194	)	$	5,531
Cash and Cash Equivalents at Beginning of Period		77,798			112,507
Cash and Cash Equivalents at End of Period	$	53,604		$	118,038
Supplemental Cash Flow Information
Cash paid for interest	$	1,039		$	2,021
Cash paid for federal income taxes	$	-		$	-
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	$	1,280		$	2,761
Transfer of loans to other assets	$	-		$	43

The accompanying notes to consolidated financial statements are an integral part of these statements.

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MBT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited consolidated financial statements include the accounts of MBT Financial Corp. (the “Company”) and its subsidiary, Monroe Bank & Trust (the “Bank”). The Bank includes the accounts of its wholly owned subsidiary, MB&T Financial Services, Inc. The Bank operates seventeen branches in Monroe County, Michigan, seven branches in Wayne County, Michigan, and a mortgage loan office in Monroe County. The Bank’s primary source of revenue is from providing loans to customers, who are predominantly small and middle-market businesses and middle-income individuals. The Company’s sole business segment is community banking.

The accounting and reporting policies of the Bank conform to practice within the banking industry and are in accordance with accounting principles generally accepted in the United States. Preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, the valuation of other real estate owned, and the fair value of investment securities.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

The significant accounting policies are as follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

FAIR VALUE

The Corporation measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Corporation uses various valuation techniques and assumptions when estimating fair value.

-6-

The Corporation applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Corporation considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Corporation looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Corporation looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Corporation must use alternative valuation techniques to derive a fair value measurement.

ACCOUNTING PRONOUNCEMENTS

No recent accounting pronouncements are expected to have a significant impact on the Corporation’s financial statements.

2. EARNINGS PER SHARE

The calculations of earnings per common share are as follows:

	For the three months ended March 31,
	2014		2013
Basic
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Earnings per common share - basic	$	0.08	$	0.06
Diluted
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Equity compensation		294,199		229,973
Average common shares outstanding - diluted		21,112,926		17,746,355
Earnings per common share - diluted	$	0.08	$	0.06

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3. STOCK BASED COMPENSATION

Stock Options - The following table summarizes the options that had been granted to certain key executives in accordance with the Long-Term Incentive Compensation Plan that was approved by shareholders at the Annual Meeting of Shareholders on April 6, 2000.

			Weighted Average
	Shares		Exercise Price
Options Outstanding, January 1, 2014		283,900	$	18.41
Granted		-		-
Exercised		-		-
Forfeited		77,000		16.69
Options Outstanding, March 31, 2014		206,900	$	19.05
Options Exercisable, March 31, 2014		206,900	$	19.05

Stock Only Stock Appreciation Rights (SOSARs) - On March 7, 2014, 110,000 Stock Only Stock Appreciation Rights (SOSARs) were awarded to certain executives in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. The SOSARs have a term of ten years and vest in three equal annual installments beginning on December 31, 2014. The fair value of $2.98 for the SOSARs was estimated at the date of the grant, using the Black-Scholes option pricing model, with the following assumptions: expected option lives of 7 years, expected volatility of 60.11%, a risk free interest rate of 2.27% and dividend yield of 0.00%.

SOSARs granted under the plan are structured as fixed grants with the exercise price equal to the market value of the underlying stock on the date of the grant.

The following table summarizes the SOSARs that have been granted:

			Weighted Average
	Shares		Exercise Price
SOSARs Outstanding, January 1, 2014		472,271	$	3.23
Granted		110,000		4.90
Exercised		5,332		1.91
Forfeited		1,334		2.35
SOSARs Outstanding, March 31, 2014		575,605	$	3.56
SOSARs Exercisable, March 31, 2014		368,228	$	3.52

Restricted Stock Unit Awards – On March 7, 2014, performance restricted stock units were awarded to certain key executive officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. Each Restricted Stock Unit (RSU) is equivalent to one share of MBT Financial Corp. common stock. Stock will be issued to the participants following a two year performance period that ends on December 31, 2015. Up to 50% of the aggregate RSUs granted may be earned in each year of the performance period subject to satisfying weighted performance thresholds. Earned RSUs vest on December 31, 2016.

The total expense for equity based compensation was $67,000 in the first quarter of 2014 and $73,000 in the first quarter of 2013.

4. LOANS

The Bank makes commercial, consumer, and mortgage loans primarily to customers in Monroe County, Michigan, southern and western Wayne County, Michigan, and surrounding areas. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the automotive, manufacturing, and real estate development economic sectors.

-8-

Loans consist of the following (000s omitted):

	March 31,		December 31,
	2014		2013
Residential real estate loans	$	225,199	$	228,024
Commercial and Construction real estate loans		278,877		280,579
Agriculture and agricultural real estate loans		14,555		14,997
Commercial and industrial loans		58,795		59,440
Loans to individuals for household, family, and other personal expenditures		14,380		14,550
Total loans, gross	$	591,806	$	597,590
Less: Allowance for loan losses		16,158		16,209
	$	575,648	$	581,381

Loans are placed in a nonaccrual status when, in the opinion of Management, the collection of additional interest is doubtful. All loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are reviewed for impairment each quarter. Allowances for loans determined to be impaired are included in the allowance for loan losses. All cash received on nonaccrual loans is applied to the principal balance. Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due, restructured loans, nonaccrual investment securities, and other real estate owned. Other real estate owned includes real estate that has been acquired in full or partial satisfaction of loan obligations or upon foreclosure and real estate that the bank has purchased but no longer intends to use for bank premises.

The following table summarizes nonperforming assets (000’s omitted):

	March 31,			December 31,
	2014			2013
Nonaccrual loans	$	23,108		$	23,710
Loans 90 days past due and accruing		29			46
Restructured loans		32,248			32,450
Total nonperforming loans	$	55,385		$	56,206
Other real estate owned		9,775			9,628
Other assets		9			10
Nonperforming investment securities		3,262			3,259
Total nonperforming assets	$	68,431		$	69,103
Nonperforming assets to total assets		5.62	%		5.65	%
Allowance for loan losses to nonperforming loans		29.17	%		28.84	%

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5. ALLOWANCE FOR LOAN LOSSES

The Company separates its loan portfolio into segments to perform the calculation and analysis of the allowance for loan losses. The six segments analyzed are Agriculture and Agricultural Real Estate, Commercial, Commercial Real Estate, Construction Real Estate, Residential Real Estate, and Consumer and Other. The Agriculture and Agricultural Real Estate segment includes all loans to finance agricultural production and all loans secured by agricultural real estate. This segment does not include loans to finance agriculture that are secured by residential real estate, which are included in the Residential Real Estate segment. The Commercial segment includes loans to finance commercial and industrial businesses that are not secured by real estate. The Commercial Real Estate segment includes loans secured by non-farm, non-residential real estate. The Construction Real Estate segment includes loans to finance construction and land development. This includes residential and commercial construction and land development. The Residential Real Estate segment includes all loans, other than construction loans, that are secured by single family and multi family residential real estate properties. The Consumer and Other segment includes all loans not included in any other segment. These are primarily loans to consumers for household, family, and other personal expenditures, such as autos, boats, and recreational vehicles.

Activity in the allowance for loan losses during the three months ended March 31, 2014 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate		Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended March 31, 2014
Beginning Balance	$	171	$	1,989		$	7,030		$	1,397		$	4,606		$	1,016		$	16,209
Charge-offs		-		(186	)		(108	)		(210	)		(132	)		(38	)		(674	)
Recoveries		-		33			65			234			165			26			523
Provision		34		(56	)		473			9			(161	)		(199	)		100
Ending balance	$	205	$	1,780		$	7,460		$	1,430		$	4,478		$	805		$	16,158
Allowance for loan losses as of March 31, 2014
Ending balance individually evaluated for impairment	$	46	$	920		$	2,758		$	1,150		$	1,713		$	248		$	6,835
Ending balance collectively evaluated for impairment		159		860			4,702			280			2,765			557			9,323
Ending balance	$	205	$	1,780		$	7,460		$	1,430		$	4,478		$	805		$	16,158
Loans as of March 31, 2014
Ending balance individually evaluated for impairment	$	713	$	2,304		$	35,937		$	4,013		$	15,715		$	596		$	59,278
Ending balance collectively evaluated for impairment		13,842		56,491			228,069			10,858			209,484			13,784			532,528
Ending balance	$	14,555	$	58,795		$	264,006		$	14,871		$	225,199		$	14,380		$	591,806

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Activity in the allowance for loan losses during the three months ended March 31, 2013 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate			Commercial			Commercial Real Estate			Construction Real Estate			Residential Real Estate			Consumer and Other			Total
Allowance for loan losses: For the three months ended March 31, 2013
Beginning Balance	$	76		$	2,224		$	7,551		$	2,401		$	4,715		$	332		$	17,299
Charge-offs		-			(202	)		(813	)		(18	)		(433	)		(121	)		(1,587	)
Recoveries		-			236			64			274			80			33			687
Provision		(6	)		(105	)		1,106			(188	)		746			(53	)		1,500
Ending balance	$	70		$	2,153		$	7,908		$	2,469		$	5,108		$	191		$	17,899
Allowance for loan losses as of March 31, 2013
Ending balance individually evaluated for impairment	$	-		$	1,330		$	2,312		$	1,863		$	2,084		$	100		$	7,689
Ending balance collectively evaluated for impairment		70			823			5,596			606			3,024			91			10,210
Ending balance	$	70		$	2,153		$	7,908		$	2,469		$	5,108		$	191		$	17,899
Loans as of March 31, 2013
Ending balance individually evaluated for impairment	$	420		$	4,193		$	35,960		$	6,225		$	18,668		$	346		$	65,812
Ending balance collectively evaluated for impairment		11,815			56,873			238,580			10,853			216,655			14,170			548,946
Ending balance	$	12,235		$	61,066		$	274,540		$	17,078		$	235,323		$	14,516		$	614,758

Each period the provision for loan losses in the income statement results from the combination of an estimate by Management of loan losses that occurred during the current period and the ongoing adjustment of prior estimates of losses occurring in prior periods.

The provision for loan losses increases the allowance for loan losses, a valuation account which appears on the consolidated balance sheets. As the specific customer and amount of a loan loss is confirmed by gathering additional information, taking collateral in full or partial settlement of the loan, bankruptcy of the borrower, etc., the loan is charged off, reducing the allowance for loan losses. If, subsequent to a charge off, the Bank is able to collect additional amounts from the customer or sell collateral worth more than earlier estimated, a recovery is recorded.

To serve as a basis for making this provision, the Bank maintains an extensive credit risk monitoring process that considers several factors including: current economic conditions affecting the Bank’s customers, the payment performance of individual loans and pools of homogeneous loans, portfolio seasoning, changes in collateral values, and detailed reviews of specific loan relationships.

The Company utilizes an internal loan grading system to assign a risk grade to all commercial loans, all renegotiated loans, and each commercial credit relationship. Grades 1 through 4 are considered “pass” credits and grades 5 and 6 are considered “watch” credits and are subject to greater scrutiny. Loans with grades 7, 8, and 9 and considered “doubtful” or “loss” and have generally been charged off. A description of the general characteristics of each grade is as follows:

• Grade 1 – Excellent – Loans secured by marketable collateral, with adequate margin, or supported by strong financial statements, including substantial levels of tangible net worth. Probability of serious financial deterioration is unlikely. Possess a sound repayment source and a secondary source. This classification will also include individual loans backed by liquid personal assets, established history and unquestionable character. High liquidity, minimum risk, strong ratios, and low handling costs are common to these loans.

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• Grade 2 – Above Average – Loans that exhibit less than average risk and clearly demonstrate debt service coverage that is consistently above average as well as a strong capital base. These loans may have some deficiency or vulnerability, but with offsetting features and are considered to be fully collectable.

• Grade 3 – Satisfactory – Loans that have an acceptable amount of risk but may exhibit vulnerability to deterioration if adverse circumstances are encountered. These loans should demonstrate adequate debt service coverage and adequate levels of capital support but warrant periodic monitoring to ensure that weaknesses do not materialize or advance.

• Grade 4 – Pass – Loans that are considered “pass credits” and typically demonstrate adequate debt service coverage. The level of risk is considered acceptable but these loans warrant ongoing monitoring to ensure that adverse trends or other credit deficiencies have not materialized or advanced. The level of risk is considered acceptable so long as the loan is given adequate and ongoing management supervision.

• Grade 5 – Watch – Loans that possess some credit deficiency or potential weakness that deserves close attention. The primary source of loan repayment is sufficient but may be considered inadequate by the Bank’s standards.

• Grade 6 – Substandard – Loans that exhibit one or more of the following characteristics: (1) a defined credit weakness, financial deterioration is underway, and uncertainty about the likelihood that the loan will be paid from the primary source of repayment; (2) inadequately protected by the current net worth and paying capacity of the obligor; (3) reliance on secondary source of repayment such as collateral liquidation or guarantees; (4) distinct possibility the Bank will sustain loss if deficiencies are not corrected; (5) unusual courses of action are needed to maintain a high probability of repayment; (6) insufficient cash flow to repay principal but continuing to pay interest; (7) the Bank is subordinated or unsecured due to flaws in documentation; (8) loans are restructured or are on nonaccrual status due to concessions to the borrower when compared to normal loan terms; (9) the Bank is contemplating foreclosure or legal action due to the apparent deterioration in the loan; or (10) there is deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

• Grade 7 – Doubtful – Loans that exhibit one or more of the following characteristics: (1) loans with all the weaknesses of Substandard loans and collection or liquidation is not probable to result in payment in full; (2) the primary source of repayment is gone and there is considerable doubt as to the quality of the secondary source of repayment; or (3) the possibility of loss is high, but certain important pending factors may strengthen the loan and loss classification is deferred.

• Grades 8 & 9 - Loss – Loans are considered uncollectible and of such little value that continuing to carry them on the Bank’s financial statements is not feasible.

The assessment of compensating factors may result in a rating plus or minus one grade from those listed above. These factors include, but are not limited to collateral, guarantors, environmental conditions, history, plan/projection reasonableness, quality of information, and payment delinquency.

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The portfolio segments in each credit risk grade as of March 31, 2014 are as follows (000s omitted):

Credit Quality Indicators as of March 31, 2014

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	140	$	1,071	$	-	$	4,696	$	138,907	$	9,710	$	154,524
1		-		3,731		-		-		-		194		3,925
2		31		150		908		-		140		-		1,229
3		205		3,968		11,236		90		918		-		16,417
4		12,441		35,255		168,834		4,839		47,560		3,559		272,488
5		934		10,977		44,413		2,495		15,078		215		74,112
6		804		3,643		38,615		2,751		22,596		702		69,111
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806
Performing	$	13,758	$	56,280	$	233,200	$	10,753	$	208,948	$	13,482	$	536,421
Nonperforming		797		2,515		30,806		4,118		16,251		898		55,385
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806

The portfolio segments in each credit risk grade as of December 31, 2013 are as follows (000s omitted):

Credit Quality Indicators as of December 31, 2013

Credit Risk by Internally Assigned Grade

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	144	$	2,151	$	-	$	3,643	$	141,102	$	9,656	$	156,696
1		-		4,054		-		-		-		194		4,248
2		31		153		931		-		142		-		1,257
3		788		4,000		10,755		99		1,040		-		16,682
4		12,304		34,130		172,592		4,825		53,047		3,743		280,641
5		838		11,594		41,914		2,525		9,005		251		66,127
6		892		3,358		39,720		3,575		23,688		706		71,939
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590
Performing	$	14,428	$	56,941	$	235,531	$	9,732	$	211,149	$	13,603	$	541,384
Nonperforming		569		2,499		30,381		4,935		16,875		947		56,206
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590

Loans are considered past due when contractually required payment of interest or principal has not been received. The amount classified as past due is the entire principal balance outstanding of the loan, not just the amount of payments that are past due. The following is a summary of past due loans as of March 31, 2014 and December 31, 2013 (000s omitted):

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March 31, 2014	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	51	$	-	$	84	$	135	$	14,420	$	14,555	$	-
Commercial		45		19		392		456		58,339		58,795		29
Commercial Real Estate		3,347		800		3,435		7,582		256,424		264,006		-
Construction Real Estate		-		9		604		613		14,258		14,871		-
Residential Real Estate		4,276		304		2,100		6,680		218,519		225,199		-
Consumer and Other		136		40		139		315		14,065		14,380		-
Total	$	7,855	$	1,172	$	6,754	$	15,781	$	576,025	$	591,806	$	29

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	210	$	-	$	171	$	381	$	14,616	$	14,997	$	-
Commercial		87		93		210		390		59,050		59,440		46
Commercial Real Estate		1,640		535		3,506		5,681		260,231		265,912		-
Construction Real Estate		90		265		1,177		1,532		13,135		14,667		-
Residential Real Estate		2,612		803		2,342		5,757		222,267		228,024		-
Consumer and Other		150		52		153		355		14,195		14,550		-
Total	$	4,789	$	1,748	$	7,559	$	14,096	$	583,494	$	597,590	$	46

Loans are placed on non-accrual status when, in the opinion of Management, the collection of additional interest is doubtful. Loans are automatically placed on non-accrual status upon becoming ninety days past due, however, loans may be placed on non-accrual status regardless of whether or not they are past due. All cash received on non-accrual loans is applied to the principal balance. Loans are considered for return to accrual status on an individual basis when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following is a summary of non-accrual loans as of March 31, 2014 and December 31, 2013 (000s omitted):

	March 31, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	84	$	172
Commercial		1,111		1,035
Commercial Real Estate		13,067		13,289
Construction Real Estate		1,221		2,009
Residential Real Estate		7,293		6,865
Consumer and Other		332		340
Total	$	23,108	$	23,710

For loans deemed to be impaired due to an expectation that all contractual payments will probably not be received, impairment is measured by comparing the Bank’s recorded investment in the loan to the present value of expected cash flows discounted at the loan’s effective interest rate, the fair value of the collateral, or the loan’s observable market price.

