Mackinac Financial Corporation (Nasdaq:MFNC) (the “Corporation”),
the bank holding company for mBank, today announced third quarter
2017 net income of $2.093 million, or $.33 per share, compared to
net income of $1.778 million or $.28 per share for the third
quarter of 2016. Net income for the first nine months of 2017
totaled $5.499 million, or $.88 per share, compared to $2.785
million, or $.45 per share, for the same period in 2016.
Total assets of the Corporation at September 30, 2017 totaled
$1.015 billion, compared to $959.121 million at September 30,
2016. Weighted average shares for 2017 totaled 6,286,772
compared to 6,226,900 shares in the same period of 2016.
The period-to-period comparison above includes
the effect of the Corporation’s April 2016 acquisition of First
National Bank of Eagle River (“Eagle River”) and August 2016
acquisition of Niagara Bancorporation (“Niagara”). In
connection with these acquisitions, the Corporation had aggregate
GAAP pre-tax transaction related expenses totaling $2.928 million
recorded in the second and third quarters of 2016. These costs,
largely associated with the early termination of the Eagle River
data processing system in June, reduced the reported nine-month
2016 income by $1.932 million, or $.31 per share, on an after-tax
basis. The adjusted 2016 nine-month net income (exclusive of
the transaction related expenses) equates to $4.718 million, or
$.76 per share. The transaction expense impact in the third
quarter of 2016 was $237 thousand, or $.04 per share, the exclusion
of which results in adjusted net income $2.015 million, or $.32 per
share, for the quarter.
Highlights for the first nine months of 2017
include:
- mBank, the Corporation’s subsidiary bank, recorded nine-month
net income of $6.543 million compared to $3.953 million in
2016. Excluding $2.512 million of transaction related
expenses ($1.658 million after tax), net income was $5.611 million
for the first nine months of 2016. The adjusted
year-over-year increase equates to 17%.
- Total shareholder equity increased $4.364 million
year-over-year from $78.285 million in September 2016 to $82.649
million in 2017.
- Total interest income was $32.985 million through September
2017 compared to $27.398 million for the same period in 2016, a 20%
increase.
- Net interest margin remains solid, at 4.21%. Net interest
income increased from $23.980 million in 2016 to $28.274 million in
2017, an 18% increase.
- Credit quality remains strong with a Texas Ratio of 9.34% as of
September 30, 2017.
Loans
and Nonperforming Assets
Total loans at September 30, 2017 were $808.149
million an increase from $756.804 million at September 30, 2016. In
addition to the balance sheet loan totals, the Corporation services
$204.078 million of sold mortgage loans and $39.737 million of sold
SBA and USDA loans. Total loans under management as of third
quarter end were $1.052 billion.
New loan production totaled $211.750 million,
with the Upper Peninsula contributing $95.3 million, the Northern
Lower Peninsula $38.9 million, Southeast Michigan $36.5 million,
Wisconsin $18.1 million and Mackinac Commercial Credit, the Bank’s
asset based lending division, $22.9 million. Commercial loan
production accounted for $106.0 million of the total, with consumer
loans, primarily 1-4 family mortgages, totaling $82.8 million,
inclusive of $48.8 million of secondary market originations.
Commenting on new loan production and overall lending activities,
Kelly W. George, President and CEO of mBank stated, “We are pleased
to have had consistent loan production thus far in 2017 compared to
2016 especially within our asset based lending division which has
had its most productive year since its inception with strong
growth. As expected, we have also seen good momentum and
production within the markets we entered last year in Northern
Wisconsin. Market pricing remains competitive in all our
regions as commercial clients continually gravitate to more fixed
rate lending structures. Our mix of loans remains very good
with diversification amongst industry types. We have passed
on some lending opportunities for non-owner occupied commercial
real estate to ensure prudent balance sheet risk management in the
event of an economic downturn. As expected, our seasonal lending
months throughout our northern regions saw an uptick in our
mortgage lending activities and income levels from our secondary
market mortgage sales along with increased SBA loans sales.”
Nonperforming assets totaled $7.478 million, or .74%
of total assets at September 30, 2017 compared to $7.938 million,
or .83% of total assets at September 30, 2016. Total loan
delinquencies greater than 30 days resided at a nominal .50%, or
$4.164 million. George, commenting on credit quality stated, “Our
loan portfolio remains sound with no material weaknesses within any
of our lines. Purchase accounting marks from diligence on the
loans acquired from the two 2016 acquisitions have proven sound
with positive resolutions accreting to the bank’s earnings. The
positive trends in our nonperforming asset totals, Texas ratio, and
delinquencies are the result of our steadfast underwriting
requirements and focus on proactive loan administration. With
further increases expected in the Prime rate and other variable
rate indexes for 2018, we are actively monitoring variable rate
borrowers through increasing “shock” tests on their cash flows to
determine future stress in any business segment which at this point
remains well controlled.”
