Mackinac Financial Corporation (Nasdaq: MFNC) (the “Corporation”),
the bank holding company for mBank, today announced 2018 net income
of $8.37 million, or $.94 per share, compared to 2017 net income of
$5.48 million, or $.87 per share.
The 2018 results included expenses related to
the acquisitions of First Federal of Northern Michigan (“FFNM”),
and Lincoln Community Bank (“Lincoln”), which had a collective
after-tax impact of $2.46 million on earnings. The 2017 results
include the effects of a $2.02 million non-cash tax expense related
to the revaluation of the company’s Deferred Tax Asset (“DTA”) as a
result of the corporate tax code change in December 2017 and a
small amount of transaction expenses related to FFNM.
Adjusted core income (net of transaction related expenses) for 2018
was $10.83 million or $1.22 per share compared to 2017 adjusted
core income (net of the DTA expense) of $7.54 million, or $1.20 per
share.
Weighted average shares outstanding for 2018
were 8,891,967 compared to 6,288,791 for 2017. Weighted average
shares outstanding for the fourth quarter 2018 were 10,712,745
compared to 6,294,930 for the same period of 2017. The
Corporation issued 2,146,378 new shares for the FFNM purchase in
May 2018 and issued an additional 2,225,807 shares related to the
common stock offering completed in June 2018.
The Corporation had fourth quarter 2018 net
income of $3.36 million or $.31 per share compared to a $20
thousand loss ($0.00 per share) for the same period of 2017 due to
the impact of the DTA revaluation. The 2018 fourth quarter
results were impacted by acquisition related expenses of $386
thousand on an after-tax basis. 2018 fourth quarter income,
excluding tax-affected transaction related expenses, was $3.75
million or $.35 per share compared to 2017 income, net of the DTA
expense, of $2.07 million or $0.33 per share.
Total assets of the Corporation at December 31,
2018 were $1.32 billion, compared to $985.37 million at December
31, 2017. Shareholders’ equity at December 31, 2018 totaled
$152.07 million, compared to $81.40 million at December 31, 2017.
Book value per share outstanding equated to $14.20 at
year-end 2018 compared to $12.93 per share outstanding a year
ago. Tangible book value at year-end 2018 was $124.33 million
or $11.61 per share outstanding compared to $73.78 million or
$11.72 per share at year-end 2017.
Additional notes:
- mBank, the Corporation’s primary asset, recorded net income of
$9.04 million in 2018, compared to $8.98 million in 2017. In
December 2018, mBank had an internal tax allocation expense between
it and the Corporation (MFNC) of $1.34 million. This
adjustment resulted from the internal DTA allocation from 2017 and
did not have an impact on the consolidated MFNC reported income or
balance sheet for 2018. It was, however, reflected in the
mBank 2018 year-end Call Report. Adjusted core net income for
2018 (including total adjustments for the tax reallocation and
transaction related expenses of $3.16 million on an after-tax
basis) was $12.20 million compared to 2017 core net income of the
aforementioned $8.98 million. Adjusted bank core net income grew
approximately 36%.
- As expected, FFNM and Lincoln have been fully integrated into
the Corporation and mBank as of year-end 2018. No further
significant transaction related expenses are expected from these
acquisitions in 2019 and beyond.
- Adjusted income before taxes of the Corporation (net of pre-tax
transaction related expenses) was $13.71 million in 2018 compared
to $11.12 million in 2017, which eliminates the effect of the
non-cash DTA expense year-over-year. Adjusted fourth quarter
income before taxes was $4.75 million in 2018 compared to $2.94
million in 2017, an increase of 61%.
- Reliance on higher cost brokered deposits decreased
significantly from $175.30 million or 21.43% of total deposits at
year-end 2017 to $136.76 million or 12.46% of total deposits at
year-end 2018.
- 2018 net interest margin (NIM) remains strong at 4.44%.
Core operating margin, which is net of accretion from acquired
loans that were subject to purchase accounting adjustments, was
4.21%.
Revenue
Total revenue of the Corporation for 2018 was
$59.64 million compared to $48.42 million in 2017. Total
revenue for the three months ended December 31, 2018 equated to
$17.54 million compared to $12.71 million for the same period of
2017. Total interest income for 2018 was $55.38 million
compared to $44.38 million for the same period in 2017.
Fourth quarter interest income equated to $16.09 million compared
to $11.39 million in the fourth quarter of 2017. The 2018
fourth quarter interest income included accretive yield of $946
thousand from combined credit mark accretion associated with
acquisitions compared to $503 thousand in the same period of
2017.