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The following is a summary of impaired loans as of March 31, 2014 and 2013 (000s omitted):

March 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-
Commercial		926		1,002		-		1,025		13
Commercial Real Estate		17,375		20,271		-		18,098		194
Construction Real Estate		870		2,326		-		1,257		2
Residential Real Estate		7,899		8,759		-		8,339		87
Consumer and Other		32		35		-		33		1
With an allowance recorded:
Agriculture and Agricultural Real Estate		713		712		46		712		9
Commercial		1,378		1,472		920		1,425		18
Commercial Real Estate		18,562		21,882		2,758		20,446		212
Construction Real Estate		3,143		3,176		1,150		3,177		33
Residential Real Estate		7,816		8,220		1,713		8,038		79
Consumer and Other		564		572		248		565		6
Total:
Agriculture and Agricultural Real Estate	$	713	$	712	$	46	$	712	$	9
Commercial		2,304		2,474		920		2,450		31
Commercial Real Estate		35,937		42,153		2,758		38,544		406
Construction Real Estate		4,013		5,502		1,150		4,434		35
Residential Real Estate		15,715		16,979		1,713		16,377		166
Consumer and Other		596		607		248		598		7

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	Recorded Investment as of December 31, 2013		Unpaid Principal Balance as of December 31, 2013		Related Allowance as of December 31, 2013		Average Recorded Investment for the Three Months Ended March 31, 2013		Interest Income Recognized in the Three Months Ended March 31, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	423	$	12
Commercial		869		966		-		775		9
Commercial Real Estate		19,567		23,005		-		18,234		191
Construction Real Estate		1,165		2,408		-		1,950		37
Residential Real Estate		7,929		9,035		-		10,376		128
Consumer and Other		33		36		-		-		-
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		-		-
Commercial		1,540		1,627		1,031		3,513		44
Commercial Real Estate		16,025		20,032		2,697		20,045		160
Construction Real Estate		3,615		4,236		1,194		4,744		41
Residential Real Estate		8,745		9,194		1,809		9,705		85
Consumer and Other		585		581		265		346		5
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	423	$	12
Commercial		2,409		2,593		1,031		4,288		53
Commercial Real Estate		35,592		43,037		2,697		38,279		351
Construction Real Estate		4,780		6,644		1,194		6,694		78
Residential Real Estate		16,674		18,229		1,809		20,081		213
Consumer and Other		618		617		265		346		5

The Bank may agree to modify the terms of a loan in order to improve the Bank’s ability to collect amounts due. These modifications may include reduction of the interest rate, extension of the loan term, or in some cases, reduction of the principal balance. Modifications that are performed due to the debtor’s financial difficulties are considered Troubled Debt Restructurings (“TDRs”).

Loans that have been classified as TDRs during the three month periods ended March 31, 2014 and March 31, 2013 are as follows (000s omitted from dollar amounts):

	Three months ended
	March 31, 2014
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		1	$	314	$	314
Commercial		-		-		-
Commercial Real Estate		2		946		931
Construction Real Estate		-		-		-
Residential Real Estate		3		265		230
Consumer and Other		-		-		-
Total		6	$	1,525	$	1,475

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	Three months ended
	March 31, 2013
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-
Commercial		3		173		172
Commercial Real Estate		3		1,461		1,449
Construction Real Estate		-		-		-
Residential Real Estate		11		986		944
Consumer and Other		2		249		13
Total		19	$	2,869	$	2,578

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the three month periods ended March 31, 2014 and March 31, 2013 that subsequently defaulted during the three month periods ended March 31, 2014 and March 31, 2013, respectively.

The Company has allocated $5,465,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at March 31, 2014. In addition, there are no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of March 31, 2014 and March 31, 2013.

6. INVESTMENT SECURITIES

The following is a summary of the Bank’s investment securities portfolio as of March 31, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	March 31, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	35,790	$	746	$	(258	)	$	36,278
Corporate Debt Securities		500		-		-			500
	$	36,290	$	746	$	(258	)	$	36,778

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	Available for Sale
	March 31, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	308,244	$	1,697	$	(7,869	)	$	302,072
Mortgage Backed Securities issued by U.S. Government Agencies		85,116		718		(943	)		84,891
Obligations of States and Political Subdivisions		16,068		355		(92	)		16,331
Trust Preferred CDO Securities		9,505		-		(3,791	)		5,714
Corporate Debt Securities		7,969		100		-			8,069
Equity Securities		2,584		307		-			2,891
	$	429,486	$	3,177	$	(12,695	)	$	419,968

	Held to Maturity
	December 31, 2013
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	34,346	$	557	$	(364	)	$	34,539
Corporate Debt Securities		500		-		-			500
	$	34,846	$	557	$	(364	)	$	35,039

	Available for Sale
	December 31, 2013
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	277,383	$	1,147	$	(11,817	)	$	266,713
Mortgage Backed Securities issued by U.S. Government Agencies		97,168		995		(1,637	)		96,526
Obligations of States and Political Subdivisions		15,197		289		(123	)		15,363
Trust Preferred CDO Securities		9,509		-		(3,758	)		5,751
Corporate Debt Securities		7,967		104		-			8,071
Equity Securities		2,584		43		(95	)		2,532
	$	409,808	$	2,578	$	(17,430	)	$	394,956

The amortized cost and estimated market values of securities by contractual maturity as of March 31, 2014 are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

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	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	5,099	$	5,112	$	5,625	$	5,660
After 1 year through five years		14,268		14,503		52,357		51,393
After 5 years through 10 years		13,158		13,292		266,024		261,558
After 10 years		3,765		3,871		17,780		13,575
Total		36,290		36,778		341,786		332,186
Mortgage Backed Securities		-		-		85,116		84,891
Securities with no stated maturity		-		-		2,584		2,891
Total	$	36,290	$	36,778	$	429,486	$	419,968

The investment securities portfolio is evaluated for impairment throughout the year. Impairment is recorded against individual securities, unless the decrease in fair value is attributable to interest rates or the lack of an active market, and Management determines that the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before a recovery of their amortized costs bases, which may be maturity. The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013.

March 31, 2014
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	194,731	$	5,646	$	42,359	$	2,223	$	237,090	$	7,869
Mortgage Backed Securities issued by U.S. Government Agencies		34,048		510		22,816		433		56,864		943
Obligations of States and Political Subdivisions		8,934		224		3,368		126		12,302		350
Trust Preferred CDO Securities		-		-		5,714		3,791		5,714		3,791
Corporate Debt Securities		-		-		-		-		-		-
Equity Securities		-		-		-		-		-		-
	$	237,713	$	6,380	$	74,257	$	6,573	$	311,970	$	12,953

December 31, 2013
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	234,264	$	10,828	$	13,614	$	989	$	247,878	$	11,817
Mortgage Backed Securities issued by U.S. Government Agencies		49,202		1,005		14,544		632		63,746		1,637
Obligations of States and Political Subdivisions		10,384		321		3,113		166		13,497		487
Trust Preferred CDO Securities		-		-		5,751		3,758		5,751		3,758
Corporate Debt Securities		1,960		40		-		-		1,960		40
Equity Securities		-		-		445		95		445		95
	$	295,810	$	12,194	$	37,467	$	5,640	$	333,277	$	17,834

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The amount of investment securities issued by government agencies, states, and political subdivisions with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates and not the result of the credit quality of the issuers of the securities. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other than temporarily impaired at March 31, 2014. As of March 31, 2014 and December 31, 2013, there were 141 and 175 securities in an unrealized loss position, respectively.

The Trust Preferred CDO Securities consist of three pooled trust Preferred Collateralized Debt Obligations (CDOs). These CDOs are debt securities issued by special purpose entities that own trust preferred stock issued by banks and insurance companies. The trust preferred stock owned by the special purpose entities is the collateral that backs the debt securities we own. The three pooled CDOs that we own have each been in an unrealized loss position for more than 12 months. These securities have final maturity dates of 2033, 2035, and 2037. The main reasons for the impairment are the overall decline in market values for financial industry securities and the lack of an active market for these types of securities in particular.

To determine whether or not the impairment is other-than-temporary, the Company utilizes a third party valuation service to conduct a fair value analysis of each individual security. The other-than-temporary-impairment analysis of each of the CDO securities owned by the Company is conducted by projecting the expected cash flows from the security, discounting the cash flows to determine the present value of the cash flows, and comparing the present value to the amortized cost to determine if there is impairment. The cash flow projection for each security is developed using estimated prepayment speeds, estimated rates at which payments will be deferred, estimated rates at which issuers will default, and the severity of the losses on the securities which default. Prepayment estimates are negatively impacted by the lack of an active market for issuers to refinance their trust preferred securities; however, prepayment of trust preferred securities is expected to increase due to recent restrictions on the treatment of trust preferred debt as regulatory capital.

The size and creditworthiness of each institution in the CDO pool are the most significant pieces of evidence in estimating prepayment speeds. Deferral and default rates are the key drivers of the cash flow projections for each of the securities. Deferral of interest payments is allowed for up to five years, and estimates of deferral rates are determined by examining the current deferral status of the issuers, the current financial condition of the issuers, and the historical deferral levels of the issuers in each CDO pool. Key evidence examined includes whether or not an issuer has received TARP funding, the most recent credit ratings from outside services, stock price information, capitalization, asset quality, profitability, and liquidity. The most significant evidence in estimating deferrals is the comparison of key financial ratios to industry benchmarks. Near term (next 12 months) deferral rates are estimated for each security by analyzing the credit characteristics of each individual issuer in the pool. When an issuer is expected to defer interest payments, the analysis assumes that the deferral will continue for the entire five year period allowed and then, depending on the individual credit characteristics of that issuer, begin performing or move to default. Longer term annual default rates for each CDO are estimated using the credit analysis of each individual issuer compared to industry benchmarks to modify the historical default rates of financial companies. Finally, loss severity is estimated using analytical research provided by Standard and Poor’s and Moody’s, which supports the assumption that a small percentage of defaulted trust preferred securities recover without loss. The projected cash flows are discounted using the contractual rate of each security.

-20-

In the Other-Than-Temporary-Impairment (OTTI) analysis of our CDO securities as of December 31, 2009, it was expected that there would be cash flow disruptions on two of the CDOs we own. These credit losses were recorded through a charge to earnings in 2009. In subsequent analyses in 2010, 2011, 2012, 2013, and 2014 the expectation of a disruption of cash flows diminished on both of these CDO securities, with one of the securities no longer expected to experience a disruption of cash flow. The present value of the expected cash flows is at least as great as the amortized costs bases following the charges to earnings recorded in 2009, therefore no additional charges to earnings have been recorded.

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined in ASC Topic 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for market activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is used on a recurring basis for Available for Sale Securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Depending on the nature of the asset or liability, the Corporation uses various valuation techniques and assumptions when estimating fair value.

The Corporation applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013, and the valuation techniques used by the Company to determine those fair values.

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									Total
	Carrying								Estimated
March 31, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	53,604	$	53,604	$	-	$	-	$	53,604
Securities - Held to Maturity
Obligations of States and Political Subdivisions		35,790		-		36,278		-		36,278
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		302,072		-		302,072		-		302,072
MBS issued by U.S. Government Agencies		84,891		-		84,891		-		84,891
Obligations of States and Political Subdivisions		16,330		-		16,330		-		16,330
Trust Preferred CDO Securities		5,714		-		-		5,714		5,714
Corporate Debt Securities		8,069		-		8,069		-		8,069
Other Securities		2,891		2,891		-		-		2,891
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		218		-		-		218		218
Loans, net		575,648		-		-		575,794		575,794
Accrued Interest Receivable		3,827		-		-		3,827		3,827
Financial Liabilities:
Noninterest Bearing Deposits		210,079		210,079		-		-		210,079
Interest Bearings Deposits		846,532		-		849,382		-		849,382
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,244		-		16,244
Accrued Interest Payable		181		-		-		181		181

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									Total
	Carrying								Estimated
December 31, 2013	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	77,798	$	77,798	$	-	$	-	$	77,798
Securities - Held to Maturity
Obligations of States and Political Subdivisions		34,346		-		34,539		-		34,539
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		266,713		-		266,713		-		266,713
MBS issued by U.S. Government Agencies		95,256		-		95,256		-		95,256
Obligations of States and Political Subdivisions		15,363		-		15,363		-		15,363
Trust Preferred CDO Securities		5,751		-		-		5,751		5,751
Corporate Debt Securities		8,071		-		8,071		-		8,071
Other Securities		2,532		2,087		445		-		2,532
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		668		-		-		668		668
Loans, net		581,381		-		-		591,471		591,471
Accrued Interest Receivable		3,502		-		-		3,502		3,502
Financial Liabilities:
Noninterest Bearing Deposits		215,844		215,844		-		-		215,844
Interest Bearings Deposits		853,874		-		857,149		-		857,149
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,352		-		16,352
Accrued Interest Payable		179		-		-		179		179

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The changes in Level 3 assets measured at fair value on a recurring basis were (000’s omitted):

Investment Securities - Available for Sale	2014			2013
Balance at January 1	$	5,751		$	5,406
Total realized and unrealized gains (losses) included in income		(4	)		(4	)
Total unrealized gains (losses) included in other comprehensive income		(33	)		-
Net purchases, sales, calls and maturities		-			-
Net transfers in/out of Level 3		-			-
Balance at March 31	$	5,714		$	5,402

The Company did not have any sales or purchases of Level 3 available for sale securities during the period.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company owns pooled Trust Preferred Securities (“TRUPs”) with a fair value of $5,714,000 as of March 31, 2014. Trading of these types of securities has increased recently but is primarily conducted on a distress sale or forced liquidation basis. As a result, the Company measures the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

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The Company also has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include loans and Other Real Estate Owned. The Company estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

Assets measured at fair value on a nonrecurring basis are as follows (000’s omitted):

	Balance at March 31, 2014		Quoted Prices in Active Markets for  Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	59,278	$	-	$	-	$	59,278
Other Real Estate Owned	$	9,775	$	-	$	-	$	9,775

	Balance at December 31, 2013		Quoted Prices in Active Markets for  Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	60,471	$	-	$	-	$	60,471
Other Real Estate Owned	$	9,628	$	-	$	-	$	9,628

Impaired loans categorized as Level 3 assets consist of non-homogenous loans that are considered impaired. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other Real Estate Owned (OREO) consists of property received in full or partial satisfaction of a receivable. The Company utilizes independent appraisals to estimate the fair value of OREO properties.

9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of condition.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for its other lending activities.

Financial instruments whose contractual amounts represent off-balance sheet credit risk were as follows (000s omitted):

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	Contractual Amount
	March 31,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	53,336	$	68,159
Unused portion of credit card lines of credit		3,278		3,255
Unused portion of home equity lines of credit		17,228		16,769
Standby letters of credit and financial guarantees written		3,567		3,667
All other off-balance sheet commitments		-		-

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Most commercial lines of credit are secured by real estate mortgages or other collateral, and generally have fixed expiration dates or other termination clauses. Since the lines of credit may expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. Credit card lines of credit have various established expiration dates, but are fundable on demand. Home equity lines of credit are secured by real estate mortgages, a majority of which have ten year expiration dates, but are fundable on demand. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of the collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on Management’s credit evaluation of the counterparty.

Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and other business transactions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

MBT Financial Corp. (the “Company”) is a bank holding company with one subsidiary, Monroe Bank & Trust (“the Bank”). The Bank is a commercial bank with a wholly owned subsidiary, MB&T Financial Services. MB&T Financial Services is an insurance agency which sells insurance policies to the Bank. The Bank operates 17 branch offices in Monroe County, Michigan and 7 offices in Wayne County, Michigan. The Bank’s primary source of income is interest income on its loans and investments and its primary expense is interest expense on its deposits and borrowings. The discussion and analysis should be read in conjunction with the accompanying consolidated statements and footnotes.

Executive Overview

The Bank is operated as a community bank, primarily providing loan, deposit, and wealth management products and services to the people, businesses, and communities in its market area. In addition to our commitment to our mission of serving the needs of our local communities, we are focused on improving asset quality, profitability, and capital.

The net profit of $1,767,000 for the quarter ended March 31, 2014 was an increase of $653,000 or 58.6% compared to the first quarter of 2013. The increase was the result of improved net interest income and significantly lower provision for loan losses. These improvements exceeded the reduction in non-interest income and the increases in non-interest expense and federal income tax expense. This quarter marked the eleventh consecutive quarterly profit following significant losses caused by the severe economic downturn that impacted the regional and national economies beginning in 2006.

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The national economic recovery is gaining momentum, and the recovery in southeast Michigan is steadily improving. Local unemployment rates improved significantly since 2011, and while they are now comparable to the state and national averages, they remain above the historical norms. Commercial and residential development property values are improving, but remain below pre-recession levels. Our total problem assets, which include nonperforming loans, other real estate owned, non accrual investments, and performing loans that are internally classified as potential problems, improved significantly during 2013 and this trend of improvement continued into the first quarter of 2014. Problem assets went down $2.9 million, or 3.0% during the first quarter of 2014, and decreased $33.8 million or 27.0% compared to a year ago. Overall asset quality has improved over the past year and net charge offs were only $151,000 in the first quarter of 2014. The low net charge offs allowed us to maintain our Allowance for Loan and Lease Losses (ALLL) at $16.2 million this quarter while recording a provision of only $100,000, a reduction of $1.4 million, or 93.3% compared to the first quarter of 2013. The loan portfolio held for investment decreased during the quarter, and the ALLL as a percent of loans increased slightly from 2.71% to 2.73%. We anticipate that the recovery in our local markets will continue through 2014, which may result in increased lending activity and problem asset reductions. We will continue to focus our efforts on improving asset quality, while looking for opportunities to grow loans and improve non-interest income and expenses.

Net Interest Income increased $451,000, or 5.6% compared to the first quarter of 2013 even though the average earning assets decreased $77.3 million because the net interest margin increased from 2.82% to 3.18%. The decrease in the average earning assets was due to the use of short term investments to pay off maturing borrowings in the second quarter of 2013. The cost of those borrowings was higher than the yield on the assets used to retire the borrowings, and this caused the net interest margin to increase. The provision for loan losses decreased $1.4 million compared to the first quarter of 2013 as the decrease in the net loan losses allowed us to maintain our ALLL with a low provision. Non-interest income for the quarter decreased $364,000, primarily due to decreases in overdraft fees and origination fees on mortgage loans sold. Non-interest expenses increased $241,000, as salaries and employee benefits, occupancy, and marketing expenses increased and maintenance costs of other real estate owned (OREO) and collection related legal expenses decreased. We expect credit related expenses to continue to decrease throughout 2014.

Critical Accounting Policies

The Company’s Allowance for Loan Losses, Fair Value of Investment Securities, and Other Real Estate Owned are “critical accounting estimates” because they are estimates that are based on assumptions that are highly uncertain, and if different assumptions were used or if any of the assumptions used were to change, there could be a material impact on the presentation of the Company’s financial condition. These assumptions include, but are not limited to, collateral values, the effect of economic conditions on the financial condition of the borrowers, the Company, and the issuers of investment securities, market interest rates, and projected earnings for the Company.

To determine the Allowance for Loan Losses, the Company estimates losses on all loans that are not classified as non accrual or renegotiated by applying historical loss rates, adjusted for current conditions, to those loans. In addition, all non accrual loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are individually tested for impairment. Any amount of monetary impairment is included in the Allowance for Loan Losses.

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To determine the fair value of investment securities, the Company utilizes quoted prices in active markets for identical assets, quoted prices for similar assets in active markets, or discounted cash flow calculations for investments where there is little, if any, market activity for the asset.

To determine the fair value of Other Real Estate Owned, the Company utilizes independent appraisals to estimate the fair value of the property.

Financial Condition

National economic conditions began to recover in the second half of 2009, but regional conditions remained weak through 2010. Local unemployment and property values stabilized during 2011 and began to improve in 2012. The economic environment in southeast Michigan continued to slowly improve throughout 2013, and we expect it to maintain its improvement during 2014. Management intends to focus our efforts on improving credit quality, increasing net interest income, and improving non-interest income and expenses.

