Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”),
the bank holding company for mBank, today announced second quarter
2018 income of $396 thousand, or $.05 per share, compared to net
income of $1.68 million, or $.27 per share, for the second quarter
of 2017. As expected, the 2018 second quarter results were
impacted by expenses related to the acquisition of First Federal of
Northern Michigan (FFNM) and pre-announcement diligence activity
related to the pending Lincoln Community Bank (Lincoln)
transaction. Weighted average share count was increased by a
common stock offering by the Corporation in June 2018 and the
issuance of shares in the FFNM acquisition.
On May 18, 2018 the Corporation completed the
acquisition of FFNM. The Corporation issued 2,146,378 new
shares as consideration for the purchase. On June 15,
2018, the Corporation closed a common stock offering resulting in
gross proceeds of roughly $34.50 million and net proceeds of
roughly $32.40 million. The Corporation issued 2,225,807
shares in connection with the stock offering. As a result of
the activities noted above, weighted average shares outstanding for
the second quarter of 2018 were 7,041,010 compared to 6,294,930 for
the same period of 2017 and 6,304,203 shares for the first quarter
of 2018.
The Corporation still expects cost efficiencies
from the FFNM acquisition and the pending Lincoln acquisition to be
fully phased in by the end of 2018, however, the savings relating
to FFNM were only partially integrated and realized in the second
quarter of 2018. The Corporation completed a successful data
processing conversion of FFNM over the weekend of July 13th. The
Corporation expects the pending Lincoln acquisition to close end of
third quarter or early in the fourth quarter subject to final
regulatory approvals with a data conversion scheduled for
mid-fourth quarter.
In connection with the acquisition, the
Corporation had second quarter GAAP pre-tax transaction related
expenses totaling $1.98 million. These one-time costs reduced
the reported net income for the quarter by $1.56 million on an
after-tax basis. The adjusted net income for the second
quarter of 2018 (exclusive of the transaction related expenses)
would equate to $1.96 million. The majority of the
expenses associated with the common stock offering were capitalized
in accordance with GAAP.
Total assets of the Corporation at June 30, 2018
were $1.27 billion compared to $1.03 billion at June 30,
2017. Shareholders’ equity at June 30, 2018 totaled $148.87
million, compared to $81.31 million on June 30, 2017. The tangible
book value per share equated to $11.57 on June 30, 2018 compared to
$11.72 per share a year ago. Subsequent to receiving the
proceeds from the stock offering, the Corporation paid down
approximately $19.45 million in senior holding company debt in the
second quarter.
The Corporation’s primary asset, mBank, recorded
net income of $1.20 million in the second quarter of 2018, compared
to $2.05 million for the same period in 2017. Combined
acquisition-related expenses totaled $1.45 million at the bank
level, with an after-tax impact of $1.15 million. Adjusted core net
income (exclusive of the expenses) for second quarter 2018 was
$2.35 million.
Revenue
Total revenue of the corporation for the three
months ended June 30, 2018 equated to $13.80 million compared to
$11.66 million for the same period of 2017. Total interest
income was $12.94 million for the second quarter of 2018 and $10.87
for the same period in 2017. The 2018 second quarter interest
income included accretive yield of $284 thousand from combined
credit mark accretion associated with acquisitions compared to 2017
same period of $351 thousand. The non-interest income portion of
total revenue increased slightly year-over-year from $795 thousand
in 2017 to $863 thousand in 2018, partially due to the positive
impact of the FFNM acquisition.
Loan Production / Credit Risk
Total balance sheet loans at June 30, 2018 were
$1.00 billion compared to June 30, 2017 balances of $811.08
million. Total loans under management now reside at $1.34
billion which includes $334 million of service retained loans.
New loan production for the first half of 2018 was slightly
behind previous year at $103 million with origination activity
increasing in the second quarter, as expected. Commercial
originations accounted for $62 million, retail, predominantly
mortgage, equated to $41 million. Commenting on new loan production
and overall lending activities, Kelly W. George, President and CEO
of mBank, stated, “Commercial loan production remains consistent
with prior year with a continued competitive environment for the
high-quality earning assets we originate. Based on steady deal flow
since the FFNM acquisition date, we expect that the addition of the
FFNM markets will have a positive impact on all types of
originations for the second half of 2018 as the operational and
cultural integration of this transaction has gone very well.
Likewise, in-house mortgage production has ramped up in our more
active summer months and is consistent with 2017 first half
activity. As we alluded to in our first quarter
communications, we have seen the change in interest rates impact
our secondary market origination, which is at about 70% of previous
year levels.”