Loan Production
Total balance sheet loans at December 31, 2018
were $1.04 billion compared to December 31, 2017 balances of
$811.08 million. Total loans under management now reside at
$1.38 billion, which includes $338.17 million of service retained
loans. New loan production for 2018 was $287 million, with
origination activity increasing through the second half of the
year, as expected. Commercial originations accounted for $169
million, retail (predominantly mortgage), equated to $46 million,
secondary market mortgage production was $57 million and Asset
Based Lending (ABL) $15 million. The tables below illustrate
year-to-date new loan production totals by region as well as
bank-wide new loan production by quarter for 2018 highlighting the
effect of seasonality on operations due to the Corporation’s
geographic footprint.
Images accompanying this section are available:
http://www.globenewswire.com/NewsRoom/AttachmentNg/d9baaebc-7e14-4ea6-88af-81e01f98526chttp://www.globenewswire.com/NewsRoom/AttachmentNg/746784e5-89b3-409b-b9dd-31ae5adb825e
Commenting on new loan production and overall
lending activities, President of the Corporation and President and
CEO of mBank, Kelly W. George, stated, “Commercial loan production
outpaced last year’s totals by $27 million with a continued
competitive environment for high-quality credits. We believe
the acquired FFNM markets and Wisconsin markets will continue to
have a positive impact on all types of originations and we are very
pleased with their contributions since the acquisitions and their
full integration into our lending culture. Secondary market
activity has improved in the third and fourth quarters but remained
$9 million less than 2017 after a slower start to the year,
predominately driven by the expected slowdown in refinance
activity. Commercial payoff activity was somewhat elevated this
year, totaling $56 million as we saw continued fixed-rate pricing
pressure and terms that led us to pass on renewing some larger
client relationships that we felt were not prudent to retain for
the long-term stability of our margin and macro portfolio mix. We
also saw several clients divest of various types of large real
estate development projects for liquidity and redeployment of their
capital throughout the latter part of the year. Overall, we remain
pleased with our lending activities in 2018 and the outlook for
2019 absent any significant adverse market conditions. Key lending
personnel should also be able to focus greater time on organic
growth initiatives given the multiple acquisition and capital raise
activities throughout 2018.”
Credit Quality
Nonperforming loans totaled $5.08 million, or
.49% of total loans at December 31, 2018 compared to $2.57 million,
or .32% of total loans at December 31, 2017. The increase in
non-performing loans is mainly the result of credits acquired in
the FFNM transaction, which were marked to fair value as part of
the credit due diligence process. Total loan delinquencies
greater than 30 days resided at a nominal .96%, compared to .66% in
2017. Provision for loan loss expense for the fourth quarter
2018 was $300 thousand.
Commenting on overall credit risk, Mr. George
stated, “As expected, we saw a slight increase in our
non-performing and problem loan credit ratios following the FFNM
and Lincoln acquisitions. We have seen no signs of any adverse
systemic issues in terms of increased payment period times for
legacy clients or material deterioration in commercial client
financial statements in any of our core industries in which we
lend. Similar to previous transactions, we anticipate this slight
increase to nonperforming loans and delinquencies will normalize
over the coming quarters as we continue to work quickly in
resolving these acquired problem credits, either through exit from
the bank, or when possible, rehabilitation to an acceptable loan
structure and performance. Also, purchase accounting marks
from the previously acquired banks have continued to prove
accurate, attaining expected accretion levels.”
Margin Analysis and Funding
Net interest income for 2018 was $47.13 million,
leading to a Net Interest Margin (NIM) of 4.44% compared to $37.94
million in 2017 and a NIM of 4.20%. Core operating margin,
which is net of accretion from acquired loans that were subject to
purchase accounting adjustments, was 4.21% for 2018. Net
interest income for the fourth quarter of 2018 resided at $13.79
million, and a NIM of 4.64%, compared to $9.66 million and a NIM of
4.18% in the fourth quarter of 2017. 2018 total interest
expense was $8.25 million versus $6.44 million for 2017 due mainly
to a larger deposit base following the FFNM transaction and
partially to an increase in rates on brokered deposits.
An image accompanying this section is
available:http://www.globenewswire.com/NewsRoom/AttachmentNg/2e338882-3736-4892-9601-ce9aea17ba9d
Total bank deposits (excluding brokered
deposits) have increased by $318.08 million year-over-year from
$642.70 million in 2017 to $960.78 million at year-end 2018.
