10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 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 November 14, 2014, there were 22,696,547 shares of the Company’s Common Stock outstanding.

Part I Financial Information

Item 1. Financial Statements

MBT FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

	September 30, 2014
Dollars in thousands	(Unaudited)			December 31, 2013
ASSETS
Cash and Cash Equivalents
Cash and due from banks
Non-interest bearing	$	13,891		$	15,448
Interest bearing		39,050			62,350
Total cash and cash equivalents		52,941			77,798
Securities - Held to Maturity		31,744			34,846
Securities - Available for Sale		467,465			394,956
Federal Home Loan Bank stock - at cost		10,605			10,605
Loans held for sale		382			668
Loans		585,770			597,590
Allowance for Loan Losses		(13,130	)		(16,209	)
Loans - Net		572,640			581,381
Accrued interest receivable and other assets		29,783			34,094
Other Real Estate Owned		6,036			9,628
Bank Owned Life Insurance		51,471			50,493
Premises and Equipment - Net		28,745			28,213
Total assets	$	1,251,812		$	1,222,682
LIABILITIES
Deposits:
Non-interest bearing	$	209,731		$	215,844
Interest-bearing		879,753			853,874
Total deposits		1,089,484			1,069,718
Federal Home Loan Bank advances		-			12,000
Repurchase agreements		15,000			15,000
Interest payable and other liabilities		16,676			15,356
Total liabilities		1,121,160			1,112,074
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 22,694,906 and 20,605,493 shares issued and outstanding)		22,946			14,671
Retained earnings		111,983			106,817
Unearned compensation		(8	)		(7	)
Accumulated other comprehensive loss		(4,269	)		(10,873	)
Total stockholders' equity		130,652			110,608
Total liabilities and stockholders' equity	$	1,251,812		$	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 Sept. 30,						Nine Months Ended Sept. 30,
Dollars in thousands, except per share data	2014			2013			2014			2013
Interest Income
Interest and fees on loans	$	7,255		$	7,605		$	21,355		$	23,106
Interest on investment securities-
Tax-exempt		288			313			892			946
Taxable		2,222			1,821			6,540			5,383
Interest on balances due from banks		32			25			86			131
Total interest income		9,797			9,764			28,873			29,566
Interest Expense
Interest on deposits		767			1,033			2,423			3,361
Interest on borrowed funds		178			192			551			1,533
Total interest expense		945			1,225			2,974			4,894
Net Interest Income		8,852			8,539			25,899			24,672
Provision For Loan Losses		(700	)		200			(500	)		2,100
Net Interest Income After
Provision For Loan Losses		9,552			8,339			26,399			22,572
Other Income
Income from wealth management services		1,194			1,078			3,496			3,256
Service charges and other fees		1,054			1,128			2,954			3,228
Debit card income		557			513			1,588			1,521
Net gain (loss) on sales of securities available for sale		(1,020	)		142			(744	)		306
Net loss on sales of Other Real Estate Owned		(634	)		(632	)		(964	)		(1,339	)
Origination fees on mortgage loans sold		80			133			230			606
Bank owned life insurance income		357			363			1,062			1,117
Rent income on Other Real Estate Owned		99			347			364			639
Other		438			412			1,387			1,420
Total other income		2,125			3,484			9,373			10,754
Other Expenses
Salaries and employee benefits		5,631			5,310			17,163			15,847
Occupancy expense		626			737			2,040			2,146
Equipment expense		723			650			2,002			2,024
Marketing expense		225			180			640			548
Professional fees		681			527			1,620			1,578
Other Real Estate Owned expenses		187			162			887			829
FDIC Deposit Insurance Assessment		275			695			1,535			2,078
Bonding and other insurance expense		258			267			777			802
Telephone expense		108			212			355			455
Other		648			591			1,833			1,917
Total other expenses		9,362			9,331			28,852			28,224
Income Before Income Taxes		2,315			2,492			6,920			5,102
Income Tax Expense		603			(18,795	)		1,754			(18,795	)
Net Income	$	1,712		$	21,287		$	5,166		$	23,897
Other Comprehensive Income (Loss) - Net of Tax
Unrealized gains (losses) on securities		(649	)		463			6,353			(8,437	)
Reclassification adjustment for gains (losses) included in net income		673			(94	)		491			(202	)
Postretirement benefit liability		26			31			(240	)		92
Total Other Comprehensive Income (Loss) - Net of Tax		50			400			6,604			(8,547	)
Comprehensive Income (Loss)	$	1,762		$	21,687		$	11,770		$	15,350
Basic Earnings Per Common Share	$	0.08		$	1.19		$	0.24		$	1.34
Diluted Earnings Per Common Share	$	0.07		$	1.18		$	0.23		$	1.33
Common Stock Dividends Declared Per Share	$	-		$	-		$	-		$	-

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

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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 (7,287 shares)		1			-		-			-			1
Restricted stock awards (6,000 shares)		29			-		(29	)		-			-
Other stock issued (2,076,126 shares)		8,838			-		-			-			8,838
Stock Offering Expense		(754	)		-		-			-			(754	)
Equity Compensation		161			-		28			-			189
Net income		-			5,166		-			-			5,166
Other comprehensive income - net of tax		-			-		-			6,604			6,604
Balance - September 30, 2014	$	22,946		$	111,983	$	(8	)	$	(4,269	)	$	130,652

									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 (936 shares)		4			-		-			-			4
Other stock issued (520,397 shares)		1,814			-		-			-			1,814
Stock Offering Expense		(18	)		-		-			-			(18	)
Equity Compensation		83			-		17			-			100
Net income		-			23,897		-			-			23,897
Other comprehensive loss - net of tax		-			-		-			(8,547	)		(8,547	)
Balance - September 30, 2013	$	4,280		$	105,177	$	(10	)	$	(8,623	)	$	100,824

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

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MBT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

	Nine Months Ended September 30,
Dollars in thousands	2014			2013
Cash Flows from Operating Activities
Net Income	$	5,166		$	23,897
Adjustments to reconcile net income to net cash from operating activities
Provision for loan losses		(500	)		2,100
Depreciation		1,210			1,416
(Increase) decrease in net deferred federal income tax asset		1,684			(18,795	)
Net amortization of investment premium and discount		677			1,415
Writedowns of Other Real Estate Owned		959			1,539
Net increase in interest payable and other liabilities		957			2,140
Net increase in interest receivable and other assets		(772	)		(739	)
Equity based compensation expense		190			209
Net (gain) loss on sale/settlement of securities		744			(306	)
Increase in cash surrender value of life insurance		(978	)		(1,032	)
Net cash provided by operating activities	$	9,337		$	11,844
Cash Flows from Investing Activities
Proceeds from maturities and redemptions of investment securities held to maturity	$	7,692		$	18,214
Proceeds from maturities and redemptions of investment securities available for sale		19,453			65,077
Proceeds from sales of investment securities available for sale		93,321			56,433
Net decrease in loans		7,003			10,840
Proceeds from sales of other real estate owned		5,113			6,345
Proceeds from sales of other assets		40			245
Purchase of investment securities held to maturity		(4,590	)		(11,309	)
Purchase of investment securities available for sale		(176,334	)		(145,382	)
Purchase of bank premises and equipment		(1,742	)		(1,358	)
Net cash used for investing activities	$	(50,044	)	$	(895	)
Cash Flows from Financing Activities
Net increase in deposits	$	19,766		$	5,313
Repayment of long term debt		-			(135	)
Repayment of Federal Home Loan Bank borrowings		(12,000	)		(95,000	)
Proceeds from issuance of common stock		8,084			1,800
Net cash provided by (used for) financing activities	$	15,850		$	(88,022	)
Net Decrease in Cash and Cash Equivalents	$	(24,857	)	$	(77,073	)
Cash and Cash Equivalents at Beginning of Period		77,798			112,507
Cash and Cash Equivalents at End of Period	$	52,941		$	35,434
Supplemental Cash Flow Information
Cash paid for interest	$	2,993		$	5,055
Cash paid for federal income taxes	$	69		$	-
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	$	2,482		$	4,078
Transfer of loans to other assets	$	42		$	124

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 loan and wealth management office in Lenawee 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.

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FAIR VALUE

The Company 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 Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company 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 Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

RECENT DEVELOPMENTS

On October 29, 2014, the Bank conducted an auction of Other Real Estate Owned. Following the auction, the Bank offered to sell some of the properties that did not sell at the auction at prices below the carrying values. As a result, the September 30, 2014 financial statements include the effect of writing down the values of these properties by $500,000.

ACCOUNTING PRONOUNCEMENTS

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” ASU 2014-04 clarifies when an in substance repossession or foreclosure occurs. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014. The adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a comprehensive revenue recognition standard for virtually all industries under US GAAP. The standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. This ASU is effective for annual and interim periods beginning after December 15, 2016. The Company may choose to apply the new standard either retrospectively or through a cumulative effect adjustment. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

2. EARNINGS PER SHARE

The calculations of earnings per common share are as follows:

	For the three months ended Sept. 30,				For the nine months ended Sept. 30,
	2014		2013		2014		2013
Basic
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Earnings per common share - basic	$	0.08	$	1.19	$	0.24	$	1.34
Diluted
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Equity compensation		194,090		164,533		192,573		155,416
Average common shares outstanding - diluted		22,885,683		18,077,479		22,104,569		17,935,340
Earnings per common share - diluted	$	0.07	$	1.18	$	0.23	$	1.33

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.

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			Weighted Average
	Shares		Exercise Price
Options Outstanding, January 1, 2014		283,900	$	18.41
Granted		-		-
Exercised		-		-
Forfeited		1,500		15.33
Expired		77,000		16.69
Options Outstanding, September 30, 2014		205,400	$	19.08
Options Exercisable, September 30, 2014		205,400	$	19.08

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%.

The following table summarizes the SOSARs that have been granted:

			Weighted Average
	SOSARs		Base Price
SOSARs Outstanding, January 1, 2014		472,271	$	3.23
Granted		110,000		4.90
Exercised		18,998		2.15
Forfeited		5,834		4.91
SOSARs Outstanding, September 30, 2014		557,439	$	3.58
SOSARs Exercisable, September 30, 2014		352,062	$	3.53

The exercise of a SOSAR results in the issuance of a number of shares of common stock of the Company based on the appreciation of the market price of the stock over the base price, which is equal to the market value of the underlying stock on the date of the grant of the SOSAR. The market value of the Company’s common stock on September 30, 2014 was $4.78. The intrinsic value of the exercisable SOSARs as of September 30, 2014 was $353,000, and exercise of those SOSARs on that date would have resulted in the issuance of 73,839 shares of common stock.

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.

Restricted Stock Awards – On March 7, 2014, 1,000 restricted shares were awarded to each non-executive member of the board of directors in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. The restricted shares vest on December 31, 2014. The expense for the restricted stock is based on the grant date value per share of $4.90 and is recognized over the vesting period. The unrecognized compensation cost related to the non-vested restricted stock awards was $8,000 as of September 30, 2014.

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The total expense for equity based compensation was $72,000 in the third quarter of 2014 and $71,000 in the third quarter of 2013. The total expense for equity based compensation was $218,000 in the first nine months of 2014 and $216,000 in the first nine months 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.

Loans consist of the following (000s omitted):

	September 30,		December 31,
	2014		2013
Residential real estate loans	$	224,130	$	228,024
Commercial and Construction real estate loans		265,951		280,579
Agriculture and agricultural real estate loans		18,113		14,997
Commercial and industrial loans		62,318		59,440
Loans to individuals for household, family,and other personal expenditures		15,258		14,550
Total loans, gross	$	585,770	$	597,590
Less: Allowance for loan losses		13,130		16,209
	$	572,640	$	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):

`	September 30,			December 31,
	2014			2013
Nonaccrual loans	$	13,351		$	23,710
Loans 90 days past due and accruing		7			46
Restructured loans		24,094			32,450
Total nonperforming loans	$	37,452		$	56,206
Other real estate owned		6,036			9,628
Other assets		7			10
Nonperforming investment securities		-			3,259
Total nonperforming assets	$	43,495		$	69,103
Nonperforming assets to total assets		3.47	%		5.65	%
Allowance for loan losses to nonperforming loans		35.06	%		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 and nine months ended September 30, 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 September 30, 2014
Beginning Balance	$	214		$	1,288		$	7,535		$	1,147		$	4,280		$	537		$	15,001
Charge-offs		(3	)		(62	)		(2,267	)		(44	)		(976	)		(1	)		(3,353	)
Recoveries		-			115			939			794			271			63			2,182
Provision		14			(22	)		390			(1,290	)		(259	)		467			(700	)
Ending balance	$	225		$	1,319		$	6,597		$	607		$	3,316		$	1,066		$	13,130
Allowance for loan losses: For the nine months ended September 30, 2014
Beginning Balance	$	171		$	1,989		$	7,030		$	1,397		$	4,606		$	1,016		$	16,209
Charge-offs		(3	)		(688	)		(3,478	)		(254	)		(1,187	)		(79	)		(5,689	)
Recoveries		5			204			1,215			1,047			509			130			3,110
Provision		52			(186	)		1,830			(1,583	)		(612	)		(1	)		(500	)
Ending balance	$	225		$	1,319		$	6,597		$	607		$	3,316		$	1,066		$	13,130
Allowance for loan losses as of September 30, 2014
Ending balance individually evaluated for impairment	$	36		$	528		$	1,290		$	480		$	649		$	257		$	3,240
Ending balance collectively evaluated for impairment		189			791			5,307			127			2,667			809			9,890
Ending balance	$	225		$	1,319		$	6,597		$	607		$	3,316		$	1,066		$	13,130
Loans as of September 30, 2014
Ending balance individually evaluated for impairment	$	946		$	1,445		$	20,257		$	2,138		$	11,901		$	573		$	37,260
Ending balance collectively evaluated for impairment		17,167			60,873			233,268			10,288			212,229			14,685			548,510
Ending balance	$	18,113		$	62,318		$	253,525		$	12,426		$	224,130		$	15,258		$	585,770

-10-

Activity in the allowance for loan losses during the three and nine months ended September 30, 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 September 30, 2013
Beginning Balance	$	109	$	2,442		$	7,556		$	1,889		$	4,787		$	412		$	17,195
Charge-offs		-		(162	)		(728	)		(30	)		(351	)		(53	)		(1,324	)
Recoveries		-		24			427			49			162			33			695
Provision		28		(409	)		453			(278	)		24			382			200
Ending balance	$	137	$	1,895		$	7,708		$	1,630		$	4,622		$	774		$	16,766
Allowance for loan losses: For the nine months ended September 30, 2013
Beginning Balance	$	76	$	2,224		$	7,551		$	2,401		$	4,715		$	332		$	17,299
Charge-offs		-		(564	)		(2,596	)		(67	)		(1,167	)		(190	)		(4,584	)
Recoveries		-		287			717			337			481			129			1,951
Provision		61		(52	)		2,036			(1,041	)		593			503			2,100
Ending balance	$	137	$	1,895		$	7,708		$	1,630		$	4,622		$	774		$	16,766
Allowance for loan losses as of September 30, 2013
Ending balance individually evaluated for impairment	$	1	$	1,133		$	2,893		$	1,333		$	1,750		$	110		$	7,220
Ending balance collectively  evaluated for impairment		136		762			4,815			297			2,872			664			9,546
Ending balance	$	137	$	1,895		$	7,708		$	1,630		$	4,622		$	774		$	16,766
Loans as of September 30, 2013
Ending balance individually evaluated for impairment	$	424	$	3,175		$	35,769		$	5,704		$	16,122		$	363		$	61,557
Ending balance collectively  evaluated for impairment		14,898		62,078			232,999			9,360			215,422			14,614			549,371
Ending balance	$	15,322	$	65,253		$	268,768		$	15,064		$	231,544		$	14,977		$	610,928

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:

-11-

• 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.