With respect to credit quality, our nonperforming assets (“NPAs”) decreased 1.0% during the quarter, from $69.1 million to $68.4 million, and total problem assets decreased 3.0% from $94.5 million to $91.6 million. Loan delinquencies increased from 2.5% to 2.9% during the quarter, but are still significantly better than the 4.8% total reported one year ago. This modest increase is not believed to represent a reversal of the recent positive trend. Over the last twelve months, NPAs decreased $19.2 million, or 21.9%, with nonperforming loans decreasing 20.2% from $69.5 million to $55.4 million, and Other Real Estate Owned (“OREO”) decreasing 35.5% from $15.2 million to $9.8 million. Total problem assets, which includes all NPAs and performing loans that are internally classified as substandard, decreased $33.8 million, or 27.0%. The Company’s Allowance for Loan and Lease Losses (“ALLL”) decreased $1.7 million over the last four quarters due to a decrease in the size of the portfolio and an improvement in the quality of the assets in the loan portfolio. The ALLL is now 2.73% of loans, down from 2.90% at March 31, 2013. The ALLL is 29.17% of nonperforming loans (“NPLs”), compared to 28.84% at year end and 25.77% at March 31, 2013. In light of current economic conditions, we believe that this level of ALLL adequately estimates the potential losses in the loan portfolio.

Since December 31, 2013, total loans held for investment decreased 1.0% because new loan activity was not sufficient to cover payments received and other reductions. New loan production increased in the recent quarters and our pipeline of loans in process remains steady, but payoffs of some large credit relationships resulted in a net reduction of total loans held for investment during the quarter. As local economic activity increases, we expect new loan production to exceed run off, resulting in an increase in loans outstanding.

Since December 31, 2013, deposits decreased $13.1 million, or 1.2% due to normal seasonal fluctuations in local deposit activity. This reduction in deposit funding was partially offset by an increase of $7.5 million in capital, and as a result our total assets decreased $4.9 million, or only 0.4%. The Company expects deposit funding to remain relatively stable for the next few quarters. The increase in total capital during the first quarter of 2014 was due to the profit of $1.8 million, a private placement of common stock of $2.5 million, and an increase of $3.2 million in the accumulated other comprehensive income (AOCI). AOCI increased mainly due to an increase in the value of our securities available for sale. The increase in capital and the decrease in total assets caused the capital to assets ratio to increase from 9.05% at December 31, 2013 to 9.70% at March 31, 2014.

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Results of Operations – First Quarter 2014 vs. First Quarter 2013

Net Interest Income - A comparison of the income statements for the three months ended March 31, 2014 and 2013 shows an increase of $451,000, or 5.6%, in Net Interest Income. Interest income on loans decreased $0.8 million or 10.4% as the average loans outstanding decreased $25.5 million and the average yield on loans decreased from 5.15% to 4.81%. The interest income on investments, fed funds sold, and interest bearing balances due from banks increased $298,000 even though the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $51.9 million as the yield increased from 1.57% to 1.98%. The yield on investments increased because the Company was maintaining a very high liquidity position in 2013 by keeping a large amount of funds in low yielding short term investments and deposits in the Federal Reserve Bank. This large cash position was being maintained in the first quarter of 2013 in anticipation of paying off maturing debt in the second quarter of 2013. A continued low overall level of interest rates and the maturity of some high cost borrowings helped reduce the funding costs. The interest expense on deposits decreased $358,000 or 29.5% even though the average deposits increased $8.6 million because the average cost of deposits decreased from 0.47% to 0.33%. The cost of borrowed funds decreased $618,000 as the average amount of borrowed funds decreased $95.1 million.

Provision for Loan Losses - The Provision for Loan Losses decreased from $1.5 million in the first quarter of 2013 to $100,000 in the first quarter of 2014. Net charge offs were $151,000 during the first quarter of 2014, compared to $900,000 in the first quarter of 2013. Each quarter, the Company conducts a review and analysis of its ALLL to determine its adequacy. This analysis involves specific allocations for impaired credits and a general allocation for losses expected based on historical experience adjusted for current conditions. Due to a decrease in the size of the portfolio, an improvement in portfolio risk indicators, and a decrease in the historical loss percentages, the amount of provision required to maintain an adequate ALLL in the first quarter of 2014 decreased 93.3% compared to the amount required in the first quarter of 2013. The ALLL is 2.73% of loans as of March 31, 2014, and, in light of current economic conditions, we believe that at this level the ALLL adequately estimates the potential losses in our loan portfolio.

Other Income – Non interest income decreased $364,000, or 9.0% compared to the first quarter of 2013. Wealth management income increased $37,000 or 3.4% due to an increase in the market value of assets managed, and debit card income increased $11,000 or 2.3% due as debit card usage continued to increase. Service charges and other fees decreased $110,000, or 10.6% due to a decrease in the amount of checking account overdraft activity. Origination fees on mortgage loans sold decreased $227,000, or 78.5% as a sharp increase in market interest rates near the end of the second quarter of 2013 significantly decreased mortgage refinance activity.

Other Expenses – Total non-interest expenses increased $241,000, or 2.5% compared to the first quarter of 2013. Salaries and Employee Benefits increased $405,000, or 7.6%, as salaries increased due to an increase in the number of employees, annual merit increases, and an increase in the accrual for the officer incentive program. Occupancy expense increased $57,000 due to higher property tax expense and higher utility costs due to the colder winter. Equipment expense decreased $83,000 due to lower depreciation expense. Marketing expense increased $40,000 due to higher advertising and sales promotion expenses in an effort to grow our lending and wealth management business. Professional fees decreased $83,000, or 16.6%, mostly due to lower credit related legal expenses. Other OREO expenses decreased $35,000, or 9.4% as property tax expense decreased due to the reduction in the amount of properties owned.

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As a result of the above activity, the Profit Before Income Taxes in the first quarter of 2014 was $2,360,000, an increase of $1,246,000 compared to the pre-tax profit of $1,114,000 in the first quarter of 2013. In the first quarter of 2013, the Company was maintaining a valuation allowance against its deferred tax asset, and accordingly, did not record a federal income tax expense. If we did not have the valuation allowance we would have incurred a federal income tax expense of $155,000, for an effective tax rate of 13.9% in the first quarter of 2013. The valuation allowance was eliminated in the third quarter of 2013, and the Company recorded a federal income tax expense of $593,000 in the first quarter of 2014, reflecting an effective tax rate of 25.1%. The Net profit for the first quarter of 2014 was $1,767,000, an increase of 58.6% compared to the net profit of $1,114,000 in the first quarter of 2013.

Cash Flows

Cash flows provided by operating activities decreased $1.4 million compared to the first three months of 2013 as the increase in net income was due to improvements in noncash items, primarily the $1.4 million decrease in the provision for loan losses. Cash flows used for investing activities increased $2.2 million in the first three months of 2014 compared to the first three months of 2013 mainly due to the net increase in investment securities portfolio activity. The amount of cash provided by financing activities decreased $26.1 million primarily because deposits grew by $13.6 million in the first three months of 2013 but decreased by $13.1 million in the first three months of 2014. The Company also issued $0.7 million more in common stock in the first quarter of 2014 compared to the first quarter of 2013.

Liquidity and Capital

The Company believes it has sufficient liquidity to fund its lending activity and allow for fluctuations in deposit levels. Internal sources of liquidity include the maturities of loans and securities in the ordinary course of business as well as our available for sale securities portfolio. External sources of liquidity include a line of credit with the Federal Home Loan Bank of Indianapolis, the Federal funds line that has been established with our correspondent bank, and Repurchase Agreements with money center banks that allow us to pledge securities as collateral for borrowings. As of March 31, 2014, the Bank utilized $12 million of its authorized limit of $265 million with the Federal Home Loan Bank of Indianapolis, none of its $10 million overdraft line of credit with the Federal Home Loan Bank of Indianapolis, and none of its $25 million of federal funds line with a correspondent bank. The Company periodically draws on its overdraft line and fed funds line to ensure that funding will be available if needed.

The Company’s Funds Management Policy includes guidelines for desired amounts of liquidity and capital. The Funds Management Policy also includes contingency plans for liquidity and capital that specify actions to take if liquidity and capital ratios fall below the levels contained in the policy. Throughout the first three months of 2014 the Company was in compliance with its Funds Management Policy regarding liquidity and capital.

Total stockholders’ equity of the Company was $118.1 million at March 31, 2014 and $110.6 million at December 31, 2013. Common stock increased $2.5 million due to the issuance of stock in a private placement, retained earnings increased $1.8 million due to the first quarter profit, and the Accumulated Other Comprehensive Loss (AOCL) decreased $3.2 million due to improvement in the value of our securities that are classified as Available For Sale. Total equity increased $7.5 million and total assets decreased $4.8 million, so the ratio of equity to assets increased from 9.05% at December 31, 2013 to 9.70% at March 31, 2014.

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Federal bank regulatory agencies have set capital adequacy standards for Total Risk Based Capital, Tier 1 Risk Based Capital, and Leverage Capital. These standards require banks to maintain Leverage and Tier 1 ratios of at least 4% and a Total Capital ratio of at least 8% to be adequately capitalized. The regulatory agencies consider a bank to be well capitalized if its Total Risk Based Capital is at least 10% of Risk Weighted Assets, Tier 1 Capital is at least 6% of Risk Weighted Assets, and the Leverage Capital Ratio is at least 5%.

The following table summarizes the capital ratios of the Company and the Bank:

	Actual					Minimum to Qualify as  Well Capitalized
	Amount		Ratio			Amount		Ratio
As of March 31, 2014:
Total Capital to Risk-Weighted Assets
Consolidated	$	115,471		14.91	%	$	77,428		10	%
Monroe Bank & Trust		114,469		14.80	%		77,343		10	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		105,570		13.63	%		46,457		6	%
Monroe Bank & Trust		104,691		13.54	%		46,406		6	%
Tier 1 Capital to Average Assets
Consolidated		105,570		8.72	%		60,536		5	%
Monroe Bank & Trust		104,691		8.65	%		60,492		5	%

	Actual					Minimum to Qualify as Well Capitalized
	Amount		Ratio			Amount		Ratio
As of December 31, 2013:
Total Capital to Risk-Weighted Assets
Consolidated	$	110,414		14.55	%	$	75,899		10	%
Monroe Bank & Trust		108,818		14.36	%		75,760		10	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		100,839		13.29	%		45,540		6	%
Monroe Bank & Trust		99,242		13.10	%		45,456		6	%
Tier 1 Capital to Average Assets
Consolidated		100,839		8.61	%		58,593		5	%
Monroe Bank & Trust		99,242		8.48	%		58,522		5	%

On July 12, 2010, the Bank entered into a Consent Order with its state and federal regulators. While the Bank is under the Consent Order, it is classified as “adequately capitalized” even though its ratios meet the “well capitalized” guidelines. The Consent Order requires the Bank to raise its Tier 1 Leverage ratio to 9% and its Total Risk Based Capital Ratio to 12%. As of March 31, 2014, the Bank is in compliance with the Total Risk Based Capital Ratio requirement but not in compliance with the Tier 1 Leverage Ratio requirement of the Consent Order. The table below indicates the amount of capital the Bank needed to be in compliance with the Consent Order as of March 31, 2014:

	Actual Capital					Minimum Capital Required by Consent Order					Additional Capital Required to Comply with
	Amount		Ratio			Amount		Ratio			Consent Order
Tier 1 Capital to Average Assets	$	104,691		8.65	%	$	108,886		9	%	$	4,195

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The Company initiated a capital raise in the fourth quarter of 2013 that consisted of $14 million in private placement of common stock and a $6 million common stock rights offering. The private placement transactions were completed in the fourth quarter of 2013 and the first quarter of 2014. The rights offering was completed on May 2, 2014 and the Company anticipates investing sufficient capital in the Bank in the second quarter of 2014 in order to reach the 9% Tier 1 Leverage ratio requirement of the Consent Order.

Market risk for the Bank, as is typical for most banks, consists mainly of interest rate risk and market price risk. The Bank’s earnings and the economic value of its equity are exposed to interest rate risk and market price risk, and monitoring this risk is the responsibility of the Asset/Liability Management Committee (ALCO) of the Bank. The Bank’s market risk is monitored monthly and it has not changed significantly since year-end 2013.

Internal Revenue Service Audit

Since the fourth quarter of 2010, the Internal Revenue Service (IRS) has been conducting an audit of our tax returns for the 2004, 2005, 2007, 2008, 2009, and 2010 tax years. The IRS is nearing completion of the audit and has proposed adjustments to our taxable income, mainly challenging our treatment of interest on non accrual loans, OREO valuations, OREO carrying costs, and loan charge-offs. Although our loan charge-offs were in compliance with state and federal bank regulatory agency guidelines, the IRS examining agent conducting the audit has called into question the deductibility of certain charge-offs for income tax purposes based on the facts and circumstances of a loan at the time of the charge-off and certain differences between tax and financial accounting for charge-offs. We believe that the charge-off deductions were proper when taken, and our belief is supported by confirmation of our charge off methodology by our federal and state banking regulators.

According to ASC 740, Accounting for Uncertainty in Income Taxes, an entity is required to evaluate the validity of uncertain tax positions and determine if the relevant taxing authority would conclude that it is more likely than not (greater than fifty percent) that the position taken will be sustained, based upon technical merits, upon examination. We have reviewed our tax positions and have concluded that it is appropriate to record a liability for potential reimbursement to the IRS.

Since the audit began in 2010, the Company has incurred over $200,000 of professional fees expenses with its accountants and lawyers for assistance in resolution. In order to resolve the audit without incurring significant additional expenses, the Company offered a settlement proposal to the IRS in the third quarter of 2012. The Company’s proposal resulted in a current tax liability of $2.0 million. The Company has concluded that its offer to settle of $2.0 million is the best estimate of potential liability at this time. The Company expects the audit to be resolved without incurring significant additional tax or professional fees expenses.

Although the timing of the resolution and/or closure of the audit remains highly uncertain, the Company believes it is reasonably possible that the IRS will conclude this audit within the next three months. Adjustments could be necessary in future periods to the estimated potential federal income tax payable noted above based on issues raised by the IRS. Management will re-evaluate the estimate quarterly based on current, relevant facts.

-31-

Forward-Looking Statements

Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E 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, changes 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 does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Bank faces market risk to the extent that the fair values of its financial instruments are affected by changes in interest rates. The Bank does not face market risk due to changes in foreign currency exchange rates, commodity prices, or equity prices. The asset and liability management process of the Bank seeks to monitor and manage the amount of interest rate risk. This is accomplished by analyzing the differences in repricing opportunities for assets and liabilities, by simulating operating results under varying interest rate scenarios, and by estimating the change in the net present value of the Bank’s assets and liabilities due to interest rate changes.

Each month, the Asset and Liability Committee (ALCO), which includes the senior management of the Bank, estimates the effect of interest rate changes on the projected net interest income of the Bank. The sensitivity of the Bank’s net interest income to changes in interest rates is measured by using a computer based simulation model to estimate the impact on earnings of both gradual and sudden increases or decreases of 100, 200, 300, and 400 basis points in the interest rates. The net interest income projections are compared to a base case projection, which assumes no changes in interest rates.

The Bank’s ALCO has established limits in the acceptable amount of interest rate risk, as measured by the change in the Bank’s projected net interest income, in its policy. Throughout the first three months of 2014, the Bank’s interest rate risk has remained within its policy limits.

The ALCO also monitors interest rate risk by estimating the effect of changes in interest rates on the economic value of the Bank’s equity each month. The economic value of the Bank’s equity is first determined by subtracting the fair value of the Bank’s liabilities from the fair value of the Bank’s assets. The Bank estimates the interest rate risk by calculating the effect of market interest rate changes on that economic value of its equity. For this analysis, the Bank assumes immediate parallel shifts of plus or minus 100, 200, and 300 basis points in interest rates. The discount rates used to determine the present values of the loans and deposits, as well as the prepayment rates for the loans, are based on Management’s expectations of the effect of the rate changes on the market for loans and deposits. In addition, each quarter, the Bank conducts additional analyses that utilize other rate scenarios, such as larger shifts in rates and changes in the shape of the yield curve, to assess the Bank’s exposure to interest rate risk in stress scenarios.

The Bank’s interest rate risk, as measured by the net interest income and economic value of equity simulations, has not changed significantly from December 31, 2013.

-32-

Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of March, 2014, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2014, in alerting them in a timely manner to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic SEC filings.

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2014, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II Other Information

Item 1. Legal Proceedings

MBT Financial Corp. and its subsidiaries are not a party to, nor is any of their property the subject of any material legal proceedings other than ordinary routine litigation incidental to their respective businesses, nor are any such proceedings known to be contemplated by governmental authorities.

Item 1A. Risk Factors

Not applicable for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 3, 2014, MBT Financial Corp. completed a private placement of 647,059 shares of its common stock for an aggregate purchase price of $2,750,000. The shares were issued pursuant to the exemption from registration with the Securities and Exchange Commission found under Rule 506 of SEC Regulation D.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

No matters to be reported.

Item 6. Exhibits 

3.1	Articles of Incorporation of MBT Financial Corp. Previously filed as Exhibit 3.1 to MBT Financial Corp.’s Form 10-Q for its quarter ended June 30, 2011.
3.2	Amended and Restated Bylaws of MBT Financial Corp. Previously filed as Exhibit 3.2 to MBT Financial Corp.’s Form 10-Q for its quarter ended March 31, 2008.
31.1	Certification by Chief Executive Officer required by Securities and Exchange Commission Rule 13a-14.