Total brokered deposits were $136.76 million at the end of
December 2018, down from $175.30 million at December 31,
2017. FHLB and other borrowings were also down slightly from
$60 million at year-end 2017 to $57 million at the end of
2018.
Images accompanying this section
are available: http://www.globenewswire.com/NewsRoom/AttachmentNg/35e0e7ff-1f86-4a71-8c66-499610696bf5http://www.globenewswire.com/NewsRoom/AttachmentNg/a24cda39-9db6-4194-aedc-0a46f7001d40
Mr. George stated, “With the lower cost core
deposit base we acquired from FFNM and Lincoln, we were able to
reposition the balance sheet and remove approximately $40 million
of much higher cost wholesale funding sources in 2018. We also
continue to maintain our pricing discipline with regard to fixed
rate lending, primarily on the commercial side to ensure margin
sustainability. The impact of any future Federal Reserve Bank rate
moves on funding sources are expected to be more than offset by the
positive impact from the increase in the variable rate portion of
our well-balanced loan portfolio given the structure of our balance
sheet. We have not seen any significant pricing pressure in our
high value deposit markets and have had to make nominal increases
in our deposit products to remain rate-competitive and offset any
potential outflows. Our focus on new core deposit procurement
remains a key initiative for 2019 as we look to continue to wind
down our wholesale funding sources through aggressive marketing and
business development initiatives within our retail branch and
treasury management business lines in target markets where greater
opportunities exist.”
Noninterest Income /
Expense
2018 Noninterest Income was $4.26 million
compared to $4.04 million for 2017. While year-over-year
improvement is negligible, 2017 included approximately $230
thousand in additional gains on sales of securities from the bank
investment portfolio as well as $315 thousand more in gains on sale
of secondary market mortgages and Small Business Administration
(SBA) loans compared to 2018. Overall, non-interest income
generated from the larger bank platform is trending positively and
we expect SBA income to normalize in 2019. Noninterest
Expense for 2018 was $40.30 million compared to $30.36 million in
2017. The expense variance from 2017 was heavily impacted by
the additional expense related to the larger bank platform
following the FFNM and Lincoln transactions including additional
salary, benefits and occupancy costs as well as the transaction
related expenses.
Assets and Capital
Total assets of the Corporation at December 31,
2018 were $1.32 billion, compared to $985.37 million at December
31, 2017. Shareholders’ equity at December 31, 2018 totaled
$152.07 million, compared to $81.40 million at December 31, 2017.
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 million in net
proceeds from the June 2018 common stock offering, the Corporation
utilized $19.45 million to retire senior holding company debt and
$8.5 million for the purchase of Lincoln. Both the
Corporation and the Bank are “well-capitalized” with total
risk-based capital to risk-weighted assets of 12.47% and 12.22% and
tier 1 capital to total tier 1 average assets at the corporation of
9.24% and at the bank of 9.02%.
Paul D. Tobias, Chairman and Chief Executive
Officer of the Corporation and Chairman of mBank concluded, “We
believe that 2018 was an extremely productive and transformative
year. We continue to execute our growth and acquisition strategy
while maintaining focus on credit quality, scale efficiencies,
community support and governance. Our balance sheet
attributes are strong due to a capital raise that provides us with
a cushion that will help us maintain our ability to seek
well-priced acquisitions. The complementary core deposit base
of FFNM and Lincoln allowed us to restructure our liabilities,
reducing holding company debt and wholesale funding levels at an
opportune time in the rate cycle. Our patience and discipline have
served us well in all aspects of our business. We remain
optimistic that we will develop acquisition opportunities as we
grow organically. Our focus on efficiency and improved
profitability always will be paramount.”