-12-

The portfolio segments in each credit risk grade as of September 30, 2014 are as follows (000s omitted):

Credit Quality Indicators as of September 30, 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	$	126	$	1,554	$	-	$	4,779	$	140,212	$	10,717	$	157,388
1		-		2,992		-		-		-		366		3,358
2		280		297		857		-		134		-		1,568
3		190		6,595		9,643		-		874		-		17,302
4		15,641		41,982		177,887		4,478		50,559		3,355		293,902
5		808		6,881		37,280		2,449		15,982		190		63,590
6		1,068		2,017		27,858		720		16,369		630		48,662
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770
Performing	$	17,087	$	60,808	$	234,708	$	10,214	$	211,067	$	14,434	$	548,318
Nonperforming		1,026		1,510		18,817		2,212		13,063		824		37,452
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770

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 September 30, 2014 and December 31, 2013 (000s omitted):

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September 30, 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	$	250	$	-	$	80	$	330	$	17,783	$	18,113	$	-
Commercial		83		26		57		166		62,152		62,318		7
Commercial Real Estate		1,590		1,176		1,457		4,223		249,302		253,525		-
Construction Real Estate		81		-		-		81		12,345		12,426		-
Residential Real Estate		4,497		1,035		640		6,172		217,958		224,130		-
Consumer and Other		61		30		70		161		15,097		15,258		-
Total	$	6,562	$	2,267	$	2,304	$	11,133	$	574,637	$	585,770	$	7

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 September 30, 2014 and December 31, 2013 (000s omitted):

	September 30, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	80	$	172
Commercial		298		1,035
Commercial Real Estate		6,234		13,289
Construction Real Estate		424		2,009
Residential Real Estate		6,064		6,865
Consumer and Other		251		340
Total	$	13,351	$	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.

-14-

The following is a summary of impaired loans as of September 30, 2014 and 2013 (000s omitted):

September 30, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment for the  Three Months  Ended		Interest Income Recognized in the  Three Months Ended		Average Recorded Investment for the Nine Months  Ended		Interest Income Recognized in the Nine Months Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	258	$	257	$	-	$	258	$	4	$	259	$	7
Commercial		396		559		-		500		7		580		25
Commercial Real Estate		9,979		11,299		-		10,461		111		10,565		352
Construction Real Estate		302		1,019		-		610		2		668		17
Residential Real Estate		6,311		7,046		-		6,674		84		6,763		234
Consumer and Other		29		32		-		30		1		31		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		688		687		36		687		9		700		28
Commercial		1,049		1,056		528		1,071		13		1,098		40
Commercial Real Estate		10,278		12,459		1,290		11,845		115		11,941		352
Construction Real Estate		1,836		1,864		480		1,855		22		1,869		66
Residential Real Estate		5,590		5,831		649		5,807		63		5,868		191
Consumer and Other		544		544		257		548		6		586		20
Total:
Agriculture and Agricultural Real Estate	$	946	$	944	$	36	$	945	$	13	$	959	$	35
Commercial		1,445		1,615		528		1,571		20		1,678		65
Commercial Real Estate		20,257		23,758		1,290		22,306		226		22,506		704
Construction Real Estate		2,138		2,883		480		2,465		24		2,537		83
Residential Real Estate		11,901		12,877		649		12,481		147		12,631		425
Consumer and Other		573		576		257		578		7		617		22

	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 September 30, 2013		Interest Income Recognized in the  Three Months  Ended September  30, 2013		Average Recorded Investment for the Nine Months  Ended September 30, 2013		Interest Income Recognized in the  Nine Months Ended September  30, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial		869		966		-		1,728		21		1,562		55
Commercial Real Estate		19,567		23,005		-		19,544		228		20,004		629
Construction Real Estate		1,165		2,408		-		2,302		23		2,452		91
Residential Real Estate		7,929		9,035		-		8,586		97		8,656		293
Consumer and Other		33		36		-		31		1		31		3
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		424		4		724		28
Commercial		1,540		1,627		1,031		1,695		16		1,739		53
Commercial Real Estate		16,025		20,032		2,697		18,660		148		19,226		594
Construction Real Estate		3,615		4,236		1,194		4,077		191		4,197		292
Residential Real Estate		8,745		9,194		1,809		8,141		91		8,347		264
Consumer and Other		585		581		265		332		5		339		14
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	424	$	4	$	724	$	28
Commercial		2,409		2,593		1,031		3,423		37		3,301		108
Commercial Real Estate		35,592		43,037		2,697		38,204		376		39,230		1,223
Construction Real Estate		4,780		6,644		1,194		6,379		214		6,649		383
Residential Real Estate		16,674		18,229		1,809		16,727		188		17,003		557
Consumer and Other		618		617		265		363		6		370		17

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 and nine month periods ended September 30, 2014 and September 30, 2013 are as follows (000s omitted from dollar amounts):

-15-

	Three months ended						Nine months ended
	September 30, 2014						September 30, 2014
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	314	$	314
Commercial		-		-		-		4		295		54
Commercial Real Estate		2		743		649		6		1,990		1,508
Construction Real Estate		3		43		22		3		43		22
Residential Real Estate		4		203		57		14		1,047		730
Consumer and Other		-		-		-		-		-		-
Total		9	$	989	$	728		28	$	3,689	$	2,628

	Three months ended						Nine months ended
	September 30, 2013						September 30, 2013
	Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance		Number of Contracts		Pre- Modification Recorded Principal Balance		Post- Modification Recorded Principal Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		-	$	-	$	-
Commercial		6		1,044		636		13		1,398		787
Commercial Real Estate		3		480		301		10		2,527		1,646
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		8		685		665		24		2,131		1,801
Consumer and Other		1		10		9		5		276		34
Total		18	$	2,219	$	1,611		52	$	6,332	$	4,268

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the three and nine month periods ended September 30, 2014 and September 30, 2013 that subsequently defaulted during the three month periods ended September 30, 2014 and September 30, 2013, respectively.

The Company has allocated $3,006,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at September 30, 2014. In addition, there are no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of September 30, 2014 and September 30, 2013.

6. INVESTMENT SECURITIES

The following is a summary of the Bank’s investment securities portfolio as of September 30, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	September 30, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of States and Political Subdivisions	$	31,244	$	1,251	$	(72	)	$	32,423
Corporate Debt Securities		500		-		-			500
	$	31,744	$	1,251	$	(72	)	$	32,923

-16-

	Available for Sale
	September 30, 2014
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Obligations of U.S. Government Agencies	$	370,077	$	646	$	(5,070	)	$	365,653
Mortgage Backed Securities issued by U.S. Government Agencies		78,464		340		(897	)		77,907
Obligations of States and Political Subdivisions		15,389		433		(64	)		15,758
Corporate Debt Securities		5,973		51		-			6,024
Equity Securities		2,044		79		-			2,123
	$	471,947	$	1,549	$	(6,031	)	$	467,465

	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 September 30, 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.

-17-

	Held to Maturity				Available for Sale
			Estimated				Estimated
	Amortized		Market		Amortized		Market
	Cost		Value		Cost		Value
Contractual maturity in
1 year or less	$	4,107	$	4,135	$	7,505	$	7,535
After 1 year through five years		13,416		13,766		90,049		89,218
After 5 years through 10 years		11,346		11,832		274,252		271,259
After 10 years		2,875		3,190		19,633		19,423
Total		31,744		32,923		391,439		387,435
Mortgage Backed Securities		-		-		78,464		77,907
Securities with no stated maturity		-		-		2,044		2,123
Total	$	31,744	$	32,923	$	471,947	$	467,465

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 September 30, 2014 and December 31, 2013.

September 30, 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	$	110,074	$	735	$	161,414	$	4,335	$	271,488	$	5,070
Mortgage Backed Securities issued by U.S. Government Agencies		16,662		68		42,403		829		59,065		897
Obligations of States and Political Subdivisions		3,633		28		4,333		108		7,966		136
	$	130,369	$	831	$	208,150	$	5,272	$	338,519	$	6,103

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
Equity Securities		-		-		445		95		445		95
	$	293,850	$	12,154	$	37,467	$	5,640	$	331,317	$	17,794

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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 September 30, 2014. As of September 30, 2014 and December 31, 2013, there were 119 and 175 securities in an unrealized loss position, respectively.

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 Company 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 Company uses various valuation techniques and assumptions when estimating fair value.

The Company 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 Company’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 Company’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, corporate debt 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 September 30, 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
September 30, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	52,941	$	52,941	$	-	$	-	$	52,941
Securities - Held to Maturity
Obligations of States and Political Subdivisions		31,244		-		32,423		-		32,423
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		365,653		-		365,653		-		365,653
MBS issued by U.S. Government Agencies		77,907		-		77,907		-		77,907
Obligations of States and Political Subdivisions		15,758		-		15,758		-		15,758
Corporate Debt Securities		6,024		-		6,024		-		6,024
Other Securities		2,123		2,123		-		-		2,123
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		382		-		-		382		382
Loans, net		572,640		-		-		581,770		581,770
Accrued Interest Receivable		4,133		-		-		4,133		4,133
Financial Liabilities:
Noninterest Bearing Deposits		209,731		209,731		-		-		209,731
Interest Bearings Deposits		879,753		-		881,906		-		881,906
Borrowed funds
FHLB Advances		-		-		-		-		-
Repurchase Agreements		15,000		-		15,974		-		15,974
Accrued Interest Payable		160		-		-		160		160

									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		96,526		-		96,526		-		96,526
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

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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 losses included in income		(2,599	)		(12	)
Total unrealized gains included in other comprehensive income		3,758			467
Net purchases, sales, calls and maturities		(6,910	)		-
Net transfers in/out of Level 3		-			-
Balance at September 30	$	-		$	5,861

The Company sold its portfolio of Level 3 available for sale securities during the quarter ended September 30, 2014.

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 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 Sept. 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired loans	$	37,260	$	-	$	-	$	37,260
Other Real Estate Owned	$	6,036	$	-	$	-	$	6,036

	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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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
	September 30,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	61,534	$	68,159
Unused portion of credit card lines of credit		3,427		3,255
Unused portion of home equity lines of credit		18,523		16,769
Standby letters of credit and financial guarantees written		3,674		3,667
All other off-balance sheet commitments		30,000		-

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.

Other off-balance sheet commitments as of September 30, 2014 consist of a commitment to purchase loan participations. This commitment is scheduled to be funded in 2014.

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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 branch offices in Wayne County, Michigan, and a loan and wealth management office in Lenawee 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, increasing net interest income, and improving non-interest income and expenses.

The net profit of $1,712,000 for the quarter ended September 30, 2014 was a decrease of $19,575,000 or 92.0% compared to the third quarter of 2013. The decrease was the result of a tax benefit of $18.8 million recorded in the third quarter of 2013 to reverse the valuation allowance on the Company’s deferred tax asset. The pre-tax income of $2,315,000 in the third quarter of 2014 represents a decrease of $177,000, or 7.1% compared to the pre-tax income in the third quarter of 2013. The pre-tax income decrease was mainly attributable to the loss on the sale of pooled trust preferred investment securities in the third quarter of 2014. The securities loss exceeded the improvement in the net interest margin and the significant improvement in the provision for loan losses. This quarter marked the thirteenth consecutive quarterly profit following significant losses caused by the severe economic downturn that impacted the regional and national economies beginning in 2006.

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 classified assets, which include internal watch list loans, other real estate owned, and sub investment grade securities, improved steadily during 2013 and the first half of 2014, and showed significant improvement in the third quarter of 2014. Classified assets went down $26.3 million, or 32.4% during the third quarter of 2014, and decreased $43.7 million or 44.4% compared to a year ago. Net charge offs increased from $0.6 million in the third quarter of 2013 to $1.2 million in the third quarter of 2014, but this was mainly due to charge offs totaling $1.7 million on a portfolio of classified assets that were sold during the quarter. These charge offs were previously identified and our allowance included a specific allocation for nearly the entire amount, so the sale did not significantly impact the provision. Also during the third quarter of 2014, we recovered $0.7 million that had been charged off in a previous year. As a result, we were able to maintain an adequate Allowance for Loan and Lease Losses (ALLL) while reducing the ALLL from $15.0 million to $13.1 million during the quarter. We recorded a credit to the provision expense of $700,000, a reduction of $900,000, or 450% compared to the third quarter of 2013. The loan portfolio held for investment decreased during the quarter due to the sale of classified loans, and the ALLL as a percent of loans decreased from 2.50% to 2.24%. We will continue to assess the adequacy of our ALLL each quarter, and adjust it as necessary by debiting or crediting the provision expense.

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Net Interest Income increased $313,000, or 3.7% compared to the third quarter of 2013 even though the net interest margin was unchanged at 3.17% because the average earning assets increased $40.6 million. The increase in the average earning assets was mainly funded by growth in deposits. The margin was unchanged as the cost of funds and the yield on earning assets both decreased due to the continued historically low level of interest rates. The provision for loan losses decreased $900,000 compared to the third quarter of 2013 as the improving quality of the loan portfolio enabled us to reduce our ALLL by recording a negative provision expense. Non-interest income for the quarter decreased $1,359,000, primarily due to a large loss on securities transactions and a decrease in the service charges and other fees on deposit accounts. Non-interest expenses increased only $31,000, as increases in salaries and employee benefits expenses and professional fees were nearly offset by a large reduction in the FDIC insurance assessment.

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 nonaccrual or renegotiated by applying historical loss rates, adjusted for current conditions, to those loans. In addition, all nonaccrual 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.

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

The pace of the economic recovery increased over the last year, with local unemployment and property values steadily improving. Management focused our efforts on improving asset quality, increasing net interest income, and improving non-interest income and expenses.

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With respect to asset quality, our nonperforming assets (“NPAs”) decreased 27.6% during the quarter, from $60.0 million to $43.5 million, and total classified assets decreased 32.4% from $81.0 million to $54.7 million. Loan delinquencies decreased from 2.1% to 1.9% during the quarter, which is significantly better than the 3.3% total reported one year ago. Over the last twelve months, NPAs decreased $28.6 million, or 39.7%, with nonperforming loans decreasing 35.4% from $57.9 million to $37.5 million, and Other Real Estate Owned (“OREO”) decreasing 44.3% from $10.8 million to $6.0 million. Total classified assets, which include internally classified watch list loans, other real estate, and pooled trust preferred collateralized debt obligation securities, decreased $43.7 million, or 44.4%. The reduction in classified assets was accomplished by the sales of $9.8 million in classified loans and $9.4 million in pooled trust preferred CDO securities in the third quarter of 2014, and $24.5 million in upgrades, payments, and charge offs of classified loans over the last four quarters. The Company’s Allowance for Loan and Lease Losses (“ALLL”) decreased $3.6 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 2.24% of loans, down from 2.74% at September 30, 2013. The ALLL is 35.06% of nonperforming loans (“NPLs”), compared to 28.84% at year end and 28.94% at September 30, 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 2.0% as new loan activity was not sufficient to cover payments received and the reduction from the sale of classified loans in the third quarter of 2014. Our new loan pipeline remains modest, and we expect loan originations and new loan participations in the fourth quarter of 2014 to result in growth in loans for the full year.