Nonperforming loans totaled $5.03 million, .50%
of total loans at June 30, 2018 compared to $3.75 million, or .47%,
of total loans at June 30, 2017. The dollar amount increase
in non-performing loans is the result of credits acquired in the
FFNM transaction which were marked to market as part of the credit
due diligence process. Total loan delinquencies greater than
30 days resided at a nominal .89%, compared to .59% in the second
quarter of 2017. Commenting on overall credit risk, Mr. George
stated, “As expected, we saw a slight increase in our
non-performing credit ratios following the FFNM acquisition.
Similar to previous transactions, we anticipate this will normalize
over the coming quarters as we work to quickly resolve some of
these acquired credits. Overall, loan portfolio performance,
both legacy mBank and acquired FFNM, remains strong with no
material credit issues within any of the business segments.
Purchase accounting marks from the previously acquired banks have
continued to prove accurate, attaining expected accretion levels.
The acquired loan portfolio from FFNM should provide accretive
results to our bottom line and support in overall granularity and
concentration levels from a macro perspective.”
Margin Analysis / Funding
Net interest income in the second quarter of
2018 resided at $10.81 million, or 4.26%, compared to $9.32
million, or 4.24%, in the second quarter of 2017. Second
quarter 2018 total interest expense was $2.13 million versus $1.55
million for the same period of 2017. Of the $578 thousand
interest expense increase from previous year, $333 thousand was
attributable to interest on brokered CDs due to repricing
experienced from normal maturities and renewals at market
rates. An additional $167 thousand of the total was a result
of increased expense on our CD & IRA products due to some
slightly higher rates offered for competitive reasons. Total
brokered deposits were $152 million at the end of June 2018, down
from $217 million at June 30, 2017. FHLB borrowings were up
from $71 million to $92 million year-over-year as a result of
liabilities acquired from FFNM. The Corporation expects to
opportunistically reduce these borrowings as they mature. The
collective $44 million net improvement in these combined wholesale
funding categories was partially made possible by the complementary
balance sheet and deposit base of FFNM. Following the close
of the FFNM acquisition, the Corporation sold roughly $46 million
of the acquired investment portfolio to decrease its wholesale
funding.
Mr. George stated, “We have been successful in
maintaining our strong net interest margin in the rising rate
environment, and each rate increase should have positive impact on
the income generated from our loan portfolio. With the lower
cost core deposit base we acquired from FFNM, we have begun to
reposition the balance sheet and remove some of the more volatile
and higher cost wholesale funding sources that we have utilized in
the past. This repositioning should further stabilize our
funding and position us very well on the liability side for the
remainder of 2018 and decrease our relative funding costs. We will
also continue to proactively monitor as to when a need could occur
to move pricing up on our core transactional accounts due to
expected market pressures, a challenge all banks will face this
year. We have pivoted to a more offensive posture in terms of
overall core deposit gathering initiatives within our branch
network. At this time, our deposit beta remains strong at .08 when
comparing the movement in the federal funds rate to the movement on
our blended interest-bearing deposit rate.”
Noninterest Expense
Noninterest expense, at $11.08 million in the
second quarter of 2018, increased $3.56 million from the second
quarter 2017 total of $7.52 million. The expense variance from the
second quarter of 2017 was heavily impacted by the $1.98 million in
pre-tax transaction related expenses as well as the additional
expense related to the larger bank platform following the FFNM
closing, including additional salary, benefits and occupancy
costs. The Corporation still expects to realize the 40% cost
efficiencies from the FFNM acquisition as originally projected and
believes they will be fully phased in by the end of
2018.
Assets and Capital
Total assets of the Corporation at June 30, 2018
were $1.27 billion compared to $1.03 billion at June 30,
2017. Shareholders’ equity at June 30, 2018 totaled $148.87
million, compared to $81.31 million on June 30, 2017. The tangible
book value per share equated to $11.57 on June 30, 2018 compared to
$11.72 per share a year ago. Both the common stock offering
and the FFNM acquisition had positive impacts on the Corporation’s
overall capitalization and regulatory capital ratios. Of the
$32.4 net proceeds from the June 2018 common stock offering, the
corporation utilized $19.45 million to retire senior holding
company debt. The Corporation is “well-capitalized” and the
Bank is “well-capitalized” with total risk-based capital to risk
weighted assets of 11.06% and 12.39%, respectively.
Paul D. Tobias, Chairman and Chief Executive
Officer of the Corporation concluded, “We had a very busy and
productive quarter with the closing of the FFNM transaction, the
announcement of the Lincoln Community Bank acquisition and the
successful common stock offering. All three of these events
are representative of our consistent strategy of asset growth and
balance sheet strength while driving continually improving earnings
metrics. Both FFNM and Lincoln are accretive transactions
that add strategic and complementary markets where we can grow
organically. The stock offering was completed at a minimal
market price discount, strengthening our balance sheet and
providing the capital we need to continue to execute our growth
plans. Further, the ability to put a considerable portion of
the new capital to work through the reduction of senior holding
company debt and the purchase of Lincoln allows us to quickly
hurdle our cost of capital with the expected yield and savings from
the activities.”