Margin/Deposit Analysis
Net interest income for the first nine months of
2017 increased to $28.274 million, a 4.21% net interest margin
compared to $23.980 million, or 4.21%, in 2016. Total
deposits of $835.203 million September 30, 2017 compared to
$807.180 at the same date in 2016. George, commenting on
deposits and overall liquidity, stated “Our net interest margin
continues to hold up well even with the various pricing impacts of
the Fed rate movements and the flat yield curve. Focus on
current and long-term asset and liability pricing will remain
important as we move through this rate cycle to protect our
margin. As we have stated in the past, the Corporation
maintains a strong short-term liquidity position made up of various
components of core and wholesale funding sources, as well as
unpledged investments to support loan growth and operations.
Our funding mix and liquidity will shift slightly throughout the
year with the seasonality of some business clients, but the other
sources allow for numerous funding instruments to help prudently
manage long term interest rate risk. Liability side focus
will remain centered on growing our core deposit levels as these
comparatively inexpensive deposits in relation to wholesale sources
will continue to prove more and more valuable as rates continue to
increase.”
Noninterest Income/Expense
Noninterest income, at $2.724 million, was $287
thousand behind the September 30, 2016 level of $3.012 million. The
primary reason for the variance to 2016 was the timing of the
customary sales of SBA loans which are anticipated to normalize for
the year. Noninterest expense was $22.418 million for the
first three quarters of 2017 compared to $22.376 million for the
same period of 2016. The 2016 total included $2.928 million
of transaction-related expenses. Excluding these charges,
noninterest expense totaled $19.448 million in the first nine
months of 2016. The largest increase in operating expenses
compared to 2016 were salaries, benefits and occupancy expense;
areas that are directly impacted by increased operating scale
primarily related to the acquisitions of Eagle River and Niagara.
The Bank was able to achieve the expected level of cost
efficiencies contemplated with the 2016 acquisitions with
noninterest expense to total average assets of 2.85% at September
30, 2017 improving from 2.95%, net of transaction expenses, at
September 30, 2016 which ratio remains in-line with peer
averages.
Assets and Capital
Total assets of the Corporation at September 30,
2017 were $1.015 billion, up $56.0 million from the $959.121
million of total assets at September 30, 2016. Total common
shareholders’ equity at September 30, 2017 was $82.649 million, or
$13.13 per share, compared to $78.285 million, or $12.50 per share
at September 30, 2016. Capital levels remain consistent with
past periods as Tier 1 Common Equity resided at 6.82% of average
assets at the Corporation and 8.88% at mBank.
In closure, Chairman and CEO of the Corporation
Paul D. Tobias stated, “We are very pleased with the consistency of
our earnings in 2017 after acquiring and integrating two banks in
2016. Our diligence on expense efficiencies and the
respective loan portfolios has proven accurate. We remain
mindful of our cost structure and efficiency ratio which has
improved compared to 2016 adjusted levels, even with some inherent
expenses of becoming a billion-dollar company. We will
continue to grow the company organically through focus on our core
business lines and remain opportunistic as to future accretive and
strategic acquisition opportunities. We believe additional scale
will positively impact efficiency and continue our progress in
earnings performance, building shareholder value and increasing our
dividend.”