Since December 31, 2013, deposits increased $19.8 million, or 1.8% due to normal seasonal fluctuations in local deposit activity. Since year end we reduced our non-deposit funding by paying off $12.0 million of Federal Home Loan Bank borrowings. The decrease in non-deposit funding was exceeded by the increase of $19.8 million in deposits and the increase of $20.0 million in capital. As a result, our total assets increased $29.1 million, or 2.4%. The Company expects deposit funding to remain stable for the rest of 2014. The increase in total capital during the first nine months of 2014 was due to the profit of $5.2 million, issuance of common stock of $8.3 million, and an increase of $6.6 million in the accumulated other comprehensive income (AOCI). AOCI increased due to an increase in the value of our securities available for sale and due to the sale of the pooled trust preferred CDOs, which had a net unrealized loss of $2.5 million that was included in AOCI at December 31, 2013. The increase in capital caused the capital to assets ratio to increase from 9.05% at December 31, 2013 to 10.44% at September 30, 2014.

On October 29, 2014, the Bank conducted an auction of commercial properties that are held in Other Real Estate. Following the auction, the Bank offered to sell some of the properties that did not sell at the auction at prices below the carrying values. As a result, the September 30, 2014 financial statements include the effect of writing down the values of these properties by $500,000. This decreased the value of the Other Real Estate and increased the amount of losses on sales of Other Real Estate in the financial statements as of September 30, 2014 by $500,000.

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

Net Interest Income - A comparison of the income statements for the three months ended September 30, 2014 and 2013 shows an increase of $313,000, or 3.7%, in Net Interest Income. Interest income on loans decreased $350,000 or 4.6% as the average loans outstanding decreased $13.5 million and the average yield on loans decreased from 4.94% to 4.82%. The interest income on investments, fed funds sold, and interest bearing balances due from banks increased $383,000 as the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $54.1 million and the yield increased from 1.81% to 1.91%. The yield on investments increased because the Company invested more of its cash into investment securities. The interest expense on deposits decreased $266,000 or 25.8% even though the average deposits increased $18.1 million because the average cost of deposits decreased from 0.39% to 0.28%.

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Provision for Loan Losses - The Provision for Loan Losses decreased from $200,000 in the third quarter of 2013 to a credit of $700,000 in the third quarter of 2014. Net charge offs were $1,171,000 during the third quarter of 2014, compared to $629,000 in the third quarter of 2013, however, $1.5 million was specifically allocated in the ALLL for loans that were included in the classified assets sold. 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 third quarter of 2014 decreased 450.0% compared to the amount required in the third quarter of 2013. The ALLL is 2.24% of loans as of September 30, 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 $1,359,000, or 39.0% compared to the third quarter of 2013 mainly due to a loss on securities transactions in 2014. The large loss on securities transactions was the result of the sale of the pooled trust preferred CDO securities, which was done in order to reduce classified assets. Excluding securities activity, non-interest income decreased $197,000, or 5.9% compared to the third quarter of 2013. Wealth management income increased $116,000 or 10.8% due to an increase in the market value of assets managed. Service charges and other fees decreased $74,000, or 6.6% due to a decrease in the amount of checking account overdraft activity. Origination fees on mortgage loans sold decreased $53,000, or 39.8% as higher market interest rates decreased mortgage refinance activity.

Other Expenses – Total non-interest expenses increased $31,000, or 0.3% compared to the third quarter of 2013. Salaries and Employee Benefits increased $321,000, or 6.0%, due to an increase of $149,000 in the officers’ incentive plan accrual, and an increase of $155,000 in salaries and wages. The incentive plan accrual increased because the awards under the plan are based on certain earnings performance measures, which are currently higher than last year. Salaries increased due to a small increase in the number of employees and annual merit increases. Occupancy expense decreased $111,000 due to lower depreciation, repairs, and maintenance expenses. Also, rent expense is lower in 2014 due to the relocation of our mortgage operations from leased space to a property that we purchased and renovated in downtown Monroe. Professional fees increased $154,000, mainly due to expenses related to the sale of classified loans in the third quarter of 2014. FDIC insurance assessments decreased $420,000 primarily due to a decrease in the assessment rate following the termination of the Bank’s Consent Order. The lower assessment rate became effective in the second quarter of 2014, requiring an adjustment to the expense accrual in the third quarter. We expect the FDIC insurance expense to be approximately $400,000 per quarter beginning in the fourth quarter of 2014.

As a result of the above activity, the Profit Before Income Taxes in the third quarter of 2014 was $2,315,000, a decrease of $177,000 compared to the pre-tax profit of $2,492,000 in the third quarter of 2013. The Company recorded a federal income tax expense of $603,000 in the third quarter of 2014, reflecting an effective tax rate of 26.0%. In the third quarter of 2013, the Company eliminated the valuation allowance against its deferred tax asset by recording a federal income tax benefit of $18.8 million. If the Company did not have the valuation allowance reversal and the benefit of its NOL carry forward, the tax expense for the third quarter of 2013 would have been $634,000, for an effective tax rate of 25.4%. The Net profit for the third quarter of 2014 was $1,712,000, a decrease of 92.0% compared to the net profit of $21,287,000 in the third quarter of 2013.

-26-

Results of Operations – Nine Months Ended September 30, 2014 vs. Nine Months Ended September 30, 2013

Net Interest Income - A comparison of the income statements for the nine months ended September 30, 2014 and 2013 shows an increase of $1,227,000, or 5.0%, in Net Interest Income. Interest income on loans decreased $1.8 million or 7.6% as the average loans outstanding decreased $19.5 million and the average yield on loans decreased from 5.01% to 4.78%. The interest income on investments, fed funds sold, and interest bearing balances due from banks increased $1,058,000 as the average amount of investments, fed funds sold, and interest bearing balances due from banks increased $0.6 million and the yield increased from 1.68% to 1.96%. 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 through most of the first six months of 2013 in anticipation of paying off maturing debt near the end of 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 $938,000 or 27.9% even though the average deposits increased $13.8 million because the average cost of deposits decreased from 0.43% to 0.30%. The cost of borrowed funds decreased $982,000 as the average amount of borrowed funds decreased $53.0 million.

Provision for Loan Losses - The Provision for Loan Losses decreased from $2.1 million in the first nine months of 2013 to a credit of $500,000 in the first nine months of 2014. Net charge offs were $2.6 million during the first nine months of 2014 and 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 nine months of 2014 decreased 123.8% compared to the amount required in the first nine months of 2013. The ALLL is 2.24% of loans as of September 30, 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 $1,381,000, or 12.8% compared to the first nine months of 2013. Wealth management income increased $240,000 or 7.4% due to an increase in the market value of assets managed. Service charges and other fees decreased $274,000, or 8.5% due to a decrease in the amount of checking account overdraft activity. Securities gains decreased $1,050,000 or 343.1% primarily due to the sale of pooled trust preferred CDOs in 2014. Losses on other real estate owned decreased $375,000 or 28.0% as real estate values in southeast Michigan continued to improve. Origination fees on mortgage loans sold decreased $376,000, or 62.0% 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 $628,000, or 2.2% compared to the first nine months of 2013. Salaries and Employee Benefits increased $1,316,000, or 8.3%, 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 decreased $106,000 due to lower depreciation and maintenance expenses. Marketing expense increased $92,000 due to higher advertising and sales promotion expenses in an effort to grow our lending and wealth management business. FDIC insurance assessments decreased $543,000 due to a decrease in the assessment rate due to the termination of our Consent Order and a decrease in the assessment base that resulted from reducing our use of borrowed funds.

-27-

As a result of the above activity, the Profit Before Income Taxes in the first nine months of 2014 was $6,920,000, an increase of $1,818,000 compared to the pre-tax profit of $5,102,000 in the first nine months of 2013. The Company recorded a federal income tax expense of $1,754,000 in the first nine months of 2014, reflecting an effective tax rate of 25.3%. In the third quarter of 2013, the Company eliminated the valuation allowance against its deferred tax asset, and accordingly, recorded a federal income tax benefit of $18.8 million. If we did not have the valuation allowance reversal and the benefit of the NOL carry forward, we would have incurred a federal income tax expense for the nine months ended September 30, 2013 of $1,086,000, for an effective tax rate of 21.3%. The Net profit for the first nine months of 2014 was $5,166,000, a decrease of 78.4% compared to the net profit of $23,897,000 in the first nine months of 2013.

Cash Flows

Cash flows provided by operating activities decreased $2.5 million compared to the first nine months of 2013 as the decrease in net income was due to improvements in noncash items, primarily the $20.5 million increase in the deferred income tax. In the first nine months of 2013, investing activities used $0.9 million in cash as net investment securities increases and investment in bank premises exceeded reductions in loans and other real estate owned. In the first nine months of 2014, cash used to purchase investment securities exceeded cash provided by sales and maturities of investment securities by $60.5 million while decreases in loans and sales of other real estate owned and other assets provided $12.2 million of cash, and total cash used for investing activities was $50.0 million. This use of cash for investing activities contributed to the improvement in interest income for the company. The amount of cash used for financing activities in the first nine months of 2013 was $88.0 million as the repayment of maturing Federal Home Loan Bank borrowings was slightly offset by an increase in deposits and issuance of common stock. The cash provided by financing was $15.9 million in the first nine months of 2014, as the repayment of $12.0 million of Federal Home Loan Bank debt was exceeded by the increase of $19.8 million in deposits and the issuance of $8.1 million in common stock. In the first nine months of 2014, the use of beginning cash and cash provided by operations for investment in securities and to reduce borrowings contributed to the improvement in net interest income by decreasing the amount of cash and cash equivalents by $24.9 million. In the first nine months of 2013, the beginning cash and cash provided by operations were used to reduce financing. This resulted in a reduction in interest expense by decreasing the amount of interest bearing borrowed funds.

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 September 30, 2014, the Bank was not utilizing any of its authorized limit of $255 million with the Federal Home Loan Bank of Indianapolis, or its $20 million overdraft line of credit with the Federal Home Loan Bank of Indianapolis, or of its $25 million of federal funds line with a correspondent bank. The Company periodically draws on its overdraft and fed funds lines 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 nine months of 2014 the Company was in compliance with its Funds Management Policy regarding liquidity and capital.

-28-

Total stockholders’ equity of the Company was $130.7 million at September 30, 2014 and $110.6 million at December 31, 2013. Common stock increased $8.3 million due to the issuance of stock in a private placement and a rights offering, retained earnings increased $5.2 million due to the year to date profit, and the Accumulated Other Comprehensive Loss (AOCL) decreased $6.6 million due to a reduction in the unrealized losses on securities that are classified as Available For Sale. Total equity increased $20.0 million and total assets increased $29.1 million, so the ratio of equity to assets increased from 9.05% at December 31, 2013 to 10.44% at September 30, 2014.

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 September 30, 2014:
Total Capital to Risk-Weighted Assets
Consolidated	$	125,863		16.92	%	$	74,389		10	%
Monroe Bank & Trust		124,281		16.71	%		74,372		10	%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		116,478		15.66	%		44,633		6	%
Monroe Bank & Trust		114,898		15.45	%		44,623		6	%
Tier 1 Capital to Average Assets
Consolidated		116,478		9.50	%		61,276		5	%
Monroe Bank & Trust		114,898		9.38	%		61,264		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 was under the Consent Order, it was classified as “adequately capitalized” even though its ratios met the “well capitalized” guidelines. The Consent Order required the Bank to raise its Tier 1 Leverage ratio to 9% and its Total Risk Based Capital Ratio to 12%. As of June 30, 2014, the Bank was in compliance with the capital ratio requirements of the Consent Order. The Consent Order was terminated by the regulators effective June 30, 2014 and the Bank is now considered “well capitalized”.

-29-

Although the Consent Order has been terminated, the Bank continues to be subject to certain informal regulatory requirements and restrictions, including, among other things, requirements to maintain a Tier 1 leverage ratio of at least 9%, continue to reduce classified and delinquent assets, continually monitor its progress, and submit quarterly progress reports to the regulators. The Bank must also request prior approval from its state and federal regulators before paying dividends.

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 current year. 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.

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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 nine 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.

-31-

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.

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 September 30, 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 September 30, 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 September 30, 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

None.

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.

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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

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

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)
November 14, 2014	By	/s/ H. Douglas Chaffin
Date	H. Douglas Chaffin
	President &
	Chief Executive Officer
November 14, 2014	By	/s/ John L. Skibski
Date	John L. Skibski
	Executive Vice President and
	Chief Financial Officer

-33-

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
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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:  November 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:  November 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 September 30, 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

November 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 September 30, 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

November 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) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Held to Maturity, Amortized Cost	$ 31,744	$ 34,846
Held to Maturity, Gross Unrealized Gains	1,251	557
Held to Maturity, Gross Unrealized Losses	(72)	(364)
Held to Maturity, Estimated Market Value	32,923	35,039
Available for Sale, Amortized Cost	471,947	409,808
Available for Sale, Gross Unrealized Gains	1,549	2,578
Available for Sale, Gross Unrealized Losses	(6,031)	(17,430)
Available For Sale, Estimated Market Value	467,465	394,956
Obligations of U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	370,077	277,383
Available for Sale, Gross Unrealized Gains	646	1,147
Available for Sale, Gross Unrealized Losses	(5,070)	(11,817)
Available For Sale, Estimated Market Value	365,653	266,713
Mortgage Backed Securities issued by U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	78,464	97,168
Available for Sale, Gross Unrealized Gains	340	995
Available for Sale, Gross Unrealized Losses	(897)	(1,637)
Available For Sale, Estimated Market Value	77,907	96,526
Obligations of States and Political Subdivisions [Member]
Investment Holdings [Line Items]
Held to Maturity, Amortized Cost	31,244	34,346
Held to Maturity, Gross Unrealized Gains	1,251	557
Held to Maturity, Gross Unrealized Losses	(72)	(364)
Held to Maturity, Estimated Market Value	32,423	34,539
Available for Sale, Amortized Cost	15,389	15,197
Available for Sale, Gross Unrealized Gains	433	289
Available for Sale, Gross Unrealized Losses	(64)	(123)
Available For Sale, Estimated Market Value	15,758	15,363
Trust Preferred CDO Securities [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost		9,509
Available for Sale, Gross Unrealized Gains		0
Available for Sale, Gross Unrealized Losses		(3,758)
Available For Sale, Estimated Market Value		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	5,973	7,967
Available for Sale, Gross Unrealized Gains	51	104
Available for Sale, Gross Unrealized Losses	0	0
Available For Sale, Estimated Market Value	6,024	8,071
Equity Securities [Member]
Investment Holdings [Line Items]
Available for Sale, Amortized Cost	2,044	2,584
Available for Sale, Gross Unrealized Gains	79	43
Available for Sale, Gross Unrealized Losses	0	(95)
Available For Sale, Estimated Market Value	$ 2,123	$ 2,532