-33-

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.
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Taxonomy Extension Schema Document (1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (1)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

-34-

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MBT Financial Corp.
	(Registrant)
May 14, 2014	By	/s/ H. Douglas Chaffin
Date	H. Douglas Chaffin
	President &
	Chief Executive Officer
May 14, 2014	By	/s/ John L. Skibski
Date	John L. Skibski
	Executive Vice President and
	Chief Financial Officer

-35-

Exhibit Index

Exhibit Number	Description of Exhibits
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.
101.INS	XBRL Instance Document(1)
101.SCH	XBRL Taxonomy Extension Schema Document(1)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document(1)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document(1)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document(1)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document(1)

(1) Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

-36-

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, H. Douglas Chaffin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MBT Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)                Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)                Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)                Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)                Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)                All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)                Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 14, 2014	/s/ H. Douglas Chaffin
	H. Douglas Chaffin
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, John L. Skibski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MBT Financial Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)                Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)                Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)                Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)                Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)                All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)                Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  May 14, 2014	/s/ John L. Skibski
	John L. Skibski
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MBT Financial Corp. (the "Company") on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission (the "Report"), I, H. Douglas Chaffin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ H. Douglas Chaffin

H. Douglas Chaffin

Chief Executive Officer

May 14, 2014

A signed original of this written statement required by Section 906 has been provided to MBT Financial Corp. and will be retained by MBT Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MBT Financial Corp. (the "Company") on Form 10-Q for the period ending March 31, 2014 as filed with the Securities and Exchange Commission (the "Report"), I, John L. Skibski, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)            The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)            The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John L. Skibski

John L. Skibski

Chief Financial Officer

May 14, 2014

A signed original of this written statement required by Section 906 has been provided to MBT Financial Corp. and will be retained by MBT Financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

INVESTMENT SECURITIES (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Available for Sale Amortized Cost 1 year or less	$ 5,625
Available for Sale Amortized Cost After 1 year through 5 years	52,357
Available for Sale Amortized Cost After 5 years through 10 years	266,024
Available for Sale Amortized Cost After 10 years	17,780
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	341,786
Available For Sale Securities Debt Maturities Mortgage Backed Securities Amortized Cost	85,116
Available for Sale Securities with no stated maturity Amortized Cost	2,584
Available-for-sale Securities, Debt Maturities, Remainder of Fiscal Year, Amortized Cost Basis	429,486
Available-for-sale Securities, Debt Maturities, Next Rolling 1 year or less, Fair Value	5,660
Available-for-sale Securities, Debt Maturities, Rolling Year One Through Five, Fair Value	51,393
Available-for-sale Securities, Debt Maturities, Rolling Year Five Through Ten, Fair Value	261,558
Available-for-sale Securities, Debt Maturities, Rolling after Year Ten, Fair Value	13,575
Available For Sale Securities Debt Maturities Total	332,186
Available For Sale Securities Debt Maturities Mortgage Backed Securities Fair Value	84,891
Available-for-sale Securities, Debt Maturities, Securities with no stated maturity, Fair Value	2,891
Available-for-sale Securities, Debt Maturities, Remainder of Fiscal Year, Fair Value	419,968
Held To Maturity Securities Debt Maturities Next Rolling Twelve Months Amortized Cost	5,099
Held To Maturity Securities Debt Maturities Next Rolling Year One Through Five Amortized Cost	14,268
Held To Maturity Securities Debt Maturities Next Rolling Year Five Through Ten Amortized Cost	13,158
Held To Maturity Securities Debt Maturities Next Rolling Year After Ten Years Amortized Cost	3,765
Held To Maturity Debt Maturities Amortized Cost Total	36,290
Held To Maturity Securities Mortgage Backed Securities Amortized Cost	0
Held To Maturity Securities Debt Maturities, Securities with no stated maturity Amortized Cost	0
Held To Maturity Securities Amortized Cost Total	36,290
Held-to-maturity Securities, Debt Maturities, Next Rolling 1 year or less, Fair Value	5,112
Held-to-maturity Securities, Debt Maturities, Rolling Year One Through Five, Fair Value	14,503
Held-to-maturity Securities, Debt Maturities, Rolling Year Five Through Ten, Fair Value	13,292
Held-to-maturity Securities, Debt Maturities, Rolling after Ten Years, Fair Value	3,871
Held To Maturity Debt Maturities Total	36,778
Held To Maturity Securities Debt Maturities Mortgage Backed Securities Fair Value	0
Held-to-maturity Securities, Debt Maturities, Securities with no stated maturity, Fair Value	0
Held-to-maturity Securities, Debt Maturities, Fair Value	$ 36,778	$ 35,039

XML

ALLOWANCE FOR LOAN LOSSES (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	$ 7,855	$ 4,789
60-89 Days Past Due	1,172	1,748
>90 Days Past Due	6,754	7,559
Total Past Due	15,781	14,096
Current	576,025	583,494
Total loans	591,806	597,590	614,758
Recorded Investment >90 Days Past Due and Accruing	29	46
Agriculture and Agricultural Real Estate [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	51	210
60-89 Days Past Due	0	0
>90 Days Past Due	84	171
Total Past Due	135	381
Current	14,420	14,616
Total loans	14,555	14,997	12,235
Recorded Investment >90 Days Past Due and Accruing	0	0
Commercial [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	45	87
60-89 Days Past Due	19	93
>90 Days Past Due	392	210
Total Past Due	456	390
Current	58,339	59,050
Total loans	58,795	59,440	61,066
Recorded Investment >90 Days Past Due and Accruing	29	46
Commercial Real Estate [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	3,347	1,640
60-89 Days Past Due	800	535
>90 Days Past Due	3,435	3,506
Total Past Due	7,582	5,681
Current	256,424	260,231
Total loans	264,006	265,912	274,540
Recorded Investment >90 Days Past Due and Accruing	0	0
Construction Real Estate [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	0	90
60-89 Days Past Due	9	265
>90 Days Past Due	604	1,177
Total Past Due	613	1,532
Current	14,258	13,135
Total loans	14,871	14,667	17,078
Recorded Investment >90 Days Past Due and Accruing	0	0
Residential Real Estate [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	4,276	2,612
60-89 Days Past Due	304	803
>90 Days Past Due	2,100	2,342
Total Past Due	6,680	5,757
Current	218,519	222,267
Total loans	225,199	228,024	235,323
Recorded Investment >90 Days Past Due and Accruing	0	0
Consumer and Other [Member]
Allowance For Loan Losses [Line Items]
30-59 Days Past Due	136	150
60-89 Days Past Due	40	52
>90 Days Past Due	139	153
Total Past Due	315	355
Current	14,065	14,195
Total loans	14,380	14,550	14,516
Recorded Investment >90 Days Past Due and Accruing	$ 0	$ 0

XML

STOCK BASED COMPENSATION (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, January 1, Shares	283,900
Granted, Shares	0
Exercised, Shares	0
Forfeited, Shares	77,000
Options Outstanding, March 31, Shares	206,900
Options Exercisable, March 31, Shares	206,900
Options Outstanding, January 1, Weighted Average Exercise Price	$ 18.41
Granted, Weighted Average Exercise Price	$ 0
Exercised, Weighted Average Exercise Price	$ 0
Forfeited, Weighted Average Exercise Price	$ 16.69
Options Outstanding, March 31, Weighted Average Exercise Price	$ 19.05
Options Exercisable, March 31, Weighted Average Exercise Price	$ 19.05

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at January 1	$ 5,751	$ 5,406
Total realized and unrealized gains (losses) included in income	(4)	(4)
Total unrealized gains (losses) included in other comprehensive income	(33)	0
Net purchases, sales, calls and maturities	0	0
Net transfers in/out of Level 3	0	0
Balance at December 31	$ 5,714	$ 5,402

XML

ALLOWANCE FOR LOAN LOSSES (Details Textuals) (USD $)	3 Months Ended
	Mar. 31, 2014
Allowance For Loan Losses [Line Items]
Minimum Aggregate Credit Exposure To Assign Grade	$ 5,465,000

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

2. EARNINGS PER SHARE

The calculations of earnings per common share are as follows:

	For the three months ended March 31,
	2014		2013
Basic
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Earnings per common share - basic	$	0.08	$	0.06
Diluted
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Equity compensation		294,199		229,973
Average common shares outstanding - diluted		21,112,926		17,746,355
Earnings per common share - diluted	$	0.08	$	0.06

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans Fair Value Disclosure Non Recurring	$ 59,278	$ 60,471
Other Real Estate Owned Fair Value Disclosure Non Recurring	9,775	9,628
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans Fair Value Disclosure Non Recurring	0	0
Other Real Estate Owned Fair Value Disclosure Non Recurring	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans Fair Value Disclosure Non Recurring	0	0
Other Real Estate Owned Fair Value Disclosure Non Recurring	0	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans Fair Value Disclosure Non Recurring	59,278	60,471
Other Real Estate Owned Fair Value Disclosure Non Recurring	$ 9,775	$ 9,628

XML

LOANS (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	$ 23,108	$ 23,710
Loans 90 days past due and accruing	29	46
Total nonperforming loans	591,806	597,590	614,758
Other real estate owned	9,775	9,628
Total nonperforming assets	1,217,812	1,222,682
Non Performing Assets [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	23,108	23,710
Loans 90 days past due and accruing	29	46
Restructured loans	32,248	32,450
Total nonperforming loans	55,385	56,206
Other real estate owned	9,775	9,628
Other assets	9	10
Nonperforming investment securities	3,262	3,259
Total nonperforming assets	$ 68,431	$ 69,103
Nonperforming assets to total assets	5.62%	5.65%
Allowance for loan losses to nonperforming loans	29.17%	28.84%

XML

LOANS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	$ 591,806	$ 597,590	$ 614,758
Less: Allowance for loan losses	16,158	16,209	17,899	17,299
Loans - Net	575,648	581,381
Residential real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	225,199	228,024
Commercial and Construction real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	278,877	280,579
Agriculture and agricultural real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	14,555	14,997
Commercial and industrial loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	58,795	59,440
Loans to individuals for household, family, and other personal expenditures [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	$ 14,380	$ 14,550

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Textual) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value, Beginning Balance	$ 5,714	$ 5,751	$ 5,402	$ 5,406
Trust Preferred Cdo Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value, Beginning Balance	$ 5,714

XML

LOANS (Details Textuals) (USD $)	Mar. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Related Parties	$ 250,000

XML

ALLOWANCE FOR LOAN LOSSES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Allowance for loan losses:
Beginning Balance	$ 16,209	$ 17,299
Charge-offs	(674)	(1,587)
Recoveries	523	687
Provision	100	1,500
Ending balance	16,158	17,899
Ending balance individually evaluated for impairment	6,835	7,689
Ending balance collectively evaluated for impairment	9,323	10,210
Ending balance	16,158	17,899
Loans:
Ending balance individually evaluated for impairment	59,278	65,812
Ending balance collectively evaluated for impairment	532,528	548,946
Ending balance	591,806	614,758	597,590
Agriculture and Agricultural Real Estate [Member]
Allowance for loan losses:
Beginning Balance	171	76
Charge-offs	0	0
Recoveries	0	0
Provision	34	(6)
Ending balance	205	70
Ending balance individually evaluated for impairment	46	0
Ending balance collectively evaluated for impairment	159	70
Ending balance	205	70
Loans:
Ending balance individually evaluated for impairment	713	420
Ending balance collectively evaluated for impairment	13,842	11,815
Ending balance	14,555	12,235	14,997
Commercial [Member]
Allowance for loan losses:
Beginning Balance	1,989	2,224
Charge-offs	(186)	(202)
Recoveries	33	236
Provision	(56)	(105)
Ending balance	1,780	2,153
Ending balance individually evaluated for impairment	920	1,330
Ending balance collectively evaluated for impairment	860	823
Ending balance	1,780	2,153
Loans:
Ending balance individually evaluated for impairment	2,304	4,193
Ending balance collectively evaluated for impairment	56,491	56,873
Ending balance	58,795	61,066	59,440
Commercial Real Estate [Member]
Allowance for loan losses:
Beginning Balance	7,030	7,551
Charge-offs	(108)	(813)
Recoveries	65	64
Provision	473	1,106
Ending balance	7,460	7,908
Ending balance individually evaluated for impairment	2,758	2,312
Ending balance collectively evaluated for impairment	4,702	5,596
Ending balance	7,460	7,908
Loans:
Ending balance individually evaluated for impairment	35,937	35,960
Ending balance collectively evaluated for impairment	228,069	238,580
Ending balance	264,006	274,540	265,912
Construction Real Estate [Member]
Allowance for loan losses:
Beginning Balance	1,397	2,401
Charge-offs	(210)	(18)
Recoveries	234	274
Provision	9	(188)
Ending balance	1,430	2,469
Ending balance individually evaluated for impairment	1,150	1,863
Ending balance collectively evaluated for impairment	280	606
Ending balance	1,430	2,469
Loans:
Ending balance individually evaluated for impairment	4,013	6,225
Ending balance collectively evaluated for impairment	10,858	10,853
Ending balance	14,871	17,078	14,667
Residential Real Estate [Member]
Allowance for loan losses:
Beginning Balance	4,606	4,715
Charge-offs	(132)	(433)
Recoveries	165	80
Provision	(161)	746
Ending balance	4,478	5,108
Ending balance individually evaluated for impairment	1,713	2,084
Ending balance collectively evaluated for impairment	2,765	3,024
Ending balance	4,478	5,108
Loans:
Ending balance individually evaluated for impairment	15,715	18,668
Ending balance collectively evaluated for impairment	209,484	216,655
Ending balance	225,199	235,323	228,024
Consumer and Other [Member]
Allowance for loan losses:
Beginning Balance	1,016	332
Charge-offs	(38)	(121)
Recoveries	26	33
Provision	(199)	(53)
Ending balance	805	191
Ending balance individually evaluated for impairment	248	100
Ending balance collectively evaluated for impairment	557	91
Ending balance	805	191
Loans:
Ending balance individually evaluated for impairment	596	346
Ending balance collectively evaluated for impairment	13,784	14,170
Ending balance	$ 14,380	$ 14,516	$ 14,550

XML

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited consolidated financial statements include the accounts of MBT Financial Corp. (the “Company”) and its subsidiary, Monroe Bank & Trust (the “Bank”). The Bank includes the accounts of its wholly owned subsidiary, MB&T Financial Services, Inc. The Bank operates seventeen branches in Monroe County, Michigan, seven branches in Wayne County, Michigan, and a mortgage loan office in Monroe County. The Bank’s primary source of revenue is from providing loans to customers, who are predominantly small and middle-market businesses and middle-income individuals. The Company’s sole business segment is community banking.

The accounting and reporting policies of the Bank conform to practice within the banking industry and are in accordance with accounting principles generally accepted in the United States. Preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant changes in the near term are the determination of the allowance for loan losses, the valuation of other real estate owned, and the fair value of investment securities.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

The significant accounting policies are as follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

FAIR VALUE

The Corporation measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Corporation uses various valuation techniques and assumptions when estimating fair value.

The Corporation applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Corporation considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Corporation looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Corporation looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Corporation must use alternative valuation techniques to derive a fair value measurement.

ACCOUNTING PRONOUNCEMENTS

No recent accounting pronouncements are expected to have a significant impact on the Corporation’s financial statements.

XML

ALLOWANCE FOR LOAN LOSSES (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Allowance For Loan Losses [Line Items]
Total loans, gross	$ 591,806	$ 597,590	$ 614,758
Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	536,421	541,384
Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	55,385	56,206
Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	154,524	156,696
Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	3,925	4,248
Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	1,229	1,257
Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	16,417	16,682
Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	272,488	280,641
Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	74,112	66,127
Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	69,111	71,939
Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	14,555	14,997	12,235
Agriculture and Agricultural Real Estate [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	13,758	14,428
Agriculture and Agricultural Real Estate [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	797	569
Agriculture and Agricultural Real Estate [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	140	144
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	31	31
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	205	788
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	12,441	12,304
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	934	838
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	804	892
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	58,795	59,440	61,066
Commercial [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	56,280	56,941
Commercial [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	2,515	2,499
Commercial [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	1,071	2,151
Commercial [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	3,731	4,054
Commercial [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	150	153
Commercial [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	3,968	4,000
Commercial [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	35,255	34,130
Commercial [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	10,977	11,594
Commercial [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	3,643	3,358
Commercial [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	264,006	265,912	274,540
Commercial Real Estate [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	233,200	235,531
Commercial Real Estate [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	30,806	30,381
Commercial Real Estate [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	908	931
Commercial Real Estate [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	11,236	10,755
Commercial Real Estate [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	168,834	172,592
Commercial Real Estate [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	44,413	41,914
Commercial Real Estate [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	38,615	39,720
Commercial Real Estate [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	14,871	14,667	17,078
Construction Real Estate [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	10,753	9,732
Construction Real Estate [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	4,118	4,935
Construction Real Estate [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	4,696	3,643
Construction Real Estate [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	90	99
Construction Real Estate [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	4,839	4,825
Construction Real Estate [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	2,495	2,525
Construction Real Estate [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	2,751	3,575
Construction Real Estate [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	225,199	228,024	235,323
Residential Real Estate [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	208,948	211,149
Residential Real Estate [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	16,251	16,875
Residential Real Estate [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	138,907	141,102
Residential Real Estate [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	140	142
Residential Real Estate [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	918	1,040
Residential Real Estate [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	47,560	53,047
Residential Real Estate [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	15,078	9,005
Residential Real Estate [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	22,596	23,688
Residential Real Estate [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	14,380	14,550	14,516
Consumer and Other [Member] | Performing [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	13,482	13,603
Consumer and Other [Member] | Nonperforming [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	898	947
Consumer and Other [Member] | Not Rated [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	9,710	9,656
Consumer and Other [Member] | Risk Grade Rating 1 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	194	194
Consumer and Other [Member] | Risk Grade Rating 2 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 3 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 4 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	3,559	3,743
Consumer and Other [Member] | Risk Grade Rating 5 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	215	251
Consumer and Other [Member] | Risk Grade Rating 6 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	702	706
Consumer and Other [Member] | Risk Grade Rating 7 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 8 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 9 [Member]
Allowance For Loan Losses [Line Items]
Total loans, gross	$ 0	$ 0

XML

INVESTMENT SECURITIES (Details 2 ) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	$ 237,713	$ 295,810
Less than 12 months, Gross Unrealized Losses	6,380	12,194
12 months or longer, Aggregate Fair Value	74,257	37,467
12 months or longer, Gross Unrealized Losses	6,573	5,640
Aggregate Fair Value, Total	311,970	333,277
Gross Unrealized Losses, Total	12,953	17,834
Obligations of U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	194,731	234,264
Less than 12 months, Gross Unrealized Losses	5,646	10,828
12 months or longer, Aggregate Fair Value	42,359	13,614
12 months or longer, Gross Unrealized Losses	2,223	989
Aggregate Fair Value, Total	237,090	247,878
Gross Unrealized Losses, Total	7,869	11,817
Mortgage Backed Securities issued by U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	34,048	49,202
Less than 12 months, Gross Unrealized Losses	510	1,005
12 months or longer, Aggregate Fair Value	22,816	14,544
12 months or longer, Gross Unrealized Losses	433	632
Aggregate Fair Value, Total	56,864	63,746
Gross Unrealized Losses, Total	943	1,637
Obligations of States and Political Subdivisions [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	8,934	10,384
Less than 12 months, Gross Unrealized Losses	224	321
12 months or longer, Aggregate Fair Value	3,368	3,113
12 months or longer, Gross Unrealized Losses	126	166
Aggregate Fair Value, Total	12,302	13,497
Gross Unrealized Losses, Total	350	487
Trust Preferred CDO Securities [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
12 months or longer, Aggregate Fair Value	5,714	5,751
12 months or longer, Gross Unrealized Losses	3,791	3,758
Aggregate Fair Value, Total	5,714	5,751
Gross Unrealized Losses, Total	3,791	3,758
Corporate Debt Securities [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	0	1,960
Less than 12 months, Gross Unrealized Losses	0	40
12 months or longer, Aggregate Fair Value	0	0
12 months or longer, Gross Unrealized Losses	0	0
Aggregate Fair Value, Total	0	1,960
Gross Unrealized Losses, Total	0	40
Equity Securities [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
12 months or longer, Aggregate Fair Value	0	445
12 months or longer, Gross Unrealized Losses	0	95
Aggregate Fair Value, Total	0	445
Gross Unrealized Losses, Total	$ 0	$ 95