Mackinac Financial Corporation is a registered
bank holding company formed under the Bank Holding Company Act of
1956 with assets in excess of $1 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 23 branch
locations; twelve in the Upper Peninsula, four 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,”
“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
SUBSIDIARIES |
|
SELECTED FINANCIAL HIGHLIGHTS |
|
|
|
|
|
As of and For the |
|
|
As of and For the |
|
|
As of and For the |
|
|
Period Ending |
|
|
Year Ending |
|
|
Period Ending |
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
(Dollars in thousands,
except per share data) |
|
2017 |
|
|
2016 |
|
|
2016 |
|
|
|
(Unaudited) |
|
|
|
|
|
(Unaudited) |
|
Selected
Financial Condition Data (at end of
period): |
|
|
|
|
|
|
|
|
|
Assets |
|
$ |
1,015,070 |
|
|
$ |
983,520 |
|
|
$ |
959,121 |
|
Loans |
|
|
808,149 |
|
|
|
781,857 |
|
|
|
756,804 |
|
Investment
securities |
|
|
85,009 |
|
|
|
86,273 |
|
|
|
88,886 |
|
Deposits |
|
|
835,203 |
|
|
|
823,512 |
|
|
|
807,180 |
|
Borrowings |
|
|
91,397 |
|
|
|
67,579 |
|
|
|
67,730 |
|
Shareholders'
equity |
|
|
82,649 |
|
|
|
78,609 |
|
|
|
78,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected
Statements of Income Data nine months and year
ended): |
|
|
|
|
|
|
|
|
|
Net interest
income |
|
$ |
28,274 |
|
|
$ |
33,098 |
|
|
$ |
23,980 |
|
Income before
taxes |
|
|
8,180 |
|
|
|
6,766 |
|
|
|
4,266 |
|
Net income |
|
|
5,499 |
|
|
|
4,483 |
|
|
|
2,785 |
|
Income per common share
- Basic |
|
.88 |
|
|
.72 |
|
|
.45 |
|
Income per common share
- Diluted |
|
.87 |
|
|
.72 |
|
|
.45 |
|
Weighted average shares
outstanding |
|
|
6,286,722 |
|
|
|
6,236,067 |
|
|
|
6,226,900 |
|
Weighted average shares
outstanding- Diluted |
|
|
6,310,866 |
|
|
|
6,268,703 |
|
|
|
6,255,803 |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended: |
|
|
|
|
|
|
|
|
|
Net interest
income |
|
$ |
9,789 |
|
|
$ |
9,118 |
|
|
$ |
8,696 |
|
Income before
taxes |
|
|
3,018 |
|
|
|
2,500 |
|
|
|
2,700 |
|
Net income |
|
|
2,093 |
|
|
|
1,698 |
|
|
|
1,778 |
|
Income per common share
- Basic |
|
.33 |
|
|
.27 |
|
|
.29 |
|
Income per common share
- Diluted |
|
.33 |
|
|
.27 |
|
|
.28 |
|
Weighted average shares
outstanding |
|
|
6,294,930 |
|
|
|
6,263,371 |
|
|
|
6,238,756 |
|
Weighted average shares
outstanding- Diluted |
|
|
6,318,488 |
|
|
|
6,316,452 |
|
|
|
6,284,359 |
|
|
|
|
|
|
|
|
|
|
|
Selected
Financial Ratios and Other Data: |
|
|
|
|
|
|
|
|
|
Performance
Ratios: |
|
|
|
|
|
|
|
|
|
Net interest
margin |
|
|
4.21 |
% |
|
|
4.19 |
% |
|
|
4.21 |
% |
Efficiency ratio |
|
|
71.09 |
|
|
|
79.69 |
|
|
|
82.89 |
|
Return on average
assets |
|
.74 |
|
|
.52 |
|
|
.45 |
|
Return on average
equity |
|
|
9.10 |
|
|
|
5.73 |
|
|
|
4.75 |
|
|
|
|
|
|
|
|
|
|
|
Average total
assets |
|
$ |
995,442 |
|
|
$ |
865,573 |
|
|
$ |
834,378 |
|
Average total
shareholders' equity |
|
|
80,833 |
|
|
|
78,300 |
|
|
|
78,264 |
|
Average loans to
average deposits ratio |
|
|
95.42 |
% |
|
|
98.14 |
% |
|
|
98.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share
Data at end of period: |
|
|
|
|
|
|
|
|
|
Market price per common
share |
|
$ |
15.50 |
|
|
$ |
13.47 |