Mackinac Financial Corporation is a registered
bank holding company formed under the Bank Holding Company Act of
1956 with assets in excess of $1.25 billion and whose common stock
is traded on the NASDAQ stock market as “MFNC.” The
principal subsidiary of the Corporation is mBank.
Headquartered in Manistique, Michigan, mBank has 29 branch
locations; eleven in the Upper Peninsula, ten in the Northern Lower
Peninsula, one in Oakland County, Michigan, and seven in Northern
Wisconsin. The Corporation’s banking services include
commercial lending and treasury management products and services
geared toward small to mid-sized businesses, as well as a full
array of personal and business deposit products and consumer
loans.
Forward-Looking Statements
This release contains certain
forward-looking statements. Words such as “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “should,” “will,”
“view,” and variations of such words and similar expressions are
intended to identify forward-looking statements as defined by the
Private Securities Litigation Reform Act of 1995. These
statements reflect management’s current beliefs as to expected
outcomes of future events and are not guarantees of future
performance. These statements involve certain risks,
uncertainties and assumptions that are difficult to predict with
regard to timing, extent, likelihood, and degree of
occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed or forecasted in such
forward-looking statements. Factors that could cause a
difference include among others: changes in the national and local
economies or market conditions; changes in interest rates and
banking regulations; the impact of competition from traditional or
new sources; and the possibility that anticipated cost savings and
revenue enhancements from mergers and acquisitions, bank
consolidations, branch closings and other sources may not be fully
realized at all or within specified time frames as well as other
risks and uncertainties including but not limited to those detailed
from time to time in filings of the Company with the Securities and
Exchange Commission. These and other factors may cause
decisions and actual results to differ materially from current
expectations. Mackinac Financial Corporation undertakes no
obligation to revise, update, or clarify forward-looking statements
to reflect events or conditions after the date of this
release.
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESSELECTED FINANCIAL
HIGHLIGHTS
|
|
As of and For the |
|
As of and For the |
As of and For the |
|
|
Period Ending |
|
Year Ending |
Period Ending |
|
|
June 30, |
|
December 31, |
June 30, |
(Dollars in thousands,
except per share data) |
|
2018 |
|
2017 |
2017 |
|
|
(Unaudited) |
|
|
(Unaudited) |
Selected
Financial Condition Data (at end of period): |
|
|
|
|
|
Assets |
|
$ |
1,274,095 |
|
$ |
985,367 |
|
$ |
1,027,450 |
Loans |
|
|
1,003,377 |
|
|
811,078 |
|
|
790,753 |
Investment
securities |
|
|
114,682 |
|
|
75,897 |
|
|
82,212 |
Deposits |
|
|
1,015,501 |
|
|
817,998 |
|
|
848,245 |
Borrowings |
|
|
91,747 |
|
|
79,552 |
|
|
92,024 |
Shareholders'
equity |
|
|
148,866 |
|
|
81,400 |
|
|
81,313 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Statements of Income Data six months and year
ended): |
|
|
|
|
Net interest
income |
|
$ |
20,122 |