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Cash and due from banks
Non-interest bearing	$ 12,228	$ 15,448
Interest bearing	41,376	62,350
Total cash and cash equivalents	53,604	77,798
Securities - Held to Maturity	36,290	34,846
Securities - Available for Sale	419,968	394,956
Federal Home Loan Bank stock - at cost	10,605	10,605
Loans held for sale	218	668
Loans	591,806	597,590
Allowance for Loan Losses	(16,158)	(16,209)
Loans - Net	575,648	581,381
Accrued interest receivable and other assets	32,445	34,094
Other Real Estate Owned	9,775	9,628
Bank Owned Life Insurance	50,846	50,493
Premises and Equipment - Net	28,413	28,213
Total assets	1,217,812	1,222,682
Deposits:
Non-interest bearing	210,079	215,844
Interest-bearing	846,532	853,874
Total deposits	1,056,611	1,069,718
Federal Home Loan Bank advances	12,000	12,000
Repurchase agreements	15,000	15,000
Interest payable and other liabilities	16,094	15,356
Total liabilities	1,099,705	1,112,074
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 21,266,380 and 20,605,493 shares issued and outstanding)	17,199	14,671
Retained Earnings	108,584	106,817
Unearned Compensation	(31)	(7)
Accumulated other comprehensive loss	(7,645)	(10,873)
Total stockholders' equity	118,107	110,608
Total liabilities and stockholders' equity	$ 1,217,812	$ 1,222,682

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Commitments to extend credit:
Standby letters of credit and financial guarantees written	$ 3,567	$ 3,667
All other off-balance sheet assets	0	0
Commercial Line Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	53,336	68,159
Credit Card Line Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	3,278	3,255
Home Equity Lines Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	$ 17,228	$ 16,769

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [Parenthetical]	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
SOSARs exercised, (in shares)	2,162	674
Restricted stock units (In shares)	6,000
Other stock issued (In Shares)	652,725	506,801

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ALLOWANCE FOR LOAN LOSSES (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Agriculture and Agricultural Real Estate [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	$ 0		$ 0
With no related allowance recorded, Unpaid Principal Balance	0		0
With no related allowance recorded, Average Recorded Investment	0	423
With no related allowance recorded, Interest Income Recognized	0	12
With an allowance recorded, Recorded Investment	713		398
With an allowance recorded, Unpaid Principal Balance	712		397
With an allowance recorded, Related Allowance	46		1
With an allowance recorded, Average Recorded Investment	712	0
With an allowance recorded, Interest Income Recognized	9	0
Total, Recorded Investment	713		398
Total, Unpaid Principal Balance	712		397
Total, Related Allowance	46		1
Total, Average Recorded Investment	712	423
Total, Interest Income Recognized	9	12
Commercial [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	926		869
With no related allowance recorded, Unpaid Principal Balance	1,002		966
With no related allowance recorded, Average Recorded Investment	1,025	775
With no related allowance recorded, Interest Income Recognized	13	9
With an allowance recorded, Recorded Investment	1,378		1,540
With an allowance recorded, Unpaid Principal Balance	1,472		1,627
With an allowance recorded, Related Allowance	920		1,031
With an allowance recorded, Average Recorded Investment	1,425	3,513
With an allowance recorded, Interest Income Recognized	18	44
Total, Recorded Investment	2,304		2,409
Total, Unpaid Principal Balance	2,474		2,593
Total, Related Allowance	920		1,031
Total, Average Recorded Investment	2,450	4,288
Total, Interest Income Recognized	31	53
Commercial Real Estate [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	17,375		19,567
With no related allowance recorded, Unpaid Principal Balance	20,271		23,005
With no related allowance recorded, Average Recorded Investment	18,098	18,234
With no related allowance recorded, Interest Income Recognized	194	191
With an allowance recorded, Recorded Investment	18,562		16,025
With an allowance recorded, Unpaid Principal Balance	21,882		20,032
With an allowance recorded, Related Allowance	2,758		2,697
With an allowance recorded, Average Recorded Investment	20,446	20,045
With an allowance recorded, Interest Income Recognized	212	160
Total, Recorded Investment	35,937		35,592
Total, Unpaid Principal Balance	42,153		43,037
Total, Related Allowance	2,758		2,697
Total, Average Recorded Investment	38,544	38,279
Total, Interest Income Recognized	406	351
Construction Real Estate [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	870		1,165
With no related allowance recorded, Unpaid Principal Balance	2,326		2,408
With no related allowance recorded, Average Recorded Investment	1,257	1,950
With no related allowance recorded, Interest Income Recognized	2	37
With an allowance recorded, Recorded Investment	3,143		3,615
With an allowance recorded, Unpaid Principal Balance	3,176		4,236
With an allowance recorded, Related Allowance	1,150		1,194
With an allowance recorded, Average Recorded Investment	3,177	4,744
With an allowance recorded, Interest Income Recognized	33	41
Total, Recorded Investment	4,013		4,780
Total, Unpaid Principal Balance	5,502		6,644
Total, Related Allowance	1,150		1,194
Total, Average Recorded Investment	4,434	6,694
Total, Interest Income Recognized	35	78
Residential Real Estate [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	7,899		7,929
With no related allowance recorded, Unpaid Principal Balance	8,759		9,035
With no related allowance recorded, Average Recorded Investment	8,339	10,376
With no related allowance recorded, Interest Income Recognized	87	128
With an allowance recorded, Recorded Investment	7,816		8,745
With an allowance recorded, Unpaid Principal Balance	8,220		9,194
With an allowance recorded, Related Allowance	1,713		1,809
With an allowance recorded, Average Recorded Investment	8,038	9,705
With an allowance recorded, Interest Income Recognized	79	85
Total, Recorded Investment	15,715		16,674
Total, Unpaid Principal Balance	16,979		18,229
Total, Related Allowance	1,713		1,809
Total, Average Recorded Investment	16,377	20,081
Total, Interest Income Recognized	166	213
Consumer and Other [Member]
Allowance For Loan Losses [Line Items]
With no related allowance recorded, Recorded Investment	32		33
With no related allowance recorded, Unpaid Principal Balance	35		36
With no related allowance recorded, Average Recorded Investment	33	0
With no related allowance recorded, Interest Income Recognized	1	0
With an allowance recorded, Recorded Investment	564		585
With an allowance recorded, Unpaid Principal Balance	572		581
With an allowance recorded, Related Allowance	248		265
With an allowance recorded, Average Recorded Investment	565	346
With an allowance recorded, Interest Income Recognized	6	5
Total, Recorded Investment	596		618
Total, Unpaid Principal Balance	607		617
Total, Related Allowance	248		265
Total, Average Recorded Investment	598	346
Total, Interest Income Recognized	$ 7	$ 5

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Schedule Of Fair Value And Carrying Value [Table Text Block]

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
March 31, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	53,604	$	53,604	$	-	$	-	$	53,604
Securities - Held to Maturity
Obligations of States and Political Subdivisions		35,790		-		36,278		-		36,278
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		302,072		-		302,072		-		302,072
MBS issued by U.S. Government Agencies		84,891		-		84,891		-		84,891
Obligations of States and Political Subdivisions		16,330		-		16,330		-		16,330
Trust Preferred CDO Securities		5,714		-		-		5,714		5,714
Corporate Debt Securities		8,069		-		8,069		-		8,069
Other Securities		2,891		2,891		-		-		2,891
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		218		-		-		218		218
Loans, net		575,648		-		-		575,794		575,794
Accrued Interest Receivable		3,827		-		-		3,827		3,827
Financial Liabilities:
Noninterest Bearing Deposits		210,079		210,079		-		-		210,079
Interest Bearings Deposits		846,532		-		849,382		-		849,382
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,244		-		16,244
Accrued Interest Payable		181		-		-		181		181

									Total
	Carrying								Estimated
December 31, 2013	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	77,798	$	77,798	$	-	$	-	$	77,798
Securities - Held to Maturity
Obligations of States and Political Subdivisions		34,346		-		34,539		-		34,539
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		266,713		-		266,713		-		266,713
MBS issued by U.S. Government Agencies		95,256		-		95,256		-		95,256
Obligations of States and Political Subdivisions		15,363		-		15,363		-		15,363
Trust Preferred CDO Securities		5,751		-		-		5,751		5,751
Corporate Debt Securities		8,071		-		8,071		-		8,071
Other Securities		2,532		2,087		445		-		2,532
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		668		-		-		668		668
Loans, net		581,381		-		-		591,471		591,471
Accrued Interest Receivable		3,502		-		-		3,502		3,502
Financial Liabilities:
Noninterest Bearing Deposits		215,844		215,844		-		-		215,844
Interest Bearings Deposits		853,874		-		857,149		-		857,149
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,352		-		16,352
Accrued Interest Payable		179		-		-		179		179

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The changes in Level 3 assets measured at fair value on a recurring basis were (000’s omitted):

Investment Securities - Available for Sale	2014		2013
Balance at January 1	$	5,751	$	5,406
Total realized and unrealized gains (losses) included in income		(4)		(4)
Total unrealized gains (losses) included in other comprehensive income		(33)		-
Net purchases, sales, calls and maturities		-		-
Net transfers in/out of Level 3		-		-
Balance at March 31	$	5,714	$	5,402

Fair Value Assets Measured On Nonrecurring Basis [Table Text Block]

Assets measured at fair value on a nonrecurring basis are as follows (000’s omitted):

	Balance at March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	59,278	$	-	$	-	$	59,278
Other Real Estate Owned	$	9,775	$	-	$	-	$	9,775

	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	60,471	$	-	$	-	$	60,471
Other Real Estate Owned	$	9,628	$	-	$	-	$	9,628

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ALLOWANCE FOR LOAN LOSSES (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Allowance For Loan Losses [Line Items]
Number of Contracts	6	19
Pre-Modification Recorded Principal Balance	$ 1,525	$ 2,869
Post-Modification Recorded Principal Balance	1,475	2,578
Agriculture and Agricultural Real Estate [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	1	0
Pre-Modification Recorded Principal Balance	314	0
Post-Modification Recorded Principal Balance	314	0
Commercial [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	0	3
Pre-Modification Recorded Principal Balance	0	173
Post-Modification Recorded Principal Balance	0	172
Commercial Real Estate [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	2	3
Pre-Modification Recorded Principal Balance	946	1,461
Post-Modification Recorded Principal Balance	931	1,449
Construction Real Estate [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	0	0
Pre-Modification Recorded Principal Balance	0	0
Post-Modification Recorded Principal Balance	0	0
Residential Real Estate [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	3	11
Pre-Modification Recorded Principal Balance	265	986
Post-Modification Recorded Principal Balance	230	944
Consumer and Other [Member]
Allowance For Loan Losses [Line Items]
Number of Contracts	0	2
Pre-Modification Recorded Principal Balance	0	249
Post-Modification Recorded Principal Balance	$ 0	$ 13

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic
Net income	$ 1,767	$ 1,114
Average common shares outstanding	20,818,727	17,516,382
Earnings per common share - basic	$ 0.08	$ 0.06
Diluted
Net income	$ 1,767	$ 1,114
Average common shares outstanding	20,818,727	17,516,382
Equity compensation	294,199	229,973
Average common shares outstanding - diluted	21,112,926	17,746,355
Earnings per common share - diluted	$ 0.08	$ 0.06

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows from Operating Activities
Net Income	$ 1,767	$ 1,114
Adjustments to reconcile net income to net cash from operating activities
Provision for loan losses	100	1,500
Depreciation	415	488
Deferred income tax benefit	593	0
Net amortization of investment premium and discount	255	493
Writedowns of Other Real Estate Owned	59	164
Net increase in interest payable and other liabilities	294	1,552
Net increase in interest receivable and other assets	(679)	(1,106)
Equity based compensation expense	51	69
Net gain on sale/settlement of securities	(57)	(10)
Increase in cash surrender value of life insurance	(353)	(390)
Net cash provided by operating activities	2,445	3,874
Cash Flows from Investing Activities
Proceeds from maturities and redemptions of investment securities held to maturity	3,146	273
Proceeds from maturities and redemptions of investment securities available for sale	4,578	24,611
Proceeds from sales of investment securities available for sale	22,376	5,180
Net decrease in loans	4,803	8,260
Proceeds from sales of other real estate owned	1,145	1,945
Proceeds from sales of other assets	1	18
Purchase of investment securities held to maturity	(4,590)	0
Purchase of investment securities available for sale	(46,829)	(53,823)
Purchase of bank premises and equipment	(615)	(206)
Net cash used for investing activities	(15,985)	(13,742)
Cash Flows from Financing Activities
Net increase (decrease) in deposits	(13,107)	13,635
Proceeds from issuance of common stock	2,453	1,764
Net cash (used for) provided by financing activities	(10,654)	15,399
Net Increase (Decrease) in Cash and Cash Equivalents	(24,194)	5,531
Cash and Cash Equivalents at Beginning of Period	77,798	112,507
Cash and Cash Equivalents at End of Period	53,604	118,038
Supplemental Cash Flow Information
Cash paid for interest	1,039	2,021
Cash paid for federal income taxes	0	0
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	1,280	2,761
Transfer of loans to other assets	$ 0	$ 43

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CONSOLIDATED BALANCE SHEETS [Parenthetical]	Mar. 31, 2014	Dec. 31, 2013
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	21,266,380	20,605,493
Common stock, shares outstanding	21,266,380	20,605,493

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The calculations of earnings per common share are as follows:

	For the three months ended March 31,
	2014		2013
Basic
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Earnings per common share - basic	$	0.08	$	0.06
Diluted
Net income	$	1,767,000	$	1,114,000
Average common shares outstanding		20,818,727		17,516,382
Equity compensation		294,199		229,973
Average common shares outstanding - diluted		21,112,926		17,746,355
Earnings per common share - diluted	$	0.08	$	0.06

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	May 14, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	MBTF
Entity Common Stock, Shares Outstanding		22,685,703
Entity Registrant Name	MBT FINANCIAL CORP
Entity Central Index Key	0001118237
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company

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STOCK BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity [Table Text Block]

The following table summarizes the options that had been granted to certain key executives in accordance with the Long-Term Incentive Compensation Plan that was approved by shareholders at the Annual Meeting of Shareholders on April 6, 2000.

		Weighted Average
	Shares	Exercise Price
Options Outstanding, January 1, 2014	283,900	$	18.41
Granted	-		-
Exercised	-		-
Forfeited	77,000		16.69
Options Outstanding, March 31, 2014	206,900	$	19.05
Options Exercisable, March 31, 2014	206,900	$	19.05

Schedule of Share-based Compensation, Stock Appreciation Rights Award Activity [Table Text Block]

The following table summarizes the SOSARs that have been granted:

		Weighted Average
	Shares	Exercise Price
SOSARs Outstanding, January 1, 2014	472,271	$	3.23
Granted	110,000		4.90
Exercised	5,332		1.91
Forfeited	1,334		2.35
SOSARs Outstanding, March 31, 2014	575,605	$	3.56
SOSARs Exercisable, March 31, 2014	368,228	$	3.52

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Interest Income
Interest and fees on loans	$ 7,079	$ 7,902
Interest on investment securities-
Tax-exempt	307	323
Taxable	2,118	1,767
Interest on balances due from banks	32	69
Total interest income	9,536	10,061
Interest Expense
Interest on deposits	855	1,213
Interest on borrowed funds	186	804
Total interest expense	1,041	2,017
Net Interest Income	8,495	8,044
Provision For Loan Losses	100	1,500
Net Interest Income After Provision For Loan Losses	8,395	6,544
Other Income
Income from wealth management services	1,134	1,097
Service charges and other fees	932	1,042
Debit card income	489	478
Net gain on sales of securities available for sale	57	10
Net gain on sales of Other Real Estate Owned	12	40
Origination fees on mortgage loans sold	62	289
Bank owned life insurance income	354	390
Rent income on Other Real Estate Owned	135	145
Other	489	537
Total other income	3,664	4,028
Other Expenses
Salaries and employee benefits	5,728	5,323
Occupancy expense	744	687
Equipment expense	617	700
Marketing expense	203	163
Professional fees	418	501
Other Real Estate Owned expenses	339	374
FDIC Deposit Insurance Assessment	640	689
Bonding and other insurance expense	264	269
Telephone expense	143	113
Other	603	639
Total other expenses	9,699	9,458
Income Before Income Taxes	2,360	1,114
Income Tax Expense	593	0
Net Income	1,767	1,114
Other Comprehensive Income (Loss) - Net of Tax
Unrealized gains (losses) on securities	3,559	(546)
Reclassification adjustment for gains included in net income	(38)	(6)
Postretirement benefit liability	(293)	31
Total Other Comprehensive Income (Loss) - Net of Tax	3,228	(521)
Comprehensive Income	$ 4,995	$ 593
Basic Earnings Per Common Share	$ 0.08	$ 0.06
Diluted Earnings Per Common Share	$ 0.08	$ 0.06
Common Stock Dividends Declared Per Share	$ 0	$ 0

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ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2014

Allowance For Loan Losses [Abstract]

Allowance For Loan Losses [Text Block]

5. ALLOWANCE FOR LOAN LOSSES

The Company separates its loan portfolio into segments to perform the calculation and analysis of the allowance for loan losses. The six segments analyzed are Agriculture and Agricultural Real Estate, Commercial, Commercial Real Estate, Construction Real Estate, Residential Real Estate, and Consumer and Other. The Agriculture and Agricultural Real Estate segment includes all loans to finance agricultural production and all loans secured by agricultural real estate. This segment does not include loans to finance agriculture that are secured by residential real estate, which are included in the Residential Real Estate segment. The Commercial segment includes loans to finance commercial and industrial businesses that are not secured by real estate. The Commercial Real Estate segment includes loans secured by non-farm, non-residential real estate. The Construction Real Estate segment includes loans to finance construction and land development. This includes residential and commercial construction and land development. The Residential Real Estate segment includes all loans, other than construction loans, that are secured by single family and multi family residential real estate properties. The Consumer and Other segment includes all loans not included in any other segment. These are primarily loans to consumers for household, family, and other personal expenditures, such as autos, boats, and recreational vehicles.