|
|
$ |
11.49 |
|
Book value per common
share |
|
|
13.13 |
|
|
|
12.55 |
|
|
|
12.50 |
|
Tangible book value per
share |
|
|
11.91 |
|
|
|
11.29 |
|
|
|
11.23 |
|
Dividends paid per
share, annualized |
|
.480 |
|
|
.400 |
|
|
.400 |
|
Common shares
outstanding |
|
|
6,294,930 |
|
|
|
6,263,371 |
|
|
|
6,263,371 |
|
|
|
|
|
|
|
|
|
|
|
Other Data at
end of period: |
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
|
$ |
5,130 |
|
$ |
5,020 |
|
|
$ |
4,862 |
|
Non-performing
assets |
|
$ |
7,478 |
|
$ |
8,906 |
|
|
$ |
7,938 |
|
Allowance for loan
losses to total loans |
|
.63 |
% |
|
.64 |
% |
|
.64 |
% |
Non-performing assets
to total assets |
|
.74 |
% |
|
.91 |
% |
|
.83 |
% |
Texas ratio |
|
|
9.34 |
% |
|
|
11.76 |
% |
|
|
10.55 |
% |
|
|
|
|
|
|
|
|
|
Number of: |
|
|
|
|
|
|
|
|
Branch
locations |
|
|
23 |
|
|
23 |
|
|
|
23 |
|
FTE
Employees |
|
|
233 |
|
|
|
222 |
|
|
|
218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
|
|
September 30, |
|
December 31, |
|
September 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2016 |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks |
$ |
52,676 |
|
|
$ |
44,620 |
|
|
$ |
46,200 |
|
Federal funds sold |
|
5,006 |
|
|
|
2,135 |
|
|
|
2,415 |
|
Cash and
cash equivalents |
|
57,682 |
|
|
|
46,755 |
|
|
|
48,615 |
|
|
|
|
|
|
|
Interest-bearing
deposits in other financial institutions |
|
13,374 |
|
|
|
14,047 |
|
|
|
14,047 |
|
Securities available
for sale |
|
85,009 |
|
|
|
86,273 |
|
|
|
88,886 |
|
Federal Home Loan Bank
stock |
|
3,250 |
|
|
|
2,911 |
|
|
|
2,926 |
|
|
|
|
|
|
|
Loans: |
|
|
|
|
|
Commercial |
|
572,799 |
|
|
|
543,573 |
|
|
|
513,266 |
|
Mortgage |
|
217,103 |
|
|
|
218,171 |
|
|
|
222,840 |
|
Consumer |
|
18,247 |
|
|
|
20,113 |
|
|
|
20,698 |
|
Total
Loans |
|
808,149 |
|
|
|
781,857 |
|
|
|
756,804 |
|
Allowance
for loan losses |
|
(5,130 |
) |
|
|
(5,020 |
) |
|
|
(4,862 |
) |
Net
loans |
|
803,019 |
|
|
|
776,837 |
|
|
|
751,942 |
|
|
|
|
|
|
|
Premises and
equipment |
|
16,619 |
|
|
|
15,891 |
|
|
|
16,028 |
|
Other real estate held
for sale |
|
4,413 |
|
|
|
4,782 |
|
|
|
3,269 |
|
Deferred tax asset |
|
6,266 |
|
|
|
8,760 |
|
|
|
9,287 |
|
Deposit based
intangibles |
|
1,985 |
|
|
|
2,172 |
|
|
|
2,235 |
|
Goodwill |
|
5,694 |
|
|
|
5,694 |
|
|
|
5,694 |
|
Other assets |
|
17,759 |
|
|
|
19,398 |
|
|
|
16,192 |
|
|
|
|
|
|
|
TOTAL
ASSETS |
$ |
1,015,070 |
|
|
$ |
983,520 |
|
|
$ |
959,121 |
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES: |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Noninterest bearing deposits |
$ |
162,142 |
|
|
$ |
164,179 |
|
|
$ |
163,278 |
|
NOW,
money market, interest checking |
|
275,854 |
|
|
|
286,622 |
|
|
|
287,097 |
|
Savings |
|
61,832 |
|
|
|
58,315 |
|
|
|
60,322 |
|
CDs<$250,000 |
|
144,031 |
|
|
|
141,629 |
|
|
|
150,170 |
|
CDs>$250,000 |
|
9,126 |
|
|
|
8,489 |
|
|
|
9,015 |
|
Brokered |
|
182,218 |
|
|
|
164,278 |
|
|
|
137,298 |
|
Total
deposits |
|
835,203 |
|
|
|
823,512 |
|
|
|
807,180 |
|
|
|
|
|
|
|
Federal
funds purchased |
|
- |
|
|
|
6,000 |
|
|
|
- |
|
Borrowings |
|
91,397 |
|
|
|
67,579 |
|
|
|
67,730 |
|
Other
liabilities |
|
5,821 |
|
|
|
7,820 |
|
|
|
5,926 |
|
Total
liabilities |