|
$ |
37,938 |
|
$ |
18,485 |
Income before
taxes |
|
|
2,444 |
|
|
11,018 |
|
|
5,162 |
Net income |
|
|
1,933 |
|
|
5,479 |
|
|
3,406 |
Income per common share
- Basic |
|
.27 |
|
|
.87 |
|
.54 |
Income per common share
- Diluted |
|
.27 |
|
|
.87 |
|
.54 |
Weighted average shares
outstanding |
|
|
7,041,010 |
|
|
6,288,791 |
|
|
6,282,551 |
Weighted average shares
outstanding- Diluted |
|
|
7,073,764 |
|
|
6,322,413 |
|
|
6,298,515 |
|
|
|
|
|
|
Three Months
Ended: |
|
|
|
|
|
Net interest
income |
|
$ |
10,813 |
|
$ |
9,664 |
|
$ |
9,319 |
Income before
taxes |
|
|
499 |
|
|
2,838 |
|
|
2,547 |
Net income |
|
|
396 |
|
|
(20 |
) |
|
1,680 |
Income per common share
- Basic |
|
.05 |
|
|
- |
|
.27 |
Income per common share
- Diluted |
|
.05 |
|
|
- |
|
.27 |
Weighted average shares
outstanding |
|
|
7,769,720 |
|
|
6,294,930 |
|
|
6,294,930 |
Weighted average shares
outstanding- Diluted |
|
|
7,809,018 |
|
|
6,294,930 |
|
|
6,307,883 |
|
|
|
|
|
|
Selected
Financial Ratios and Other Data: |
|
|
|
|
|
Performance
Ratios: |
|
|
|
|
|
Net interest
margin |
|
|
4.23 |
% |
|
4.20 |
% |
|
4.21 |
Efficiency ratio |
|
|
87.27 |
|
|
71.39 |
|
|
71.61 |
Return on average
assets |
|
.37 |
|
|
.55 |
|
.70 |
Return on average
equity |
|
|
4.27 |
|
|
6.74 |
|
|
8.57 |
|
|
|
|
|
|
Average total
assets |
|
$ |
1,050,305 |
|
$ |
995,826 |
|
$ |
982,374 |
Average total
shareholders' equity |
|
|
91,258 |
|
|
81,349 |
|
|
80,158 |
Average loans to
average deposits ratio |
|
|
99.89 |
% |
|
96.29 |
% |
|
95.38 |
|
|
|
|
|
|
|
|
|
|
|
|
Common Share
Data at end of period: |
|
|
|
|
|
Market price per common
share |
|
$ |
16.58 |
|
$ |
15.90 |
|
$ |
13.99 |
Book value per common
share |
|
|
13.90 |
|
|
12.93 |
|
|
12.92 |
Tangible book value per
share |
|
|
11.57 |
|
|
11.72 |
|
|
11.69 |
Dividends paid per
share, annualized |
|
.480 |
|
|
.480 |
|
.480 |
Common shares
outstanding |
|
|
10,712,745 |
|
|
6,294,930 |
|
|
6,294,930 |
|
|
|
|
|
|
Other Data at
end of period: |
|
|
|
|
|
Allowance for loan
losses |
|
$ |
5,141 |
|
$ |
5,079 |
|
$ |
5,133 |
Non-performing
assets |
|
$ |
7,486 |
|
$ |
6,126 |
|
$ |
7,798 |
Allowance for loan
losses to total loans |
|
.51 |
% |
|
.63 |
% |
.65 |
Non-performing assets
to total assets |
|
.59 |
% |
|
.62 |
% |
.76 |
Texas ratio |
|
|
5.80 |
% |
|
7.77 |
% |
|
9.91 |
|
|
|
|
|
|
Number of: |
|
|
|
|
|
Branch
locations |
|
|
29 |
|
|
23 |
|
|
24 |
FTE
Employees |
|
|
233 |
|
|
233 |
|
|
235 |
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS
|
June 30, |
|
December 31, |
|
June 30, |
|
2018 |
|
2017 |
|
2017 |
|
(Unaudited) |
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks |
$ |
64,874 |
|
|
$ |
37,420 |
|
|
$ |
78,972 |
|
Federal funds sold |
|
15 |
|
|
|
6 |
|
|
|
10,006 |
|
Cash and
cash equivalents |
|
64,889 |
|
|
|
37,426 |
|
|
|
88,978 |
|
|
|
|
|
|
|
Interest-bearing
deposits in other financial institutions |
|
10,873 |
|
|
|
13,374 |
|
|
|
14,312 |
|
Securities available
for sale |
|
114,182 |
|
|
|
75,397 |
|
|
|
81,712 |
|
Other securities |
|
500 |
|
|
|
500 |
|
|
|
500 |
|
Federal Home Loan Bank
stock |
|
4,860 |
|
|
|
3,112 |
|
|
|
3,250 |
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
Commercial |
|
684,725 |
|
|
|
572,936 |
|
|
|
559,388 |
|
Mortgage |
|
299,450 |
|
|
|
220,708 |
|
|
|
212,306 |
|
Consumer |
|