XML

ALLOWANCE FOR LOAN LOSSES (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	$ 585,770	$ 597,590	$ 610,928
Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	548,318	541,384
Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	37,452	56,206
Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	157,388	156,696
Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	3,358	4,248
Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	1,568	1,257
Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	17,302	16,682
Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	293,902	280,641
Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	63,590	66,127
Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	48,662	71,939
Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	18,113	14,997	15,322
Agriculture and Agricultural Real Estate [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	17,087	14,428
Agriculture and Agricultural Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	1,026	569
Agriculture and Agricultural Real Estate [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	126	144
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	280	31
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	190	788
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	15,641	12,304
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	808	838
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	1,068	892
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Agriculture and Agricultural Real Estate [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	62,318	59,440	65,253
Commercial [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	60,808	56,941
Commercial [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	1,510	2,499
Commercial [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	1,554	2,151
Commercial [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	2,992	4,054
Commercial [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	297	153
Commercial [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	6,595	4,000
Commercial [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	41,982	34,130
Commercial [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	6,881	11,594
Commercial [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	2,017	3,358
Commercial [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	253,525	265,912	268,768
Commercial Real Estate [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	234,708	235,531
Commercial Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	18,817	30,381
Commercial Real Estate [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	857	931
Commercial Real Estate [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	9,643	10,755
Commercial Real Estate [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	177,887	172,592
Commercial Real Estate [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	37,280	41,914
Commercial Real Estate [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	27,858	39,720
Commercial Real Estate [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Commercial Real Estate [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	12,426	14,667	15,064
Construction Real Estate [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	10,214	9,732
Construction Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	2,212	4,935
Construction Real Estate [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	4,779	3,643
Construction Real Estate [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	99
Construction Real Estate [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	4,478	4,825
Construction Real Estate [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	2,449	2,525
Construction Real Estate [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	720	3,575
Construction Real Estate [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Construction Real Estate [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	224,130	228,024	231,544
Residential Real Estate [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	211,067	211,149
Residential Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	13,063	16,875
Residential Real Estate [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	140,212	141,102
Residential Real Estate [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	134	142
Residential Real Estate [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	874	1,040
Residential Real Estate [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	50,559	53,047
Residential Real Estate [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	15,982	9,005
Residential Real Estate [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	16,369	23,688
Residential Real Estate [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Residential Real Estate [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	15,258	14,550	14,977
Consumer and Other [Member] | Performing [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	14,434	13,603
Consumer and Other [Member] | Nonperforming [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	824	947
Consumer and Other [Member] | Not Rated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	10,717	9,656
Consumer and Other [Member] | Risk Grade Rating 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	366	194
Consumer and Other [Member] | Risk Grade Rating 2 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 3 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 4 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	3,355	3,743
Consumer and Other [Member] | Risk Grade Rating 5 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	190	251
Consumer and Other [Member] | Risk Grade Rating 6 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	630	706
Consumer and Other [Member] | Risk Grade Rating 7 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 8 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	0	0
Consumer and Other [Member] | Risk Grade Rating 9 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans, gross	$ 0	$ 0

XML

EARNINGS PER SHARE (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic
Net income (in dollars)	$ 1,712	$ 21,287	$ 5,166	$ 23,897
Average common shares outstanding	22,691,593	17,912,946	21,911,996	17,779,924
Earnings per common share - basic (in dollars per share)	$ 0.08	$ 1.19	$ 0.24	$ 1.34
Diluted
Net income (in dollars)	$ 1,712	$ 21,287	$ 5,166	$ 23,897
Average common shares outstanding	22,691,593	17,912,946	21,911,996	17,779,924
Equity compensation	194,090	164,533	192,573	155,416
Average common shares outstanding - diluted	22,885,683	18,077,479	22,104,569	17,935,340
Earnings per common share - diluted (in dollars per share)	$ 0.07	$ 1.18	$ 0.23	$ 1.33

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012
Financial Assets:
Cash and Due from Banks Carrying Value	$ 52,941	$ 77,798	$ 35,434	$ 112,507
Securities - Held to Maturity Carrying Value	31,744	34,846
Securities - Available for Sale Carrying Value	467,465	394,956
Federal Home Loan Bank Stock Carrying Value	10,605	10,605
Loans Held for Sale Carrying value	382	668
Loans, net Carrying Value	572,640	581,381
Accrued Interest Receivable Carrying Value	4,133	3,502
Cash and due from banks Estimated Fair Value	52,941	77,798
Securities - Held to Maturity Estimated Fair Value	32,923	35,039
Securities - Available for Sale Estimated Fair Value	467,465	394,956
Federal Home Loan Bank Stock Estimated Fair Value	10,605	10,605
Loans Held for Sale Estimated Fair Value	382	668
Loans, net Estimated Fair Value	581,770	591,471
Accrued Interest Receivable Estimated Fair Value	4,133	3,502
Financial Liabilities:
Noninterest Bearing Deposits Carrying Value	209,731	215,844
Interest Bearings Deposits Carrying Value	879,753	853,874
FHLB Advances Carrying Value	0	12,000
Repurchase Agreements Carrying Value	15,000	15,000
Accrued Interest Payable Carrying Value	160	179
Noninterest Bearing Deposits Estimated Fair Value	209,731	215,844
Interest Bearings Deposits Estimated Fair Value	881,906	857,149
FHLB Advances Estimated Fair Value	0	12,000
Repurchase Agreements Estimated Fair Value	15,974	16,352
Accrued Interest Payable Estimated Fair Value	160	179
Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	365,653	266,713
Securities - Available for Sale Estimated Fair Value	365,653	266,713
Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Cash and Due from Banks Carrying Value	52,941	77,798
Federal Home Loan Bank Stock Carrying Value	0	0
Loans Held for Sale Carrying value	0	0
Loans, net Carrying Value	0	0
Accrued Interest Receivable Carrying Value	0	0
Financial Liabilities:
Noninterest Bearing Deposits Carrying Value	209,731	215,844
Interest Bearings Deposits Carrying Value	0	0
FHLB Advances Carrying Value	0	0
Repurchase Agreements Carrying Value	0	0
Accrued Interest Payable Carrying 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 Carrying Value	0	0
Federal Home Loan Bank Stock Carrying Value	10,605	10,605
Loans Held for Sale Carrying value	0	0
Loans, net Carrying Value	0	0
Accrued Interest Receivable Carrying Value	0	0
Financial Liabilities:
Noninterest Bearing Deposits Carrying Value	0	0
Interest Bearings Deposits Carrying Value	881,906	857,149
FHLB Advances Carrying Value	0	12,000
Repurchase Agreements Carrying Value	15,974	16,352
Accrued Interest Payable Carrying Value	0	0
Fair Value, Inputs, Level 2 [Member] | Obligations Of U.S. Government Agencies [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	365,653	266,713
Securities - Available for Sale Estimated Fair Value	365,653	266,713
Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Cash and Due from Banks Carrying Value	0	0
Federal Home Loan Bank Stock Carrying Value	0	0
Loans Held for Sale Carrying value	382	668
Loans, net Carrying Value	581,770	591,471
Accrued Interest Receivable Carrying Value	4,133	3,502
Financial Liabilities:
Noninterest Bearing Deposits Carrying Value	0	0
Interest Bearings Deposits Carrying Value	0	0
FHLB Advances Carrying Value	0	0
Repurchase Agreements Carrying Value	0	0
Accrued Interest Payable Carrying Value	160	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	31,244	34,346
Securities - Available for Sale Carrying Value	15,758	15,363
Securities - Held to Maturity Estimated Fair Value	32,423	34,539
Securities - Available for Sale Estimated Fair Value	15,758	15,363
Obligations Of States and Political Subdivisions [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	0	0
Securities - Available for Sale Carrying 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 - Held to Maturity Carrying Value	32,423	34,539
Securities - Available for Sale Carrying Value	15,758	15,363
Securities - Available for Sale Estimated Fair Value	15,758	15,363
Obligations Of States and Political Subdivisions [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	0	0
Securities - Available for Sale Carrying 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	6,024	8,071
Securities - Held to Maturity Estimated Fair Value	500	500
Securities - Available for Sale Estimated Fair Value	6,024	8,071
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	0	0
Securities - Available for Sale Carrying 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 - Held to Maturity Carrying Value	500	500
Securities - Available for Sale Carrying Value	6,024	8,071
Securities - Available for Sale Estimated Fair Value	6,024	8,071
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Held to Maturity Carrying Value	0	0
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]
Financial Assets:
Securities - Available for Sale Carrying Value	77,907	96,526
Securities - Available for Sale Estimated Fair Value	77,907	96,526
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	77,907	96,526
Securities - Available for Sale Estimated Fair Value	77,907	96,526
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		5,751
Securities - Available for Sale Estimated Fair Value		5,751
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value		0
Securities - Available for Sale Estimated Fair Value		0
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value		0
Securities - Available for Sale Estimated Fair Value		0
Trust Preferred CDO Securities [Member] | Fair Value, Inputs, Level 3 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value		5,751
Securities - Available for Sale Estimated Fair Value		5,751
Other Securities [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	2,123	2,532
Securities - Available for Sale Estimated Fair Value	2,123	2,532
Other Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Financial Assets:
Securities - Available for Sale Carrying Value	2,123	2,087
Securities - Available for Sale Estimated Fair Value	2,123	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

XML

ALLOWANCE FOR LOAN LOSSES (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	9	18	28	52
Pre-Modification Recorded Principal Balance	$ 989	$ 2,219	$ 3,689	$ 6,332
Post-Modification Recorded Principal Balance	728	1,611	2,628	4,268
Agriculture and Agricultural Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	0	0	1	0
Pre-Modification Recorded Principal Balance	0	0	314	0
Post-Modification Recorded Principal Balance	0	0	314	0
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	0	6	4	13
Pre-Modification Recorded Principal Balance	0	1,044	295	1,398
Post-Modification Recorded Principal Balance	0	636	54	787
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	2	3	6	10
Pre-Modification Recorded Principal Balance	743	480	1,990	2,527
Post-Modification Recorded Principal Balance	649	301	1,508	1,646
Construction Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	3	0	3	0
Pre-Modification Recorded Principal Balance	43	0	43	0
Post-Modification Recorded Principal Balance	22	0	22	0
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	4	8	14	24
Pre-Modification Recorded Principal Balance	203	685	1,047	2,131
Post-Modification Recorded Principal Balance	57	665	730	1,801
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Contracts	0	1	0	5
Pre-Modification Recorded Principal Balance	0	10	0	276
Post-Modification Recorded Principal Balance	$ 0	$ 9	$ 0	$ 34

XML

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 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 Sept. 30,				For the nine months ended Sept. 30,
	2014		2013		2014		2013
Basic
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Earnings per common share - basic	$	0.08	$	1.19	$	0.24	$	1.34
Diluted
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Equity compensation		194,090		164,533		192,573		155,416
Average common shares outstanding - diluted		22,885,683		18,077,479		22,104,569		17,935,340
Earnings per common share - diluted	$	0.07	$	1.18	$	0.23	$	1.33

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 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 losses included in income	(2,599)	(12)
Total unrealized gains included in other comprehensive income	3,758	467
Net purchases, sales, calls and maturities	(6,910)	0
Net transfers in/out of Level 3	0	0
Balance at September 30	$ 0	$ 5,861

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LOANS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	$ 585,770		$ 597,590	$ 610,928
Less: Allowance for loan losses	13,130	15,001	16,209	16,766	17,195	17,299
Loans - Net	572,640		581,381
Residential real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	224,130		228,024
Commercial and Construction real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	265,951		280,579
Agriculture and agricultural real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	18,113		14,997
Commercial and industrial loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	62,318		59,440
Loans to individuals for household, family,and other personal expenditures [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans, gross	$ 15,258		$ 14,550

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STOCK BASED COMPENSATION (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock or Unit Expense	$ 72,000	$ 71,000	$ 218,000	$ 216,000
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%
Fair Value Common Stock	$ 4.78		$ 4.78
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Issued	73,839		73,839
Restricted Stock [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, Weighted Average Grant Date Fair Value			$ 4.90
Weighted Average Number of Shares, Restricted Stock			1,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	8,000		8,000
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1	$ 353,000		$ 353,000
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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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Impaired Loans Fair Value Disclosure Non Recurring	$ 37,260	$ 60,471
Other Real Estate Owned Fair Value Disclosure Non Recurring	6,036	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	37,260	60,471
Other Real Estate Owned Fair Value Disclosure Non Recurring	$ 6,036	$ 9,628

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LOANS (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	$ 13,351	$ 23,710
Loans 90 days past due and accruing	7	46
Total nonperforming loans	585,770	597,590	610,928
Other real estate owned	6,036	9,628
Other assets	29,783	34,094
Total nonperforming assets	1,251,812	1,222,682
Non Performing Assets [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Nonaccrual loans	13,351	23,710
Loans 90 days past due and accruing	7	46
Restructured loans	24,094	32,450
Total nonperforming loans	37,452	56,206
Other real estate owned	6,036	9,628
Other assets	7	10
Nonperforming investment securities	0	3,259
Total nonperforming assets	$ 43,495	$ 69,103
Nonperforming assets to total assets	3.47%	5.65%
Allowance for loan losses to nonperforming loans	35.06%	28.84%

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LOANS (Details Textual) (USD $)	Sep. 30, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Related Parties	$ 250,000

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BASIS OF PRESENTATION AND ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 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 loan and wealth management office in Lenawee 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 Company 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 Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company 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 Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

RECENT DEVELOPMENTS

On October 29, 2014, the Bank conducted an auction of Other Real Estate Owned. Following the auction, the Bank offered to sell some of the properties that did not sell at the auction at prices below the carrying values. As a result, the September 30, 2014 financial statements include the effect of writing down the values of these properties by $500,000.

ACCOUNTING PRONOUNCEMENTS

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” ASU 2014-04 clarifies when an in substance repossession or foreclosure occurs. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014. The adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a comprehensive revenue recognition standard for virtually all industries under US GAAP. The standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. This ASU is effective for annual and interim periods beginning after December 15, 2016. The Company may choose to apply the new standard either retrospectively or through a cumulative effect adjustment. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