|
932,421 |
|
|
|
904,911 |
|
|
|
880,836 |
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY: |
|
|
|
|
|
Common
stock and additional paid in capital - No par value |
|
|
|
|
|
Authorized - 18,000,000 shares |
|
|
|
|
|
Issued
and outstanding - 6,294,930; 6,263,371; and 6,263,371 shares
respectively |
|
61,881 |
|
|
|
61,583 |
|
|
|
61,433 |
|
Retained
earnings |
|
20,439 |
|
|
|
17,206 |
|
|
|
16,115 |
|
Accumulated other comprehensive income |
|
|
|
|
|
Unrealized gains (losses) on available for sale securities |
|
407 |
|
|
|
(102 |
) |
|
|
786 |
|
Minimum
pension liability |
|
(78 |
) |
|
|
(78 |
) |
|
|
(49 |
) |
|
|
|
|
|
|
Total
shareholders' equity |
|
82,649 |
|
|
|
78,609 |
|
|
|
78,285 |
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
1,015,070 |
|
|
$ |
983,520 |
|
|
$ |
959,121 |
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
(Unaudited) |
|
(Unaudited) |
INTEREST
INCOME: |
|
|
|
|
|
|
|
|
Interest
and fees on loans: |
|
|
|
|
|
|
|
|
Taxable |
|
$ |
10,799 |
|
|
$ |
9,441 |
|
|
$ |
31,016 |
|
|
$ |
26,085 |
|
Tax-exempt |
|
|
21 |
|
|
|
19 |
|
|
|
73 |
|
|
|
34 |
|
Interest
on securities: |
|
|
|
|
|
|
|
|
Taxable |
|
|
401 |
|
|
|
387 |
|
|
|
1,195 |
|
|
|
953 |
|
Tax-exempt |
|
|
72 |
|
|
|
57 |
|
|
|
226 |
|
|
|
114 |
|
Other
interest income |
|
|
230 |
|
|
|
91 |
|
|
|
475 |
|
|
|
212 |
|
Total
interest income |
|
|
11,523 |
|
|
|
9,995 |
|
|
|
32,985 |
|
|
|
27,398 |
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
Deposits |
|
|
1,157 |
|
|
|
870 |
|
|
|
3,170 |
|
|
|
2,410 |
|
Borrowings |
|
|
577 |
|
|
|
429 |
|
|
|
1,541 |
|
|
|
1,008 |
|
Total
interest expense |
|
|
1,734 |
|
|
|
1,299 |
|
|
|
4,711 |
|
|
|
3,418 |
|
|
|
|
|
|
|
|
|
|
Net interest
income |
|
|
9,789 |
|
|
|
8,696 |
|
|
|
28,274 |
|
|
|
23,980 |
|
Provision for loan
losses |
|
|
200 |
|
|
|
200 |
|
|
|
400 |
|
|
|
350 |
|
Net interest income
after provision for loan losses |
|
|
9,589 |
|
|
|
8,496 |
|
|
|
27,874 |
|
|
|
23,630 |
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME: |
|
|
|
|
|
|
|
|
Deposit
service fees |
|
|
262 |
|
|
|
259 |
|
|
|
803 |
|
|
|
723 |
|
Income
from loans sold on the secondary market |
|
|
434 |
|
|
|
512 |
|
|
|
1,048 |
|
|
|
1,118 |
|
SBA/USDA
loan sale gains |
|
|
278 |
|
|
|
551 |
|
|
|
426 |
|
|
|
717 |
|
Mortgage
servicing income |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
(24 |
) |
|
|
(74 |
) |
Net
security gains |
|
|
38 |
|
|
|
40 |
|
|
|
38 |
|
|
|
149 |
|
Other |
|
|
147 |
|
|
|
139 |
|
|
|
433 |
|
|
|
379 |
|
Total
other income |
|
|
1,153 |
|
|
|
1,489 |
|
|
|
2,724 |
|
|
|
3,012 |
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSE: |
|
|
|
|
|
|
|
|
Salaries
and employee benefits |
|
|
3,934 |
|
|
|
3,687 |
|
|
|
11,388 |
|
|
|
10,592 |
|
Occupancy |
|
|
761 |
|
|
|
680 |
|
|
|
2,322 |
|
|
|
1,960 |
|
Furniture
and equipment |
|
|
616 |
|
|
|
440 |
|
|
|
1,640 |
|
|
|
1,248 |
|
Data
processing |
|
|
533 |
|
|
|
440 |
|
|
|
1,482 |
|
|
|
1,118 |
|
Advertising |
|
|
227 |
|
|
|
157 |
|
|
|
524 |
|
|
|
494 |
|
Professional service fees |
|
|
323 |
|
|
|
309 |
|
|
|
1,049 |
|
|
|
807 |
|
Loan and
deposit |
|
|
181 |
|
|
|
152 |
|
|
|
515 |
|
|
|
434 |
|