Mackinac Financial Corporation is a registered
bank holding company formed under the Bank Holding Company Act of
1956 with assets in excess of $1.3 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 Company’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,”
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, 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
SUBSIDIARIES
SELECTED FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and For the |
|
As of and For the |
|
|
|
|
|
|
|
Year Ending |
|
Year Ending |
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
(Dollars in
thousands, except per share data) |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
Selected Financial Condition Data (at end of
period): |
|
|
|
|
|
Assets |
|
|
|
|
|
$ |
1,318,040 |
|
$ |
985,367 |
|
Loans |
|
|
|
|
|
|
1,038,864 |
|
|
811,078 |
|
Investment
securities |
|
|
|
|
|
116,748 |
|
|
75,897 |
|
Deposits |
|
|
|
|
|
|
1,097,537 |
|
|
817,998 |
|
Borrowings |
|
|
|
|
|
60,441 |
|
|
79,552 |
|
Shareholders' equity |
|
|
|
|
|
152,069 |
|
|
81,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Statements of Income Data: |
|
|
|
|
|
|
Net
interest income |
|
|
|
|
$ |
47,130 |
|
$ |
37,938 |
|
Income
before taxes |
|
|
|
|
|
10,593 |
|
|
11,018 |
|
Net
income |
|
|
|
|
|
8,367 |
|
|
5,479 |
|
Income per
common share - Basic |
|
|
|
.94 |
|
.87 |
|
Income per
common share - Diluted |
|
|
.94 |
|
.87 |
|
Weighted
average shares outstanding |
|
|
|
8,891,967 |
|
|
6,288,791 |
|
Weighted
average shares outstanding- Diluted |
|
|
|
8,921,658 |
|
|
6,322,413 |
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Ratios and Other Data: |
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
|
|
|
Net
interest margin |
|
|
|
|
|
4.44 |
% |
|
4.20 |
% |
Efficiency
ratio |
|
|
|
|
|
77.70 |
|
|
71.39 |
|
Return on
average assets |
|
|
|
.71 |
|
.55 |
|
Return on
average equity |
|
|
|
|
6.94 |
|
|
6.74 |
|
|
|
|
|
|
|
|
|
|
|
Average
total assets |
|
|
|
|
$ |
1,177,455 |
|
$ |
995,826 |
|
Average
total shareholders' equity |
|
|
|
|
120,478 |
|
|
81,349 |
|
Average
loans to average deposits ratio |
|
|
|
97.75 |
% |
|
96.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share Data at end of period: |
|
|
|
|
|
|
Market
price per common share |
|
|
|
$ |
13.65 |
|
$ |
15.90 |
|
Book value
per common share |
|
|
|
|
14.20 |
|
|
12.93 |
|
Tangible
book value per share |
|
|
|
|
11.61 |
|
|
11.72 |
|
Dividends
paid per share, annualized |
|
|
.480 |
|
.480 |
|
Common
shares outstanding |
|
|
|
|
10,712,745 |
|
|
6,294,930 |
|
|
|
|
|
|
|
|
|
|
|
Other Data at end of period: |
|
|
|
|
|
|
|
Allowance
for loan losses |
|
|
|
$ |
5,183 |
|
$ |
5,079 |
|
Non-performing assets |
|
|
|
|
$ |
8,196 |
|
$ |
6,126 |
|
Allowance
for loan losses to total loans |
|
|
.50 |
% |
.63 |
% |
Non-performing assets to total assets |
|
|
.62 |
% |
.62 |
% |
Texas ratio |
|
|
|
|
|
|
6.33 |
% |
|
7.77 |
% |
|
|
|
|
|
|
|
|
|
|
Number of: |
|
|
|
|
|
|
|
|
|
Branch locations |
|
|
|
|
|
29 |
|
|
23 |
|
FTE Employees |
|
|
|
|
|
288 |
|
|
233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
(Unaudited) |
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and due from
banks |
$ |