19,202 |
|
|
|
17,434 |
|
|
|
19,059 |
|
Total
Loans |
|
1,003,377 |
|
|
|
811,078 |
|
|
|
790,753 |
|
Allowance
for loan losses |
|
(5,141 |
) |
|
|
(5,079 |
) |
|
|
(5,133 |
) |
Net
loans |
|
998,236 |
|
|
|
805,999 |
|
|
|
785,620 |
|
|
|
|
|
|
|
Premises and
equipment |
|
21,790 |
|
|
|
16,290 |
|
|
|
16,654 |
|
Other real estate held
for sale |
|
2,461 |
|
|
|
3,558 |
|
|
|
4,050 |
|
Deferred tax asset |
|
8,000 |
|
|
|
4,970 |
|
|
|
7,139 |
|
Deposit based
intangibles |
|
4,504 |
|
|
|
1,922 |
|
|
|
2,047 |
|
Goodwill |
|
20,389 |
|
|
|
5,694 |
|
|
|
5,694 |
|
Other assets |
|
23,411 |
|
|
|
17,125 |
|
|
|
17,494 |
|
|
|
|
|
|
|
TOTAL
ASSETS |
$ |
1,274,095 |
|
|
$ |
985,367 |
|
|
$ |
1,027,450 |
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Noninterest bearing deposits |
$ |
220,176 |
|
|
$ |
148,079 |
|
|
$ |
156,970 |
|
NOW,
money market, interest checking |
|
337,344 |
|
|
|
280,309 |
|
|
|
259,423 |
|
Savings |
|
106,022 |
|
|
|
61,097 |
|
|
|
61,741 |
|
CDs<$250,000 |
|
181,352 |
|
|
|
142,159 |
|
|
|
142,649 |
|
CDs>$250,000 |
|
18,930 |
|
|
|
11,055 |
|
|
|
10,597 |
|
Brokered |
|
151,677 |
|
|
|
175,299 |
|
|
|
216,865 |
|
Total
deposits |
|
1,015,501 |
|
|
|
817,998 |
|
|
|
848,245 |
|
|
|
|
|
|
|
Federal
funds purchased |
|
10,000 |
|
|
|
- |
|
|
|
- |
|
Borrowings |
|
91,747 |
|
|
|
79,552 |
|
|
|
92,024 |
|
Other
liabilities |
|
7,980 |
|
|
|
6,417 |
|
|
|
5,868 |
|
Total
liabilities |
|
1,125,228 |
|
|
|
903,967 |
|
|
|
946,137 |
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY: |
|
|
|
|
|
Common
stock and additional paid in capital - No par value |
|
|
|
|
|
Authorized - 18,000,000 shares |
|
|
|
|
|
Issued
and outstanding - 10,712,745; 6,294,930; and
6,294,930 shares respectively |
|
128,880 |
|
|
|
61,981 |
|
|
|
61,782 |
|
Retained
earnings |
|
19,602 |
|
|
|
19,711 |
|
|
|
19,101 |
|
Accumulated other comprehensive income |
|
|
|
|
|
Unrealized gains (losses) on available for sale securities |
|
606 |
|
|
|
(71 |
) |
|
|
508 |
|
Minimum
pension liability |
|
(221 |
) |
|
|
(221 |
) |
|
|
(78 |
) |
|
|
|
|
|
|
Total
shareholders' equity |
|
148,867 |
|
|
|
81,400 |
|
|
|
81,313 |
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,274,095 |
|
|
$ |
985,367 |
|
|
$ |
1,027,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
(Unaudited) |
|
(Unaudited) |
INTEREST
INCOME: |
|
|
|
|
|
|
|
|
Interest
and fees on loans: |
|
|
|
|
|
|
|
|
Taxable |
|
$ |
12,071 |
|
|
$ |
10,260 |
|
|
$ |
22,461 |
|
|
$ |
20,217 |
|
Tax-exempt |
|
|
31 |
|
|
|
19 |
|
|
|
56 |
|
|
|
52 |
|
Interest
on securities: |
|
|
|
|
|
|
|
|
Taxable |
|
|
560 |
|
|
|
396 |
|
|
|
932 |
|
|
|
795 |
|
Tax-exempt |
|
|
79 |
|
|
|
75 |
|
|
|
148 |
|
|
|
154 |
|
Other
interest income |
|
|
197 |
|
|
|
116 |
|
|
|
396 |
|
|
|
244 |
|
Total
interest income |
|
|
12,938 |
|
|
|
10,866 |
|
|
|
23,993 |
|
|
|
21,462 |
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
Deposits |
|
|
1,602 |
|
|
|
1,054 |
|
|
|
2,838 |
|
|
|
2,013 |
|
Borrowings |
|
|
523 |
|
|
|
493 |
|
|
|
1,033 |
|
|
|
964 |
|
Total
interest expense |
|
|
2,125 |
|
|
|
1,547 |
|
|
|
3,871 |
|
|
|
2,977 |
|
|
|
|
|
|
|
|
|
|
Net interest
income |
|
|
10,813 |
|
|
|
9,319 |
|
|
|
20,122 |
|
|
|
18,485 |
|
Provision for loan
losses |
|
|
100 |
|
|
|
50 |
|
|
|
150 |
|
|
|
200 |
|
Net interest income