Writedowns and losses on other real estate held for sale |
|
|
43 |
|
|
|
60 |
|
|
|
298 |
|
|
|
62 |
|
FDIC
insurance assessment |
|
|
210 |
|
|
|
131 |
|
|
|
556 |
|
|
|
356 |
|
Telephone |
|
|
154 |
|
|
|
140 |
|
|
|
445 |
|
|
|
374 |
|
Transaction related expenses |
|
|
- |
|
|
|
359 |
|
|
|
- |
|
|
|
2,928 |
|
Other |
|
|
742 |
|
|
|
730 |
|
|
|
2,199 |
|
|
|
2,003 |
|
Total
other expenses |
|
|
7,724 |
|
|
|
7,285 |
|
|
|
22,418 |
|
|
|
22,376 |
|
|
|
|
|
|
|
|
|
|
Income before provision
for income taxes |
|
|
3,018 |
|
|
|
2,700 |
|
|
|
8,180 |
|
|
|
4,266 |
|
Provision for income
taxes |
|
|
925 |
|
|
|
922 |
|
|
|
2,681 |
|
|
|
1,481 |
|
|
|
|
|
|
|
|
|
|
NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS |
|
|
2,093 |
|
|
|
1,778 |
|
|
|
5,499 |
|
|
|
2,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME PER
COMMON SHARE: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
.33 |
|
|
$ |
.29 |
|
|
$ |
.88 |
|
|
$ |
.45 |
|
Diluted |
|
$ |
.33 |
|
|
$ |
.28 |
|
|
$ |
.87 |
|
|
$ |
.45 |
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES |
|
LOAN PORTFOLIO AND CREDIT QUALITY |
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands) |
|
|
|
Loan Portfolio
Balances (at end of period): |
|
|
|
|
|
|
|
September
30, |
|
December 31, |
|
September 30, |
|
|
2017 |
|
2016 |
|
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
Commercial Loans: |
|
|
|
|
|
|
Real
estate - operators of nonresidential buildings |
$ |
116,526 |
|
$ |
121,861 |
|
$ |
110,252 |
|
Hospitality and tourism |
|
74,500 |
|
|
68,025 |
|
|
53,182 |
|
Lessors
of residential buildings |
|
31,985 |
|
|
27,590 |
|
|
23,939 |
|
Gasoline
stations and convenience stores |
|
20,210 |
|
|
20,509 |
|
|
20,286 |
|
Logging |
|
16,363 |
|
|
19,903 |
|
|
19,203 |
|
Commercial construction |
|
8,892 |
|
|
11,505 |
|
|
14,343 |
|
Other |
|
304,323 |
|
|
274,180 |
|
|
272,061 |
|
Total
Commercial Loans |
|
572,799 |
|
|
543,573 |
|
|
513,266 |
|
|
|
|
|
|
|
|
1-4
family residential real estate |
|
204,419 |
|
|
205,945 |
|
|
211,072 |
|
Consumer |
|
18,247 |
|
|
20,113 |
|
|
20,698 |
|
Consumer
construction |
|
12,684 |
|
|
12,226 |
|
|
11,768 |
|
|
|
|
|
|
|
|
Total
Loans |
$ |
808,149 |
|
$ |
781,857 |
|
$ |
756,804 |
|
|
|
|
|
|
|
|
Credit Quality
(at end of period): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2016 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
Nonperforming Assets : |
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
$ |
2,964 |
|
|
$ |
3,959 |
|
|
$ |
4,498 |
|
|
Loans
past due 90 days or more |
|
- |
|
|
|
- |
|
|
|
32 |
|
|
Restructured loans |
|
101 |
|
|
|
165 |
|
|
|
139 |
|
|
Total
nonperforming loans |
|
3,065 |
|
|
|
4,124 |
|
|
|
4,669 |
|
|
Other
real estate owned |
|
4,413 |
|
|
|
4,782 |
|
|
|
3,269 |
|
|
Total
nonperforming assets |
$ |
7,478 |
|
|
$ |
8,906 |
|
|
$ |
7,938 |
|
|
Nonperforming loans as a % of loans |
.38 |
% |
|
.53 |
% |
|
.62 |
% |
|
Nonperforming assets as a % of assets |
.74 |
% |
|
.91 |
% |
|
.83 |
% |
|
Reserve for Loan Losses: |
|
|
|
|
|
|
|
|
|
At period
end |
$ |
5,130 |
|
|
$ |
5,020 |
|
|
$ |
4,862 |
|
|
As a % of
average loans |
.63 |
% |
|
.64 |
% |
|
.71 |
% |
|
As a % of
nonperforming loans |
|
167.37 |