64,151 |
|
|
$ |
37,420 |
|
|
Federal funds sold |
|
6 |
|
|
|
6 |
|
|
Cash and
cash equivalents |
|
64,157 |
|
|
|
37,426 |
|
|
|
|
|
|
|
Interest-bearing
deposits in other financial institutions |
|
13,452 |
|
|
|
13,374 |
|
|
Securities available
for sale |
|
116,248 |
|
|
|
75,397 |
|
|
Other securities |
|
500 |
|
|
|
500 |
|
|
Federal Home Loan Bank
stock |
|
4,924 |
|
|
|
3,112 |
|
|
|
|
|
|
|
Loans: |
|
|
|
|
Commercial |
|
717,032 |
|
|
|
572,936 |
|
|
Mortgage |
|
301,461 |
|
|
|
220,708 |
|
|
Consumer |
|
20,371 |
|
|
|
17,434 |
|
|
Total
Loans |
|
1,038,864 |
|
|
|
811,078 |
|
|
Allowance
for loan losses |
|
(5,183 |
) |
|
|
(5,079 |
) |
|
Net
loans |
|
1,033,681 |
|
|
|
805,999 |
|
|
|
|
|
|
|
Premises and
equipment |
|
22,783 |
|
|
|
16,290 |
|
|
Other real estate held
for sale |
|
3,119 |
|
|
|
3,558 |
|
|
Deferred tax asset |
|
5,763 |
|
|
|
4,970 |
|
|
Deposit based
intangibles |
|
5,720 |
|
|
|
1,922 |
|
|
Goodwill |
|
22,024 |
|
|
|
5,694 |
|
|
Other assets |
|
25,669 |
|
|
|
17,125 |
|
|
|
|
|
|
|
TOTAL
ASSETS |
$ |
1,318,040 |
|
|
$ |
985,367 |
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
Deposits: |
|
|
|
|
Noninterest bearing deposits |
$ |
241,556 |
|
|
$ |
148,079 |
|
|
NOW,
money market, interest checking |
|
368,890 |
|
|
|
280,309 |
|
|
Savings |
|
111,358 |
|
|
|
61,097 |
|
|
CDs<$250,000 |
|
225,236 |
|
|
|
142,159 |
|
|
CDs>$250,000 |
|
13,737 |
|
|
|
11,055 |
|
|
Brokered |
|
136,760 |
|
|
|
175,299 |
|
|
Total
deposits |
|
1,097,537 |
|
|
|
817,998 |
|
|
|
|
|
|
|
Federal
funds purchased |
|
2,905 |
|
|
|
- |
|
|
Borrowings |
|
57,536 |
|
|
|
79,552 |
|
|
Other
liabilities |
|
7,993 |
|
|
|
6,417 |
|
|
Total
liabilities |
|
1,165,971 |
|
|
|
903,967 |
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY: |
|
|
|
|
Common
stock and additional paid in capital - No par value |
|
|
|
|
Authorized - 18,000,000 shares |
|
|
|
|
Issued
and outstanding - 10,712,745 and 6,294,930, shares
respectively |
|
129,066 |
|
|
|
61,981 |
|
|
Retained
earnings |
|
23,466 |
|
|
|
19,711 |
|
|
Accumulated other comprehensive income |
|
|
|
|
Unrealized gains (losses) on available for sale securities |
|
(245 |
) |
|
|
(71 |
) |
|
Minimum
pension liability |
|
(218 |
) |
|
|
(221 |
) |
|
|
|
|
|
|
Total
shareholders' equity |
|
152,069 |
|
|
|
81,400 |
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,318,040 |
|
|
$ |
985,367 |
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
For the Years Ended |
|
|
December 31, |
|
|
2018 |
|
2017 |
|
2016 |
|
|
(Unaudited) |
|
(Audited) |
|
(Audited) |
INTEREST
INCOME: |
|
|
|
|
|
|
Interest
and fees on loans: |
|
|
|
|
|
|
Taxable |
|
$ |
51,407 |
|
$ |
41,770 |
|
|
$ |
36,078 |
|
Tax-exempt |
|
|
123 |
|
|
95 |
|
|
|
64 |
|
Interest
on securities: |
|
|
|
|
|
|
Taxable |
|
|
2,408 |
|
|
1,606 |
|
|
|
1,322 |
|
Tax-exempt |
|
|
338 |
|
|
298 |
|
|
|
220 |
|
Other
interest income |
|
|
1,101 |
|
|
607 |
|
|
|
299 |
|
Total
interest income |
|
|
55,377 |
|
|
44,376 |
|
|
|
37,983 |
|
|
|
|
|
|
|
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
Deposits |
|
|
6,492 |
|
|
4,361 |
|
|
|
3,322 |
|
Borrowings |
|
|
1,755 |
|
|
2,077 |
|
|
|
1,563 |
|
Total
interest expense |
|
|
8,247 |