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ALLOWANCE FOR LOAN LOSSES (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Allowance for loan losses:
Beginning Balance	$ 15,001	$ 17,195	$ 16,209	$ 17,299
Charge-offs	(3,353)	(1,324)	(5,689)	(4,584)
Recoveries	2,182	695	3,110	1,951
Provision	(700)	200	(500)	2,100
Ending balance	13,130	16,766	13,130	16,766
Ending balance individually evaluated for impairment	3,240	7,220	3,240	7,220
Ending balance collectively evaluated for impairment	9,890	9,546	9,890	9,546
Ending balance	13,130	16,766	13,130	16,766
Loans:
Ending balance individually evaluated for impairment	37,260	61,557	37,260	61,557
Ending balance collectively evaluated for impairment	548,510	549,371	548,510	549,371
Ending balance	585,770	610,928	585,770	610,928	597,590
Agriculture and Agricultural Real Estate [Member]
Allowance for loan losses:
Beginning Balance	214	109	171	76
Charge-offs	(3)	0	(3)	0
Recoveries	0	0	5	0
Provision	14	28	52	61
Ending balance	225	137	225	137
Ending balance individually evaluated for impairment	36	1	36	1
Ending balance collectively evaluated for impairment	189	136	189	136
Ending balance	225	137	225	137
Loans:
Ending balance individually evaluated for impairment	946	424	946	424
Ending balance collectively evaluated for impairment	17,167	14,898	17,167	14,898
Ending balance	18,113	15,322	18,113	15,322	14,997
Commercial [Member]
Allowance for loan losses:
Beginning Balance	1,288	2,442	1,989	2,224
Charge-offs	(62)	(162)	(688)	(564)
Recoveries	115	24	204	287
Provision	(22)	(409)	(186)	(52)
Ending balance	1,319	1,895	1,319	1,895
Ending balance individually evaluated for impairment	528	1,133	528	1,133
Ending balance collectively evaluated for impairment	791	762	791	762
Ending balance	1,319	1,895	1,319	1,895
Loans:
Ending balance individually evaluated for impairment	1,445	3,175	1,445	3,175
Ending balance collectively evaluated for impairment	60,873	62,078	60,873	62,078
Ending balance	62,318	65,253	62,318	65,253	59,440
Commercial Real Estate [Member]
Allowance for loan losses:
Beginning Balance	7,535	7,556	7,030	7,551
Charge-offs	(2,267)	(728)	(3,478)	(2,596)
Recoveries	939	427	1,215	717
Provision	390	453	1,830	2,036
Ending balance	6,597	7,708	6,597	7,708
Ending balance individually evaluated for impairment	1,290	2,893	1,290	2,893
Ending balance collectively evaluated for impairment	5,307	4,815	5,307	4,815
Ending balance	6,597	7,708	6,597	7,708
Loans:
Ending balance individually evaluated for impairment	20,257	35,769	20,257	35,769
Ending balance collectively evaluated for impairment	233,268	232,999	233,268	232,999
Ending balance	253,525	268,768	253,525	268,768	265,912
Construction Real Estate [Member]
Allowance for loan losses:
Beginning Balance	1,147	1,889	1,397	2,401
Charge-offs	(44)	(30)	(254)	(67)
Recoveries	794	49	1,047	337
Provision	(1,290)	(278)	(1,583)	(1,041)
Ending balance	607	1,630	607	1,630
Ending balance individually evaluated for impairment	480	1,333	480	1,333
Ending balance collectively evaluated for impairment	127	297	127	297
Ending balance	607	1,630	607	1,630
Loans:
Ending balance individually evaluated for impairment	2,138	5,704	2,138	5,704
Ending balance collectively evaluated for impairment	10,288	9,360	10,288	9,360
Ending balance	12,426	15,064	12,426	15,064	14,667
Residential Real Estate [Member]
Allowance for loan losses:
Beginning Balance	4,280	4,787	4,606	4,715
Charge-offs	(976)	(351)	(1,187)	(1,167)
Recoveries	271	162	509	481
Provision	(259)	24	(612)	593
Ending balance	3,316	4,622	3,316	4,622
Ending balance individually evaluated for impairment	649	1,750	649	1,750
Ending balance collectively evaluated for impairment	2,667	2,872	2,667	2,872
Ending balance	3,316	4,622	3,316	4,622
Loans:
Ending balance individually evaluated for impairment	11,901	16,122	11,901	16,122
Ending balance collectively evaluated for impairment	212,229	215,422	212,229	215,422
Ending balance	224,130	231,544	224,130	231,544	228,024
Consumer and Other [Member]
Allowance for loan losses:
Beginning Balance	537	412	1,016	332
Charge-offs	(1)	(53)	(79)	(190)
Recoveries	63	33	130	129
Provision	467	382	(1)	503
Ending balance	1,066	774	1,066	774
Ending balance individually evaluated for impairment	257	110	257	110
Ending balance collectively evaluated for impairment	809	664	809	664
Ending balance	1,066	774	1,066	774
Loans:
Ending balance individually evaluated for impairment	573	363	573	363
Ending balance collectively evaluated for impairment	14,685	14,614	14,685	14,614
Ending balance	$ 15,258	$ 14,977	$ 15,258	$ 14,977	$ 14,550

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INVESTMENT SECURITIES (Details 1) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Available for Sale Amortized Cost 1 year or less	$ 7,505
Available for Sale Amortized Cost After 1 year through 5 years	90,049
Available for Sale Amortized Cost After 5 years through 10 years	274,252
Available for Sale Amortized Cost After 10 years	19,633
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	391,439
Available For Sale Securities Debt Maturities Mortgage Backed Securities Amortized Cost	78,464
Available for Sale Securities with no stated maturity Amortized Cost	2,044
Available-for-sale Securities, Debt Maturities, Remainder of Fiscal Year, Amortized Cost Basis	471,947
Available-for-sale Securities, Debt Maturities, Next Rolling 1 year or less, Fair Value	7,535
Available-for-sale Securities, Debt Maturities, Rolling Year One Through Five, Fair Value	89,218
Available-for-sale Securities, Debt Maturities, Rolling Year Five Through Ten, Fair Value	271,259
Available-for-sale Securities, Debt Maturities, Rolling after Year Ten, Fair Value	19,423
Available For Sale Securities Debt Maturities Total	387,435
Available For Sale Securities Debt Maturities Mortgage Backed Securities Fair Value	77,907
Available-for-sale Securities, Debt Maturities, Securities with no stated maturity, Fair Value	2,123
Available-for-sale Securities, Debt Maturities, Remainder of Fiscal Year, Fair Value	467,465
Held To Maturity Securities Debt Maturities Next Rolling Twelve Months Amortized Cost	4,107
Held To Maturity Securities Debt Maturities Next Rolling Year One Through Five Amortized Cost	13,416
Held To Maturity Securities Debt Maturities Next Rolling Year Five Through Ten Amortized Cost	11,346
Held To Maturity Securities Debt Maturities Next Rolling Year After Ten Years Amortized Cost	2,875
Held To Maturity Debt Maturities Amortized Cost Total	31,744
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	31,744	34,846
Held-to-maturity Securities, Debt Maturities, Next Rolling 1 year or less, Fair Value	4,135
Held-to-maturity Securities, Debt Maturities, Rolling Year One Through Five, Fair Value	13,766
Held-to-maturity Securities, Debt Maturities, Rolling Year Five Through Ten, Fair Value	11,832
Held-to-maturity Securities, Debt Maturities, Rolling after Ten Years, Fair Value	3,190
Held To Maturity Debt Maturities Total	32,923
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	$ 32,923	$ 35,039

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Cash and due from banks
Non-interest bearing	$ 13,891	$ 15,448
Interest bearing	39,050	62,350
Total cash and cash equivalents	52,941	77,798
Securities - Held to Maturity	31,744	34,846
Securities - Available for Sale	467,465	394,956
Federal Home Loan Bank stock - at cost	10,605	10,605
Loans held for sale	382	668
Loans	585,770	597,590
Allowance for Loan Losses	(13,130)	(16,209)
Loans - Net	572,640	581,381
Accrued interest receivable and other assets	29,783	34,094
Other Real Estate Owned	6,036	9,628
Bank Owned Life Insurance	51,471	50,493
Premises and Equipment - Net	28,745	28,213
Total assets	1,251,812	1,222,682
Deposits:
Non-interest bearing	209,731	215,844
Interest-bearing	879,753	853,874
Total deposits	1,089,484	1,069,718
Federal Home Loan Bank advances	0	12,000
Repurchase agreements	15,000	15,000
Interest payable and other liabilities	16,676	15,356
Total liabilities	1,121,160	1,112,074
STOCKHOLDERS' EQUITY
Common stock (no par value; 50,000,000 shares authorized, 22,694,906 and 20,605,493 shares issued and outstanding)	22,946	14,671
Retained earnings	111,983	106,817
Unearned compensation	(8)	(7)
Accumulated other comprehensive loss	(4,269)	(10,873)
Total stockholders' equity	130,652	110,608
Total liabilities and stockholders' equity	$ 1,251,812	$ 1,222,682

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Commitments to extend credit:
Standby letters of credit and financial guarantees written	$ 3,674	$ 3,667
All other off-balance sheet commitments	30,000	0
Commercial Line Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	61,534	68,159
Credit Card Line Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	3,427	3,255
Home Equity Lines Of Credit [Member]
Commitments to extend credit:
Unused portion of home equity lines of credit	$ 18,523	$ 16,769

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [Parenthetical]	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
SOSARs exercised, (in shares)	7,287	936
Restricted stock units (In shares)	6,000
Other stock issued (In Shares)	2,076,126	520,397

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ALLOWANCE FOR LOAN LOSSES (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	$ 13,351	$ 23,710
Agriculture and Agricultural Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	80	172
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	298	1,035
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	6,234	13,289
Construction Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	424	2,009
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	6,064	6,865
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Non accrual loans	$ 251	$ 340

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2014 and December 31, 2013, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
September 30, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	52,941	$	52,941	$	-	$	-	$	52,941
Securities - Held to Maturity
Obligations of States and Political Subdivisions		31,244		-		32,423		-		32,423
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		365,653		-		365,653		-		365,653
MBS issued by U.S. Government Agencies		77,907		-		77,907		-		77,907
Obligations of States and Political Subdivisions		15,758		-		15,758		-		15,758
Corporate Debt Securities		6,024		-		6,024		-		6,024
Other Securities		2,123		2,123		-		-		2,123
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		382		-		-		382		382
Loans, net		572,640		-		-		581,770		581,770
Accrued Interest Receivable		4,133		-		-		4,133		4,133
Financial Liabilities:
Noninterest Bearing Deposits		209,731		209,731		-		-		209,731
Interest Bearings Deposits		879,753		-		881,906		-		881,906
Borrowed funds
FHLB Advances		-		-		-		-		-
Repurchase Agreements		15,000		-		15,974		-		15,974
Accrued Interest Payable		160		-		-		160		160

									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		96,526		-		96,526		-		96,526
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 losses included in income		(2,599)		(12)
Total unrealized gains included in other comprehensive income		3,758		467
Net purchases, sales, calls and maturities		(6,910)		-
Net transfers in/out of Level 3		-		-
Balance at September 30	$	-	$	5,861

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):

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Balance at		for Identical Assets		Observable		Unobservable
	Sept. 30, 2014		(Level 1)		Inputs (Level 2)		Inputs (Level 3)
Impaired loans	$	37,260	$	-	$	-	$	37,260
Other Real Estate Owned	$	6,036	$	-	$	-	$	6,036

			Quoted Prices in
	Balance at		Active Markets for		Significant Other		Significant
	December 31,		Identical Assets		Observable		Unobservable
	2013		(Level 1)		Inputs (Level 2)		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 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Agriculture and Agricultural Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	$ 258		$ 258		$ 0
With no related allowance recorded, Unpaid Principal Balance	257		257		0
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	258	0	259	0
With no related allowance recorded, Interest Income Recognized	4	0	7	0
With an allowance recorded, Recorded Investment	688		688		398
With an allowance recorded, Unpaid Principal Balance	687		687		397
With an allowance recorded, Related Allowance	36		36		1
With an allowance recorded, Average Recorded Investment	687	424	700	724
With an allowance recorded, Interest Income Recognized	9	4	28	28
Total, Recorded Investment	946		946		398
Total, Unpaid Principal Balance	944		944		397
Total, Related Allowance	36		36		1
Total, Average Recorded Investment	945	424	959	724
Total, Interest Income Recognized	13	4	35	28
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	396		396		869
With no related allowance recorded, Unpaid Principal Balance	559		559		966
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	500	1,728	580	1,562
With no related allowance recorded, Interest Income Recognized	7	21	25	55
With an allowance recorded, Recorded Investment	1,049		1,049		1,540
With an allowance recorded, Unpaid Principal Balance	1,056		1,056		1,627
With an allowance recorded, Related Allowance	528		528		1,031
With an allowance recorded, Average Recorded Investment	1,071	1,695	1,098	1,739
With an allowance recorded, Interest Income Recognized	13	16	40	53
Total, Recorded Investment	1,445		1,445		2,409
Total, Unpaid Principal Balance	1,615		1,615		2,593
Total, Related Allowance	528		528		1,031
Total, Average Recorded Investment	1,571	3,423	1,678	3,301
Total, Interest Income Recognized	20	37	65	108
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	9,979		9,979		19,567
With no related allowance recorded, Unpaid Principal Balance	11,299		11,299		23,005
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	10,461	19,544	10,565	20,004
With no related allowance recorded, Interest Income Recognized	111	228	352	629
With an allowance recorded, Recorded Investment	10,278		10,278		16,025
With an allowance recorded, Unpaid Principal Balance	12,459		12,459		20,032
With an allowance recorded, Related Allowance	1,290		1,290		2,697
With an allowance recorded, Average Recorded Investment	11,845	18,660	11,941	19,226
With an allowance recorded, Interest Income Recognized	115	148	352	594
Total, Recorded Investment	20,257		20,257		35,592
Total, Unpaid Principal Balance	23,758		23,758		43,037
Total, Related Allowance	1,290		1,290		2,697
Total, Average Recorded Investment	22,306	38,204	22,506	39,230
Total, Interest Income Recognized	226	376	704	1,223
Construction Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	302		302		1,165
With no related allowance recorded, Unpaid Principal Balance	1,019		1,019		2,408
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	610	2,302	668	2,452
With no related allowance recorded, Interest Income Recognized	2	23	17	91
With an allowance recorded, Recorded Investment	1,836		1,836		3,615
With an allowance recorded, Unpaid Principal Balance	1,864		1,864		4,236
With an allowance recorded, Related Allowance	480		480		1,194
With an allowance recorded, Average Recorded Investment	1,855	4,077	1,869	4,197
With an allowance recorded, Interest Income Recognized	22	191	66	292
Total, Recorded Investment	2,138		2,138		4,780
Total, Unpaid Principal Balance	2,883		2,883		6,644
Total, Related Allowance	480		480		1,194
Total, Average Recorded Investment	2,465	6,379	2,537	6,649
Total, Interest Income Recognized	24	214	83	383
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	6,311		6,311		7,929
With no related allowance recorded, Unpaid Principal Balance	7,046		7,046		9,035
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	6,674	8,586	6,763	8,656
With no related allowance recorded, Interest Income Recognized	84	97	234	293
With an allowance recorded, Recorded Investment	5,590		5,590		8,745
With an allowance recorded, Unpaid Principal Balance	5,831		5,831		9,194
With an allowance recorded, Related Allowance	649		649		1,809
With an allowance recorded, Average Recorded Investment	5,807	8,141	5,868	8,347
With an allowance recorded, Interest Income Recognized	63	91	191	264
Total, Recorded Investment	11,901		11,901		16,674
Total, Unpaid Principal Balance	12,877		12,877		18,229
Total, Related Allowance	649		649		1,809
Total, Average Recorded Investment	12,481	16,727	12,631	17,003
Total, Interest Income Recognized	147	188	425	557
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
With no related allowance recorded, Recorded Investment	29		29		33
With no related allowance recorded, Unpaid Principal Balance	32		32		36
With no related allowance recorded, Related Allowance	0		0		0
With no related allowance recorded, Average Recorded Investment	30	31	31	31
With no related allowance recorded, Interest Income Recognized	1	1	2	3
With an allowance recorded, Recorded Investment	544		544		585
With an allowance recorded, Unpaid Principal Balance	544		544		581
With an allowance recorded, Related Allowance	257		257		265
With an allowance recorded, Average Recorded Investment	548	332	586	339
With an allowance recorded, Interest Income Recognized	6	5	20	14
Total, Recorded Investment	573		573		618
Total, Unpaid Principal Balance	576		576		617
Total, Related Allowance	257		257		265
Total, Average Recorded Investment	578	363	617	370
Total, Interest Income Recognized	$ 7	$ 6	$ 22	$ 17