% |
|
|
121.73 |
% |
|
|
104.13 |
% |
|
As a % of
nonaccrual loans |
|
173.08 |
% |
|
|
126.80 |
% |
|
|
108.09 |
% |
|
Texas
Ratio |
|
9.34 |
% |
|
|
11.76 |
% |
|
|
10.55 |
% |
|
|
|
|
|
|
|
|
|
|
|
Charge-off Information (year to date): |
|
|
|
|
|
|
|
|
|
Average
loans |
$ |
803,825 |
|
|
$ |
703,047 |
|
|
$ |
680,027 |
|
|
Net
charge-offs (recoveries) |
$ |
290 |
|
|
$ |
584 |
|
|
$ |
492 |
|
|
Charge-offs as a % of average |
|
|
|
|
|
|
|
|
|
loans,
annualized |
.05 |
% |
|
.08 |
% |
|
.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
MACKINAC FINANCIAL CORPORATION AND
SUBSIDIARIES |
|
QUARTERLY FINANCIAL HIGHLIGHTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUARTER ENDED |
|
|
(Unaudited) |
|
|
September 30, |
|
|
June 30 |
|
|
March 31 |
|
|
December 31 |
|
|
September 30 |
|
|
|
2017 |
|
|
|
|
2017 |
|
|
|
|
2017 |
|
|
|
|
2016 |
|
|
|
|
2016 |
|
|
BALANCE
SHEET (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans |
$ |
808,149 |
|
|
|
$ |
790,753 |
|
|
|
$ |
786,546 |
|
|
|
$ |
781,857 |
|
|
|
$ |
756,804 |
|
|
Allowance for loan
losses |
|
(5,130 |
) |
|
|
|
(5,133 |
) |
|
|
|
(5,146 |
) |
|
|
|
(5,020 |
) |
|
|
|
(4,862 |
) |
|
Total
loans, net |
|
803,019 |
|
|
|
|
785,620 |
|
|
|
|
781,400 |
|
|
|
|
776,837 |
|
|
|
|
751,942 |
|
|
Total assets |
|
1,015,070 |
|
|
|
|
1,027,450 |
|
|
|
|
976,635 |
|
|
|
|
983,520 |
|
|
|
|
959,121 |
|
|
Core deposits |
|
643,859 |
|
|
|
|
621,303 |
|
|
|
|
633,160 |
|
|
|
|
650,745 |
|
|
|
|
660,867 |
|
|
Noncore deposits |
|
191,344 |
|
|
|
|
226,942 |
|
|
|
|
188,660 |
|
|
|
|
172,767 |
|
|
|
|
146,313 |
|
|
Total
deposits |
|
835,203 |
|
|
|
|
848,245 |
|
|
|
|
821,820 |
|
|
|
|
823,512 |
|
|
|
|
807,180 |
|
|
Total borrowings |
|
91,397 |
|
|
|
|
92,024 |
|
|
|
|
66,279 |
|
|
|
|
67,579 |
|
|
|
|
67,730 |
|
|
Total shareholders'
equity |
|
82,649 |
|
|
|
|
81,313 |
|
|
|
|
80,009 |
|
|
|
|
78,609 |
|
|
|
|
78,285 |
|
|
Total tangible
equity |
|
74,970 |
|
|
|
|
73,572 |
|
|
|
|
72,205 |
|
|
|
|
70,743 |
|
|
|
|
70,356 |
|
|
Total shares
outstanding |
|
6,294,930 |
|
|
|
|
6,294,930 |
|
|
|
|
6,294,930 |
|
|
|
|
6,263,371 |
|
|
|
|
6,263,371 |
|
|
Weighted average shares
outstanding |
|
6,294,930 |
|
|
|
|
6,294,930 |
|
|
|
|
6,270,034 |
|
|
|
|
6,263,371 |
|
|
|
|
6,238,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE
BALANCES (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
$ |
1,021,152 |
|
|
|
$ |
984,236 |
|
|
|
$ |
980,491 |
|
|
|
$ |
958,781 |
|
|
|
$ |
930,353 |
|
|
Loans |
|
803,825 |
|
|
|
|
787,143 |
|
|
|
|
782,477 |
|
|
|
|
771,279 |
|
|
|
|
734,702 |
|
|
Deposits |
|
841,699 |
|
|
|
|
820,375 |
|
|
|
|
825,309 |
|
|
|
|
800,508 |
|
|
|
|
780,265 |
|
|
Equity |
|
82,162 |
|
|
|
|
81,013 |
|
|
|
|
79,293 |
|
|
|
|
78,406 |
|
|
|
|
78,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
STATEMENT (Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
9,789 |
|
|
|
$ |
9,319 |
|
|
|
$ |
9,166 |
|
|
|
$ |
9,118 |
|
|
|
$ |
8,696 |
|
|
Provision for loan
losses |
|
200 |
|
|
|
|
50 |
|
|
|
|
150 |
|
|
|
|
250 |
|
|
|
|
200 |
|
|
Net
interest income after provision |
|
9,589 |
|
|
|
|
9,269 |
|
|
|
|
9,016 |
|
|
|
|
8,868 |
|
|
|
|
8,496 |
|
|
Total noninterest