after provision for loan losses |
|
|
10,713 |
|
|
|
9,269 |
|
|
|
19,972 |
|
|
|
18,285 |
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME: |
|
|
|
|
|
|
|
|
Deposit
service fees |
|
|
323 |
|
|
|
268 |
|
|
|
592 |
|
|
|
540 |
|
Income
from loans sold on the secondary market |
|
|
277 |
|
|
|
316 |
|
|
|
454 |
|
|
|
614 |
|
SBA/USDA
loan sale gains |
|
|
83 |
|
|
|
89 |
|
|
|
134 |
|
|
|
149 |
|
Mortgage
servicing income |
|
|
(2 |
) |
|
|
(9 |
) |
|
|
(10 |
) |
|
|
(17 |
) |
Other |
|
|
182 |
|
|
|
131 |
|
|
|
307 |
|
|
|
285 |
|
Total
other income |
|
|
863 |
|
|
|
795 |
|
|
|
1,477 |
|
|
|
1,571 |
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSE: |
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
|
4,923 |
|
|
|
3,658 |
|
|
|
9,077 |
|
|
|
7,455 |
|
Occupancy |
|
|
928 |
|
|
|
776 |
|
|
|
1,739 |
|
|
|
1,561 |
|
Furniture
and equipment |
|
|
644 |
|
|
|
544 |
|
|
|
1,175 |
|
|
|
1,025 |
|
Data
processing |
|
|
586 |
|
|
|
489 |
|
|
|
1,090 |
|
|
|
950 |
|
Advertising |
|
|
192 |
|
|
|
174 |
|
|
|
387 |
|
|
|
297 |
|
Professional service fees |
|
|
397 |
|
|
|
405 |
|
|
|
701 |
|
|
|
726 |
|
Loan and
deposit |
|
|
148 |
|
|
|
155 |
|
|
|
274 |
|
|
|
334 |
|
Writedowns and losses on other real estate held for sale |
|
|
40 |
|
|
|
243 |
|
|
|
66 |
|
|
|
255 |
|
FDIC
insurance assessment |
|
|
187 |
|
|
|
189 |
|
|
|
343 |
|
|
|
346 |
|
Telephone |
|
|
152 |
|
|
|
134 |
|
|
|
307 |
|
|
|
291 |
|
Transaction related expenses |
|
|
1,976 |
|
|
|
- |
|
|
|
2,165 |
|
|
|
- |
|
Other |
|
|
904 |
|
|
|
750 |
|
|
|
1,681 |
|
|
|
1,454 |
|
Total
other expenses |
|
|
11,077 |
|
|
|
7,517 |
|
|
|
19,005 |
|
|
|
14,694 |
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
|
499 |
|
|
|
2,547 |
|
|
|
2,444 |
|
|
|
5,162 |
|
Provision for income
taxes |
|
|
103 |
|
|
|
867 |
|
|
|
511 |
|
|
|
1,756 |
|
|
|
|
|
|
|
|
|
|
NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS |
|
|
396 |
|
|
|
1,680 |
|
|
|
1,933 |
|
|
|
3,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME PER
COMMON SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
.05 |
|
|
$ |
.27 |
|
|
$ |
.27 |
|
|
$ |
.54 |
|
Diluted |
|
$ |
.05 |
|
|
$ |
.27 |
|
|
$ |
.27 |
|
|
$ |
.54 |
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESLOAN PORTFOLIO AND CREDIT
QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
|
June 30, |
|
December 31, |
|
June 30, |
|
2018 |
|
2017 |
|
2017 |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
Commercial
Loans: |
|
|
|
|
|
Real estate - operators
of nonresidential buildings |
$ |
117,285 |
|
$ |
119,025 |
|
$ |
114,129 |
Hospitality and
tourism |
|
78,122 |
|
|
75,228 |
|
|
73,109 |
Lessors of residential
buildings |
|
37,866 |
|
|
33,032 |
|
|
30,719 |
Gasoline stations and
convenience stores |
|
22,207 |
|
|
21,176 |
|
|
19,903 |
Logging |
|
17,368 |
|
|
17,554 |
|
|
18,143 |
Commercial
construction |
|
20,895 |
|
|
9,243 |
|
|
10,145 |
Other |
|
390,982 |
|
|
297,678 |
|
|
293,240 |
Total Commercial
Loans |
|
684,725 |
|
|
572,936 |
|
|
559,388 |
|
|
|
|
|
|
1-4 family residential
real estate |
|
284,041 |
|
|
209,890 |
|
|
200,771 |
Consumer |
|
19,202 |
|
|
17,434 |
|
|
19,059 |
Consumer
construction |
|
15,409 |
|
|
10,818 |
|
|
11,535 |
|
|
|
|
|
|
Total Loans |
$ |
1,003,377 |
|
$ |
811,078 |
|
$ |
790,753 |
|
|
|
|
|
|
|
|
|