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BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2014
Accounting Policies [Line Items]
Inventory Write-down	$ 500,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows from Operating Activities
Net Income	$ 5,166	$ 23,897
Adjustments to reconcile net income to net cash from operating activities
Provision for loan losses	(500)	2,100
Depreciation	1,210	1,416
(Increase) decrease in net deferred federal income tax asset	1,684	(18,795)
Net amortization of investment premium and discount	677	1,415
Writedowns of Other Real Estate Owned	959	1,539
Net increase in interest payable and other liabilities	957	2,140
Net increase in interest receivable and other assets	(772)	(739)
Equity based compensation expense	190	209
Net (gain) loss on sale/settlement of securities	744	(306)
Increase in cash surrender value of life insurance	(978)	(1,032)
Net cash provided by operating activities	9,337	11,844
Cash Flows from Investing Activities
Proceeds from maturities and redemptions of investment securities held to maturity	7,692	18,214
Proceeds from maturities and redemptions of investment securities available for sale	19,453	65,077
Proceeds from sales of investment securities available for sale	93,321	56,433
Net decrease in loans	7,003	10,840
Proceeds from sales of other real estate owned	5,113	6,345
Proceeds from sales of other assets	40	245
Purchase of investment securities held to maturity	(4,590)	(11,309)
Purchase of investment securities available for sale	(176,334)	(145,382)
Purchase of bank premises and equipment	(1,742)	(1,358)
Net cash used for investing activities	(50,044)	(895)
Cash Flows from Financing Activities
Net increase in deposits	19,766	5,313
Repayment of long term debt	0	(135)
Repayment of Federal Home Loan Bank borrowings	(12,000)	(95,000)
Proceeds from issuance of common stock	8,084	1,800
Net cash provided by (used for) financing activities	15,850	(88,022)
Net Decrease in Cash and Cash Equivalents	(24,857)	(77,073)
Cash and Cash Equivalents at Beginning of Period	77,798	112,507
Cash and Cash Equivalents at End of Period	52,941	35,434
Supplemental Cash Flow Information
Cash paid for interest	2,993	5,055
Cash paid for federal income taxes	69	0
Supplemental Schedule of Non Cash Investing Activities
Transfer of loans to other real estate owned	2,482	4,078
Transfer of loans to other assets	$ 42	$ 124

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CONSOLIDATED BALANCE SHEETS [Parenthetical]	Sep. 30, 2014	Dec. 31, 2013
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	22,694,906	20,605,493
Common stock, shares outstanding	22,694,906	20,605,493

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 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 Sept. 30,				For the nine months ended Sept. 30,
	2014		2013		2014		2013
Basic
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Earnings per common share - basic	$	0.08	$	1.19	$	0.24	$	1.34
Diluted
Net income	$	1,712,000	$	21,287,000	$	5,166,000	$	23,897,000
Average common shares outstanding		22,691,593		17,912,946		21,911,996		17,779,924
Equity compensation		194,090		164,533		192,573		155,416
Average common shares outstanding - diluted		22,885,683		18,077,479		22,104,569		17,935,340
Earnings per common share - diluted	$	0.07	$	1.18	$	0.23	$	1.33

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 14, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Registrant Name	MBT FINANCIAL CORP
Entity Central Index Key	0001118237
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	MBTF
Entity Common Stock, Shares Outstanding		22,696,547

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STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 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		1,500		15.33
Expired		77,000		16.69
Options Outstanding, September 30, 2014		205,400	$	19.08
Options Exercisable, September 30, 2014		205,400	$	19.08

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
	SOSARs		Base Price
SOSARs Outstanding, January 1, 2014		472,271	$	3.23
Granted		110,000		4.90
Exercised		18,998		2.15
Forfeited		5,834		4.91
SOSARs Outstanding, September 30, 2014		557,439	$	3.58
SOSARs Exercisable, September 30, 2014		352,062	$	3.53

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest Income
Interest and fees on loans	$ 7,255	$ 7,605	$ 21,355	$ 23,106
Interest on investment securities-
Tax-exempt	288	313	892	946
Taxable	2,222	1,821	6,540	5,383
Interest on balances due from banks	32	25	86	131
Total interest income	9,797	9,764	28,873	29,566
Interest Expense
Interest on deposits	767	1,033	2,423	3,361
Interest on borrowed funds	178	192	551	1,533
Total interest expense	945	1,225	2,974	4,894
Net Interest Income	8,852	8,539	25,899	24,672
Provision For Loan Losses	(700)	200	(500)	2,100
Net Interest Income After Provision For Loan Losses	9,552	8,339	26,399	22,572
Other Income
Income from wealth management services	1,194	1,078	3,496	3,256
Service charges and other fees	1,054	1,128	2,954	3,228
Debit card income	557	513	1,588	1,521
Net gain (loss) on sales of securities available for sale	(1,020)	142	(744)	306
Net loss on sales of Other Real Estate Owned	(634)	(632)	(964)	(1,339)
Origination fees on mortgage loans sold	80	133	230	606
Bank owned life insurance income	357	363	1,062	1,117
Rent income on Other Real Estate Owned	99	347	364	639
Other	438	412	1,387	1,420
Total other income	2,125	3,484	9,373	10,754
Other Expenses
Salaries and employee benefits	5,631	5,310	17,163	15,847
Occupancy expense	626	737	2,040	2,146
Equipment expense	723	650	2,002	2,024
Marketing expense	225	180	640	548
Professional fees	681	527	1,620	1,578
Other Real Estate Owned expenses	187	162	887	829
FDIC Deposit Insurance Assessment	275	695	1,535	2,078
Bonding and other insurance expense	258	267	777	802
Telephone expense	108	212	355	455
Other	648	591	1,833	1,917
Total other expenses	9,362	9,331	28,852	28,224
Income Before Income Taxes	2,315	2,492	6,920	5,102
Income Tax Expense	603	(18,795)	1,754	(18,795)
Net Income	1,712	21,287	5,166	23,897
Other Comprehensive Income (Loss) - Net of Tax
Unrealized gains (losses) on securities	(649)	463	6,353	(8,437)
Reclassification adjustment for gains (losses) included in net income	673	(94)	491	(202)
Postretirement benefit liability	26	31	(240)	92
Total Other Comprehensive Income (Loss) - Net of Tax	50	400	6,604	(8,547)
Comprehensive Income (Loss)	$ 1,762	$ 21,687	$ 11,770	$ 15,350
Basic Earnings Per Common Share (in dollars per share)	$ 0.08	$ 1.19	$ 0.24	$ 1.34
Diluted Earnings Per Common Share (in dollars per share)	$ 0.07	$ 1.18	$ 0.23	$ 1.33
Common Stock Dividends Declared Per Share	$ 0	$ 0	$ 0	$ 0

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ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 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 September 30, 2014
Beginning Balance	$	214	$	1,288	$	7,535	$	1,147	$	4,280	$	537	$	15,001
Charge-offs		(3)		(62)		(2,267)		(44)		(976)		(1)		(3,353)
Recoveries		-		115		939		794		271		63		2,182
Provision		14		(22)		390		(1,290)		(259)		467		(700)
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Allowance for loan losses: For the nine months ended September 30, 2014
Beginning Balance	$	171	$	1,989	$	7,030	$	1,397	$	4,606	$	1,016	$	16,209
Charge-offs		(3)		(688)		(3,478)		(254)		(1,187)		(79)		(5,689)
Recoveries		5		204		1,215		1,047		509		130		3,110
Provision		52		(186)		1,830		(1,583)		(612)		(1)		(500)
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Allowance for loan losses as of September 30, 2014
Ending balance individually evaluated for impairment	$	36	$	528	$	1,290	$	480	$	649	$	257	$	3,240
Ending balance collectively evaluated for impairment		189		791		5,307		127		2,667		809		9,890
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Loans as of September 30, 2014
Ending balance individually evaluated for impairment	$	946	$	1,445	$	20,257	$	2,138	$	11,901	$	573	$	37,260
Ending balance collectively evaluated for impairment		17,167		60,873		233,268		10,288		212,229		14,685		548,510
Ending balance	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770

Activity in the allowance for loan losses during the three and nine months ended September 30, 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 September 30, 2013
Beginning Balance	$	109	$	2,442	$	7,556	$	1,889	$	4,787	$	412	$	17,195
Charge-offs		-		(162)		(728)		(30)		(351)		(53)		(1,324)
Recoveries		-		24		427		49		162		33		695
Provision		28		(409)		453		(278)		24		382		200
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Allowance for loan losses: For the nine months ended September 30, 2013
Beginning Balance	$	76	$	2,224	$	7,551	$	2,401	$	4,715	$	332	$	17,299
Charge-offs		-		(564)		(2,596)		(67)		(1,167)		(190)		(4,584)
Recoveries		-		287		717		337		481		129		1,951
Provision		61		(52)		2,036		(1,041)		593		503		2,100
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Allowance for loan losses as of September 30, 2013
Ending balance individually evaluated for impairment	$	1	$	1,133	$	2,893	$	1,333	$	1,750	$	110	$	7,220
Ending balance collectively evaluated for impairment		136		762		4,815		297		2,872		664		9,546
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Loans as of September 30, 2013
Ending balance individually evaluated for impairment	$	424	$	3,175	$	35,769	$	5,704	$	16,122	$	363	$	61,557
Ending balance collectively evaluated for impairment		14,898		62,078		232,999		9,360		215,422		14,614		549,371
Ending balance	$	15,322	$	65,253	$	268,768	$	15,064	$	231,544	$	14,977	$	610,928

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 September 30, 2014 are as follows (000s omitted):

Credit Quality Indicators as of September 30, 2014

Credit Risk by Internally Assigned Grade

	Agriculture
	and
	Agricultural				Commercial		Construction		Residential		Consumer
	Real Estate		Commercial		Real Estate		Real Estate		Real Estate		and Other		Total
Not Rated	$	126	$	1,554	$	-	$	4,779	$	140,212	$	10,717	$	157,388
1		-		2,992		-		-		-		366		3,358
2		280		297		857		-		134		-		1,568
3		190		6,595		9,643		-		874		-		17,302
4		15,641		41,982		177,887		4,478		50,559		3,355		293,902
5		808		6,881		37,280		2,449		15,982		190		63,590
6		1,068		2,017		27,858		720		16,369		630		48,662
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770
Performing	$	17,087	$	60,808	$	234,708	$	10,214	$	211,067	$	14,434	$	548,318
Nonperforming		1,026		1,510		18,817		2,212		13,063		824		37,452
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770

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				Commercial		Construction		Residential		Consumer
	Real Estate		Commercial		Real Estate		Real Estate		Real Estate		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 September 30, 2014 and December 31, 2013 (000s omitted):

													Recorded
													Investment >90
	30-59 Days		60-89 Days		>90 Days		Total Past						Days Past Due
September 30, 2014	Past Due		Past Due		Past Due		Due		Current		Total Loans		and Accruing
Agriculture and Agricultural Real Estate	$	250	$	-	$	80	$	330	$	17,783	$	18,113	$	-
Commercial		83		26		57		166		62,152		62,318		7
Commercial Real Estate		1,590		1,176		1,457		4,223		249,302		253,525		-
Construction Real Estate		81		-		-		81		12,345		12,426		-
Residential Real Estate		4,497		1,035		640		6,172		217,958		224,130		-
Consumer and Other		61		30		70		161		15,097		15,258		-
Total	$	6,562	$	2,267	$	2,304	$	11,133	$	574,637	$	585,770	$	7

													Recorded
													Investment >90
	30-59 Days		60-89 Days		>90 Days		Total Past						Days Past Due
December 31, 2013	Past Due		Past Due		Past Due		Due		Current		Total Loans		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 September 30, 2014 and December 31, 2013 (000s omitted):

	September 30, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	80	$	172
Commercial		298		1,035
Commercial Real Estate		6,234		13,289
Construction Real Estate		424		2,009
Residential Real Estate		6,064		6,865
Consumer and Other		251		340
Total	$	13,351	$	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 September 30, 2014 and 2013 (000s omitted):

							Average				Average
							Recorded		Interest Income		Recorded		Interest Income
			Unpaid				Investment for the		Recognized in the		Investment for		Recognized in the
	Recorded		Principal		Related		Three Months		Three Months		the Nine Months		Nine Months
September 30, 2014	Investment		Balance		Allowance		Ended		Ended		Ended		Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	258	$	257	$	-	$	258	$	4	$	259	$	7
Commercial		396		559		-		500		7		580		25
Commercial Real Estate		9,979		11,299		-		10,461		111		10,565		352
Construction Real Estate		302		1,019		-		610		2		668		17
Residential Real Estate		6,311		7,046		-		6,674		84		6,763		234
Consumer and Other		29		32		-		30		1		31		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		688		687		36		687		9		700		28
Commercial		1,049		1,056		528		1,071		13		1,098		40
Commercial Real Estate		10,278		12,459		1,290		11,845		115		11,941		352
Construction Real Estate		1,836		1,864		480		1,855		22		1,869		66
Residential Real Estate		5,590		5,831		649		5,807		63		5,868		191
Consumer and Other		544		544		257		548		6		586		20
Total:
Agriculture and Agricultural Real Estate	$	946	$	944	$	36	$	945	$	13	$	959	$	35
Commercial		1,445		1,615		528		1,571		20		1,678		65
Commercial Real Estate		20,257		23,758		1,290		22,306		226		22,506		704
Construction Real Estate		2,138		2,883		480		2,465		24		2,537		83
Residential Real Estate		11,901		12,877		649		12,481		147		12,631		425
Consumer and Other		573		576		257		578		7		617		22

											Average
							Average				Recorded
			Unpaid				Recorded		Interest Income		Investment for		Interest Income
	Recorded		Principal		Related		Investment for the		Recognized in the		the Nine Months		Recognized in the
	Investment as		Balance as of		Allowance as		Three Months		Three Months		Ended		Nine Months
	of December		December 31,		of December		Ended September		Ended September		September 30,		Ended September
	31, 2013		2,013		31, 2013		30, 2013		30, 2013		2013		30, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial		869		966		-		1,728		21		1,562		55
Commercial Real Estate		19,567		23,005		-		19,544		228		20,004		629
Construction Real Estate		1,165		2,408		-		2,302		23		2,452		91
Residential Real Estate		7,929		9,035		-		8,586		97		8,656		293
Consumer and Other		33		36		-		31		1		31		3
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		424		4		724		28
Commercial		1,540		1,627		1,031		1,695		16		1,739		53
Commercial Real Estate		16,025		20,032		2,697		18,660		148		19,226		594
Construction Real Estate		3,615		4,236		1,194		4,077		191		4,197		292
Residential Real Estate		8,745		9,194		1,809		8,141		91		8,347		264
Consumer and Other		585		581		265		332		5		339		14
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	424	$	4	$	724	$	28
Commercial		2,409		2,593		1,031		3,423		37		3,301		108
Commercial Real Estate		35,592		43,037		2,697		38,204		376		39,230		1,223
Construction Real Estate		4,780		6,644		1,194		6,379		214		6,649		383
Residential Real Estate		16,674		18,229		1,809		16,727		188		17,003		557
Consumer and Other		618		617		265		363		6		370		17

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 and nine month periods ended September 30, 2014 and September 30, 2013 are as follows (000s omitted from dollar amounts):

	Three months ended						Nine months ended
	September 30, 2014						September 30, 2014
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Recorded		Recorded				Recorded		Recorded
	Number of		Principal		Principal		Number of		Principal		Principal
	Contracts		Balance		Balance		Contracts		Balance		Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	314	$	314
Commercial		-		-		-		4		295		54
Commercial Real Estate		2		743		649		6		1,990		1,508
Construction Real Estate		3		43		22		3		43		22
Residential Real Estate		4		203		57		14		1,047		730
Consumer and Other		-		-		-		-		-		-
Total		9	$	989	$	728		28	$	3,689	$	2,628

	Three months ended						Nine months ended
	September 30, 2013						September 30, 2013
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Recorded		Recorded				Recorded		Recorded
	Number of		Principal		Principal		Number of		Principal		Principal
	Contracts		Balance		Balance		Contracts		Balance		Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		-	$	-	$	-
Commercial		6		1,044		636		13		1,398		787
Commercial Real Estate		3		480		301		10		2,527		1,646
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		8		685		665		24		2,131		1,801
Consumer and Other		1		10		9		5		276		34
Total		18	$	2,219	$	1,611		52	$	6,332	$	4,268

The Bank considers TDRs that become past due under the modified terms as defaulted. There were no loans that became TDRs during the three and nine month periods ended September 30, 2014 and September 30, 2013 that subsequently defaulted during the three month periods ended September 30, 2014 and September 30, 2013, respectively.