|
|
6,438 |
|
|
|
4,885 |
|
|
|
|
|
|
|
|
Net interest
income |
|
|
47,130 |
|
|
37,938 |
|
|
|
33,098 |
|
Provision for loan
losses |
|
|
500 |
|
|
625 |
|
|
|
600 |
|
Net interest income
after provision for loan losses |
|
|
46,630 |
|
|
37,313 |
|
|
|
32,498 |
|
|
|
|
|
|
|
|
OTHER
INCOME: |
|
|
|
|
|
|
Deposit
service fees |
|
|
1,441 |
|
|
1,056 |
|
|
|
995 |
|
Income
from mortgage loans sold on the secondary market |
|
|
1,289 |
|
|
1,373 |
|
|
|
1,575 |
|
SBA/USDA
loan sale gains |
|
|
661 |
|
|
867 |
|
|
|
897 |
|
Mortgage
servicing income - net |
|
|
197 |
|
|
(31 |
) |
|
|
(40 |
) |
Net
security gains |
|
|
- |
|
|
231 |
|
|
|
150 |
|
Other |
|
|
675 |
|
|
545 |
|
|
|
576 |
|
Total
other income |
|
|
4,263 |
|
|
4,041 |
|
|
|
4,153 |
|
|
|
|
|
|
|
|
OTHER
EXPENSE: |
|
|
|
|
|
|
Salaries
and employee benefits |
|
|
20,064 |
|
|
15,490 |
|
|
|
14,625 |
|
Occupancy |
|
|
3,640 |
|
|
3,104 |
|
|
|
2,680 |
|
Furniture
and equipment |
|
|
2,548 |
|
|
2,209 |
|
|
|
1,749 |
|
Data
processing |
|
|
2,503 |
|
|
2,037 |
|
|
|
1,620 |
|
Advertising |
|
|
905 |
|
|
711 |
|
|
|
620 |
|
Professional service fees |
|
|
1,575 |
|
|
1,534 |
|
|
|
1,169 |
|
Loan and
deposit |
|
|
1,166 |
|
|
1,335 |
|
|
|
1,100 |
|
Writedowns and losses on other real estate held for sale |
|
|
182 |
|
|
388 |
|
|
|
202 |
|
FDIC
insurance assessment |
|
|
700 |
|
|
731 |
|
|
|
488 |
|
Telephone |
|
|
726 |
|
|
604 |
|
|
|
528 |
|
Transaction related expenses |
|
|
2,951 |
|
|
50 |
|
|
|
3,101 |
|
Other |
|
|
3,340 |
|
|
2,143 |
|
|
|
2,003 |
|
Total
other expenses |
|
|
40,300 |
|
|
30,336 |
|
|
|
29,885 |
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
|
10,593 |
|
|
11,018 |
|
|
|
6,766 |
|
Provision for (benefit
of) income taxes |
|
|
2,226 |
|
|
5,539 |
|
|
|
2,283 |
|
|
|
|
|
|
|
|
NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS |
|
$ |
8,367 |
|
$ |
5,479 |
|
|
$ |
4,483 |
|
|
|
|
|
|
|
|
INCOME PER
COMMON SHARE: |
|
|
|
|
|
|
Basic |
|
$ |
.94 |
|
$ |
.87 |
|
|
$ |
.72 |
|
Diluted |
|
$ |
.94 |
|
$ |
.87 |
|
|
$ |
.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES
LOAN PORTFOLIO AND CREDIT
QUALITY
(Dollars in thousands)
Loan Portfolio Balances (at end of period):
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
(Unaudited) |
|
(Unaudited) |
|
Commercial
Loans: |
|
|
|
|
Real estate - operators
of nonresidential buildings |
$ |
150,251 |
|
$ |
119,025 |
|
Hospitality and
tourism |
|
77,598 |
|
|
75,228 |
|
Lessors of residential
buildings |
|
50,204 |
|
|
33,032 |
|
Gasoline stations and
convenience stores |
|
24,189 |
|
|
21,176 |
|
Logging |
|
20,860 |
|
|
17,554 |
|
Commercial
construction |
|
12,752 |
|
|
9,243 |
|
Other |
|
381,178 |
|
|
297,678 |
|
Total
Commercial Loans |
|
717,032 |
|
|
572,936 |
|
|
|
|
|
|
1-4 family residential
real estate |
|
286,908 |
|
|
209,890 |
|
Consumer |
|
20,371 |
|
|
17,434 |
|
Consumer
construction |
|
14,553 |
|
|
10,818 |
|
|
|
|
|
|
Total
Loans |
$ |
1,038,864 |
|
$ |
811,078 |
|
|
|
|
|
|
Credit Quality (at end of period):
|
|
|
|
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
(Unaudited) |
|
(Unaudited) |
|
Nonperforming
Assets : |
|
|
|
|
Nonaccrual loans |
$ |
5,054 |
|
$ |
2,388 |
|