Credit Quality (at end of period):
|
June 30, |
|
December 31, |
|
June 30, |
|
|
2018 |
|
2017 |
|
2017 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
Nonperforming
Assets : |
|
|
|
|
|
|
Nonaccrual loans |
$ |
3,825 |
|
$ |
2,388 |
|
$ |
3,644 |
|
Loans past due 90 days
or more |
|
- |
|
|
- |
|
|
- |
|
Restructured loans |
|
1,200 |
|
|
180 |
|
|
104 |
|
Total
nonperforming loans |
|
5,025 |
|
|
2,568 |
|
|
3,748 |
|
Other real estate
owned |
|
2,461 |
|
|
3,558 |
|
|
4,050 |
|
Total
nonperforming assets |
$ |
7,486 |
|
$ |
6,126 |
|
$ |
7,798 |
|
Nonperforming loans as
a % of loans |
.50 |
% |
.32 |
% |
.47 |
% |
Nonperforming assets as
a % of assets |
.59 |
% |
.62 |
% |
.76 |
% |
Reserve for
Loan Losses: |
|
|
|
|
|
|
At period end |
$ |
5,141 |
|
$ |
5,079 |
|
$ |
5,133 |
|
As a % of average
loans |
.51 |
% |
.64 |
% |
.65 |
% |
As a % of nonperforming
loans |
|
102.31 |
% |
|
197.78 |
% |
|
136.95 |
% |
As a % of nonaccrual
loans |
|
215.28 |
% |
|
212.69 |
% |
|
140.86 |
% |
Texas Ratio |
|
5.80 |
% |
|
7.77 |
% |
|
9.91 |
% |
|
|
|
|
|
|
|
Charge-off
Information (year to date): |
|
|
|
|
|
|
Average
loans |
$ |
858,508 |
|
$ |
795,532 |
|
$ |
784,823 |
|
Net charge-offs
(recoveries) |
$ |
88 |
|
$ |
566 |
|
$ |
87 |
|
Charge-offs as a
% of average |
|
|
|
|
|
|
loans,
annualized |
.02 |
% |
.07 |
% |
.02 |
% |
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIESQUARTERLY FINANCIAL HIGHLIGHTS
|
QUARTER ENDED |
|
|
(Unaudited) |
|
|
June 30, |
|
March 31, |
|
December 31 |
|
September 30, |
|
June 30 |
|
|
2018 |
|
2018 |
|
2017 |
|
2017 |
|
2017 |
|
BALANCE SHEET
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
$ |
1,003,377 |
|
|
$ |
812,441 |
|
|
$ |
811,078 |
|
|
$ |
808,149 |
|
|
$ |
790,753 |
|
|
Allowance for loan
losses |
|
(5,141 |
) |
|
|
(5,101 |
) |
|
|
(5,079 |
) |
|
|
(5,130 |
) |
|
|
(5,133 |
) |
|
Total loans,
net |
|
998,236 |
|
|
|
807,340 |
|
|
|
805,999 |
|
|
|
803,019 |
|
|
|
785,620 |
|
|
Total assets |
|
1,274,095 |
|
|
|
983,929 |
|
|
|
985,367 |
|
|
|
1,015,070 |
|
|
|
1,027,450 |
|
|
Core deposits |
|
844,894 |
|
|
|
602,601 |
|
|
|
631,644 |
|
|
|
643,859 |
|
|
|
621,303 |
|
|
Noncore deposits |
|
170,607 |
|
|
|
204,196 |
|
|
|
186,354 |
|
|
|
191,344 |
|
|
|
226,942 |
|
|
Total
deposits |
|
1,015,501 |
|
|
|
806,797 |
|
|
|
817,998 |
|
|
|
835,203 |
|
|
|
848,245 |
|
|
Total borrowings |
|
91,747 |
|
|
|
80,002 |
|
|
|
79,552 |
|
|
|
91,397 |
|
|
|
92,024 |
|
|
Total shareholders'
equity |
|
148,867 |
|
|
|
81,857 |
|
|
|
81,400 |
|
|
|
82,649 |
|
|
|
81,313 |
|
|
Total tangible
equity |
|
123,974 |
|
|
|
74,303 |
|
|
|
73,784 |
|
|
|
74,970 |
|
|
|
73,572 |
|
|
Total shares
outstanding |
|
10,712,745 |
|
|
|
6,332,560 |
|
|
|
6,294,930 |
|
|
|
6,294,930 |
|
|
|
6,294,930 |
|
|
Weighted average shares
outstanding |
|
7,041,010 |
|
|
|
6,304,203 |
|
|
|
6,294,930 |
|
|
|
6,294,930 |
|
|
|
6,294,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
$ |
1,117,188 |
|
|
$ |
982,679 |
|
|
$ |
996,966 |
|
|
$ |
1,021,152 |
|
|
$ |
984,236 |
|
|
Loans |
|
905,802 |
|
|
|
810,688 |
|
|
|
808,306 |
|
|
|
803,825 |
|
|
|
787,143 |
|
|
Deposits |
|
913,220 |
|
|
|
805,092 |
|
|
|
817,338 |
|
|
|
841,699 |
|
|
|
820,375 |
|
|
Equity |
|
100,518 |
|
|
|
81,894 |
|
|
|
82,879 |
|
|
|
82,162 |
|
|
|
81,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