The Company has allocated $3,006,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings at September 30, 2014. In addition, there are no commitments to lend additional amounts to borrowers that are classified as troubled debt restructurings as of September 30, 2014 and September 30, 2013.

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LOANS

9 Months Ended

Sep. 30, 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):

	September 30,		December 31,
	2014		2013
Residential real estate loans	$	224,130	$	228,024
Commercial and Construction real estate loans		265,951		280,579
Agriculture and agricultural real estate loans		18,113		14,997
Commercial and industrial loans		62,318		59,440
Loans to individuals for household, family,and other personal expenditures		15,258		14,550
Total loans, gross	$	585,770	$	597,590
Less: Allowance for loan losses		13,130		16,209
	$	572,640	$	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): 

	September 30,			December 31,
	2014			2013
Nonaccrual loans	$	13,351		$	23,710
Loans 90 days past due and accruing		7			46
Restructured loans		24,094			32,450
Total nonperforming loans	$	37,452		$	56,206
Other real estate owned		6,036			9,628
Other assets		7			10
Nonperforming investment securities		-			3,259
Total nonperforming assets	$	43,495		$	69,103
Nonperforming assets to total assets		3.47	%		5.65	%
Allowance for loan losses to nonperforming loans		35.06	%		28.84	%

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables)

9 Months Ended

Sep. 30, 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
	September 30,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	61,534	$	68,159
Unused portion of credit card lines of credit		3,427		3,255
Unused portion of home equity lines of credit		18,523		16,769
Standby letters of credit and financial guarantees written		3,674		3,667
All other off-balance sheet commitments		30,000		-

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LOANS (Tables)

9 Months Ended

Sep. 30, 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):

	September 30,		December 31,
	2014		2013
Residential real estate loans	$	224,130	$	228,024
Commercial and Construction real estate loans		265,951		280,579
Agriculture and agricultural real estate loans		18,113		14,997
Commercial and industrial loans		62,318		59,440
Loans to individuals for household, family,and other personal expenditures		15,258		14,550
Total loans, gross	$	585,770	$	597,590
Less: Allowance for loan losses		13,130		16,209
	$	572,640	$	581,381

Schedule Of Non Performing Assets [Table Text Block]

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

	September 30,			December 31,
	2014			2013
Nonaccrual loans	$	13,351		$	23,710
Loans 90 days past due and accruing		7			46
Restructured loans		24,094			32,450
Total nonperforming loans	$	37,452		$	56,206
Other real estate owned		6,036			9,628
Other assets		7			10
Nonperforming investment securities		-			3,259
Total nonperforming assets	$	43,495		$	69,103
Nonperforming assets to total assets		3.47	%		5.65	%
Allowance for loan losses to nonperforming loans		35.06	%		28.84	%

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

9 Months Ended

Sep. 30, 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
	September 30,		December 31,
	2014		2013
Commitments to extend credit:
Unused portion of commercial lines of credit	$	61,534	$	68,159
Unused portion of credit card lines of credit		3,427		3,255
Unused portion of home equity lines of credit		18,523		16,769
Standby letters of credit and financial guarantees written		3,674		3,667
All other off-balance sheet commitments		30,000		-

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.

Other off-balance sheet commitments as of September 30, 2014 consist of a commitment to purchase loan participations. This commitment is scheduled to be funded in 2014.

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 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 September 30, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	September 30, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	31,244	$	1,251	$	(72)	$	32,423
Corporate Debt Securities		500		-		-		500
	$	31,744	$	1,251	$	(72)	$	32,923

	Available for Sale
	September 30, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	370,077	$	646	$	(5,070)	$	365,653
Mortgage Backed Securities issued by U.S. Government Agencies		78,464		340		(897)		77,907
Obligations of States and Political Subdivisions		15,389		433		(64)		15,758
Corporate Debt Securities		5,973		51		-		6,024
Equity Securities		2,044		79		-		2,123
	$	471,947	$	1,549	$	(6,031)	$	467,465

	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 September 30, 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	$	4,107	$	4,135	$	7,505	$	7,535
After 1 year through five years		13,416		13,766		90,049		89,218
After 5 years through 10 years		11,346		11,832		274,252		271,259
After 10 years		2,875		3,190		19,633		19,423
Total		31,744		32,923		391,439		387,435
Mortgage Backed Securities		-		-		78,464		77,907
Securities with no stated maturity		-		-		2,044		2,123
Total	$	31,744	$	32,923	$	471,947	$	467,465

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 September 30, 2014 and December 31, 2013.

	September 30, 2014
	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Aggregate		Unrealized		Aggregate		Unrealized		Aggregate		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of United States Government Agencies	$	110,074	$	735	$	161,414	$	4,335	$	271,488	$	5,070
Mortgage Backed Securities issued by U.S. Government Agencies		16,662		68		42,403		829		59,065		897
Obligations of States and Political Subdivisions		3,633		28		4,333		108		7,966		136
	$	130,369	$	831	$	208,150	$	5,272	$	338,519	$	6,103

	December 31, 2013
	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Aggregate		Unrealized		Aggregate		Unrealized		Aggregate		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		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
Equity Securities		-		-		445		95		445		95
	$	293,850	$	12,154	$	37,467	$	5,640	$	331,317	$	17,794

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 September 30, 2014. As of September 30, 2014 and December 31, 2013, there were 119 and 175 securities in an unrealized loss position, respectively.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 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 Company 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 Company uses various valuation techniques and assumptions when estimating fair value.

The Company 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 Company’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 Company’s borrowed funds and investments in U.S. government agency securities, government sponsored mortgage backed securities, corporate debt 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 September 30, 2014 and December 31, 2013, and the valuation techniques used by the Company to determine those fair values.

									Total
	Carrying								Estimated
September 30, 2014	Value		Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and due from banks	$	52,941	$	52,941	$	-	$	-	$	52,941
Securities - Held to Maturity
Obligations of States and Political Subdivisions		31,244		-		32,423		-		32,423
Corporate Debt Securities		500		-		500		-		500
Securities - Available for Sale
Obligations of U.S. Government Agencies		365,653		-		365,653		-		365,653
MBS issued by U.S. Government Agencies		77,907		-		77,907		-		77,907
Obligations of States and Political Subdivisions		15,758		-		15,758		-		15,758
Corporate Debt Securities		6,024		-		6,024		-		6,024
Other Securities		2,123		2,123		-		-		2,123
Federal Home Loan Bank Stock		10,605		-		10,605		-		10,605
Loans Held for Sale		382		-		-		382		382
Loans, net		572,640		-		-		581,770		581,770
Accrued Interest Receivable		4,133		-		-		4,133		4,133
Financial Liabilities:
Noninterest Bearing Deposits		209,731		209,731		-		-		209,731
Interest Bearings Deposits		879,753		-		881,906		-		881,906
Borrowed funds
FHLB Advances		-		-		-		-		-
Repurchase Agreements		15,000		-		15,974		-		15,974
Accrued Interest Payable		160		-		-		160		160

									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		96,526		-		96,526		-		96,526
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 losses included in income		(2,599)		(12)
Total unrealized gains included in other comprehensive income		3,758		467
Net purchases, sales, calls and maturities		(6,910)		-
Net transfers in/out of Level 3		-		-
Balance at September 30	$	-	$	5,861

The Company sold its portfolio of Level 3 available for sale securities during the quarter ended September 30, 2014.

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 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):

			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Balance at		for Identical Assets		Observable		Unobservable
	Sept. 30, 2014		(Level 1)		Inputs (Level 2)		Inputs (Level 3)
Impaired loans	$	37,260	$	-	$	-	$	37,260
Other Real Estate Owned	$	6,036	$	-	$	-	$	6,036

			Quoted Prices in
	Balance at		Active Markets for		Significant Other		Significant
	December 31,		Identical Assets		Observable		Unobservable
	2013		(Level 1)		Inputs (Level 2)		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)

9 Months Ended

Sep. 30, 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 Company 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 Company uses various valuation techniques and assumptions when estimating fair value.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at and/or marked to fair value, the Company 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 Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets or liabilities. Nevertheless, certain assets and liabilities are not actively traded in observable markets and the Company must use alternative valuation techniques to derive a fair value measurement.

Real Estate Held for Development and Sale, Policy [Policy Text Block]

RECENT DEVELOPMENTS

On October 29, 2014, the Bank conducted an auction of Other Real Estate Owned. Following the auction, the Bank offered to sell some of the properties that did not sell at the auction at prices below the carrying values. As a result, the September 30, 2014 financial statements include the effect of writing down the values of these properties by $500,000.

New Accounting Pronouncements Policy [Policy Text Block]

ACCOUNTING PRONOUNCEMENTS

In January 2014, the FASB issued ASU 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” ASU 2014-04 clarifies when an in substance repossession or foreclosure occurs. The ASU also requires additional related interim and annual disclosures. The guidance in this ASU is effective for annual and interim periods beginning after December 15, 2014. The adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” ASU 2014-09 establishes a comprehensive revenue recognition standard for virtually all industries under US GAAP. The standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. This ASU is effective for annual and interim periods beginning after December 15, 2016. The Company may choose to apply the new standard either retrospectively or through a cumulative effect adjustment. Adoption of this ASU is not expected to have a material effect on our financial position or results of operations.

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ALLOWANCE FOR LOAN LOSSES (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	$ 6,562	$ 4,789
60-89 Days Past Due	2,267	1,748
>90 Days Past Due	2,304	7,559
Total Past Due	11,133	14,096
Current	574,637	583,494
Total nonperforming loans	585,770	597,590	610,928
Recorded Investment >90 Days Past Due and Accruing	7	46
Agriculture and Agricultural Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	250	210
60-89 Days Past Due	0	0
>90 Days Past Due	80	171
Total Past Due	330	381
Current	17,783	14,616
Total nonperforming loans	18,113	14,997	15,322
Recorded Investment >90 Days Past Due and Accruing	0	0
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	83	87
60-89 Days Past Due	26	93
>90 Days Past Due	57	210
Total Past Due	166	390
Current	62,152	59,050
Total nonperforming loans	62,318	59,440	65,253
Recorded Investment >90 Days Past Due and Accruing	7	46
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	1,590	1,640
60-89 Days Past Due	1,176	535
>90 Days Past Due	1,457	3,506
Total Past Due	4,223	5,681
Current	249,302	260,231
Total nonperforming loans	253,525	265,912	268,768
Recorded Investment >90 Days Past Due and Accruing	0	0
Construction Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	81	90
60-89 Days Past Due	0	265
>90 Days Past Due	0	1,177
Total Past Due	81	1,532
Current	12,345	13,135
Total nonperforming loans	12,426	14,667	15,064
Recorded Investment >90 Days Past Due and Accruing	0	0
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	4,497	2,612
60-89 Days Past Due	1,035	803
>90 Days Past Due	640	2,342
Total Past Due	6,172	5,757
Current	217,958	222,267
Total nonperforming loans	224,130	228,024	231,544
Recorded Investment >90 Days Past Due and Accruing	0	0
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
30-59 Days Past Due	61	150
60-89 Days Past Due	30	52
>90 Days Past Due	70	153
Total Past Due	161	355
Current	15,097	14,195
Total nonperforming loans	15,258	14,550	14,977
Recorded Investment >90 Days Past Due and Accruing	$ 0	$ 0

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2014 and December 31, 2013 (000’s omitted):

	Held to Maturity
	September 30, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	31,244	$	1,251	$	(72)	$	32,423
Corporate Debt Securities		500		-		-		500
	$	31,744	$	1,251	$	(72)	$	32,923

	Available for Sale
	September 30, 2014
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of U.S. Government Agencies	$	370,077	$	646	$	(5,070)	$	365,653
Mortgage Backed Securities issued by U.S. Government Agencies		78,464		340		(897)		77,907
Obligations of States and Political Subdivisions		15,389		433		(64)		15,758
Corporate Debt Securities		5,973		51		-		6,024
Equity Securities		2,044		79		-		2,123
	$	471,947	$	1,549	$	(6,031)	$	467,465

	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 September 30, 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	$	4,107	$	4,135	$	7,505	$	7,535
After 1 year through five years		13,416		13,766		90,049		89,218
After 5 years through 10 years		11,346		11,832		274,252		271,259
After 10 years		2,875		3,190		19,633		19,423
Total		31,744		32,923		391,439		387,435
Mortgage Backed Securities		-		-		78,464		77,907
Securities with no stated maturity		-		-		2,044		2,123
Total	$	31,744	$	32,923	$	471,947	$	467,465

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 September 30, 2014 and December 31, 2013.

	September 30, 2014
	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Aggregate		Unrealized		Aggregate		Unrealized		Aggregate		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Obligations of United States Government Agencies	$	110,074	$	735	$	161,414	$	4,335	$	271,488	$	5,070
Mortgage Backed Securities issued by U.S. Government Agencies		16,662		68		42,403		829		59,065		897
Obligations of States and Political Subdivisions		3,633		28		4,333		108		7,966		136
	$	130,369	$	831	$	208,150	$	5,272	$	338,519	$	6,103

	December 31, 2013
	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Aggregate		Unrealized		Aggregate		Unrealized		Aggregate		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		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
Equity Securities		-		-		445		95		445		95
	$	293,850	$	12,154	$	37,467	$	5,640	$	331,317	$	17,794

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STOCK BASED COMPENSATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, January 1, 2014, Shares	283,900
Granted, Shares	0
Exercised, Shares	0
Forfeited, Shares	1,500
Expired, Shares	77,000
Options Outstanding, September 30, 2014 Shares	205,400
Options Exercisable, September 30, 2014 Shares	205,400
Options Outstanding, January 1, 2014, Weighted Average Exercise Price	$ 18.41
Granted, Weighted Average Exercise Price	$ 0
Exercised, Weighted Average Exercise Price	$ 0
Forfeited, Weighted Average Exercise Price	$ 15.33
Expired, Weighted Average Exercise Price	$ 16.69
Options Outstanding, September 30, 2014 Weighted Average Exercise Price	$ 19.08
Options Exercisable, September 30, 2014 Weighted Average Exercise Price	$ 19.08

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INVESTMENT SECURITIES (Details 2 ) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	$ 130,369	$ 293,850
Less than 12 months, Gross Unrealized Losses	831	12,154
12 months or longer, Aggregate Fair Value	208,150	37,467
12 months or longer, Gross Unrealized Losses	5,272	5,640
Aggregate Fair Value, Total	338,519	331,317
Gross Unrealized Losses, Total	6,103	17,794
Obligations of U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	110,074	234,264
Less than 12 months, Gross Unrealized Losses	735	10,828
12 months or longer, Aggregate Fair Value	161,414	13,614
12 months or longer, Gross Unrealized Losses	4,335	989
Aggregate Fair Value, Total	271,488	247,878
Gross Unrealized Losses, Total	5,070	11,817
Mortgage Backed Securities issued by U.S. Government Agencies [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	16,662	49,202
Less than 12 months, Gross Unrealized Losses	68	1,005
12 months or longer, Aggregate Fair Value	42,403	14,544
12 months or longer, Gross Unrealized Losses	829	632
Aggregate Fair Value, Total	59,065	63,746
Gross Unrealized Losses, Total	897	1,637
Obligations of States and Political Subdivisions [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value	3,633	10,384
Less than 12 months, Gross Unrealized Losses	28	321
12 months or longer, Aggregate Fair Value	4,333	3,113
12 months or longer, Gross Unrealized Losses	108	166
Aggregate Fair Value, Total	7,966	13,497
Gross Unrealized Losses, Total	136	487
Trust Preferred CDO Securities [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value		0
Less than 12 months, Gross Unrealized Losses		0
12 months or longer, Aggregate Fair Value		5,751
12 months or longer, Gross Unrealized Losses		3,758
Aggregate Fair Value, Total		5,751
Gross Unrealized Losses, Total		3,758
Equity Securities [Member]
Investment Holdings [Line Items]
Less than 12 months, Aggregate Fair Value		0
Less than 12 months, Gross Unrealized Losses		0
12 months or longer, Aggregate Fair Value		445
12 months or longer, Gross Unrealized Losses		95
Aggregate Fair Value, Total		445
Gross Unrealized Losses, Total		$ 95

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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	1,814	1,814	0	0	0
Stock Offering Expense	(18)	(18)	0	0	0
Equity Compensation	100	83	0	17	0
Net income	23,897	0	23,897	0	0
Other comprehensive income (loss) - net of tax	(8,547)	0	0	0	(8,547)
Balance at Sep. 30, 2013	100,824	4,280	105,177	(10)	(8,623)
Balance at Dec. 31, 2013	110,608	14,671	106,817	(7)	(10,873)
SOSARs exercised	1	1	0	0	0
Restricted stock awards	0	29	0	(29)	0
Other stock issued	8,838	8,838	0	0	0
Stock Offering Expense	(754)	(754)	0	0	0
Equity Compensation	189	161	0	28	0
Net income	5,166	0	5,166	0	0
Other comprehensive income (loss) - net of tax	6,604	0	0	0	6,604
Balance at Sep. 30, 2014	$ 130,652	$ 22,946	$ 111,983	$ (8)	$ (4,269)

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 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		1,500		15.33
Expired		77,000		16.69
Options Outstanding, September 30, 2014		205,400	$	19.08
Options Exercisable, September 30, 2014		205,400	$	19.08

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%.