Loans past due 90 days
or more |
|
23 |
|
|
- |
|
Restructured loans |
|
- |
|
|
180 |
|
Total
nonperforming loans |
|
5,077 |
|
|
2,568 |
|
Other real estate
owned |
|
3,119 |
|
|
3,558 |
|
Total
nonperforming assets |
$ |
8,196 |
|
$ |
6,126 |
|
Nonperforming loans as
a % of loans |
.49 |
% |
.32 |
% |
Nonperforming assets as
a % of assets |
.62 |
% |
.62 |
% |
Reserve for
Loan Losses: |
|
|
|
|
At period end |
$ |
5,183 |
|
$ |
5,079 |
|
As a % of average
loans |
.55 |
% |
.64 |
% |
As a % of nonperforming
loans |
|
102.09 |
% |
|
197.78 |
% |
As a % of nonaccrual
loans |
|
102.55 |
% |
|
212.69 |
% |
Texas Ratio |
|
6.33 |
% |
|
7.77 |
% |
|
|
|
|
|
Charge-off
Information (year to date): |
|
|
|
|
Average
loans |
$ |
941,221 |
|
$ |
795,532 |
|
Net
charge-offs (recoveries) |
$ |
396 |
|
$ |
566 |
|
Charge-offs as a % of average |
|
|
|
|
loans,
annualized |
.04 |
% |
.07 |
% |
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
QUARTER ENDED |
|
|
|
(Unaudited) |
|
|
|
December 31 |
|
September 30, |
|
June 30 |
|
March 31 |
|
December 31 |
|
|
|
2018 |
|
2018 |
|
2018 |
|
2018 |
|
2017 |
|
|
BALANCE SHEET
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
$ |
1,038,864 |
|
|
$ |
993,808 |
|
|
$ |
1,003,377 |
|
|
$ |
812,441 |
|
|
$ |
811,078 |
|
|
|
Allowance for loan
losses |
|
(5,183 |
) |
|
|
(5,186 |
) |
|
|
(5,141 |
) |
|
|
(5,101 |
) |
|
|
(5,079 |
) |
|
|
Total
loans, net |
|
1,033,681 |
|
|
|
988,622 |
|
|
|
998,236 |
|
|
|
807,340 |
|
|
|
805,999 |
|
|
|
Total assets |
|
1,318,040 |
|
|
|
1,254,335 |
|
|
|
1,274,095 |
|
|
|
983,929 |
|
|
|
985,367 |
|
|
|
Core deposits |
|
947,040 |
|
|
|
885,988 |
|
|
|
844,894 |
|
|
|
602,601 |
|
|
|
631,644 |
|
|
|
Noncore
deposits |
|
150,497 |
|
|
|
142,070 |
|
|
|
170,607 |
|
|
|
204,196 |
|
|
|
186,354 |
|
|
|
Total deposits |
|
1,097,537 |
|
|
|
1,028,058 |
|
|
|
1,015,501 |
|
|
|
806,797 |
|
|
|
817,998 |
|
|
|
Total borrowings |
|
60,441 |
|
|
|
69,216 |
|
|
|
91,747 |
|
|
|
80,002 |
|
|
|
79,552 |
|
|
|
Total shareholders'
equity |
|
152,069 |
|
|
|
149,367 |
|
|
|
148,867 |
|
|
|
81,857 |
|
|
|
81,400 |
|
|
|
Total tangible
equity |
|
124,325 |
|
|
|
124,605 |
|
|
|
123,974 |
|
|
|
74,303 |
|
|
|
73,784 |
|
|
|
Total shares
outstanding |
|
10,712,745 |
|
|
|
10,712,745 |
|
|
|
10,712,745 |
|
|
|
6,332,560 |
|
|
|
6,294,930 |
|
|
|
Weighted average shares
outstanding |
|
10,712,745 |
|
|
|
10,712,745 |
|
|
|
7,769,720 |
|
|
|
6,304,203 |
|
|
|
6,294,930 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
$ |
1,320,996 |
|
|
$ |
1,284,068 |
|
|
$ |
1,117,188 |
|
|
$ |
982,679 |
|
|
$ |
996,966 |
|
|
|
Loans |
|
1,043,409 |
|
|
|
1,001,763 |
|
|
|
905,802 |
|
|
|
810,688 |
|
|
|
808,306 |
|
|
|
Deposits |
|
1,087,174 |
|
|
|
1,042,004 |
|
|
|
913,220 |
|
|
|
805,092 |
|
|
|
817,338 |
|
|
|
Equity |
|
149,241 |
|
|
|
149,202 |
|
|
|
100,518 |
|
|
|
81,894 |
|
|
|
82,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
STATEMENT (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
13,795 |
|
|
$ |
13,214 |
|
|
$ |
10,813 |
|
|
$ |
9,309 |
|
|
$ |
9,664 |
|
|
|
Provision for loan
losses |
|
300 |
|
|
|
50 |
|
|
|
100 |
|
|
|
50 |
|
|
|
225 |
|
|
|
Net
interest income after provision |
|
13,495 |
|