Activity in the allowance for loan losses during the three months ended March 31, 2014 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Allowance for loan losses: For the three months ended March 31, 2014
Beginning Balance	$	171	$	1,989	$	7,030	$	1,397	$	4,606	$	1,016	$	16,209
Charge-offs		-		(186)		(108)		(210)		(132)		(38)		(674)
Recoveries		-		33		65		234		165		26		523
Provision		34		(56)		473		9		(161)		(199)		100
Ending balance	$	205	$	1,780	$	7,460	$	1,430	$	4,478	$	805	$	16,158
Allowance for loan losses as of March 31, 2014
Ending balance individually evaluated for impairment	$	46	$	920	$	2,758	$	1,150	$	1,713	$	248	$	6,835
Ending balance collectively evaluated for impairment		159		860		4,702		280		2,765		557		9,323
Ending balance	$	205	$	1,780	$	7,460	$	1,430	$	4,478	$	805	$	16,158
Loans as of March 31, 2014
Ending balance individually evaluated for impairment	$	713	$	2,304	$	35,937	$	4,013	$	15,715	$	596	$	59,278
Ending balance collectively evaluated for impairment		13,842		56,491		228,069		10,858		209,484		13,784		532,528
Ending balance	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806

Activity in the allowance for loan losses during the three months ended March 31, 2013 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Allowance for loan losses: For the three months ended March 31, 2013
Beginning Balance	$	76	$	2,224	$	7,551	$	2,401	$	4,715	$	332	$	17,299
Charge-offs		-		(202)		(813)		(18)		(433)		(121)		(1,587)
Recoveries		-		236		64		274		80		33		687
Provision		(6)		(105)		1,106		(188)		746		(53)		1,500
Ending balance	$	70	$	2,153	$	7,908	$	2,469	$	5,108	$	191	$	17,899
Allowance for loan losses as of March 31, 2013
Ending balance individually evaluated for impairment	$	-	$	1,330	$	2,312	$	1,863	$	2,084	$	100	$	7,689
Ending balance collectively evaluated for impairment		70		823		5,596		606		3,024		91		10,210
Ending balance	$	70	$	2,153	$	7,908	$	2,469	$	5,108	$	191	$	17,899
Loans as of March 31, 2013
Ending balance individually evaluated for impairment	$	420	$	4,193	$	35,960	$	6,225	$	18,668	$	346	$	65,812
Ending balance collectively evaluated for impairment		11,815		56,873		238,580		10,853		216,655		14,170		548,946
Ending balance	$	12,235	$	61,066	$	274,540	$	17,078	$	235,323	$	14,516	$	614,758

Each period the provision for loan losses in the income statement results from the combination of an estimate by Management of loan losses that occurred during the current period and the ongoing adjustment of prior estimates of losses occurring in prior periods.

The provision for loan losses increases the allowance for loan losses, a valuation account which appears on the consolidated balance sheets. As the specific customer and amount of a loan loss is confirmed by gathering additional information, taking collateral in full or partial settlement of the loan, bankruptcy of the borrower, etc., the loan is charged off, reducing the allowance for loan losses. If, subsequent to a charge off, the Bank is able to collect additional amounts from the customer or sell collateral worth more than earlier estimated, a recovery is recorded.

To serve as a basis for making this provision, the Bank maintains an extensive credit risk monitoring process that considers several factors including: current economic conditions affecting the Bank’s customers, the payment performance of individual loans and pools of homogeneous loans, portfolio seasoning, changes in collateral values, and detailed reviews of specific loan relationships.

The Company utilizes an internal loan grading system to assign a risk grade to all commercial loans, all renegotiated loans, and each commercial credit relationship. Grades 1 through 4 are considered “pass” credits and grades 5 and 6 are considered “watch” credits and are subject to greater scrutiny. Loans with grades 7, 8, and 9 and considered “doubtful” or “loss” and have generally been charged off. A description of the general characteristics of each grade is as follows:

• Grade 1 – Excellent – Loans secured by marketable collateral, with adequate margin, or supported by strong financial statements, including substantial levels of tangible net worth. Probability of serious financial deterioration is unlikely. Possess a sound repayment source and a secondary source. This classification will also include individual loans backed by liquid personal assets, established history and unquestionable character. High liquidity, minimum risk, strong ratios, and low handling costs are common to these loans.

• Grade 2 – Above Average – Loans that exhibit less than average risk and clearly demonstrate debt service coverage that is consistently above average as well as a strong capital base. These loans may have some deficiency or vulnerability, but with offsetting features and are considered to be fully collectable.

• Grade 3 – Satisfactory – Loans that have an acceptable amount of risk but may exhibit vulnerability to deterioration if adverse circumstances are encountered. These loans should demonstrate adequate debt service coverage and adequate levels of capital support but warrant periodic monitoring to ensure that weaknesses do not materialize or advance.

• Grade 4 – Pass – Loans that are considered “pass credits” and typically demonstrate adequate debt service coverage. The level of risk is considered acceptable but these loans warrant ongoing monitoring to ensure that adverse trends or other credit deficiencies have not materialized or advanced. The level of risk is considered acceptable so long as the loan is given adequate and ongoing management supervision.

• Grade 5 – Watch – Loans that possess some credit deficiency or potential weakness that deserves close attention. The primary source of loan repayment is sufficient but may be considered inadequate by the Bank’s standards.

• Grade 6 – Substandard – Loans that exhibit one or more of the following characteristics: (1) a defined credit weakness, financial deterioration is underway, and uncertainty about the likelihood that the loan will be paid from the primary source of repayment; (2) inadequately protected by the current net worth and paying capacity of the obligor; (3) reliance on secondary source of repayment such as collateral liquidation or guarantees; (4) distinct possibility the Bank will sustain loss if deficiencies are not corrected; (5) unusual courses of action are needed to maintain a high probability of repayment; (6) insufficient cash flow to repay principal but continuing to pay interest; (7) the Bank is subordinated or unsecured due to flaws in documentation; (8) loans are restructured or are on nonaccrual status due to concessions to the borrower when compared to normal loan terms; (9) the Bank is contemplating foreclosure or legal action due to the apparent deterioration in the loan; or (10) there is deterioration in the market conditions and the borrower is highly vulnerable to these conditions.

• Grade 7 – Doubtful – Loans that exhibit one or more of the following characteristics: (1) loans with all the weaknesses of Substandard loans and collection or liquidation is not probable to result in payment in full; (2) the primary source of repayment is gone and there is considerable doubt as to the quality of the secondary source of repayment; or (3) the possibility of loss is high, but certain important pending factors may strengthen the loan and loss classification is deferred.

• Grades 8 & 9 - Loss – Loans are considered uncollectible and of such little value that continuing to carry them on the Bank’s financial statements is not feasible.

The assessment of compensating factors may result in a rating plus or minus one grade from those listed above. These factors include, but are not limited to collateral, guarantors, environmental conditions, history, plan/projection reasonableness, quality of information, and payment delinquency.

The portfolio segments in each credit risk grade as of March 31, 2014 are as follows (000s omitted):

 

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	140	$	1,071	$	-	$	4,696	$	138,907	$	9,710	$	154,524
1		-		3,731		-		-		-		194		3,925
2		31		150		908		-		140		-		1,229
3		205		3,968		11,236		90		918		-		16,417
4		12,441		35,255		168,834		4,839		47,560		3,559		272,488
5		934		10,977		44,413		2,495		15,078		215		74,112
6		804		3,643		38,615		2,751		22,596		702		69,111
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806
Performing	$	13,758	$	56,280	$	233,200	$	10,753	$	208,948	$	13,482	$	536,421
Nonperforming		797		2,515		30,806		4,118		16,251		898		55,385
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806

The portfolio segments in each credit risk grade as of December 31, 2013 are as follows (000s omitted):

 

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	144	$	2,151	$	-	$	3,643	$	141,102	$	9,656	$	156,696
1		-		4,054		-		-		-		194		4,248
2		31		153		931		-		142		-		1,257
3		788		4,000		10,755		99		1,040		-		16,682
4		12,304		34,130		172,592		4,825		53,047		3,743		280,641
5		838		11,594		41,914		2,525		9,005		251		66,127
6		892		3,358		39,720		3,575		23,688		706		71,939
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590
Performing	$	14,428	$	56,941	$	235,531	$	9,732	$	211,149	$	13,603	$	541,384
Nonperforming		569		2,499		30,381		4,935		16,875		947		56,206
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590

Loans are considered past due when contractually required payment of interest or principal has not been received. The amount classified as past due is the entire principal balance outstanding of the loan, not just the amount of payments that are past due. The following is a summary of past due loans as of March 31, 2014 and December 31, 2013 (000s omitted):

March 31, 2014	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	51	$	-	$	84	$	135	$	14,420	$	14,555	$	-
Commercial		45		19		392		456		58,339		58,795		29
Commercial Real Estate		3,347		800		3,435		7,582		256,424		264,006		-
Construction Real Estate		-		9		604		613		14,258		14,871		-
Residential Real Estate		4,276		304		2,100		6,680		218,519		225,199		-
Consumer and Other		136		40		139		315		14,065		14,380		-
Total	$	7,855	$	1,172	$	6,754	$	15,781	$	576,025	$	591,806	$	29

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	210	$	-	$	171	$	381	$	14,616	$	14,997	$	-
Commercial		87		93		210		390		59,050		59,440		46
Commercial Real Estate		1,640		535		3,506		5,681		260,231		265,912		-
Construction Real Estate		90		265		1,177		1,532		13,135		14,667		-
Residential Real Estate		2,612		803		2,342		5,757		222,267		228,024		-
Consumer and Other		150		52		153		355		14,195		14,550		-
Total	$	4,789	$	1,748	$	7,559	$	14,096	$	583,494	$	597,590	$	46

Loans are placed on non-accrual status when, in the opinion of Management, the collection of additional interest is doubtful. Loans are automatically placed on non-accrual status upon becoming ninety days past due, however, loans may be placed on non-accrual status regardless of whether or not they are past due. All cash received on non-accrual loans is applied to the principal balance. Loans are considered for return to accrual status on an individual basis when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following is a summary of non-accrual loans as of March 31, 2014 and December 31, 2013 (000s omitted):

	March 31, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	84	$	172
Commercial		1,111		1,035
Commercial Real Estate		13,067		13,289
Construction Real Estate		1,221		2,009
Residential Real Estate		7,293		6,865
Consumer and Other		332		340
Total	$	23,108	$	23,710

For loans deemed to be impaired due to an expectation that all contractual payments will probably not be received, impairment is measured by comparing the Bank’s recorded investment in the loan to the present value of expected cash flows discounted at the loan’s effective interest rate, the fair value of the collateral, or the loan’s observable market price.

The following is a summary of impaired loans as of March 31, 2014 and 2013 (000s omitted):

March 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-
Commercial		926		1,002		-		1,025		13
Commercial Real Estate		17,375		20,271		-		18,098		194
Construction Real Estate		870		2,326		-		1,257		2
Residential Real Estate		7,899		8,759		-		8,339		87
Consumer and Other		32		35		-		33		1
With an allowance recorded:
Agriculture and Agricultural Real Estate		713		712		46		712		9
Commercial		1,378		1,472		920		1,425		18
Commercial Real Estate		18,562		21,882		2,758		20,446		212
Construction Real Estate		3,143		3,176		1,150		3,177		33
Residential Real Estate		7,816		8,220		1,713		8,038		79
Consumer and Other		564		572		248		565		6
Total:
Agriculture and Agricultural Real Estate	$	713	$	712	$	46	$	712	$	9
Commercial		2,304		2,474		920		2,450		31
Commercial Real Estate		35,937		42,153		2,758		38,544		406
Construction Real Estate		4,013		5,502		1,150		4,434		35
Residential Real Estate		15,715		16,979		1,713		16,377		166
Consumer and Other		596		607		248		598		7

	Recorded Investment as of December 31, 2013		Unpaid Principal Balance as of December 31, 2013		Related Allowance as of December 31, 2013		Average Recorded Investment for the Three Months Ended March 31, 2013		Interest Income Recognized in the Three Months Ended March 31, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	423	$	12
Commercial		869		966		-		775		9
Commercial Real Estate		19,567		23,005		-		18,234		191
Construction Real Estate		1,165		2,408		-		1,950		37
Residential Real Estate		7,929		9,035		-		10,376		128
Consumer and Other		33		36		-		-		-
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		-		-
Commercial		1,540		1,627		1,031		3,513		44
Commercial Real Estate		16,025		20,032		2,697		20,045		160
Construction Real Estate		3,615		4,236		1,194		4,744		41
Residential Real Estate		8,745		9,194		1,809		9,705		85
Consumer and Other		585		581		265		346		5
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	423	$	12
Commercial		2,409		2,593		1,031		4,288		53
Commercial Real Estate		35,592		43,037		2,697		38,279		351
Construction Real Estate		4,780		6,644		1,194		6,694		78
Residential Real Estate		16,674		18,229		1,809		20,081		213
Consumer and Other		618		617		265		346		5

The Bank may agree to modify the terms of a loan in order to improve the Bank’s ability to collect amounts due. These modifications may include reduction of the interest rate, extension of the loan term, or in some cases, reduction of the principal balance. Modifications that are performed due to the debtor’s financial difficulties are considered Troubled Debt Restructurings (“TDRs”).

Loans that have been classified as TDRs during the three month periods ended March 31, 2014 and March 31, 2013 are as follows (000s omitted from dollar amounts):

	Three months ended
	March 31, 2014
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		1	$	314	$	314
Commercial		-		-		-
Commercial Real Estate		2		946		931
Construction Real Estate		-		-		-
Residential Real Estate		3		265		230
Consumer and Other		-		-		-
Total		6	$	1,525	$	1,475

	Three months ended
	March 31, 2013
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-
Commercial		3		173		172
Commercial Real Estate		3		1,461		1,449
Construction Real Estate		-		-		-
Residential Real Estate		11		986		944
Consumer and Other		2		249		13
Total		19	$	2,869	$	2,578

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the three month periods ended March 31, 2014 and March 31, 2013 that subsequently defaulted during the three month periods ended March 31, 2014 and March 31, 2013, respectively.

The Company has allocated $5,465,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at March 31, 2014. In addition, there are no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of March 31, 2014 and March 31, 2013.

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LOANS

3 Months Ended

Mar. 31, 2014

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Accounts, Notes, Loans and Financing Receivable Disclosure [Text Block]

4. LOANS

The Bank makes commercial, consumer, and mortgage loans primarily to customers in Monroe County, Michigan, southern and western Wayne County, Michigan, and surrounding areas. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the automotive, manufacturing, and real estate development economic sectors.

Loans consist of the following (000s omitted):

	March 31,		December 31,
	2014		2013
Residential real estate loans	$	225,199	$	228,024
Commercial and Construction real estate loans		278,877		280,579
Agriculture and agricultural real estate loans		14,555		14,997
Commercial and industrial loans		58,795		59,440
Loans to individuals for household, family, and other personal expenditures		14,380		14,550
Total loans, gross	$	591,806	$	597,590
Less: Allowance for loan losses		16,158		16,209
	$	575,648	$	581,381

Loans are placed in a nonaccrual status when, in the opinion of Management, the collection of additional interest is doubtful. All loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are reviewed for impairment each quarter. Allowances for loans determined to be impaired are included in the allowance for loan losses. All cash received on nonaccrual loans is applied to the principal balance. Nonperforming assets consist of nonaccrual loans, loans 90 days or more past due, restructured loans, nonaccrual investment securities, and other real estate owned. Other real estate owned includes real estate that has been acquired in full or partial satisfaction of loan obligations or upon foreclosure and real estate that the bank has purchased but no longer intends to use for bank premises.

The following table summarizes nonperforming assets (000’s omitted):

	March 31,			December 31,
	2014			2013
Nonaccrual loans	$	23,108		$	23,710
Loans 90 days past due and accruing		29			46
Restructured loans		32,248			32,450
Total nonperforming loans	$	55,385		$	56,206
Other real estate owned		9,775			9,628
Other assets		9			10
Nonperforming investment securities		3,262			3,259
Total nonperforming assets	$	68,431		$	69,103
Nonperforming assets to total assets		5.62	%		5.65	%
Allowance for loan losses to nonperforming loans		29.17	%		28.84	%

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Off Balance Sheet Risk [Abstract]

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

Financial instruments whose contractual amounts represent off-balance sheet credit risk were as follows (000s omitted):

	Contractual Amount
	March 31,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	53,336	$	68,159
Unused portion of credit card lines of credit		3,278		3,255
Unused portion of home equity lines of credit		17,228		16,769
Standby letters of credit and financial guarantees written		3,567		3,667
All other off-balance sheet commitments		-		-

XML

LOANS (Tables)

3 Months Ended

Mar. 31, 2014

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans consist of the following (000s omitted):

	March 31,		December 31,
	2014		2013
Residential real estate loans	$	225,199	$	228,024
Commercial and Construction real estate loans		278,877		280,579
Agriculture and agricultural real estate loans		14,555		14,997
Commercial and industrial loans		58,795		59,440
Loans to individuals for household, family, and other personal expenditures		14,380		14,550
Total loans, gross	$	591,806	$	597,590
Less: Allowance for loan losses		16,158		16,209
	$	575,648	$	581,381

Schedule Of Non Performing Assets [Table Text Block]

The following table summarizes nonperforming assets (000’s omitted):

	March 31,			December 31,
	2014			2013
Nonaccrual loans	$	23,108		$	23,710
Loans 90 days past due and accruing		29			46
Restructured loans		32,248			32,450
Total nonperforming loans	$	55,385		$	56,206
Other real estate owned		9,775			9,628
Other assets		9			10
Nonperforming investment securities		3,262			3,259
Total nonperforming assets	$	68,431		$	69,103
Nonperforming assets to total assets		5.62	%		5.65	%
Allowance for loan losses to nonperforming loans		29.17	%		28.84	%

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

3 Months Ended

Mar. 31, 2014

Fair Value Off Balance Sheet Risk [Abstract]

Financial Instruments With Off - Balance Sheet Risk [Text Block]

9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of condition.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for its other lending activities.

Financial instruments whose contractual amounts represent off-balance sheet credit risk were as follows (000s omitted):

	Contractual Amount
	March 31,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	53,336	$	68,159
Unused portion of credit card lines of credit		3,278		3,255
Unused portion of home equity lines of credit		17,228		16,769
Standby letters of credit and financial guarantees written		3,567		3,667
All other off-balance sheet commitments		-		-

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Most commercial lines of credit are secured by real estate mortgages or other collateral, and generally have fixed expiration dates or other termination clauses. Since the lines of credit may expire without being drawn upon, the total committed amounts do not necessarily represent future cash requirements. Credit card lines of credit have various established expiration dates, but are fundable on demand. Home equity lines of credit are secured by real estate mortgages, a majority of which have ten year expiration dates, but are fundable on demand. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of the collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on Management’s credit evaluation of the counterparty.

Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements and other business transactions.

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INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

6. INVESTMENT SECURITIES

The following is a summary of the Bank’s investment securities portfolio as of March 31, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	March 31, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	35,790	$	746	$	(258)	$	36,278
Corporate Debt Securities		500		-		-		500
	$	36,290	$	746	$	(258)	$	36,778

	Available for Sale
	March 31, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	308,244	$	1,697	$	(7,869)	$	302,072
Mortgage Backed Securities issued by U.S. Government Agencies		85,116		718		(943)		84,891
Obligations of States and Political Subdivisions		16,068		355		(92)		16,331
Trust Preferred CDO Securities		9,505		-		(3,791)		5,714
Corporate Debt Securities		7,969		100		-		8,069
Equity Securities		2,584		307		-		2,891
	$	429,486	$	3,177	$	(12,695)	$	419,968

	Held to Maturity
	December 31, 2013
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	34,346	$	557	$	(364)	$	34,539
Corporate Debt Securities		500		-		-		500
	$	34,846	$	557	$	(364)	$	35,039

	Available for Sale
	December 31, 2013
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	277,383	$	1,147	$	(11,817)	$	266,713
Mortgage Backed Securities issued by U.S. Government Agencies		97,168		995		(1,637)		96,526
Obligations of States and Political Subdivisions		15,197		289		(123)		15,363
Trust Preferred CDO Securities		9,509		-		(3,758)		5,751
Corporate Debt Securities		7,967		104		-		8,071
Equity Securities		2,584		43		(95)		2,532
	$	409,808	$	2,578	$	(17,430)	$	394,956

The amortized cost and estimated market values of securities by contractual maturity as of March 31, 2014 are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	5,099	$	5,112	$	5,625	$	5,660
After 1 year through five years		14,268		14,503		52,357		51,393
After 5 years through 10 years		13,158		13,292		266,024		261,558
After 10 years		3,765		3,871		17,780		13,575
Total		36,290		36,778		341,786		332,186
Mortgage Backed Securities		-		-		85,116		84,891
Securities with no stated maturity		-		-		2,584		2,891
Total	$	36,290	$	36,778	$	429,486	$	419,968

The investment securities portfolio is evaluated for impairment throughout the year. Impairment is recorded against individual securities, unless the decrease in fair value is attributable to interest rates or the lack of an active market, and Management determines that the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before a recovery of their amortized costs bases, which may be maturity. The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013.