STATEMENT (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
10,813 |
|
|
$ |
9,309 |
|
|
$ |
9,664 |
|
|
$ |
9,789 |
|
|
$ |
9,319 |
|
|
Provision for loan
losses |
|
100 |
|
|
|
50 |
|
|
|
225 |
|
|
|
200 |
|
|
|
50 |
|
|
Net interest
income after provision |
|
10,713 |
|
|
|
9,259 |
|
|
|
9,439 |
|
|
|
9,589 |
|
|
|
9,269 |
|
|
Total noninterest
income |
|
863 |
|
|
|
614 |
|
|
|
1,317 |
|
|
|
1,153 |
|
|
|
795 |
|
|
Total noninterest
expense |
|
11,077 |
|
|
|
7,928 |
|
|
|
7,918 |
|
|
|
7,724 |
|
|
|
7,517 |
|
|
Income before
taxes |
|
499 |
|
|
|
1,945 |
|
|
|
2,838 |
|
|
|
3,018 |
|
|
|
2,547 |
|
|
Provision for income
taxes |
|
103 |
|
|
|
408 |
|
|
|
2,858 |
|
|
|
925 |
|
|
|
867 |
|
|
Net income available to
common shareholders |
$ |
396 |
|
|
$ |
1,537 |
|
|
$ |
(20 |
) |
|
$ |
2,093 |
|
|
$ |
1,680 |
|
|
Income pre-tax,
pre-provision |
$ |
599 |
|
|
$ |
1,995 |
|
|
$ |
3,062 |
|
|
$ |
3,218 |
|
|
$ |
2,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
$ |
.05 |
|
|
$ |
.24 |
|
|
$ |
(.01 |
) |
|
$ |
.33 |
|
|
$ |
.27 |
|
|
Book value per
common share |
|
13.90 |
|
|
|
12.96 |
|
|
|
12.93 |
|
|
|
13.13 |
|
|
|
12.92 |
|
|
Tangible book value per
share |
|
11.57 |
|
|
|
11.73 |
|
|
|
11.72 |
|
|
|
11.91 |
|
|
|
11.69 |
|
|
Market value, closing
price |
|
16.58 |
|
|
|
16.25 |
|
|
|
15.90 |
|
|
|
15.50 |
|
|
|
13.99 |
|
|
Dividends per
share |
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
loans/total loans |
|
.50 |
% |
|
|
.53 |
% |
|
|
.32 |
% |
|
|
.38 |
% |
|
|
.47 |
% |
|
Nonperforming
assets/total assets |
|
.59 |
|
|
|
.70 |
|
|
|
.62 |
|
|
|
.74 |
|
|
|
.76 |
|
|
Allowance for loan
losses/total loans |
|
.51 |
|
|
|
.63 |
|
|
|
.63 |
|
|
|
.63 |
|
|
|
.65 |
|
|
Allowance for loan
losses/nonperforming loans |
|
102.31 |
|
|
|
117.48 |
|
|
|
197.78 |
|
|
|
167.37 |
|
|
|
136.95 |
|
|
Texas ratio |
|
5.80 |
|
|
|
6.87 |
|
|
|
7.77 |
|
|
|
9.34 |
|
|
|
9.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFITABILITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
.14 |
% |
|
|
.63 |
% |
|
|
(.01 |
)% |
|
|
.81 |
% |
|
|
.68 |
% |
|
Return on average
equity |
|
1.58 |
|
|
|
7.61 |
|
|
|
(.10 |
) |
|
|
10.11 |
|
|
|
8.32 |
|
|
Net interest
margin |
|
4.26 |
|
|
|
4.19 |
|
|
|
4.18 |
|
|
|
4.23 |
|
|
|
4.24 |
|
|
Average loans/average
deposits |
|
99.19 |
|
|
|
100.70 |
|
|
|
98.89 |
|
|
|
95.50 |
|
|
|
95.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
ADEQUACY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage
ratio |
|
9.39 |
% |
|
|
7.25 |
% |
|
|
7.06 |
% |
|
|
6.82 |
% |
|
|
7.02 |
% |
|
Tier 1 capital to risk
weighted assets |
|
11.87 |
|
|
|
8.79 |
|
|
|
8.66 |
|
|
|
8.47 |
|
|
|
8.57 |
|
|
Total capital to risk
weighted assets |
|
12.39 |
|
|
|
9.43 |
|
|
|
9.29 |
|
|
|
9.10 |
|
|
|
9.21 |
|
|
Average equity/average
assets (for the quarter) |
|
9.00 |
|
|
|
8.33 |
|
|
|
8.31 |
|
|
|
8.05 |
|
|
|
8.23 |
|
|
Tangible
equity/tangible assets (at quarter end) |
|
9.92 |
|
|
|
7.62 |
|
|
|
7.55 |
|
|
|
7.44 |
|
|
|
7.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: |
|
Jesse A.
Deering, (248) 290-5906 / jdeering@bankmbank.comPaul D. Tobias,
(248) 290-5900 / ptobias@bankmbank.com |
Website: |
|
www.bankmbank.com |
|
|
|
Mackinac Financial (NASDAQ:MFNC)
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