|
|
13,164 |
|
|
|
10,713 |
|
|
|
9,259 |
|
|
|
9,439 |
|
|
|
Total noninterest
income |
|
1,443 |
|
|
|
1,343 |
|
|
|
863 |
|
|
|
614 |
|
|
|
1,317 |
|
|
|
Total noninterest
expense |
|
10,678 |
|
|
|
10,618 |
|
|
|
11,077 |
|
|
|
7,928 |
|
|
|
7,918 |
|
|
|
Income before
taxes |
|
4,260 |
|
|
|
3,889 |
|
|
|
499 |
|
|
|
1,945 |
|
|
|
2,838 |
|
|
|
Provision for income
taxes |
|
895 |
|
|
|
820 |
|
|
|
103 |
|
|
|
408 |
|
|
|
2,858 |
|
|
|
Net income available to
common shareholders |
$ |
3,365 |
|
|
$ |
3,069 |
|
|
$ |
396 |
|
|
$ |
1,537 |
|
|
$ |
(20 |
) |
|
|
Income pre-tax,
pre-provision |
$ |
4,560 |
|
|
$ |
3,939 |
|
|
$ |
599 |
|
|
$ |
1,995 |
|
|
$ |
3,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
$ |
.31 |
|
|
$ |
.29 |
|
|
$ |
.05 |
|
|
$ |
.24 |
|
|
$ |
- |
|
|
|
Book value per
common share |
|
14.20 |
|
|
|
13.94 |
|
|
|
13.90 |
|
|
|
12.96 |
|
|
|
12.93 |
|
|
|
Tangible book value per
share |
|
11.61 |
|
|
|
11.63 |
|
|
|
11.57 |
|
|
|
11.73 |
|
|
|
11.72 |
|
|
|
Market value, closing
price |
|
13.65 |
|
|
|
16.20 |
|
|
|
16.58 |
|
|
|
16.25 |
|
|
|
15.90 |
|
|
|
Dividends per
share |
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
.120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
loans/total loans |
|
.49 |
|
% |
|
.46 |
|
% |
|
.50 |
|
% |
|
.53 |
|
% |
|
.32 |
|
% |
|
Nonperforming
assets/total assets |
|
.62 |
|
|
|
.53 |
|
|
|
.59 |
|
|
|
.70 |
|
|
|
.62 |
|
|
|
Allowance for loan
losses/total loans |
|
.50 |
|
|
|
.52 |
|
|
|
.51 |
|
|
|
.63 |
|
|
|
.63 |
|
|
|
Allowance for loan
losses/nonperforming loans |
|
102.09 |
|
|
|
114.58 |
|
|
|
102.31 |
|
|
|
117.48 |
|
|
|
197.78 |
|
|
|
Texas ratio |
|
6.33 |
|
|
|
5.14 |
|
|
|
5.80 |
|
|
|
6.87 |
|
|
|
7.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFITABILITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
1.01 |
|
% |
|
.95 |
|
% |
|
.14 |
|
% |
|
.63 |
|
% |
|
(.01) |
|
% |
|
Return on average
equity |
|
8.95 |
|
|
|
8.16 |
|
|
|
1.58 |
|
|
|
7.61 |
|
|
|
(.10) |
|
|
|
Net interest
margin |
|
4.64 |
|
|
|
4.60 |
|
|
|
4.26 |
|
|
|
4.19 |
|
|
|
4.18 |
|
|
|
Average loans/average
deposits |
|
95.97 |
|
|
|
96.14 |
|
|
|
99.19 |
|
|
|
100.70 |
|
|
|
98.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
ADEQUACY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage
ratio |
|
9.24 |
|
% |
|
9.51 |
|
% |
|
9.39 |
|
% |
|
7.25 |
|
% |
|
7.06 |
|
% |
|
Tier 1 capital to risk
weighted assets |
|
11.95 |
|
|
|
12.62 |
|
|
|
11.87 |
|
|
|
8.79 |
|
|
|
8.66 |
|
|
|
Total capital to risk
weighted assets |
|
12.47 |
|
|
|
13.17 |
|
|
|
12.39 |
|
|
|
9.43 |
|
|
|
9.29 |
|
|
|
Average equity/average
assets (for the quarter) |
|
11.30 |
|
|
|
11.62 |
|
|
|
9.00 |
|
|
|
8.33 |
|
|
|
8.31 |
|
|
|
Tangible
equity/tangible assets (at quarter end) |
|
9.64 |
|
|
|
10.13 |
|
|
|
9.92 |
|
|
|
7.62 |
|
|
|
7.55 |
|
|
|
|
|
|
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|
Contact:
Jesse A. Deering, EVP & Chief Financial Officer (248) 290-5906
/jdeering@bankmbank.comWebsite:
www.bankmbank.com
Mackinac Financial (NASDAQ:MFNC)
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Mackinac Financial (NASDAQ:MFNC)
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