income |
|
1,153 |
|
|
|
|
795 |
|
|
|
|
776 |
|
|
|
|
1,141 |
|
|
|
|
1,489 |
|
|
Total noninterest
expense |
|
7,724 |
|
|
|
|
7,517 |
|
|
|
|
7,177 |
|
|
|
|
7,509 |
|
|
|
|
7,285 |
|
|
Income before
taxes |
|
3,018 |
|
|
|
|
2,547 |
|
|
|
|
2,615 |
|
|
|
|
2,500 |
|
|
|
|
2,700 |
|
|
Provision for income
taxes |
|
925 |
|
|
|
|
867 |
|
|
|
|
889 |
|
|
|
|
802 |
|
|
|
|
922 |
|
|
Net income available to
common shareholders |
$ |
2,093 |
|
|
|
$ |
1,680 |
|
|
|
$ |
1,726 |
|
|
|
$ |
1,698 |
|
|
|
$ |
1,778 |
|
|
Income pre-tax,
pre-provision |
$ |
3,218 |
|
|
|
$ |
2,597 |
|
|
|
$ |
2,765 |
|
|
|
$ |
2,750 |
|
|
|
$ |
2,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings |
$ |
.33 |
|
|
|
$ |
.27 |
|
|
|
$ |
.28 |
|
|
|
$ |
.27 |
|
|
|
$ |
.29 |
|
|
Book value per
common share |
|
13.13 |
|
|
|
|
12.92 |
|
|
|
|
12.71 |
|
|
|
|
12.55 |
|
|
|
|
12.50 |
|
|
Tangible book value per
share |
|
11.91 |
|
|
|
|
11.69 |
|
|
|
|
11.47 |
|
|
|
|
11.29 |
|
|
|
|
11.23 |
|
|
Market value, closing
price |
|
15.50 |
|
|
|
|
13.99 |
|
|
|
|
13.72 |
|
|
|
|
13.47 |
|
|
|
|
11.49 |
|
|
Dividends per
share |
|
.120 |
|
|
|
|
.120 |
|
|
|
|
.120 |
|
|
|
|
.100 |
|
|
|
|
.100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
loans/total loans |
|
.38 |
|
% |
|
|
.47 |
|
% |
|
|
.47 |
|
% |
|
|
.53 |
|
% |
|
|
.62 |
|
% |
Nonperforming
assets/total assets |
|
.74 |
|
|
|
|
.76 |
|
|
|
|
.84 |
|
|
|
|
.91 |
|
|
|
|
.83 |
|
|
Allowance for loan
losses/total loans |
|
.63 |
|
|
|
|
.65 |
|
|
|
|
.65 |
|
|
|
|
.64 |
|
|
|
|
.64 |
|
|
Allowance for loan
losses/nonperforming loans |
|
167.37 |
|
|
|
|
136.95 |
|
|
|
|
137.96 |
|
|
|
|
121.73 |
|
|
|
|
104.13 |
|
|
Texas ratio |
|
9.34 |
|
|
|
|
9.91 |
|
|
|
|
10.60 |
|
|
|
|
11.76 |
|
|
|
|
10.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROFITABILITY
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
.81 |
|
% |
|
|
.68 |
|
% |
|
|
.71 |
|
% |
|
|
.70 |
|
% |
|
|
.76 |
|
% |
Return on average
equity |
|
10.11 |
|
|
|
|
8.32 |
|
|
|
|
8.83 |
|
|
|
|
8.62 |
|
|
|
|
9.06 |
|
|
Net interest
margin |
|
4.23 |
|
|
|
|
4.24 |
|
|
|
|
4.19 |
|
|
|
|
4.14 |
|
|
|
|
4.18 |
|
|
Average loans/average
deposits |
|
95.50 |
|
|
|
|
95.95 |
|
|
|
|
94.81 |
|
|
|
|
96.35 |
|
|
|
|
94.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL
ADEQUACY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage
ratio |
|
6.82 |
|
% |
|
|
7.02 |
|
% |
|
|
6.77 |
|
% |
|
|
7.18 |
|
% |
|
|
7.29 |
|
% |
Tier 1 capital to risk
weighted assets |
|
8.47 |
|
|
|
|
8.57 |
|
|
|
|
8.49 |
|
|
|
|
8.80 |
|
|
|
|
8.22 |
|
|
Total capital to risk
weighted assets |
|
9.10 |
|
|
|
|
9.21 |
|
|
|
|
9.15 |
|
|
|
|
9.45 |
|
|
|
|
8.81 |
|
|
Average equity/average
assets (for the quarter) |
|
8.05 |
|
|
|
|
8.23 |
|
|
|
|
8.09 |
|
|
|
|
8.18 |
|
|
|
|
8.39 |
|
|
Tangible
equity/tangible assets (at quarter end) |
|
7.44 |
|
|
|
|
7.22 |
|
|
|
|
7.45 |
|
|
|
|
7.25 |
|
|
|
|
7.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
Paul D. Tobias, (248) 290-5901 / ptobias@bankmbank.com Jesse A.
Deering, (248) 290-5906 /jdeering@bankmbank.comWebsite:
www.bankmbank.com
Mackinac Financial (NASDAQ:MFNC)
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