March 31, 2014
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	194,731	$	5,646	$	42,359	$	2,223	$	237,090	$	7,869
Mortgage Backed Securities issued by U.S. Government Agencies		34,048		510		22,816		433		56,864		943
Obligations of States and Political Subdivisions		8,934		224		3,368		126		12,302		350
Trust Preferred CDO Securities		-		-		5,714		3,791		5,714		3,791
Corporate Debt Securities		-		-		-		-		-		-
Equity Securities		-		-		-		-		-		-
	$	237,713	$	6,380	$	74,257	$	6,573	$	311,970	$	12,953

December 31, 2013
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	234,264	$	10,828	$	13,614	$	989	$	247,878	$	11,817
Mortgage Backed Securities issued by U.S. Government Agencies		49,202		1,005		14,544		632		63,746		1,637
Obligations of States and Political Subdivisions		10,384		321		3,113		166		13,497		487
Trust Preferred CDO Securities		-		-		5,751		3,758		5,751		3,758
Corporate Debt Securities		1,960		40		-		-		1,960		40
Equity Securities		-		-		445		95		445		95
	$	295,810	$	12,194	$	37,467	$	5,640	$	333,277	$	17,834

The amount of investment securities issued by government agencies, states, and political subdivisions with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates and not the result of the credit quality of the issuers of the securities. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other than temporarily impaired at March 31, 2014. As of March 31, 2014 and December 31, 2013, there were 141 and 175 securities in an unrealized loss position, respectively.

The Trust Preferred CDO Securities consist of three pooled trust Preferred Collateralized Debt Obligations (CDOs). These CDOs are debt securities issued by special purpose entities that own trust preferred stock issued by banks and insurance companies. The trust preferred stock owned by the special purpose entities is the collateral that backs the debt securities we own. The three pooled CDOs that we own have each been in an unrealized loss position for more than 12 months. These securities have final maturity dates of 2033, 2035, and 2037. The main reasons for the impairment are the overall decline in market values for financial industry securities and the lack of an active market for these types of securities in particular.

To determine whether or not the impairment is other-than-temporary, the Company utilizes a third party valuation service to conduct a fair value analysis of each individual security. The other-than-temporary-impairment analysis of each of the CDO securities owned by the Company is conducted by projecting the expected cash flows from the security, discounting the cash flows to determine the present value of the cash flows, and comparing the present value to the amortized cost to determine if there is impairment. The cash flow projection for each security is developed using estimated prepayment speeds, estimated rates at which payments will be deferred, estimated rates at which issuers will default, and the severity of the losses on the securities which default. Prepayment estimates are negatively impacted by the lack of an active market for issuers to refinance their trust preferred securities; however, prepayment of trust preferred securities is expected to increase due to recent restrictions on the treatment of trust preferred debt as regulatory capital.

The size and creditworthiness of each institution in the CDO pool are the most significant pieces of evidence in estimating prepayment speeds. Deferral and default rates are the key drivers of the cash flow projections for each of the securities. Deferral of interest payments is allowed for up to five years, and estimates of deferral rates are determined by examining the current deferral status of the issuers, the current financial condition of the issuers, and the historical deferral levels of the issuers in each CDO pool. Key evidence examined includes whether or not an issuer has received TARP funding, the most recent credit ratings from outside services, stock price information, capitalization, asset quality, profitability, and liquidity. The most significant evidence in estimating deferrals is the comparison of key financial ratios to industry benchmarks. Near term (next 12 months) deferral rates are estimated for each security by analyzing the credit characteristics of each individual issuer in the pool. When an issuer is expected to defer interest payments, the analysis assumes that the deferral will continue for the entire five year period allowed and then, depending on the individual credit characteristics of that issuer, begin performing or move to default. Longer term annual default rates for each CDO are estimated using the credit analysis of each individual issuer compared to industry benchmarks to modify the historical default rates of financial companies. Finally, loss severity is estimated using analytical research provided by Standard and Poor’s and Moody’s, which supports the assumption that a small percentage of defaulted trust preferred securities recover without loss. The projected cash flows are discounted using the contractual rate of each security.

In the Other-Than-Temporary-Impairment (OTTI) analysis of our CDO securities as of December 31, 2009, it was expected that there would be cash flow disruptions on two of the CDOs we own. These credit losses were recorded through a charge to earnings in 2009. In subsequent analyses in 2010, 2011, 2012, 2013, and 2014 the expectation of a disruption of cash flows diminished on both of these CDO securities, with one of the securities no longer expected to experience a disruption of cash flow. The present value of the expected cash flows is at least as great as the amortized costs bases following the charges to earnings recorded in 2009, therefore no additional charges to earnings have been recorded.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurement Inputs [Text Block]

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value, as defined in ASC Topic 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for market activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

The Corporation utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value is used on a recurring basis for Available for Sale Securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Depending on the nature of the asset or liability, the Corporation uses various valuation techniques and assumptions when estimating fair value.

The Corporation applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
March 31, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	53,604	$	53,604	$	-	$	-	$	53,604
Securities - Held to Maturity
Obligations of States and Political Subdivisions		35,790		-		36,278		-		36,278
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		302,072		-		302,072		-		302,072
MBS issued by U.S. Government Agencies		84,891		-		84,891		-		84,891
Obligations of States and Political Subdivisions		16,330		-		16,330		-		16,330
Trust Preferred CDO Securities		5,714		-		-		5,714		5,714
Corporate Debt Securities		8,069		-		8,069		-		8,069
Other Securities		2,891		2,891		-		-		2,891
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		218		-		-		218		218
Loans, net		575,648		-		-		575,794		575,794
Accrued Interest Receivable		3,827		-		-		3,827		3,827
Financial Liabilities:
Noninterest Bearing Deposits		210,079		210,079		-		-		210,079
Interest Bearings Deposits		846,532		-		849,382		-		849,382
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,244		-		16,244
Accrued Interest Payable		181		-		-		181		181

									Total
	Carrying								Estimated
December 31, 2013	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	77,798	$	77,798	$	-	$	-	$	77,798
Securities - Held to Maturity
Obligations of States and Political Subdivisions		34,346		-		34,539		-		34,539
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		266,713		-		266,713		-		266,713
MBS issued by U.S. Government Agencies		95,256		-		95,256		-		95,256
Obligations of States and Political Subdivisions		15,363		-		15,363		-		15,363
Trust Preferred CDO Securities		5,751		-		-		5,751		5,751
Corporate Debt Securities		8,071		-		8,071		-		8,071
Other Securities		2,532		2,087		445		-		2,532
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		668		-		-		668		668
Loans, net		581,381		-		-		591,471		591,471
Accrued Interest Receivable		3,502		-		-		3,502		3,502
Financial Liabilities:
Noninterest Bearing Deposits		215,844		215,844		-		-		215,844
Interest Bearings Deposits		853,874		-		857,149		-		857,149
Borrowed funds
FHLB Advances		12,000		-		12,000		-		12,000
Repurchase Agreements		15,000		-		16,352		-		16,352
Accrued Interest Payable		179		-		-		179		179

In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.

The changes in Level 3 assets measured at fair value on a recurring basis were (000’s omitted):

Investment Securities - Available for Sale	2014		2013
Balance at January 1	$	5,751	$	5,406
Total realized and unrealized gains (losses) included in income		(4)		(4)
Total unrealized gains (losses) included in other comprehensive income		(33)		-
Net purchases, sales, calls and maturities		-		-
Net transfers in/out of Level 3		-		-
Balance at March 31	$	5,714	$	5,402

The Company did not have any sales or purchases of Level 3 available for sale securities during the period.

Both observable and unobservable inputs may be used to determine the fair value of positions classified as Level 3 assets. As a result, the unrealized gains and losses for these assets presented in the tables above may include changes in fair value that were attributable to both observable and unobservable inputs.

The Company owns pooled Trust Preferred Securities (“TRUPs”) with a fair value of $5,714,000 as of March 31, 2014. Trading of these types of securities has increased recently but is primarily conducted on a distress sale or forced liquidation basis. As a result, the Company measures the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

The Company also has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include loans and Other Real Estate Owned. The Company estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections.

Assets measured at fair value on a nonrecurring basis are as follows (000’s omitted):

	Balance at March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	59,278	$	-	$	-	$	59,278
Other Real Estate Owned	$	9,775	$	-	$	-	$	9,775

	Balance at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	60,471	$	-	$	-	$	60,471
Other Real Estate Owned	$	9,628	$	-	$	-	$	9,628

Impaired loans categorized as Level 3 assets consist of non-homogenous loans that are considered impaired. The Company estimates the fair value of the loans based on the present value of expected future cash flows using management’s best estimate of key assumptions. These assumptions include future payment ability, timing of payment streams, and estimated realizable values of available collateral (typically based on outside appraisals). Other Real Estate Owned (OREO) consists of property received in full or partial satisfaction of a receivable. The Company utilizes independent appraisals to estimate the fair value of OREO properties.

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BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiary. All material intercompany transactions and balances have been eliminated.

Comprehensive Income Policy [Policy Text Block]

COMPREHENSIVE INCOME

Accounting principles generally require that revenue, expenses, gains, and losses be included in net income. Certain changes in assets and liabilities, however, such as unrealized gains and losses on securities available for sale and amounts recognized related to postretirement benefit plans (gains and losses, prior service costs, and transition assets or obligations), are reported as a direct adjustment to the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income.

Segment Reporting, Policy [Policy Text Block]

BUSINESS SEGMENTS

While the Company's chief decision makers monitor the revenue streams of various products and services, operations are managed and financial performance is evaluated on a company wide basis. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable segment.

Fair Value Measurement Policy [Policy Text Block]

FAIR VALUE

The Corporation measures or monitors many of its assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities that are elected to be accounted for under The Fair Value Option as well as for certain assets and liabilities in which fair value is the primary basis of accounting. Examples of these include derivative instruments and available for sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets or liabilities for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include certain loans held for sale accounted for on a lower of cost or market basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Corporation uses various valuation techniques and assumptions when estimating fair value.

The Corporation applied the following fair value hierarchy:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. The Corporation’s mutual fund investments where quoted prices are available in an active market generally are classified within Level 1 of the fair value hierarchy.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. The Corporation’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, and obligations of states and political subdivisions are generally classified in Level 2 of the fair value hierarchy. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Private equity investments and trust preferred collateralized debt obligations are classified within Level 3 of the fair value hierarchy. Fair values are initially valued based on transaction price and are adjusted to reflect exit values.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Corporation considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Corporation looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Corporation looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Corporation must use alternative valuation techniques to derive a fair value measurement.

New Accounting Pronouncements Policy [Policy Text Block]

ACCOUNTING PRONOUNCEMENTS

No recent accounting pronouncements are expected to have a significant impact on the Corporation’s financial statements.

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ALLOWANCE FOR LOAN LOSSES (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Allowance For Loan Losses [Line Items]
Non accrual loans	$ 23,108	$ 23,710
Agriculture and Agricultural Real Estate [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	84	172
Commercial [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	1,111	1,035
Commercial Real Estate [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	13,067	13,289
Construction Real Estate [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	1,221	2,009
Residential Real Estate [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	7,293	6,865
Consumer and Other [Member]
Allowance For Loan Losses [Line Items]
Non accrual loans	$ 332	$ 340

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INVESTMENT SECURITIES (Tables)

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule Of Investment Securities Portfolio [Table Text Block]

The following is a summary of the Bank’s investment securities portfolio as of March 31, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	March 31, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	35,790	$	746	$	(258)	$	36,278
Corporate Debt Securities		500		-		-		500
	$	36,290	$	746	$	(258)	$	36,778

	Available for Sale
	March 31, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	308,244	$	1,697	$	(7,869)	$	302,072
Mortgage Backed Securities issued by U.S. Government Agencies		85,116		718		(943)		84,891
Obligations of States and Political Subdivisions		16,068		355		(92)		16,331
Trust Preferred CDO Securities		9,505		-		(3,791)		5,714
Corporate Debt Securities		7,969		100		-		8,069
Equity Securities		2,584		307		-		2,891
	$	429,486	$	3,177	$	(12,695)	$	419,968

	Held to Maturity
	December 31, 2013
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	34,346	$	557	$	(364)	$	34,539
Corporate Debt Securities		500		-		-		500
	$	34,846	$	557	$	(364)	$	35,039

	Available for Sale
	December 31, 2013
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	277,383	$	1,147	$	(11,817)	$	266,713
Mortgage Backed Securities issued by U.S. Government Agencies		97,168		995		(1,637)		96,526
Obligations of States and Political Subdivisions		15,197		289		(123)		15,363
Trust Preferred CDO Securities		9,509		-		(3,758)		5,751
Corporate Debt Securities		7,967		104		-		8,071
Equity Securities		2,584		43		(95)		2,532
	$	409,808	$	2,578	$	(17,430)	$	394,956

Expected Maturities Of Amortized Cost and Estimated Market Value [Table Text Block]

The amortized cost and estimated market values of securities by contractual maturity as of March 31, 2014 are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	5,099	$	5,112	$	5,625	$	5,660
After 1 year through five years		14,268		14,503		52,357		51,393
After 5 years through 10 years		13,158		13,292		266,024		261,558
After 10 years		3,765		3,871		17,780		13,575
Total		36,290		36,778		341,786		332,186
Mortgage Backed Securities		-		-		85,116		84,891
Securities with no stated maturity		-		-		2,584		2,891
Total	$	36,290	$	36,778	$	429,486	$	419,968

Schedule Of Gross Unrealized Losses and Fair Value Of Investments With Unrealized Losses [Table Text Block]

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses (in thousands), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013.

March 31, 2014
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	194,731	$	5,646	$	42,359	$	2,223	$	237,090	$	7,869
Mortgage Backed Securities issued by U.S. Government Agencies		34,048		510		22,816		433		56,864		943
Obligations of States and Political Subdivisions		8,934		224		3,368		126		12,302		350
Trust Preferred CDO Securities		-		-		5,714		3,791		5,714		3,791
Corporate Debt Securities		-		-		-		-		-		-
Equity Securities		-		-		-		-		-		-
	$	237,713	$	6,380	$	74,257	$	6,573	$	311,970	$	12,953

December 31, 2013
	Less than 12 months				12 months or longer				Total
	Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses		Aggregate Fair Value		Gross Unrealized Losses
Obligations of United States Government Agencies	$	234,264	$	10,828	$	13,614	$	989	$	247,878	$	11,817
Mortgage Backed Securities issued by U.S. Government Agencies		49,202		1,005		14,544		632		63,746		1,637
Obligations of States and Political Subdivisions		10,384		321		3,113		166		13,497		487
Trust Preferred CDO Securities		-		-		5,751		3,758		5,751		3,758
Corporate Debt Securities		1,960		40		-		-		1,960		40
Equity Securities		-		-		445		95		445		95
	$	295,810	$	12,194	$	37,467	$	5,640	$	333,277	$	17,834

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STOCK BASED COMPENSATION (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
SOSARs Outstanding, January 1, 2014 Shares	472,271
Granted, Shares	110,000
Exercised, Shares	5,332
Forfeited, Shares	1,334
SOSARs Outstanding, March 31, 2014, Shares	575,605
SOSARs Exercisable, March 31, 2014, Shares	368,228
SOSARs Outstanding, January 1, 2014, Weighted Average Exercise Price	$ 3.23
Granted, Weighted Average Exercise Price	$ 4.90
Exercised , Weighted Average Exercise Price	$ 1.91
Forfeited, Weighted Average Exercise Price	$ 2.35
SOSARs Outstanding, March 31, 2014 Weighted Average Exercise Price	$ 3.56
SOSARs Exercisable, March 31, 2014, Weighted Average Exercise Price	$ 3.52