The following table summarizes the SOSARs that have been granted:

			Weighted Average
	SOSARs		Base Price
SOSARs Outstanding, January 1, 2014		472,271	$	3.23
Granted		110,000		4.90
Exercised		18,998		2.15
Forfeited		5,834		4.91
SOSARs Outstanding, September 30, 2014		557,439	$	3.58
SOSARs Exercisable, September 30, 2014		352,062	$	3.53

The exercise of a SOSAR results in the issuance of a number of shares of common stock of the Company based on the appreciation of the market price of the stock over the base price, which is equal to the market value of the underlying stock on the date of the grant of the SOSAR. The market value of the Company’s common stock on September 30, 2014 was $4.78. The intrinsic value of the exercisable SOSARs as of September 30, 2014 was $353,000, and exercise of those SOSARs on that date would have resulted in the issuance of 73,839 shares of common stock.

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.

Restricted Stock Awards – On March 7, 2014, 1,000 restricted shares were awarded to each non-executive member of the board of directors in accordance with the MBT 2008 Stock Incentive Plan that was approved by shareholders on May 1, 2008. The restricted shares vest on December 31, 2014. The expense for the restricted stock is based on the grant date value per share of $4.90 and is recognized over the vesting period. The unrecognized compensation cost related to the non-vested restricted stock awards was $8,000 as of September 30, 2014.

The total expense for equity based compensation was $72,000 in the third quarter of 2014 and $71,000 in the third quarter of 2013. The total expense for equity based compensation was $218,000 in the first nine months of 2014 and $216,000 in the first nine months of 2013.

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STOCK BASED COMPENSATION (Details 1) (USD $)	9 Months Ended
	Sep. 30, 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	18,998
Forfeited, Shares	5,834
SOSARs Outstanding, September 30, 2014 Shares	557,439
SOSARs Exercisable, September 30, 2014 Shares	352,062
SOSARs Outstanding, January 1, 2014, Weighted Average Base Price	$ 3.23
Granted, Weighted Average Base Price	$ 4.90
Exercised , Weighted Average Base Price	$ 2.15
Forfeited, Weighted Average Base Price	$ 4.91
SOSARs Outstanding, September 30, 2014 Weighted Average Base Price	$ 3.58
SOSARs Exercisable, September 30, 2014 Weighted Average Base Price	$ 3.53

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ALLOWANCE FOR LOAN LOSSES (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Minimum Aggregate Credit Exposure To Assign Grade	$ 3,006

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ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 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 September 30, 2014
Beginning Balance	$	214	$	1,288	$	7,535	$	1,147	$	4,280	$	537	$	15,001
Charge-offs		(3)		(62)		(2,267)		(44)		(976)		(1)		(3,353)
Recoveries		-		115		939		794		271		63		2,182
Provision		14		(22)		390		(1,290)		(259)		467		(700)
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Allowance for loan losses: For the nine months ended September 30, 2014
Beginning Balance	$	171	$	1,989	$	7,030	$	1,397	$	4,606	$	1,016	$	16,209
Charge-offs		(3)		(688)		(3,478)		(254)		(1,187)		(79)		(5,689)
Recoveries		5		204		1,215		1,047		509		130		3,110
Provision		52		(186)		1,830		(1,583)		(612)		(1)		(500)
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Allowance for loan losses as of September 30, 2014
Ending balance individually evaluated for impairment	$	36	$	528	$	1,290	$	480	$	649	$	257	$	3,240
Ending balance collectively evaluated for impairment		189		791		5,307		127		2,667		809		9,890
Ending balance	$	225	$	1,319	$	6,597	$	607	$	3,316	$	1,066	$	13,130
Loans as of September 30, 2014
Ending balance individually evaluated for impairment	$	946	$	1,445	$	20,257	$	2,138	$	11,901	$	573	$	37,260
Ending balance collectively evaluated for impairment		17,167		60,873		233,268		10,288		212,229		14,685		548,510
Ending balance	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770

Activity in the allowance for loan losses during the three and nine months ended September 30, 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 September 30, 2013
Beginning Balance	$	109	$	2,442	$	7,556	$	1,889	$	4,787	$	412	$	17,195
Charge-offs		-		(162)		(728)		(30)		(351)		(53)		(1,324)
Recoveries		-		24		427		49		162		33		695
Provision		28		(409)		453		(278)		24		382		200
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Allowance for loan losses: For the nine months ended September 30, 2013
Beginning Balance	$	76	$	2,224	$	7,551	$	2,401	$	4,715	$	332	$	17,299
Charge-offs		-		(564)		(2,596)		(67)		(1,167)		(190)		(4,584)
Recoveries		-		287		717		337		481		129		1,951
Provision		61		(52)		2,036		(1,041)		593		503		2,100
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Allowance for loan losses as of September 30, 2013
Ending balance individually evaluated for impairment	$	1	$	1,133	$	2,893	$	1,333	$	1,750	$	110	$	7,220
Ending balance collectively evaluated for impairment		136		762		4,815		297		2,872		664		9,546
Ending balance	$	137	$	1,895	$	7,708	$	1,630	$	4,622	$	774	$	16,766
Loans as of September 30, 2013
Ending balance individually evaluated for impairment	$	424	$	3,175	$	35,769	$	5,704	$	16,122	$	363	$	61,557
Ending balance collectively evaluated for impairment		14,898		62,078		232,999		9,360		215,422		14,614		549,371
Ending balance	$	15,322	$	65,253	$	268,768	$	15,064	$	231,544	$	14,977	$	610,928

Financing Receivable Credit Quality Indicators [Table Text Block]

The portfolio segments in each credit risk grade as of September 30, 2014 are as follows (000s omitted):

Credit Quality Indicators as of September 30, 2014

Credit Risk by Internally Assigned Grade

	Agriculture
	and
	Agricultural				Commercial		Construction		Residential		Consumer
	Real Estate		Commercial		Real Estate		Real Estate		Real Estate		and Other		Total
Not Rated	$	126	$	1,554	$	-	$	4,779	$	140,212	$	10,717	$	157,388
1		-		2,992		-		-		-		366		3,358
2		280		297		857		-		134		-		1,568
3		190		6,595		9,643		-		874		-		17,302
4		15,641		41,982		177,887		4,478		50,559		3,355		293,902
5		808		6,881		37,280		2,449		15,982		190		63,590
6		1,068		2,017		27,858		720		16,369		630		48,662
7		-		-		-		-		-		-		-
8		-		-		-		-		-		-		-
9		-		-		-		-		-		-		-
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770
Performing	$	17,087	$	60,808	$	234,708	$	10,214	$	211,067	$	14,434	$	548,318
Nonperforming		1,026		1,510		18,817		2,212		13,063		824		37,452
Total	$	18,113	$	62,318	$	253,525	$	12,426	$	224,130	$	15,258	$	585,770

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				Commercial		Construction		Residential		Consumer
	Real Estate		Commercial		Real Estate		Real Estate		Real Estate		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]

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 September 30, 2014 and December 31, 2013 (000s omitted):

													Recorded
													Investment >90
	30-59 Days		60-89 Days		>90 Days		Total Past						Days Past Due
September 30, 2014	Past Due		Past Due		Past Due		Due		Current		Total Loans		and Accruing
Agriculture and Agricultural Real Estate	$	250	$	-	$	80	$	330	$	17,783	$	18,113	$	-
Commercial		83		26		57		166		62,152		62,318		7
Commercial Real Estate		1,590		1,176		1,457		4,223		249,302		253,525		-
Construction Real Estate		81		-		-		81		12,345		12,426		-
Residential Real Estate		4,497		1,035		640		6,172		217,958		224,130		-
Consumer and Other		61		30		70		161		15,097		15,258		-
Total	$	6,562	$	2,267	$	2,304	$	11,133	$	574,637	$	585,770	$	7

													Recorded
													Investment >90
	30-59 Days		60-89 Days		>90 Days		Total Past						Days Past Due
December 31, 2013	Past Due		Past Due		Past Due		Due		Current		Total Loans		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 September 30, 2014 and December 31, 2013 (000s omitted):

	September 30, 2014		December 31, 2013
Agriculture and Agricultural Real Estate	$	80	$	172
Commercial		298		1,035
Commercial Real Estate		6,234		13,289
Construction Real Estate		424		2,009
Residential Real Estate		6,064		6,865
Consumer and Other		251		340
Total	$	13,351	$	23,710

Impaired Financing Receivables [Table Text Block]

The following is a summary of impaired loans as of September 30, 2014 and 2013 (000s omitted):

							Average				Average
							Recorded		Interest Income		Recorded		Interest Income
			Unpaid				Investment for the		Recognized in the		Investment for		Recognized in the
	Recorded		Principal		Related		Three Months		Three Months		the Nine Months		Nine Months
September 30, 2014	Investment		Balance		Allowance		Ended		Ended		Ended		Ended
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	258	$	257	$	-	$	258	$	4	$	259	$	7
Commercial		396		559		-		500		7		580		25
Commercial Real Estate		9,979		11,299		-		10,461		111		10,565		352
Construction Real Estate		302		1,019		-		610		2		668		17
Residential Real Estate		6,311		7,046		-		6,674		84		6,763		234
Consumer and Other		29		32		-		30		1		31		2
With an allowance recorded:
Agriculture and Agricultural Real Estate		688		687		36		687		9		700		28
Commercial		1,049		1,056		528		1,071		13		1,098		40
Commercial Real Estate		10,278		12,459		1,290		11,845		115		11,941		352
Construction Real Estate		1,836		1,864		480		1,855		22		1,869		66
Residential Real Estate		5,590		5,831		649		5,807		63		5,868		191
Consumer and Other		544		544		257		548		6		586		20
Total:
Agriculture and Agricultural Real Estate	$	946	$	944	$	36	$	945	$	13	$	959	$	35
Commercial		1,445		1,615		528		1,571		20		1,678		65
Commercial Real Estate		20,257		23,758		1,290		22,306		226		22,506		704
Construction Real Estate		2,138		2,883		480		2,465		24		2,537		83
Residential Real Estate		11,901		12,877		649		12,481		147		12,631		425
Consumer and Other		573		576		257		578		7		617		22

											Average
							Average				Recorded
			Unpaid				Recorded		Interest Income		Investment for		Interest Income
	Recorded		Principal		Related		Investment for the		Recognized in the		the Nine Months		Recognized in the
	Investment as		Balance as of		Allowance as		Three Months		Three Months		Ended		Nine Months
	of December		December 31,		of December		Ended September		Ended September		September 30,		Ended September
	31, 2013		2,013		31, 2013		30, 2013		30, 2013		2013		30, 2013
With no related allowance recorded:
Agriculture and Agricultural Real Estate	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial		869		966		-		1,728		21		1,562		55
Commercial Real Estate		19,567		23,005		-		19,544		228		20,004		629
Construction Real Estate		1,165		2,408		-		2,302		23		2,452		91
Residential Real Estate		7,929		9,035		-		8,586		97		8,656		293
Consumer and Other		33		36		-		31		1		31		3
With an allowance recorded:
Agriculture and Agricultural Real Estate		398		397		1		424		4		724		28
Commercial		1,540		1,627		1,031		1,695		16		1,739		53
Commercial Real Estate		16,025		20,032		2,697		18,660		148		19,226		594
Construction Real Estate		3,615		4,236		1,194		4,077		191		4,197		292
Residential Real Estate		8,745		9,194		1,809		8,141		91		8,347		264
Consumer and Other		585		581		265		332		5		339		14
Total:
Agriculture and Agricultural Real Estate	$	398	$	397	$	1	$	424	$	4	$	724	$	28
Commercial		2,409		2,593		1,031		3,423		37		3,301		108
Commercial Real Estate		35,592		43,037		2,697		38,204		376		39,230		1,223
Construction Real Estate		4,780		6,644		1,194		6,379		214		6,649		383
Residential Real Estate		16,674		18,229		1,809		16,727		188		17,003		557
Consumer and Other		618		617		265		363		6		370		17

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Loans that have been classified as TDRs during the three and nine month periods ended September 30, 2014 and September 30, 2013 are as follows (000s omitted from dollar amounts):

	Three months ended						Nine months ended
	September 30, 2014						September 30, 2014
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Recorded		Recorded				Recorded		Recorded
	Number of		Principal		Principal		Number of		Principal		Principal
	Contracts		Balance		Balance		Contracts		Balance		Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		1	$	314	$	314
Commercial		-		-		-		4		295		54
Commercial Real Estate		2		743		649		6		1,990		1,508
Construction Real Estate		3		43		22		3		43		22
Residential Real Estate		4		203		57		14		1,047		730
Consumer and Other		-		-		-		-		-		-
Total		9	$	989	$	728		28	$	3,689	$	2,628

	Three months ended						Nine months ended
	September 30, 2013						September 30, 2013
			Pre-		Post-				Pre-		Post-
			Modification		Modification				Modification		Modification
			Recorded		Recorded				Recorded		Recorded
	Number of		Principal		Principal		Number of		Principal		Principal
	Contracts		Balance		Balance		Contracts		Balance		Balance
Agriculture and Agricultural Real Estate		-	$	-	$	-		-	$	-	$	-
Commercial		6		1,044		636		13		1,398		787
Commercial Real Estate		3		480		301		10		2,527		1,646
Construction Real Estate		-		-		-		-		-		-
Residential Real Estate		8		685		665		24		2,131		1,801
Consumer and Other		1		10		9		5		276		34
Total		18	$	2,219	$	1,611		52	$	6,332	$	4,268