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Financial Assets:
Cash and Due from Banks Carrying Value	$ 53,604	$ 77,798	$ 118,038	$ 112,507
Securities - Held to Maturity Carrying Value	36,290	34,846
Securities - Available for Sale Carrying Value	419,968	394,956
Federal Home Loan Bank Stock Carrying Value	10,605	10,605
Loans Held for Sale Carrying value	218	668
Loans, net Carrying Value	575,648	581,381
Accrued Interest Receivable Carrying Value	3,827	3,502
Cash and due from banks Estimated Fair Value	53,604	77,798
Securities - Held to Maturity Estimated Fair Value	36,778	35,039
Securities - Available for Sale Estimated Fair Value	419,968	394,956
Federal Home Loan Bank Stock Estimated Fair Value	10,605	10,605
Loans Held for Sale Estimated Fair Value	218	668
Loans, net Estimated Fair Value	575,794	591,471
Accrued Interest Receivable Estimated Fair Value	3,827	3,502
Financial Liabilities:
Noninterest Bearing Deposits Carrying Value	210,079	215,844
Interest Bearings Deposits Carrying Value	846,532	853,874
FHLB Advances Carrying Value	12,000	12,000
Repurchase Agreements Carrying Value	15,000	15,000
Accrued Interest Payable Carrying Value	181	179
Noninterest Bearing Deposits Estimated Fair Value	210,079	215,844
Interest Bearings Deposits Estimated Fair Value	849,382	857,149
FHLB Advances Estimated Fair Value	12,000	12,000
Repurchase Agreements Estimated Fair Value	16,244	16,352
Accrued Interest Payable Estimated Fair Value	181	179
Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	302,072	266,713
Securities - Available for Sale Estimated Fair Value	302,072	266,713
Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and due from banks Estimated Fair Value	53,604	77,798
Federal Home Loan Bank Stock Estimated Fair Value	0	0
Loans Held for Sale Estimated Fair Value	0	0
Loans, net Estimated Fair Value	0	0
Accrued Interest Receivable Estimated Fair Value	0	0
Financial Liabilities:
Noninterest Bearing Deposits Estimated Fair Value	210,079	215,844
Interest Bearings Deposits Estimated Fair Value	0	0
FHLB Advances Estimated Fair Value	0	0
Repurchase Agreements Estimated Fair Value	0	0
Accrued Interest Payable Estimated Fair Value	0	0
Fair Value, Inputs, Level 1 [Member] | Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash and due from banks Estimated Fair Value	0	0
Federal Home Loan Bank Stock Estimated Fair Value	10,605	10,605
Loans Held for Sale Estimated Fair Value	0	0
Loans, net Estimated Fair Value	0	0
Accrued Interest Receivable Estimated Fair Value	0	0
Financial Liabilities:
Noninterest Bearing Deposits Estimated Fair Value	0	0
Interest Bearings Deposits Estimated Fair Value	849,382	857,149
FHLB Advances Estimated Fair Value	12,000	12,000
Repurchase Agreements Estimated Fair Value	16,244	16,352
Accrued Interest Payable Estimated Fair Value	0	0
Fair Value, Inputs, Level 2 [Member] | Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	302,072	266,713
Securities - Available for Sale Estimated Fair Value	302,072	266,713
Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and due from banks Estimated Fair Value	0	0
Federal Home Loan Bank Stock Estimated Fair Value	0	0
Loans Held for Sale Estimated Fair Value	218	668
Loans, net Estimated Fair Value	575,794	591,471
Accrued Interest Receivable Estimated Fair Value	3,827	3,502
Financial Liabilities:
Noninterest Bearing Deposits Estimated Fair Value	0	0
Interest Bearings Deposits Estimated Fair Value	0	0
FHLB Advances Estimated Fair Value	0	0
Repurchase Agreements Estimated Fair Value	0	0
Accrued Interest Payable Estimated Fair Value	181	179
Fair Value, Inputs, Level 3 [Member] | Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Obligations Of States and Political Subdivisions [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	35,790	34,346
Securities - Available for Sale Carrying Value	16,330	15,363
Securities - Held to Maturity Estimated Fair Value	36,278	34,539
Securities - Available for Sale Estimated Fair Value	16,330	15,363
Obligations Of States and Political Subdivisions [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Held to Maturity Estimated Fair Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Obligations Of States and Political Subdivisions [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	16,330	15,363
Securities - Held to Maturity Estimated Fair Value	36,278	34,539
Securities - Available for Sale Estimated Fair Value	16,330	15,363
Obligations Of States and Political Subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Held to Maturity Estimated Fair Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Corporate Debt Securities [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	500	500
Securities - Available for Sale Carrying Value	8,069	8,071
Securities - Held to Maturity Estimated Fair Value	500	500
Securities - Available for Sale Estimated Fair Value	8,069	8,071
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Held to Maturity Estimated Fair Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	8,069	8,071
Securities - Held to Maturity Estimated Fair Value	500	500
Securities - Available for Sale Estimated Fair Value	8,069	8,071
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Held to Maturity Estimated Fair Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Mortgage Backed Securities Issued By U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	84,891	95,256
Securities - Available for Sale Estimated Fair Value	84,891	95,256
Mortgage Backed Securities Issued By U.S. Government Agencies [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Mortgage Backed Securities Issued By U.S. Government Agencies [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	84,891	95,256
Securities - Available for Sale Estimated Fair Value	84,891	95,256
Mortgage Backed Securities Issued By U.S. Government Agencies [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Trust Preferred CDO Securities [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	5,714	5,751
Securities - Available for Sale Estimated Fair Value	5,714	5,751
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	0	0
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	5,714	5,751
Securities - Available for Sale Estimated Fair Value	5,714	5,751
Other Securities [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	2,891	2,532
Securities - Available for Sale Estimated Fair Value	2,891	2,532
Other Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	2,891	2,087
Securities - Available for Sale Estimated Fair Value	2,891	2,087
Other Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	445
Securities - Available for Sale Estimated Fair Value	0	445
Other Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	0	0
Securities - Available for Sale Estimated Fair Value	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Common Stock [Member]	Retained Earnings [Member]	Unearned Compensation [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2012	$ 83,574	$ 2,397	$ 81,280	$ (27)	$ (76)
SOSARs exercised	4	4	0	0	0
Other stock issued	1,760	1,760	0	0	0
Stock Offering Expense	(15)	(15)	0	0	0
Equity compensation	33	27	0	6	0
Net income	1,114	0	1,114	0	0
Other comprehensive loss - net of tax	(521)	0	0	0	(521)
Balance at Mar. 31, 2013	85,949	4,173	82,394	(21)	(597)
Balance at Dec. 31, 2013	110,608	14,671	106,817	(7)	(10,873)
SOSARs exercised	0	0	0	0	0
Restricted stock awards	0	29	0	(29)	0
Other stock issued	2,778	2,778	0	0	0
Stock Offering Expense	(325)	(325)	0	0	0
Equity compensation	51	46	0	5	0
Net income	1,767	0	1,767	0	0
Other comprehensive loss - net of tax	3,228	0	0	0	3,228
Balance at Mar. 31, 2014	$ 118,107	$ 17,199	$ 108,584	$ (31)	$ (7,645)

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STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

3. STOCK BASED COMPENSATION

Stock Options - The following table summarizes the options that had been granted to certain key executives in accordance with the Long-Term Incentive Compensation Plan that was approved by shareholders at the Annual Meeting of Shareholders on April 6, 2000.

		Weighted Average
	Shares	Exercise Price
Options Outstanding, January 1, 2014	283,900	$	18.41
Granted	-		-
Exercised	-		-
Forfeited	77,000		16.69
Options Outstanding, March 31, 2014	206,900	$	19.05
Options Exercisable, March 31, 2014	206,900	$	19.05

Stock Only Stock Appreciation Rights (SOSARs) - On March 7, 2014, 110,000 Stock Only Stock Appreciation Rights (SOSARs) were awarded to certain executives in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. The SOSARs have a term of ten years and vest in three equal annual installments beginning on December 31, 2014. The fair value of $2.98 for the SOSARs was estimated at the date of the grant, using the Black-Scholes option pricing model, with the following assumptions: expected option lives of 7 years, expected volatility of 60.11%, a risk free interest rate of 2.27% and dividend yield of 0.00%.

SOSARs granted under the plan are structured as fixed grants with the exercise price equal to the market value of the underlying stock on the date of the grant.

The following table summarizes the SOSARs that have been granted:

		Weighted Average
	Shares	Exercise Price
SOSARs Outstanding, January 1, 2014	472,271	$	3.23
Granted	110,000		4.90
Exercised	5,332		1.91
Forfeited	1,334		2.35
SOSARs Outstanding, March 31, 2014	575,605	$	3.56
SOSARs Exercisable, March 31, 2014	368,228	$	3.52

Restricted Stock Unit Awards – On March 7, 2014, performance restricted stock units were awarded to certain key executive officers in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. Each Restricted Stock Unit (RSU) is equivalent to one share of MBT Financial Corp. common stock. Stock will be issued to the participants following a two year performance period that ends on December 31, 2015. Up to 50% of the aggregate RSUs granted may be earned in each year of the performance period subject to satisfying weighted performance thresholds. Earned RSUs vest on December 31, 2016.

The total expense for equity based compensation was $67,000 in the first quarter of 2014 and $73,000 in the first quarter of 2013.

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STOCK BASED COMPENSATION (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock or Unit Expense	$ 67,000	$ 73,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	110,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 4.90
Share based Compensation Arrangement by Share based Payment Award, Equity Instruments Other than Options, Granted Percentage	50.00%
Executive Officer [Member] | Stock Incentive Plan 2008 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	110,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 2.98
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term	7 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate	60.11%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate	2.27%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%

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INVESTMENT SECURITIES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Held to Maturity, Amortized Cost	$ 36,290	$ 34,846
Held to Maturity, Gross Unrealized Gains	746	557
Held to Maturity, Gross Unrealized Losses	(258)	(364)
Held to Maturity, Estimated Market Value	36,778	35,039
Available for Sale, Amortized Cost	429,486	409,808
Available for Sale, Gross Unrealized Gains	3,177	2,578
Available for Sale, Gross Unrealized Losses	(12,695)	(17,430)
Available For Sale, Estimated Market Value	419,968	394,956
Obligations of U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	308,244	277,383
Available for Sale, Gross Unrealized Gains	1,697	1,147
Available for Sale, Gross Unrealized Losses	(7,869)	(11,817)
Available For Sale, Estimated Market Value	302,072	266,713
Mortgage Backed Securities issued by U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	85,116	97,168
Available for Sale, Gross Unrealized Gains	718	995
Available for Sale, Gross Unrealized Losses	(943)	(1,637)
Available For Sale, Estimated Market Value	84,891	96,526
Obligations of States and Political Subdivisions [Member]
Investment Holdings [Line Items]
Held to Maturity, Amortized Cost	35,790	34,346
Held to Maturity, Gross Unrealized Gains	746	557
Held to Maturity, Gross Unrealized Losses	(258)	(364)
Held to Maturity, Estimated Market Value	36,278	34,539
Available for Sale, Amortized Cost	16,068	15,197
Available for Sale, Gross Unrealized Gains	355	289
Available for Sale, Gross Unrealized Losses	(92)	(123)
Available For Sale, Estimated Market Value	16,331	15,363
Trust Preferred CDO Securities [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	9,505	9,509
Available for Sale, Gross Unrealized Gains	0	0
Available for Sale, Gross Unrealized Losses	(3,791)	(3,758)
Available For Sale, Estimated Market Value	5,714	5,751
Corporate Debt Securities [Member]
Investment Holdings [Line Items]
Held to Maturity, Amortized Cost	500	500
Held to Maturity, Gross Unrealized Gains	0	0
Held to Maturity, Gross Unrealized Losses	0	0
Held to Maturity, Estimated Market Value	500	500
Available for Sale, Amortized Cost	7,969	7,967
Available for Sale, Gross Unrealized Gains	100	104
Available for Sale, Gross Unrealized Losses	0	0
Available For Sale, Estimated Market Value	8,069	8,071
Equity Securities [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	2,584	2,584
Available for Sale, Gross Unrealized Gains	307	43
Available for Sale, Gross Unrealized Losses	0	(95)
Available For Sale, Estimated Market Value	$ 2,891	$ 2,532

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ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2014

Allowance For Loan Losses [Abstract]

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Activity in the allowance for loan losses during the three months ended March 31, 2014 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Allowance for loan losses: For the three months ended March 31, 2014
Beginning Balance	$	171	$	1,989	$	7,030	$	1,397	$	4,606	$	1,016	$	16,209
Charge-offs		-		(186)		(108)		(210)		(132)		(38)		(674)
Recoveries		-		33		65		234		165		26		523
Provision		34		(56)		473		9		(161)		(199)		100
Ending balance	$	205	$	1,780	$	7,460	$	1,430	$	4,478	$	805	$	16,158
Allowance for loan losses as of March 31, 2014
Ending balance individually evaluated for impairment	$	46	$	920	$	2,758	$	1,150	$	1,713	$	248	$	6,835
Ending balance collectively evaluated for impairment		159		860		4,702		280		2,765		557		9,323
Ending balance	$	205	$	1,780	$	7,460	$	1,430	$	4,478	$	805	$	16,158
Loans as of March 31, 2014
Ending balance individually evaluated for impairment	$	713	$	2,304	$	35,937	$	4,013	$	15,715	$	596	$	59,278
Ending balance collectively evaluated for impairment		13,842		56,491		228,069		10,858		209,484		13,784		532,528
Ending balance	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806

Activity in the allowance for loan losses during the three months ended March 31, 2013 was as follows (000s omitted):

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Allowance for loan losses: For the three months ended March 31, 2013
Beginning Balance	$	76	$	2,224	$	7,551	$	2,401	$	4,715	$	332	$	17,299
Charge-offs		-		(202)		(813)		(18)		(433)		(121)		(1,587)
Recoveries		-		236		64		274		80		33		687
Provision		(6)		(105)		1,106		(188)		746		(53)		1,500
Ending balance	$	70	$	2,153	$	7,908	$	2,469	$	5,108	$	191	$	17,899
Allowance for loan losses as of March 31, 2013
Ending balance individually evaluated for impairment	$	-	$	1,330	$	2,312	$	1,863	$	2,084	$	100	$	7,689
Ending balance collectively evaluated for impairment		70		823		5,596		606		3,024		91		10,210
Ending balance	$	70	$	2,153	$	7,908	$	2,469	$	5,108	$	191	$	17,899
Loans as of March 31, 2013
Ending balance individually evaluated for impairment	$	420	$	4,193	$	35,960	$	6,225	$	18,668	$	346	$	65,812
Ending balance collectively evaluated for impairment		11,815		56,873		238,580		10,853		216,655		14,170		548,946
Ending balance	$	12,235	$	61,066	$	274,540	$	17,078	$	235,323	$	14,516	$	614,758

Financing Receivable Credit Quality Indicators [Table Text Block]

The portfolio segments in each credit risk grade as of March 31, 2014 are as follows (000s omitted):

 

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	140	$	1,071	$	-	$	4,696	$	138,907	$	9,710	$	154,524
1		-		3,731		-		-		-		194		3,925
2		31		150		908		-		140		-		1,229
3		205		3,968		11,236		90		918		-		16,417
4		12,441		35,255		168,834		4,839		47,560		3,559		272,488
5		934		10,977		44,413		2,495		15,078		215		74,112
6		804		3,643		38,615		2,751		22,596		702		69,111
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806
Performing	$	13,758	$	56,280	$	233,200	$	10,753	$	208,948	$	13,482	$	536,421
Nonperforming		797		2,515		30,806		4,118		16,251		898		55,385
Total	$	14,555	$	58,795	$	264,006	$	14,871	$	225,199	$	14,380	$	591,806

The portfolio segments in each credit risk grade as of December 31, 2013 are as follows (000s omitted):

 

	Agriculture and Agricultural Real Estate		Commercial		Commercial Real Estate		Construction Real Estate		Residential Real Estate		Consumer and Other		Total
Not Rated	$	144	$	2,151	$	-	$	3,643	$	141,102	$	9,656	$	156,696
1		-		4,054		-		-		-		194		4,248
2		31		153		931		-		142		-		1,257
3		788		4,000		10,755		99		1,040		-		16,682
4		12,304		34,130		172,592		4,825		53,047		3,743		280,641
5		838		11,594		41,914		2,525		9,005		251		66,127
6		892		3,358		39,720		3,575		23,688		706		71,939
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590
Performing	$	14,428	$	56,941	$	235,531	$	9,732	$	211,149	$	13,603	$	541,384
Nonperforming		569		2,499		30,381		4,935		16,875		947		56,206
Total	$	14,997	$	59,440	$	265,912	$	14,667	$	228,024	$	14,550	$	597,590

Past Due Financing Receivables [Table Text Block]

The amount classified as past due is the entire principal balance outstanding of the loan, not just the amount of payments that are past due. The following is a summary of past due loans as of March 31, 2014 and December 31, 2013 (000s omitted):

March 31, 2014	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	51	$	-	$	84	$	135	$	14,420	$	14,555	$	-
Commercial		45		19		392		456		58,339		58,795		29
Commercial Real Estate		3,347		800		3,435		7,582		256,424		264,006		-
Construction Real Estate		-		9		604		613		14,258		14,871		-
Residential Real Estate		4,276		304		2,100		6,680		218,519		225,199		-
Consumer and Other		136		40		139		315		14,065		14,380		-
Total	$	7,855	$	1,172	$	6,754	$	15,781	$	576,025	$	591,806	$	29

December 31, 2013	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment >90 Days Past Due and Accruing
Agriculture and Agricultural Real Estate	$	210	$	-	$	171	$	381	$	14,616	$	14,997	$	-
Commercial		87		93		210		390		59,050		59,440		46
Commercial Real Estate		1,640		535		3,506		5,681		260,231		265,912		-
Construction Real Estate		90		265		1,177		1,532		13,135		14,667		-
Residential Real Estate		2,612		803		2,342		5,757		222,267		228,024		-
Consumer and Other		150		52		153		355		14,195		14,550		-
Total	$	4,789	$	1,748	$	7,559	$	14,096	$	583,494	$	597,590	$	46

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

The following is a summary of non-accrual loans as of March 31, 2014 and December 31, 2013 (000s omitted):

	March 31, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	84	$	172
Commercial		1,111		1,035
Commercial Real Estate		13,067		13,289
Construction Real Estate		1,221		2,009
Residential Real Estate		7,293		6,865
Consumer and Other		332		340
Total	$	23,108	$	23,710

Impaired Financing Receivables [Table Text Block]

The following is a summary of impaired loans as of March 31, 2014 and 2013 (000s omitted):

March 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the Three Months Ended		Interest Income Recognized in the Three Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-
Commercial		926		1,002		-		1,025		13
Commercial Real Estate		17,375		20,271		-		18,098		194
Construction Real Estate		870		2,326		-		1,257		2
Residential Real Estate		7,899		8,759		-		8,339		87
Consumer and Other		32		35		-		33		1
With an allowance recorded:
Agriculture and Agricultural Real Estate		713		712		46		712		9
Commercial		1,378		1,472		920		1,425		18
Commercial Real Estate		18,562		21,882		2,758		20,446		212
Construction Real Estate		3,143		3,176		1,150		3,177		33
Residential Real Estate		7,816		8,220		1,713		8,038		79
Consumer and Other		564		572		248		565		6
Total:
Agriculture and Agricultural Real Estate	$	713	$	712	$	46	$	712	$	9
Commercial		2,304		2,474		920		2,450		31
Commercial Real Estate		35,937		42,153		2,758		38,544		406
Construction Real Estate		4,013		5,502		1,150		4,434		35
Residential Real Estate		15,715		16,979		1,713		16,377		166
Consumer and Other		596		607		248		598		7

	Recorded Investment as of December 31, 2013		Unpaid Principal Balance as of December 31, 2013		Related Allowance as of December 31, 2013		Average Recorded Investment for the Three Months Ended March 31, 2013		Interest Income Recognized in the Three Months Ended March 31, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	423	$	12
Commercial		869		966		-		775		9
Commercial Real Estate		19,567		23,005		-		18,234		191
Construction Real Estate		1,165		2,408		-		1,950		37
Residential Real Estate		7,929		9,035		-		10,376		128
Consumer and Other		33		36		-		-		-
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		-		-
Commercial		1,540		1,627		1,031		3,513		44
Commercial Real Estate		16,025		20,032		2,697		20,045		160
Construction Real Estate		3,615		4,236		1,194		4,744		41
Residential Real Estate		8,745		9,194		1,809		9,705		85
Consumer and Other		585		581		265		346		5
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	423	$	12
Commercial		2,409		2,593		1,031		4,288		53
Commercial Real Estate		35,592		43,037		2,697		38,279		351
Construction Real Estate		4,780		6,644		1,194		6,694		78
Residential Real Estate		16,674		18,229		1,809		20,081		213
Consumer and Other		618		617		265		346		5

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Loans that have been classified as TDRs during the three month periods ended March 31, 2014 and March 31, 2013 are as follows (000s omitted from dollar amounts):

	Three months ended
	March 31, 2014
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		1	$	314	$	314
Commercial		-		-		-
Commercial Real Estate		2		946		931
Construction Real Estate		-		-		-
Residential Real Estate		3		265		230
Consumer and Other		-		-		-
Total		6	$	1,525	$	1,475

	Three months ended
	March 31, 2013
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-
Commercial		3		173		172
Commercial Real Estate		3		1,461		1,449
Construction Real Estate		-		-		-
Residential Real Estate		11		986		944
Consumer and Other		2		249		13
Total		19	$	2,869	$	2,578